Where a plaintiff debtor has filed a complaint alleging violations of various state and federal consumer protection laws related to a mortgage loan, judgment should enter in favor of the defendants on equitable estoppel grounds, as the debtor knowingly made false statements in her closing affidavits.
“Before the Court is the First Amended Complaint [Dkt. No. 21] (the ‘Complaint’) filed by the debtor-plaintiff, Ludmila Kalaydzhan (the ‘Debtor’ or ‘Plaintiff’), for violations of various state and federal consumer protection laws related to a mortgage loan (the ‘Loan’) she obtained from Salisbury Lending Trust (‘Salisbury’), of which Steven A. Ross (‘Ross’) is the trustee. Ross is also the principal and sole manager QS Private Lending, LLC (‘QSPL’), which originated the Loan. The defendants are Salisbury, QSPL, and Ross, individually (collectively, the ‘Defendants’). Of the eight pleaded counts, three remain: Count I alleging violations of Mass. Gen. Laws ch. 93A (‘Chapter 93A’) related to unfair loan terms and unfair and deceptive conduct in the origination of the Loan; Count II alleging violations of the material disclosure requirements of the Truth in Lending Act (‘TILA’); and Count III alleging violations of disclosure and substantive requirements of the Home Ownership and Equity Protection Act of 1994 (‘HOEPA’), which amended TILA by adding the provisions codified at 15 U.S.C. §§1602(bb) (defining high-cost mortgage) and 1639 (setting forth disclosure requirements and substantive obligations as to high-cost mortgages) (Counts I through III, collectively, the ‘Counts’). …
“The remaining Counts assert claims under TILA, HOEPA, and Chapter 93A. To prevail on any one of these, the Plaintiff must show that the Loan at issue was a consumer loan — a loan obtained to purchase real property in which she would live as her primary residence. As an affirmative defense to all the claims, however, the Defendants argue that the Plaintiff is equitably estopped from asserting the claims because, at the closing, she signed the Closing Affidavits in which she stated, under penalty of perjury, that she did not intend the premises to ever become her principal residence and that a majority of the Loan proceeds would be used for a commercial or business purpose. …
“The remaining Counts assert claims under TILA, HOEPA, and Chapter 93A. To prevail on any one of these, the Plaintiff must show that the Loan at issue was a consumer loan — a loan obtained to purchase real property in which she would live as her primary residence. As an affirmative defense to all the claims, however, the Defendants argue that the Plaintiff is equitably estopped from asserting the claims because, at the closing, she signed the Closing Affidavits in which she stated, under penalty of perjury, that she did not intend the premises to ever become her principal residence and that a majority of the Loan proceeds would be used for a commercial or business purpose. …
“I have found, and the Plaintiff does not dispute, that in signing the Closing Affidavits, the Plaintiff knowingly made false statements. … The Plaintiff disputes that the Defendants actually relied on those statements and asserts that any reliance the Defendants may have placed on them was not reasonable. The Defendants contend that the misrepresentations made by the Plaintiff were intentional and Defendants were under no obligation to investigate the accuracy of the misrepresentations. The Defendants further assert that they did reasonably and actually rely on the Closing Affidavits.
“While this case raises important issues related to the lending practices of Ross and QSPL, and the Plaintiff has presented evidence from which I might infer that QSPL and Ross have demonstrated an indifference to whether other borrowers were misrepresenting their intentions in other loans originated by QSPL and Ross, the facts and circumstances of the Plaintiff’s Loan support application of the doctrine of equitable estoppel. …
“For these reasons, the Plaintiff is estopped by the misrepresentations made in the Closing Affidavits from asserting any of the remaining claims against the Defendants.”
In re: Kalaydzhan, Ludmila (Lawyers Weekly No. 04-003-24) (32 pages) (Panos, J.) (Chapter 13 Case No. 20-40020-CJP; AP No. 20-4026-CJP) (March 26, 2024).
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