Legal Case Summary

Good morning, Your Honours. Joseph Chang on behalf of Roddled and Philistoluca, the plaintiff, appellant homeowners in this matter. And a lot of- There's so many issues in this case. We didn't give you enough time. But as you can see, we're not that judicious about watching the clock. There are a number of things here that we need to discuss. So, aren't you- Yeah, can we just start at the beginning? I mean, the claim against Quicken. I'm sitting there saying, you've got- What did you plead against Quicken? Because you seem like you've got a perfectly good claim at the outset. The question is, did you plead it? They make $80,000. Reportedly, the person tells them to say that they're making $240. So they get a $672,000 loan. But the court is saying, you had a chance to amend, right? Yes, you did amend. That is correct. And the court found what problems? The court looked at this through the Iqbal. They conducted the Iqbal test. And- That doesn't have to. Correct. And they felt that the pleadings did not rise to the level that Iqbal required. And I think looking at the exchange between you and the court

. For a lot of the pleadings that the court wants to review, and the conclusions of law that are in the complaint that you actually agreed with the concerns that the court was raising. There were conclusions of law and not allegations under Iqbal and Twambi. Chief Judge, I'd like to bring something to your attention. There was a calendaring issue, which was my fault. Were state practitioners or not used to being before the federal bench. And because of that, I was actually quite late to court. And I hadn't prepared the way I really wanted to. So that has a lot to do with why the transcript read the way that it did. But you still had a chance to amend the complaint. That is true. And you claim that they quickened Lord them into an unfavorable loan agreement. But then didn't describe how the agreement was unfavorable in this context. I mean, that's what the court was saying. And then the causal relationship is that you noted the only loss mentioned was a default on the mortgage. But the complaint didn't explain how quickens alleged fraud caused them to default. So it really is a plea. We're stuck in pleading here. I could part of it seems to be a fraud on quick and not a fraud that quick and committed

. But if we take your allegations as true as we must at this point, to extent that there's a factually specific allegation there, it seems that you're really alleging a fraud on quick and those perpetuated by misseen. And some other folks that jacked up overstated the assets and understated the amount of the immunization requirements. That is true. And unfortunately, the delukas are now in a position where they're living in their home. They've been there for many years. And because of this alleged fraud, they're not comfortable in their homes. They don't know when a foreclosure proceeding might begin. And there has been no exchange of discovery whatsoever. This case was also initially filed in burden county, New Jersey, and was removed to federal court. I think that's an important issue to bring up because they were prepared for a state law claim. And under the New Jersey Consumer Fraud Act, the courts looking through the eyes of the average consumer. Now, the delukas, they were running an auto body and a mechanic shop for several years. So I think they're the average American consumer in this case. When the average American consumer could not run, at least maybe shouldn't speak that broadly. I could not imagine running an auto body shop. I just got a pre-assembled trying to figure out how do I know when it's running. So the degree of sophistication I think is substantially greater than is alleged in the briefs. These are fairly familiar with financing, not real estate financing and the intricacies that might be unique to real estate financing

. But in terms of debt obligations and legislation, those kinds of things, we're not talking about someone, even though there's a high school education, we're not talking about totally unsophisticated naive persons that are unfamiliar with aspects of financing. I'm assuming that financing involved in the businesses, but this is, we're going to be under record here, and that's not really appropriate. Well, that's a very interesting point. And my reading of the Consumer Fraud Act, and when I take a look at the model jury charges, the way I look at the New Jersey CFA is that you're looking through the eyes of the average consumer, not necessarily through the eyes of the plan if in the case. And then once you do that and I acknowledge your remarks, they are running a business. So there is some heightened sophistication there. But I think we're going in the wrong direction if we're conducting that type of analysis. It's not so easy to figure out what the average consumer is. And I guess that's going to be realized on a case by case basis. But I do argue that in this particular case, the level of sophistication that might have been analyzed for this ruling on the motion to dismiss was not reasonable. What were, what, in plain language, what were the city mortgage do wrong? They're a loan servicer, right? Your Honor, city mortgage was initially, I believe they were the originating lender on that well now. I apologize. I was in the originating lender. So city mortgage was a servicer. And they were trying to get them into, you know, suggesting that you need to apply to try to get, in effect, what would come out as a result, as a modification. So what did they do wrong? I think the most powerful allegation with respect to that is being told, and I believe this is an unconsciousable business practice, being told to default. And that would then kickstart your ability to apply for a hand or other in-house. Well, I mean, put yourself in the city mortgage persons shoes

