Countrywide class action claims whittled down

By Steve Korris | May 3, 2007

Paul Marks

On the day Mark Brown of the Lakin Law Firm bargained a class action down to a penny before Madison County Circuit Judge Dave Hylla, Paul Marks abandoned three accusations in a Lakin class action before Hylla.

At a March 27 hearing, Marks said he would not pursue charges of duress, coercion and breach of contract against Countrywide Home Loans.

Marks tried to score points on federal real estate law, but when Hylla asked him if he brought a claim under it Marks said he did not.

That left nothing of the complaint but a routine count of consumer fraud and a quaint count of unjust enrichment.

Hylla said, "Is unjust enrichment a law?"

Marks said, "Yes sir, as recognized by the state of Illinois as a count and by virtually every other state as well."

Hylla said, "Is there a statute on unjust enrichment?"

Marks said, "Not that I am aware of. It's a common law cause of action."

Countrywide has asked for summary judgment in its favor. As of May 1 Hylla had not reached a decision.

In Hylla's other March 27 hearing, Brown said he would pursue a claim against Fifth Third Mortgage over the difference between $100 and $99.99.

Back in the day

Freed & Weiss of Chicago and the Lakin firm of Wood River used to be a mighty class action force in Madison County's courthouse.

But shrinking suits contradict the nostalgia of attorney Paul Weiss, who estimates that the legal battle between his firm and the Lakins involves several million dollars in fees.

Though dozens of their suits remain open, few hold potential for bonanzas like the Lakins and Weiss used to strike.

Some suits hold potential for embarrassment.

The hearing on Countrywide renewed the legend of Emert Wyss, the attorney who accidentally sued himself.

For years Wyss closed home loans through Centerre Title, a company he owned and operated next to his law office in Alton.

About five years ago, he searched Centerre Title files for clients who might have paid unreasonable fees.

He called former clients to his office, signed them up for class actions and referred them to the Lakins.

For signing prospects, Wyss stood to collect 10 percent of the proceeds.

The Lakins would file about 25 suits over fees on loans that Centerre Title closed. Wyss did not put his name on the complaints.

One suit claimed Countrywide Home Loans charged Todd Morgan $30 for a courier, paid less than that and improperly kept the rest.

Among the Chicago names on the Lakin team, Countrywide attorneys spotted Malik Diab. He had defended Countrywide in similar claims.

Countrywide asked Circuit Judge Philip Kardis to disqualify all Morgan's attorneys for improper communication.

Diab withdrew. That satisfied Circuit Judge Philip Kardis, who denied disqualification for the other attorneys.

In another fee case, defendant Alliance Mortgage asked Kardis to name Centerre Title as third party defendant.

Wyss sent Kardis a letter renouncing his fee.

Kardis nevertheless named Centerre Title and Wyss as defendants.

Later Kardis dismissed Wyss personally, but not Centerre Title.

When Kardis retired his cases passed to Circuit Judge Don Weber. Last fall, Madison County voters handed Weber's cases over to Hylla.

Hylla in charge

At Hylla's hearing on Countrywide, defense attorney Troy Bozarth said Wyss went through files to find plaintiffs.

Hylla asked Bozarth what evidence he had.

Bozarth said he had Wyss's deposition.

Hylla said, "That's a factual basis for that, not just your speculation?"

Bozarth said, "Not my speculation."

Robert Schmieder II of the Lakin firm said, "We are here on summary judgment. None of these are material facts."

Hylla said, "Wyss is no longer participating in the case?"

Bozarth said, "The reason why I think that is relevant – and even you know more than interesting – is because Emert Wyss is the one that identified our particular fee in this case as being inappropriate.

"His company didn't identify it as a problem when it was closed. As a matter of fact his company charged the exact same fee, $30, for overnight services."

Hylla said, "And he was critical of this when someone else did it?"

Bozarth said, "Exactly."

Hylla asked if Morgan was at risk of losing the deal if he didn't go through with the transaction.

Bozarth said he would have had his same loan.

He said, "His monthly payment was reduced. He cashed out. So he got a better interest rate and he got cash out to work on his roof."

