Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D. Mo.: Foreclosure-related activities did not violate deceptive practices statute, (Feb 4, 2014)

By Jody Coultas, J.D.

Mortgage holders could not state Missouri Merchandising Practices Act (MMPA) claims against a title insurance company and a bank for foreclosure-related activities, the federal district court in St. Louis has held (Myers v. Sander, February 3, 2014, Perry, C.). The MMPA did not apply to the title insurance company, and there was an insufficient showing that the bank engaged in unfair or deceptive practices.

Middlewest Properties issued a mortgage despite Middlewest’s knowledge that it had previously pledged the property in exchange for a line of credit from First Bank. Because of the lien, the mortgage holder could not refinance and eventually could not pay the balloon note. Middlewest foreclosed and sought a deficiency judgment.

A state court ruled that Middlewest was not entitled to the deficiency judgment because it, and its agent, had breached the covenant of good faith and fair dealing and had come to the court with unclean hands.

The homeowners could not state a MMPA claim against Investors Title Company because the statute does not apply to companies subject to chartering, licensing, or regulation by the director of the Department of Insurance. The Attorney General has not been directed to implement the MMPA against title insurance companies, and no statute provides a private right of action to assert a MMPA cause of action against title insurance companies.

There was insufficient evidence that First Bank engaged in an unfair practice, deception, false promise, omission, or other act declared unlawful by the MMPA, according to the court. The mortgage holders alleged that First Bank filed a deed of trust and made written demands to the mortgage holders for payment. However, the complaint did not identify what that payment would have been for or why the filing of the deed of trust was fraudulent. Although the mortgage holders identified the failure to immediately record the deed of trust as a concealment, this was not done “in connection with” the purchase of any good or service, as required by the MMPA.

The case is No. 4:13CV2192 CDP.

Attorneys: Rufus J. Tate, Jr. (Tate Law Firm, LLC) for Ronald Myers. Lawrence F. Hartstein (Hartstein Law Office) for Leda J. Sander, Middlewest Properties, Inc., First Bank and Investors Title Co., Inc.

Companies: Investors Title Company; First Bank; Middlewest Properties

Cases: StateUnfairTradePractices MissouriNews