. You've got a couple before you that as we would say where I go, ain't no way they're going to be able to pay a mortgage for $670,000. And in order to try to get a modification, to get some type of relief, they're going to default sooner or later. So the person is probably thinking, you know what? Just having the fault now. Let's acknowledge what clearly is going to happen. They can't afford this. Now, maybe what they should have done was filed for bankruptcy, let the house be taken, et cetera. But that sounds like they wanted to keep their house. So the city mortgage person, you know, perhaps goes beyond the book of what the person should say and says, look, here's the only thing I can think of. Because at this point, the plaintiffs didn't have an attorney, did they, when they were met with city mortgage or did they? I don't believe so, Your Honor. Okay, so, you know, maybe the person should have said you need to see an attorney like now. But the person in the city mortgage didn't do that. So what, what did the city mortgage person do that was violation of law of state law? I think just making that statement of when you're, you know, being directed to default and understand there might be situations where that might be a blessing in disguise to be told that. It might be, you know, having that cup of coffee that you should have had months ago. But the problem is, once you default, these are a lot of these individuals that are going through the foreclosure issue. They're going paycheck to paycheck with respect to income. So if they're defaulting and then all of a sudden, you know, the arrearage is astronomical, you know, from one month to another month. So if you're being told default and even looking at this from a chapter 13 perspective where you have a chance to get current again, do bankruptcy code. If you're not making these right decisions timely, so if you're defaulting today and for some reason you're not well prepared and you don't file chapter 13 quickly enough, the arrearage and then the payment plan that you're, that you're supposed to pay back might be impossible

. What was that's what happened here? They ended up with the implementation of interest of $70,000, is that right? Equally grew, I have control of due judge. So, you know, I do state that simply by setting mortgage telling them to default, you know, without, you know, without telling them, look, make sure to go seek counsel. Because initially, how could the world for the afford council and these are folks that are really up against the wall, they're trying their best to hang under their home. They've got this ridiculous payment scheme under the TTP loan that they've gotten under the fixed law payments to qualify for the new payment deal. I don't know, what could they afford? I mean, that were me. I'm something to me to see an attorney. So, fine, you pay for the lawyer, and I'll be happy to go see the lawyer. But that doesn't help us in terms of your claim and working on our claim has been stated right quick and stay with quick and within our claim has been stated with sufficient specificity against quick and you mentioned the shuttling back and forth from one drop to another rep. I think was that quick and that you're saying did that or was that city mortgage? That's quick and that's quick. And also, I'd like to bring to your attention the fact that we have two loans here at origination, you have an 80% loan and then a 20% loan. So, in essence, the homeowner, what percentage I thought it was 6.7 and 9.0 something. That's with respect to the interest interest rate, but in terms of the overall loans that were offered, there was an 80% and then a 20% loan that when I look at this, it's clearly a way to deceptively provide a down payment. Now, I have no reason to believe since there's been no discovery exchanged that quick and quick and may or may not have perceived the 20% loan has a down payment. And that's why it's important to have discovery in this particular case. I feel that it's disruptive because if the homeowner didn't have a down payment, oh well, it doesn't matter. Give them a 20% line of credit, give them a he-lock, give them the 20% where they're going to be perceived as having the equity that all banks want

. Did you save time for your battle? If I didn't, I wanted to save five minutes. I'm not sure if I've gone over that. We'll give you some latitude. I'll show you some more questions for you, after your call is finished. Okay, thank you. We never really did get this city. It was probably signed quick and go ahead. Okay. Thank you. May I please the court, Josh Howley from Cills, Cummins and Gross on behalf of the Appellee City Mortgage. This is not a typical mortgage fraud case. City Mortgage made the plaintiffs three separate permanent modification offers out of the HAMP program, all of which the plaintiffs rejected as too expensive or not affordable. Nevertheless, despite city mortgages, good faith in offering them permanent loan modifications. The plaintiffs then sued City Mortgage, alleging fraud, consumer fraud, breach of contract and a stock. It was not a good faith, but the loan modifications you offered them, I think, were some of them are $60,000 a year, total payments. And this is a couple whose income for the year is 80,000. Your Honor, I'm not sure that that fact is actually in the record. I don't believe that

. I thought it was pled. Is that right? I don't believe it was pled. You're on. Okay. And it's part of the reason that goes to the insufficiency of the pleading. The plaintiffs in their fraud and consumer fraud act claims they based them on two factual allegations, one of which is that City Mortgage told the plaintiffs to default in order to be qualified for a HAMP modification. The HAMP program requires that the plaintiffs submit a hardship affidavit in which they must affirm under oath that they are either in default or about to go into default. So, Your Honor, I would submit that that is not a misrepresentation, but in fact is consistent with what the HAMP program requires. In addition, on a pleading level, the allegation was that City Mortgage frauds and ugly induce the plaintiffs here to delukas to enter into a to default and misrepresented that they will receive a favorable loan. So, that's a fraud claim. And it would seem that that fraud claim you're saying that somehow it's preempted, but how fraud claims are not preempted by HAMP? At least most courts are still held back. None that I know of that have held the otherwise. Your Honor, getting beyond the decision to dismiss for failure to state a claim judge, Chester also concluded that the claims were preempted by HAMP based upon the end run theory of preemption. But the point is, we're sort of approaching from the state perspective. Let's assume we don't have to deal with preemption. And from the state law perspective, the problem you have here is that you've got a fraud claim against City Mortgage. And fraud claims I don't believe are preempted by HAMP. Well, Your Honor, Judge Chester concluded that they were in the House of

