Mark Brown of the Lakin Law Firm bargained a class action lawsuit down to a penny at a hearing before Madison County Circuit Judge Dave Hylla.
The suit alleges that in 1999, Old Kent Mortgage charged three borrowers $100 for a credit report, paid less than that for the report, and improperly retained the difference.
No one at the hearing could tell Hylla how much Old Kent paid for the report.
Hylla said, "I am being asked to rule on this without knowing whether the mortgage broker kept what the court might consider a reasonable administrative fee of five percent or maybe 10 percent of this hundred dollars, or in fact may have kept 90 percent of it and paid $10 to a credit bureau reporting agency."
Marta Stein, representing Old Kent successor Fifth Third Mortgage, said, "Under their complaint as pled, if we kept a penny and gave a credit bureau 99 dollars and 99 cents, they were still defrauded."
Hylla said to Brown, "Plaintiff's counsel, is that true?"
Brown said, "Your honor, I don't think the cause of action is dependent on the amount that was kept by the defendants."
"The cause of action is based on the fact that there was an amount kept by the defendant," he said.
The Lakin firm filed the suit for Michael Stevens, William Stevens and Helen Stevens in 2003, four years after they closed a loan with Old Kent.
Fifth Third attorney Joe Whyte moved to dismiss the suit. He and Stein brought the motion to Hylla on March 27.
Hylla said to Whyte, "They are claiming that you promised to pay the credit bureau a hundred dollars?
Whyte said yes.
"And you are saying that you never made that promise?" Hylla said.
"We are saying that we never made that promise," Whyte answered. He said the fee was paid outside of closing.
Hylla asked what that meant.
"It was paid before they got to the date of closing," Whyte said. "It was not something that we withheld from the loan amount or charged them a finance charge for."
"Their damage could not have been proximately caused by them being actually deceived by any statement that we made after they had already paid the amount."
Hylla said, "That point appears logical. I am following you on that."
Whyte said, "They do not allege that they made any effort to discover the actual amount paid to the credit bureau."
Stein said plaintiffs alleged breach of contract.
"We cannot find out what contract they are talking about," she said. "If it is an actual contract, then they had an obligation to attach it."
Hylla said, "Are you asking the court to make a finding that these documents do not constitute a contract?"
Stein said, "If your honor wants to go that far we would welcome that."
Brown of the Lakin firm said, "I would concede that these documents don't constitute both a contract and a fraudulent representation. It is one or the other."
"Were they actually paying a hundred dollars for a credit report that Old Kent received from a third party credit reporting agency, or were they paying a hundred dollars for the credit report plus built in profit to Old Kent?" Brown said.
"If I understand the defendant's arguments correctly, they are not arguing that their practices were not deceptive," he said.
Hylla said, "I don't think they are conceding the point on deception."
Brown said, "I didn't mean to misquote Mr. Whyte. He has not conceded that the representations here were deceptive."
Hylla said it seemed the $100 was paid outside closing. He said, "Is that not the case?"
Brown said he did not know. He said, "I don't think it matters for the purposes of our discussion."
Hylla said, "Explain to me why it doesn't matter because I'm having a question here. What are you alleging was deceptive? What deceived your clients before they paid the hundered dollars?"
Brown said, "Mr. Whyte has done a good job of phrasing it as the question but it is not the right question."
He said, "The deception doesn't stop at the minute that the borrower actually pays the hundred dollar check. It continues through the point at which the borrower closes the transaction."
He said, "I don't know what questions a borrower would even ask under those circumstances at closing."
He said, "We as plaintiffs' counsel have asked some of those very same questions in discovery and we don't have answers yet."
Stein said, "Come on counsel. We have already agreed by agreement that the discovery was tolled."
Brown said, "I didn't mean to imply that defendants have done anything improper by not answering discovery."
At that point Hylla tried to find out how much the report cost. He got no answer.
After Brown argued for a penny, Hylla asked if mortgage regulations required a lender to say where every penny would go.
Brown said, "That is certainly not the basis of our claim."
Hylla said, "Do you know the answer to that question?"
Brown said, "I cannot cite to you any statutes at this point."
Hylla took it under advisement. He asked both sides to submit proposed orders by April 17.
On April 24 Hylla extended the deadline to April 27.