Hylla asked what the courier cost.

Bozarth said the St. Louis branch charged $30.

Hylla said, "They just come up with a blanket $30 charge?"

Bozarth said, "Based on their experience of what the costs are for the number of loans that they do."

As Bozarth prepared to wrap up he said, "I believe the breach of contract is not an issue any more."

Marks said, "We will not vigorously oppose the point."

Hylla said to Bozarth, "You're telling the court that they didn't know what their overnight charge was going to be after the closing, but didn't they do thousands of these?"

Bozarth said, "Yes, and that's where they get their $30 from."

Hylla asked if they based it on other transactions. Bozarth said yes.

Hylla said, "That's your position?"

Bozarth said, "Yes, which is exactly what Centerre Title testified that they did. They didn't think it was a problem for them."

Marks said, "They did need to disclose their true charges, your honor."

Hylla said, "Doesn't this document show a $60 fee?"

Marks said, "No, it shows two $30 fees on different lines."

Bozarth said, "One was not charged by my client, Judge."

Marks said the transaction was in 1999. He said in 2001, Countrywide stopped charging courier fees.

Hylla said, "What does the 2001 policy have to do with what happened in 1999?"

Marks said, "Shows their state of mind."

Hylla said, "Their state of mind when?"

Marks said, "2001, that they knew that this was improper."

Hylla said, "I'm having a tough time seeing how violation of their policy equates to unjust enrichment."

Marks said, "They know it's wrong but yet they do it anyway."

Hylla said, "That could be just an operating policy in order to attract more business."

Hylla asked Marks what law required them to document the actual cost.

Marks said state consumer fraud laws did. He said the national Real Estate Settlement Agreement Procedures Act allows no kickbacks to third parties.

Hylla said, "That was my question, if it's your position that these actions that he took in 1999 violated RESPA, and you said no."

Marks said, "I stand by that."

Hylla asked what they violated in the Illinois consumer fraud act.

Marks said, "They had a deceptive practice through misrepresentation of what the actual cost was, and they omitted to tell Mr. Morgan and the other borrowers what the actual cost was."

"To this day we don't know what the actual cost was," he said. "They cannot make a secret profit by marking up somebody else's charge."

Hylla said, "What is your basis for that statement?"

Marks said a section of RESPA implied it.

Hylla asked if he had the section.

Marks said he didn't think he did. He said, "As I may have mentioned before, there is no cause of action necessarily under that section."

Schmieder tried to add some punch. He said there was no evidence that they incurred any courier expenses whatsoever.

Hylla said, "I'm still not understanding line 1114. Overnight fee, Centerre, $30."

Schmieder said, "That's not an issue in this case."

Hylla said, "Why isn't it?"

Schmieder said, "Because Mr. Wyss testified that he did employ a courier and that those were his actual costs."

Bozarth said, "That's not what he testified to. He testified it was an estimate."

Schmieder said, "They brought up that Emert Wyss should have somehow told them that that fee was not incurred by Countrywide. Countrywide doesn't even know whether they incurred a courier fee in the case."

"How in the world could Emert Wyss know what Countrywide's actual costs were?," he said. "He didn't work for them."

"They lied," Schmieder said. "We proved it. We went out and got the business records. There's nothing in it."

Hylla asked Marks why there was no cause of action under RESPA.

Marks said, "There is a line of cases where attorneys attempted that and were largely unsuccessful."

Hylla asked Bozarth why he could not tell the exact cost.

Bozarth said Countrywide had a national contract with more than 20,000 overnight deliveries a week. He said there was no individual invoice.

Hylla prepared to wrap up. He said to Marks, "Are you saying that I should not look at any questions of fact regarding duress or coercion on Mr. Morgan to continue with this transaction even though he thought the courier fee was unreasonable?"

Marks said, "I think we can put that aside, your honor."

Hylla said, "Put that aside?" Marks said yes.

Hylla said, "So there was no duress or coercion. That will save me a lot of time if that's your position."

Schmieder said, "Your honor, I mean yes."

Hylla said he would review it.

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