. What support is there for that in any other court? There's trial court support throughout the country, Your Honor, for the end run theory of preemption, which means that because Congress did not expressly provide a remedy within hand. And end run theory rate fraud or end run theory rate other claims? I believe all claims, Your Honor. The trial court cases throughout the country do not distinguish between fraud or contract cases. I have a hard time looking at that tattoo. Other than the language about the secretary, which seems to me to stretch the text language of the secretary in the EES and then extrapolate that into some kind of congression intent to preempt. But I'm also skeptical that this is a situation where there is either it's certainly not expressed preemption unless you're lying upon the language about the secretary in EES. But even implied preemption, I just wonder how when it accomplishes that because in order if if a lender complies with HAMP, it would I assume get around the kinds of allegations that would lead to a murderous fraud or consumer length. So I don't see any conflict between providing with the federal statute or being in a situation where we're acting in a manner which is consistent with the federal statute, but make it impossible to comply with the state statute, which is the usual kind of implicit preemption that rises under conflict or obstruction preemption. I just have to be on this time. I have a hard time seeing it here. If he sent you lying upon Wigid, well, he sent the Chessler to lie upon Wigid. I just don't read that case that way. Your Honor, we do not rely upon Wigid. We think that Wigid is distinguishable. And Wigid, the seven circuit obviously concluded that end run preemption does not apply. Therefore, disagreeing with Judge Chessler's conclusion. But on HAMP, Your Honor, we would submit, and this was not argued below, but Judge Chessler obviously concluded that preemption applied. We believe that this court can find an alternative reason so long as Judge Chessler's reason was correct

. Was that obstacle preemption apply, Syria, Your Honor? And that's because I thought your argument in your brief was that conflict preemption applies to state law claims if they require more than the loan modification HAMP procedure. That's correct, Your Honor. So you're now saying something different than that, aren't you? Well, no, it is that is the obstacle preemption prong of conflict preemption. And our argument is that if state law requires lenders to go further than HAMP requires, then there is a conflict between state law and Federal law. What's the conflict? Well, the conflict is that lenders will, lenders are incentivized to participate in HAMP by being paid $1,000 per loan modification. Okay. And they will conceivably withdraw from participating in the HAMP program if they have to worry about 50 different state laws potentially ensnaring them in lawsuits throughout the country. They want certainty of complying with the HAMP program and being sure that they're not going to be sued under the New Jersey Consumer Fraud Act or any consumer fraud act throughout the country. But I think we're mixing apples and oranges. When you said that some records go the other way, that's with regard to respect to field preemption. And then conflict preemption, you're saying that you're not relying on the seven circuit case, why good, why God, whatever. And but then your brief seems to say, no, you are any time that a state law claim requires a state law provision requires more than is required under HAMP. That's conflict preemption. That's correct, Your Honor. We don't think, I can't- That's what your brief said, but you said something different just a moment ago, didn't you? I can't stand before your Honor and rely upon Wage, because it concluded differently than Judge Chessler. So we think the case is factually in opposite in any event. Our argument here, Your Honor, is that the obstacle preemption prong of conflict preemption applies because the plaintiffs here are saying, city mortgage, you need to go beyond what HAMP requires, you need to give us a quote favorable loan modification end quote. And our position is, Your Honor, we complied with HAMP

. We offered them three separate permanent loan modifications. But the failure, it's more than that, the failure is to provide a favorable modification, wouldn't give rise to a cause of action. That's correct. What they were saying is rise to the cause of action is in manner in which the loan modifications were procured to listed and communicate. But HAMP does not necessarily require that notice consumer fraud law. I can't imagine a federal law saying that if you commit fraud in handling it in some way that that state law claim is preempted. I mean, how so? But Your Honor, what again, I go back to the pleading and what they're saying here is you offered us, you offered, you complied with HAMP. You offered us three permanent loan modifications, but you didn't, you need to offer us a better permanent loan modification. And in connection with negotiating the permanent loan modifications, you made me speak to 10 different representatives. And if state law requires a mortgage loan servicer to go beyond what HAMP requires, and they concede that city mortgage complied with HAMP, then we submit that that would be conflict preemption. Because if we're in the HAMP rubric and we comply with HAMP, we can't then have to worry about complying with state law, which they argue requires us to do more than what HAMP requires. Does HAMP require the person to say you should default? Well, the borrowers need to submit a hardship affidavit that when they- Sotomayor, that this HAMP require that the person say you have an option of defaulting. They need to certify either their indifault or about to go into default. And that's through a the form 45. That's a little different than saying you should default. And the reason they're there is because they fear very much they're about, they're on the verge of going into default like any minute. But HAMP doesn't require that you should default. It just says that you should- the idea is to go to them before you default, isn't it? Either I'm in trouble. I've lost my job, whatever it might be, and I need to work something out here. That's correct, Runner. But obviously there needs to be either a default or an impending default in order to be considered for a HAMP modification. Lenders aren't going to be soliciting their consumers for modifications unless there's some indication that- that the loan is in trouble, that the loan is about to go into default. So again, HAMP does require that the borrowers either be in default or about to go into default. And we would submit that that's not a misrepresentation what the borrowers were allegedly told in this case. Got it. Good. Good day. On to this briefs you, duty of good faith and fair dealing. In the Wigod case, the Seven Circuit, a lot of their claim to survive the 12-6 motion because although the bank offered claim of a TPP, they didn't offer a one that they could have. It wasn't permanent. It wasn't useful. Here the delukas are saying the same thing. We got the runner-on. We never got anything that was any better than what we had with Quicken. Now the pleadings indicate that Sharon's son of Quicken dealing with her, they knew that the delukas were only making $80,000. So you, where you said it was not in the record, is it not in the records that you knew your clients knew? Because it's in the pleadings that they were making $80,000

