Mortgage suits in jeopardy over Alton attorney's dual role

Alton attorney Emert Wyss, famous from coast to coast for accidentally suing himself, has boomeranged again.

His dual role as attorney and title company owner jeopardizes the only two class actions that any Madison County judge has certified among more than 20 suits that Wyss helped the Lakin Law Firm file over fees on mortgages.

Both class actions stopped moving last fall after one defendant, American Home Loans, asked Circuit Judge Nicholas Byron to dismiss the claim against it.

Defense attorney John Baroni of St. Louis wrote that Wyss represented plaintiffs Paul Wratchford and Ladonna Wratchford when they closed a mortgage at Centerre Title, a company Wyss owned next to his law office.

"Plaintiffs knowingly, willingly, and with assistance of competent and experienced counsel entered into the transaction," Baroni wrote.

He also wrote that, "…it was not until after plaintiffs executed the closing documents that their lawyer alerted plaintiffs of the possibility of the alleged overcharges."

In a similar move with a bolder touch, defendant Alliance Mortgage in 2004 moved Circuit Judge Phillip Kardis to add Centerre Title and Wyss as third party defendants.

Kardis granted the motion.

Because Wyss had initiated the suit by inviting a Centerre Title client to his office and signing her up with four law firms, the Record last year reported that he accidentally sued himself.

Fark.com, a website of oddities, featured Wyss and drew about 40,000 readers to the Record's website.

The story highlighted the noon talk show on St. Louis radio station KTRS and the drive time show on KMOX.

Wyss moved to dismiss himself and Centerre Title as defendants. Kardis dismissed Wyss but not Centerre Title.

Just last month on NBC television, Tonight Show host Jay Leno displayed last year's story in a segment on amusing headlines.

The tapestry

Beneath the chuckles a mystery remains.

When Centerre Title clients signed up in Wyss's office as class action clients for the Lakin firm, they also signed retainers with Freed and Weiss, of Chicago, and Campbell and Brinkley, of Godfrey.

They also signed with a Chicago firm that included Malik Diab. He had defended Countrywide Home Loans in 19 suits over fees.

The Lakin firm began filing class action mortgage complaints in 2002. Wyss's name did not appear, though he stood to collect a tenth of the proceeds.

The Wratchfords filed a pair of suits, claiming that their old lender and their new lender both cheated them.

In one, they claimed American Home Loans charged $50 for a credit report, paid less than that, and kept the difference.

In the other, they claimed Accredited Home Lenders charged $20.90 for a courier fee, paid less than that, and kept the difference.

In a deposition, Ladonna Wratchford told defense attorney Irene Freidel of Boston that Wyss contacted her and said there seemed to be a discrepancy.

Freidel asked what Wyss told her. Plaintiff attorney Bradley Lakin objected, citing attorney-client privilege.

Freidel said, "It is not clear to me that there was an attorney-client relationship."

"It's clear to me," Lakin responded.

Freidel asked if she had an agreement with Wyss. Wratchford said yes. Freidel asked if she had a written agreement. Wratchford said she was not sure.

Freidel asked Paul Wratchford in a deposition if he sought money damages from Accredited. "No ma'am," he said. "Just whoever else is satisfied with whatever happens."

Freidel asked Wyss in a deposition if he represented the Wratchfords. Wyss said, "I have contemplated entering my appearance on their behalf."

Kardis quash

In 2003 the Lakin firm sued Countrywide Home Loans, former client of Malik Diab, on behalf of borrower Todd Morgan.

When Countrywide attorneys spotted Diab's name in the record, they asked Kardis to disqualify all the plaintiff firms.

They argued that Diab discussed strategy and reviewed confidential information.

Diab and partner Phillip Bock withdrew from the Countrywide case but not from other cases. Lakin attorneys argued that withdrawal from the Countrywide case settled the matter.

Several Lakin attorneys swore in affidavits that they had little or no contact with Diab.

