Maddox rules no cause of action in fax fee class action

Steve Korris Sep. 14, 2006, 10:17am

Paul Marks

Troy Bozarth

For a year and a half Lakin Law Firm attorneys pursued a goofy class action suit as if it might bring them more than national ridicule, but Madison County Circuit Judge Lola Maddox has put a stop to the foolishness.

Maddox granted summary judgment to Alliance Mortgage Sept. 6, throwing out a claim that the lender cheated borrower Carmelita McLaughlin.

The suit gained fame because the attorney who initiated it, Emert Wyss of Alton, wound up as a third party defendant in it.

In March 2005 the Madison County Record reported that Wyss accidentally sued himself., a website of oddities, spread the story. About 40,000 of its readers, coast to coast, clicked through to the Record's website.

This year, Tonight Show host Jay Leno displayed the Record's headline and cracked a joke about it.

In spite of the uproar, and in spite of Illinois Supreme Court decisions that knocked the props out from under class actions, the Lakin firm stuck with the suit to the bitter end.

McLaughlin sued Alliance in 2003. She claimed that at the closing of her home loan, the lender improperly charged $60 for two facsimile transmissions.

The Lakin firm moved to certify McLaughlin as representative of a class of borrowers who overpaid for faxes.

The Lakin firm filed about 26 other class actions over mortgage fees, including another with McLaughlin as proposed class representative.

All the plaintiffs closed their loans at Centerre Title, a company Wyss owned and operated next to his law practice.

After they had closed the loans, Wyss invited them to his law office and signed them up as Lakin Law Firm class action plaintiffs.

On the complaints the borrowers listed the Lakin firm and three other firms as counsel.

Although Wyss stood to collect a tenth of the proceeds, his name did not appear on the complaints.

In the Alliance Mortgage case, the lender asked Circuit Judge Phillip Kardis to add Centerre Title as a third party defendant.

Alliance argued that if anything went wrong at closing, the title company should have corrected it.

Wyss then gave up on collecting his 10 percent. He submitted a "fee renunciation letter" to Kardis, under seal.

Kardis signed an order adding Centerre Title and Wyss personally as third party defendants.

Wyss moved to dismiss himself and his company. After the case turned into a national joke, Kardis dismissed Wyss personally but did not dismiss Centerre Title.

When Kardis retired the case passed to Circuit Judge Don Weber, but Weber had to drop it because McLaughlin moved for substitution.

In Illinois any party can substitute a judge once without cause, if the judge has not made a substantial ruling.

Chief Judge Ann Callis assigned the case to Maddox, who held a hearing July 28 on a motion of Alliance Mortgage for summary judgment.

At the hearing Alliance attorney Troy Bozarth told Maddox that, "After these fees were incurred the service was provided and the statement that she received – the payoff statement – then reflected these fees."

Maddox asked if McLaughlin received anything that itemized two $30 fax fees. Bozarth said the payoff statement contained the fees.

Bozarth asked Maddox to apply the doctrine of voluntary payment, which bars a claim unless a person paid under compulsion.

Paul Marks of the Lakin firm said McLaughlin paid under compulsion. He said Alliance conditioned the release of loan proceeds on payment of the fax fees.

Maddox scanned the statement and said to Marks, "You attach it to your complaint, so she saw this before?"

Marks said, "No, I think her testimony is, she probably did not see that."

Bozarth said, "She never read it. It was sent to the closing agent, Centerre. Centerre said their policy was not to show it to her unless she asked."

Marks said, "Someone saw it and relied upon it."

Maddox said, "You think there was no agency on her behalf?"

Marks said, "Right."

Maddox said, "Did she want them to extend credit to her?"

Marks said, "Certainly."

Maddox said, "So the same law exists in every mortgage contract in the world then?"

Marks said, "Agency is a question of individual fact. There are questions of material fact in this case. Summary judgment cannot be granted."

Maddox said, "Doesn't she have the right to walk away if she doesn't want to pay that fee?"

Marks said, "They won't release her mortgage unless she pays the fee."

Maddox said, "She could get one from somebody else or she could find another way to pay it off."

Marks said, "She will incur more interest until she does, and she will have further closing costs in addition to that. That is compulsion."

Maddox said, "You think they have no right to any fees of any kind?"

Marks said, "I didn't say that. I didn't say that at all."

Maddox said, "Your point? They charge too much for a fax or they shouldn't have charged for a fax at all? What is your point?"

Marks began quoting the mortgage, and Maddox cut in: "Would we be here today if the fax fee was ten dollars?"

Marks said, "Maybe."

Three and a half years into the suit, Lakin Law Firm attorneys still had not decided how much of the fee they wished to challenge.

Maddox thought it over for six weeks and issued her order.

She wrote, "These charges were disclosed to Plaintiff and/or Centerre on her behalf and imposition of such disclosed charges cannot constitute a breach of contract."

She wrote that McLaughlin did not object to the fax fees at closing.

McLaughlin submitted nothing to support her allegation that Alliance threatened her, Maddox wrote.

"Plaintiff could not have been threatened or deceived by this language from paragraph 2 of the payoff statement that she did not read at or before the closing," she wrote.

"It is common sense that a charge imposed for a fax fee includes the labor of some employee to prepare and send the fax as well as the actual fax charges," she wrote

"Plaintiff could have avoided the fax fee altogether. Alliance would have mailed the payoff statement without charging a fee," she wrote.

"Centerre was acting as Plaintiff's agent and was aware of the fax charges and did not dispute them," she wrote.

"…the Plaintiff has no cause of action and thus no class can be certified by the Court."

She wrote that her order rendered the third party complaint against Centerre moot.

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