. I've lost my job, whatever it might be, and I need to work something out here. That's correct, Runner. But obviously there needs to be either a default or an impending default in order to be considered for a HAMP modification. Lenders aren't going to be soliciting their consumers for modifications unless there's some indication that- that the loan is in trouble, that the loan is about to go into default. So again, HAMP does require that the borrowers either be in default or about to go into default. And we would submit that that's not a misrepresentation what the borrowers were allegedly told in this case. Got it. Good. Good day. On to this briefs you, duty of good faith and fair dealing. In the Wigod case, the Seven Circuit, a lot of their claim to survive the 12-6 motion because although the bank offered claim of a TPP, they didn't offer a one that they could have. It wasn't permanent. It wasn't useful. Here the delukas are saying the same thing. We got the runner-on. We never got anything that was any better than what we had with Quicken. Now the pleadings indicate that Sharon's son of Quicken dealing with her, they knew that the delukas were only making $80,000. So you, where you said it was not in the record, is it not in the records that you knew your clients knew? Because it's in the pleadings that they were making $80,000. That fact is in the record you're on, I believe what Chief Judge McKee was asking me was what their yearly mortgage payments would be in total. And I'm not sure that that is in the record. On the breach of the implied cover. If you knew that they were making $80,000, why isn't a breach of good faith, fair dealing for you to go all this way and not offer them anything they can afford? And they can't pay 60 grand or whatever they're not making it kind of money. So why is that not fair dealing or a fund fair deal? Well, you're on, it's not unfair dealing because my client's city mortgage complied with hemp. There is a waterfall process, there's an analysis that a mortgage servicer is required to go through. They ran that, they ran the calculations and they offered the delukas three separate permanent loan modifications. So I would submit that it can't be bad faith if my client complied with the hemp regulations. And the delukas couldn't afford the payment that the calculations that were concluded based on the calculations. We complied, we offered them three permanent loan modifications. I don't believe we were required to do anything more than that. It is curious how that water level process could come up with this kind of a number. Even the fact that we're in the net asset value and all kinds of things that go into that waterfall, I guess it's a four-step process or four-factor process. For that process to result in this kind of a number, it's, you wonder what good the process is. I believe in the record, it's that the trial period plan payments were approximately $2,500 a month. And that's $30,000 a year. So I'm not sure that they try to get to 31% of monthly income. That's the goal in a hemp analysis

. That fact is in the record you're on, I believe what Chief Judge McKee was asking me was what their yearly mortgage payments would be in total. And I'm not sure that that is in the record. On the breach of the implied cover. If you knew that they were making $80,000, why isn't a breach of good faith, fair dealing for you to go all this way and not offer them anything they can afford? And they can't pay 60 grand or whatever they're not making it kind of money. So why is that not fair dealing or a fund fair deal? Well, you're on, it's not unfair dealing because my client's city mortgage complied with hemp. There is a waterfall process, there's an analysis that a mortgage servicer is required to go through. They ran that, they ran the calculations and they offered the delukas three separate permanent loan modifications. So I would submit that it can't be bad faith if my client complied with the hemp regulations. And the delukas couldn't afford the payment that the calculations that were concluded based on the calculations. We complied, we offered them three permanent loan modifications. I don't believe we were required to do anything more than that. It is curious how that water level process could come up with this kind of a number. Even the fact that we're in the net asset value and all kinds of things that go into that waterfall, I guess it's a four-step process or four-factor process. For that process to result in this kind of a number, it's, you wonder what good the process is. I believe in the record, it's that the trial period plan payments were approximately $2,500 a month. And that's $30,000 a year. So I'm not sure that they try to get to 31% of monthly income. That's the goal in a hemp analysis. I'm not sure that $2,500 is unreasonable if somebody is making $80,000 a year as is alleged. But the complaint does not allege what the delukas were making at the time that they were offered the loan modifications. They say they were making $80,000 at the time the loans were originated by quicken. So that fact is missing. Thank you. Mr. Hart, you have a few minutes. Good morning, Your Honours and I have pleased the court. David Hart on behalf of the so-called quicken defendants in this matter. I have to start with, I think perhaps we've gotten a little bit downstream and we need to sort of put this whole situation into context here. What has been pled by the plaintiffs in their amended complaint is that they were in financial distress. And I say that with emphasis because it was recited three times in the amended complaint. The plaintiffs were in financial distress. The plaintiffs, the appellants herein, set out to find a new loan to replace a loan that was in place at that time. And the reason we know this is because we know how the money is worth. What was the unconscionable behavior that the delukas alleged in their amended complaint with respect to the New Jersey Consumer Fraud Statue? Is I understand that there were three things alleged. One, that their questions were deflected. Two, that they were rushed through at closing