They offered no affidavit from Vincent Rapp, who signed the complaints. Nor did they offer an affidavit from Wyss.

Countrywide served notice that it would depose the firm of Diab and Bock. The Lakin firm moved to quash the deposition.

Kardis in 2004 denied Countrywide's motion to disqualify the remaining firms. He quashed Countrywide's depositions.

Smoky claims

Meanwhile the Wratchford claims moved faster than the rest. In December 2004, Byron held hearings on certifying them as class actions.

At the American Home Loans hearing, Lakin class action team leader Gary Peel said Byron could apply unjust enrichment laws of all states.

Peel said the defense claimed part of the fee went to a credit agency and part of it went for services the lender provided in connection with the credit report.

He said the lender should have charged for its services on line 801, instead of adding it to the credit agency's fee on line 804.

Byron said, "Let's assume they had a line item for the $25, and it is stated as $25, and it said an additional expenditure for services on our part, and its valuation $25."

Peel said, "Perfect. They could have done that."

Peel said the voluntary payment did not apply, "because the hidden markup was not disclosed."

Peel said, "Statutes of limitations vary from state to state, says the defendant. That is true. So what, says Gary Peel."

He said, "Those are procedural issues that do not apply to our case because again, Illinois applies its own procedural statutes."

For American Home Loans, Bruce Allensworth of Boston told Byron it was a bad case for the plaintiffs to bring forward.

He said, "We have plaintiffs who had tremendous credit problems, and a lot of time had to be spent on this credit report."

He said Peel wanted him to find the fee secret and deceptive without permitting him to offer proof that American Home Loans provided services.

Byron said it would be almost impossible to establish that the fees were unreasonable.

Peel said, "It makes zero difference to us whether they are reasonable or not reasonable."

He said, "Whether reasonable or not, you did not disclose them to us. And when you don't disclose the fees, that is the deceptive practice."

Allensworth told Byron, "He is entirely abandoning his claim that this fee was not earned – that the whole case now he has is a disclosure case."

Allensworth said, "They are not even alleging damage."

He said, "This case is nothing but smoke."

Pinning it on Wyss

Three weeks later they gathered again to argue class certification on the Wratchford claim against Accredited Home Lenders.

Peel said, "You didn't tell us that the courier fee costs less than $20.90. You hid that from us. You didn't tell us that the courier fee included a markup so that you could get extra profit."

Peel said, "In a large and impersonal society, class actions are often the last barricade of consumer protection."

Peel said applying Illinois law to other states would not violate due process unless the defendant demonstrated a difference that would determine the outcome.

Allensworth said Peel's argument would fall apart without accepting the premise that the lender universally applied a hidden markup.

Allensworth said that for the Wratchfords, "Accredited had to spend significantly more than $20.90 in getting the papers couriered to and from the closing table."

Allensworth said, "This is not a profit center to Accredited. The $20.90 defrays part of the cost but not all of the cost. We say that on a class wide basis."

Byron certified both cases as class actions in January 2005.

Both defendants moved for leave to appeal. Byron denied both motions last July.

The Boston attorneys withdrew from the American Home Loans case but stayed on as counsel to Accredited.

In September Accredited asked Byron to reconsider class certification.

The new attorney for American Home Loans, Baroni, pursued a different strategy. In October he amended the answer to the complaint, pinning responsibility on Wyss.

Baroni wrote that Byron should deny class certification, enter judgment in favor of his client on all counts, dismiss with prejudice, and award attorney fees and costs.

The plaintiffs replied, and nothing has happened since. Byron has set case management conferences and the parties have agreed to continue them.

In December Byron denied Accredited's motion to reconsider. Nothing has happened since in that case except that the Boston lawyers changed their address.

Along the way the Lakin firm lost its class action leader.

Peel left the firm in March after a federal grand jury indicted him on charges of bankruptcy fraud, obstruction of justice and possession of child pornography.