. I'm not sure that $2,500 is unreasonable if somebody is making $80,000 a year as is alleged. But the complaint does not allege what the delukas were making at the time that they were offered the loan modifications. They say they were making $80,000 at the time the loans were originated by quicken. So that fact is missing. Thank you. Mr. Hart, you have a few minutes. Good morning, Your Honours and I have pleased the court. David Hart on behalf of the so-called quicken defendants in this matter. I have to start with, I think perhaps we've gotten a little bit downstream and we need to sort of put this whole situation into context here. What has been pled by the plaintiffs in their amended complaint is that they were in financial distress. And I say that with emphasis because it was recited three times in the amended complaint. The plaintiffs were in financial distress. The plaintiffs, the appellants herein, set out to find a new loan to replace a loan that was in place at that time. And the reason we know this is because we know how the money is worth. What was the unconscionable behavior that the delukas alleged in their amended complaint with respect to the New Jersey Consumer Fraud Statue? Is I understand that there were three things alleged. One, that their questions were deflected. Two, that they were rushed through at closing. This is in connection with the original loan. Yes, this is what the complaint says. I certainly don't. I'm not asserting these as being truth, but only that they're alleged. And three, that during the closing of the loan transaction, husband and wife plaintiffs were in separate rooms. At plaintiffs place of business. Now that's what I understand is the unconstitutional practice that's been alleged. And really what did you, what are you alleging that they are led that they claim for the first time on appeal then? Well initially if you read the complaint and in the proceedings in the trial court, the discussion was about fraud, state court fraud, common law fraud. Now the terms perhaps, the terms unconscionable commercial practice had been stated somewhere, but that isn't what this case was about. Now, before your honor is the appellate level, that apparently is what the case is about. What does the Account One of the amended complaint seems to make a fraud accusation, doesn't it, right? It makes a fraud accusation, absolutely. But the case wasn't about in at the motion hearing and in the motion papers for the rule 12 motion. It wasn't the emphasis was not on an unconscionable commercial practice. But really take that as what's at play here in order for there to be an unconscionable commercial practice. What has to be played is a lack of good faith, a lack of honesty in fact, and a lack of observance of fair dealing. And that's the Cox v. Sears, Sears Rosebuck case that's cited by the appellants here. But more, in addition to that, there has to be an ascertainable loss

. This is in connection with the original loan. Yes, this is what the complaint says. I certainly don't. I'm not asserting these as being truth, but only that they're alleged. And three, that during the closing of the loan transaction, husband and wife plaintiffs were in separate rooms. At plaintiffs place of business. Now that's what I understand is the unconstitutional practice that's been alleged. And really what did you, what are you alleging that they are led that they claim for the first time on appeal then? Well initially if you read the complaint and in the proceedings in the trial court, the discussion was about fraud, state court fraud, common law fraud. Now the terms perhaps, the terms unconscionable commercial practice had been stated somewhere, but that isn't what this case was about. Now, before your honor is the appellate level, that apparently is what the case is about. What does the Account One of the amended complaint seems to make a fraud accusation, doesn't it, right? It makes a fraud accusation, absolutely. But the case wasn't about in at the motion hearing and in the motion papers for the rule 12 motion. It wasn't the emphasis was not on an unconscionable commercial practice. But really take that as what's at play here in order for there to be an unconscionable commercial practice. What has to be played is a lack of good faith, a lack of honesty in fact, and a lack of observance of fair dealing. And that's the Cox v. Sears, Sears Rosebuck case that's cited by the appellants here. But more, in addition to that, there has to be an ascertainable loss. And probably most importantly for us now, there has to have been a causal nexus played between this unlawful or unlawful. Now, assume for the moment that obviously you're without conceding this, anything. That they do go to a quick and employee. And the quick and employee says that, yeah, you're making 80. That's times three of that. Let's say it's 240. And that'll get you alone for the type of this house that you want. What kind of claim would you have if that were true? Well, we've cited some one in our brief and there was a discussion both at the lower court and now again here today. That isn't the loan application is a representation of the borrower. It is not a representation of the lender. But if the borrower, in my example, again, you're not conceding this. If in my example, the person, the employee suggests to them that you should, you can triple this and get this kind of loan. What sound does if the employee is being at least complicit if the deluca's agreed to do that? Wouldn't that be the case? I mean, you're right. I would never concede anything. But why is it your does? Perhaps that is the case, Your Honor. However, the instance here is you've got borrower to resigning a loan application. Making a representation is under some pretty clear language that we're doing this. We're representing to you

. And probably most importantly for us now, there has to have been a causal nexus played between this unlawful or unlawful. Now, assume for the moment that obviously you're without conceding this, anything. That they do go to a quick and employee. And the quick and employee says that, yeah, you're making 80. That's times three of that. Let's say it's 240. And that'll get you alone for the type of this house that you want. What kind of claim would you have if that were true? Well, we've cited some one in our brief and there was a discussion both at the lower court and now again here today. That isn't the loan application is a representation of the borrower. It is not a representation of the lender. But if the borrower, in my example, again, you're not conceding this. If in my example, the person, the employee suggests to them that you should, you can triple this and get this kind of loan. What sound does if the employee is being at least complicit if the deluca's agreed to do that? Wouldn't that be the case? I mean, you're right. I would never concede anything. But why is it your does? Perhaps that is the case, Your Honor. However, the instance here is you've got borrower to resigning a loan application. Making a representation is under some pretty clear language that we're doing this. We're representing to you. These are truthful assertions. And that's what the loan application does. These are the kind of things that got, for example, countrywide and deep kimchi. I mean, they were doing maybe slightly worse than ninja loans, no income, no jobs or no assets. But here, you're inflating the income. Wouldn't that seem to fit into the same type of claims that would have been made against, for example, countrywide? I would contend that even the most unsophisticated borrower understands the more they make, the more money they can borrow. And that is clear. So when a borrower goes and signs an application for a loan, and we've cited law on the briefs in this matter, this is a representation of the borrower. They're making that statement. So no, I don't believe that that would constitute the basis for the claim here. But I think we need to focus, though, on the notion that there needs to be a causal nexus between an unconscionable practice, if it exists. Apparently, it's in the pled here. And an ascertainable loss. And the reason that is a key point here is because it hasn't in pled. And that's really the most important part, at least for a rule 12 motion. But more importantly, for in the bigger picture, it doesn't exist. The plaintiffs here, the loan that they received here paid off $593,000 to their existing underlying loan. $17,000 for American Express

. These are truthful assertions. And that's what the loan application does. These are the kind of things that got, for example, countrywide and deep kimchi. I mean, they were doing maybe slightly worse than ninja loans, no income, no jobs or no assets. But here, you're inflating the income. Wouldn't that seem to fit into the same type of claims that would have been made against, for example, countrywide? I would contend that even the most unsophisticated borrower understands the more they make, the more money they can borrow. And that is clear. So when a borrower goes and signs an application for a loan, and we've cited law on the briefs in this matter, this is a representation of the borrower. They're making that statement. So no, I don't believe that that would constitute the basis for the claim here. But I think we need to focus, though, on the notion that there needs to be a causal nexus between an unconscionable practice, if it exists. Apparently, it's in the pled here. And an ascertainable loss. And the reason that is a key point here is because it hasn't in pled. And that's really the most important part, at least for a rule 12 motion. But more importantly, for in the bigger picture, it doesn't exist. The plaintiffs here, the loan that they received here paid off $593,000 to their existing underlying loan. $17,000 for American Express. $17,000 to another credit card. $16,000 to some thousand to the state for taxes. So not only is there not an ascertainable loss, if anything, this loan and question benefited the plaintiffs, but there can be no nexus between an unconscionable practice, because there isn't one pled here. And so notwithstanding whether, and your honor, I get the point that you're taking, that if perhaps an employee of a lender said, hey, let's get together, we're going to figure out a way to misstate all the facts here and get you a loan, which I'm going sort of off on a tangent. Even if that occurred, this loan benefited the plaintiffs. It didn't occasion a loss, and most importantly, no nexus between any unconscionable practice and any ascertainable loss, has in any way been pled here. And so the grant of the motion below was appropriate, and your honors should affirm that. Really. Thank you. Thank you. Thank you. Your honors, I just had two brief points. You know, we ended up with Mr. Hart, pretty much where we ended up, or were at one point with you, what, how were they harmed? What is the causal relation between the action and a purported harm to the delukus? Well, ultimately, your honor, if they cannot get any relief with this case that they filed, ultimately, the likelihood of them losing their house and not being able to stay in that home becomes a definite, not even probability it will happen. But when they got the loan initially, were they harmed? And I would not say initially, your honor. Well, then..

. $17,000 to another credit card. $16,000 to some thousand to the state for taxes. So not only is there not an ascertainable loss, if anything, this loan and question benefited the plaintiffs, but there can be no nexus between an unconscionable practice, because there isn't one pled here. And so notwithstanding whether, and your honor, I get the point that you're taking, that if perhaps an employee of a lender said, hey, let's get together, we're going to figure out a way to misstate all the facts here and get you a loan, which I'm going sort of off on a tangent. Even if that occurred, this loan benefited the plaintiffs. It didn't occasion a loss, and most importantly, no nexus between any unconscionable practice and any ascertainable loss, has in any way been pled here. And so the grant of the motion below was appropriate, and your honors should affirm that. Really. Thank you. Thank you. Thank you. Your honors, I just had two brief points. You know, we ended up with Mr. Hart, pretty much where we ended up, or were at one point with you, what, how were they harmed? What is the causal relation between the action and a purported harm to the delukus? Well, ultimately, your honor, if they cannot get any relief with this case that they filed, ultimately, the likelihood of them losing their house and not being able to stay in that home becomes a definite, not even probability it will happen. But when they got the loan initially, were they harmed? And I would not say initially, your honor. Well, then... Yeah, that, that, we had to pull the quick hand used, but you were putting it. They weren't harmed initially. When did the harm keep in and what caused it? I would say the harm occurred when these appellants realized that they were, they had no choice but to default to save their home. The conduct of the sentence remained the same. The contract you had based on your claim on was the same before and after that harm. Because it was stuck me this morning that, usually in the situation of fraud, the remedy that saw is rescission. Now, you're not asking for rescission inside because why are you not? But why doesn't that go exactly to Mr. Hart's argument? That you don't really want rescission here, because rescission doesn't help you, but that puts you in an even deeper hole. But the fact that rescission is not a remedy that would help your clients, why doesn't that basically prove the point that Mr. Hart and to us, or Mr. Hollier making? That is that the client's benefitter from the loan. And if it was a benefit, then what is the cause of the next? Well, in terms of the amount of the loan and it paying off previous stats, the allegation is that this loan was used as a debt consolidation tool. So in effect, if they would not have consolidated all their debts, they could have followed chapter 7, bankruptcy to get rid of all their unsecured debt. But that is another issue that's really in the complaint. And that's not an option now. I think since the rear-rich has skyrocketed to where it is today, chapter 13 would in no way be an option. No, he's making 7, a 13, probably wouldn't be. And your honor is the only other point I would make

. Yeah, that, that, we had to pull the quick hand used, but you were putting it. They weren't harmed initially. When did the harm keep in and what caused it? I would say the harm occurred when these appellants realized that they were, they had no choice but to default to save their home. The conduct of the sentence remained the same. The contract you had based on your claim on was the same before and after that harm. Because it was stuck me this morning that, usually in the situation of fraud, the remedy that saw is rescission. Now, you're not asking for rescission inside because why are you not? But why doesn't that go exactly to Mr. Hart's argument? That you don't really want rescission here, because rescission doesn't help you, but that puts you in an even deeper hole. But the fact that rescission is not a remedy that would help your clients, why doesn't that basically prove the point that Mr. Hart and to us, or Mr. Hollier making? That is that the client's benefitter from the loan. And if it was a benefit, then what is the cause of the next? Well, in terms of the amount of the loan and it paying off previous stats, the allegation is that this loan was used as a debt consolidation tool. So in effect, if they would not have consolidated all their debts, they could have followed chapter 7, bankruptcy to get rid of all their unsecured debt. But that is another issue that's really in the complaint. And that's not an option now. I think since the rear-rich has skyrocketed to where it is today, chapter 13 would in no way be an option. No, he's making 7, a 13, probably wouldn't be. And your honor is the only other point I would make. I find it interesting that today, when the homeowner does apply for a ham or it has modification, very quickly, the lender will ask you to sign or execute a 4,506 T form, which with a couple weeks, will get that lender confirmation of what the individual makes. So even if it were just an error, let's say the Internet does not. Because then you are doing that, making the fraud is not the clients, but the founders. The other ones were the fraud, by the misrepresentations, by relying upon an inflated income and inflated assets. What you just said does not advance your cause that much. It's basically Mr. Hart was arguing about who the victim is. Well, ultimately, if these homeowners and other homeowners in the same situation are in extending the credit and aren't being put in the home to begin with, I think another way of looking at this, you're being given this opportunity, this American dream, here's a mortgage, go buy a house, and you're in this home that you're creating a home over years and you're used to it. If you weren't giving that opportunity in the first place, then you're not losing it. But here you're being given this opportunity through this reckless lending. You're in the home and then now it's, I mean, it is 2020 hindsight, unfortunately. Thank you, thank you very much. Thank you. Have a good day. Thank you, Madam. The advisory, thank you all. Very rest in the tragic case.

Good morning, Your Honours. Joseph Chang on behalf of Roddled and Philistoluca, the plaintiff, appellant homeowners in this matter. And a lot of- There's so many issues in this case. We didn't give you enough time. But as you can see, we're not that judicious about watching the clock. There are a number of things here that we need to discuss. So, aren't you- Yeah, can we just start at the beginning? I mean, the claim against Quicken. I'm sitting there saying, you've got- What did you plead against Quicken? Because you seem like you've got a perfectly good claim at the outset. The question is, did you plead it? They make $80,000. Reportedly, the person tells them to say that they're making $240. So they get a $672,000 loan. But the court is saying, you had a chance to amend, right? Yes, you did amend. That is correct. And the court found what problems? The court looked at this through the Iqbal. They conducted the Iqbal test. And- That doesn't have to. Correct. And they felt that the pleadings did not rise to the level that Iqbal required. And I think looking at the exchange between you and the court. For a lot of the pleadings that the court wants to review, and the conclusions of law that are in the complaint that you actually agreed with the concerns that the court was raising. There were conclusions of law and not allegations under Iqbal and Twambi. Chief Judge, I'd like to bring something to your attention. There was a calendaring issue, which was my fault. Were state practitioners or not used to being before the federal bench. And because of that, I was actually quite late to court. And I hadn't prepared the way I really wanted to. So that has a lot to do with why the transcript read the way that it did. But you still had a chance to amend the complaint. That is true. And you claim that they quickened Lord them into an unfavorable loan agreement. But then didn't describe how the agreement was unfavorable in this context. I mean, that's what the court was saying. And then the causal relationship is that you noted the only loss mentioned was a default on the mortgage. But the complaint didn't explain how quickens alleged fraud caused them to default. So it really is a plea. We're stuck in pleading here. I could part of it seems to be a fraud on quick and not a fraud that quick and committed. But if we take your allegations as true as we must at this point, to extent that there's a factually specific allegation there, it seems that you're really alleging a fraud on quick and those perpetuated by misseen. And some other folks that jacked up overstated the assets and understated the amount of the immunization requirements. That is true. And unfortunately, the delukas are now in a position where they're living in their home. They've been there for many years. And because of this alleged fraud, they're not comfortable in their homes. They don't know when a foreclosure proceeding might begin. And there has been no exchange of discovery whatsoever. This case was also initially filed in burden county, New Jersey, and was removed to federal court. I think that's an important issue to bring up because they were prepared for a state law claim. And under the New Jersey Consumer Fraud Act, the courts looking through the eyes of the average consumer. Now, the delukas, they were running an auto body and a mechanic shop for several years. So I think they're the average American consumer in this case. When the average American consumer could not run, at least maybe shouldn't speak that broadly. I could not imagine running an auto body shop. I just got a pre-assembled trying to figure out how do I know when it's running. So the degree of sophistication I think is substantially greater than is alleged in the briefs. These are fairly familiar with financing, not real estate financing and the intricacies that might be unique to real estate financing. But in terms of debt obligations and legislation, those kinds of things, we're not talking about someone, even though there's a high school education, we're not talking about totally unsophisticated naive persons that are unfamiliar with aspects of financing. I'm assuming that financing involved in the businesses, but this is, we're going to be under record here, and that's not really appropriate. Well, that's a very interesting point. And my reading of the Consumer Fraud Act, and when I take a look at the model jury charges, the way I look at the New Jersey CFA is that you're looking through the eyes of the average consumer, not necessarily through the eyes of the plan if in the case. And then once you do that and I acknowledge your remarks, they are running a business. So there is some heightened sophistication there. But I think we're going in the wrong direction if we're conducting that type of analysis. It's not so easy to figure out what the average consumer is. And I guess that's going to be realized on a case by case basis. But I do argue that in this particular case, the level of sophistication that might have been analyzed for this ruling on the motion to dismiss was not reasonable. What were, what, in plain language, what were the city mortgage do wrong? They're a loan servicer, right? Your Honor, city mortgage was initially, I believe they were the originating lender on that well now. I apologize. I was in the originating lender. So city mortgage was a servicer. And they were trying to get them into, you know, suggesting that you need to apply to try to get, in effect, what would come out as a result, as a modification. So what did they do wrong? I think the most powerful allegation with respect to that is being told, and I believe this is an unconsciousable business practice, being told to default. And that would then kickstart your ability to apply for a hand or other in-house. Well, I mean, put yourself in the city mortgage persons shoes. You've got a couple before you that as we would say where I go, ain't no way they're going to be able to pay a mortgage for $670,000. And in order to try to get a modification, to get some type of relief, they're going to default sooner or later. So the person is probably thinking, you know what? Just having the fault now. Let's acknowledge what clearly is going to happen. They can't afford this. Now, maybe what they should have done was filed for bankruptcy, let the house be taken, et cetera. But that sounds like they wanted to keep their house. So the city mortgage person, you know, perhaps goes beyond the book of what the person should say and says, look, here's the only thing I can think of. Because at this point, the plaintiffs didn't have an attorney, did they, when they were met with city mortgage or did they? I don't believe so, Your Honor. Okay, so, you know, maybe the person should have said you need to see an attorney like now. But the person in the city mortgage didn't do that. So what, what did the city mortgage person do that was violation of law of state law? I think just making that statement of when you're, you know, being directed to default and understand there might be situations where that might be a blessing in disguise to be told that. It might be, you know, having that cup of coffee that you should have had months ago. But the problem is, once you default, these are a lot of these individuals that are going through the foreclosure issue. They're going paycheck to paycheck with respect to income. So if they're defaulting and then all of a sudden, you know, the arrearage is astronomical, you know, from one month to another month. So if you're being told default and even looking at this from a chapter 13 perspective where you have a chance to get current again, do bankruptcy code. If you're not making these right decisions timely, so if you're defaulting today and for some reason you're not well prepared and you don't file chapter 13 quickly enough, the arrearage and then the payment plan that you're, that you're supposed to pay back might be impossible. What was that's what happened here? They ended up with the implementation of interest of $70,000, is that right? Equally grew, I have control of due judge. So, you know, I do state that simply by setting mortgage telling them to default, you know, without, you know, without telling them, look, make sure to go seek counsel. Because initially, how could the world for the afford council and these are folks that are really up against the wall, they're trying their best to hang under their home. They've got this ridiculous payment scheme under the TTP loan that they've gotten under the fixed law payments to qualify for the new payment deal. I don't know, what could they afford? I mean, that were me. I'm something to me to see an attorney. So, fine, you pay for the lawyer, and I'll be happy to go see the lawyer. But that doesn't help us in terms of your claim and working on our claim has been stated right quick and stay with quick and within our claim has been stated with sufficient specificity against quick and you mentioned the shuttling back and forth from one drop to another rep. I think was that quick and that you're saying did that or was that city mortgage? That's quick and that's quick. And also, I'd like to bring to your attention the fact that we have two loans here at origination, you have an 80% loan and then a 20% loan. So, in essence, the homeowner, what percentage I thought it was 6.7 and 9.0 something. That's with respect to the interest interest rate, but in terms of the overall loans that were offered, there was an 80% and then a 20% loan that when I look at this, it's clearly a way to deceptively provide a down payment. Now, I have no reason to believe since there's been no discovery exchanged that quick and quick and may or may not have perceived the 20% loan has a down payment. And that's why it's important to have discovery in this particular case. I feel that it's disruptive because if the homeowner didn't have a down payment, oh well, it doesn't matter. Give them a 20% line of credit, give them a he-lock, give them the 20% where they're going to be perceived as having the equity that all banks want. Did you save time for your battle? If I didn't, I wanted to save five minutes. I'm not sure if I've gone over that. We'll give you some latitude. I'll show you some more questions for you, after your call is finished. Okay, thank you. We never really did get this city. It was probably signed quick and go ahead. Okay. Thank you. May I please the court, Josh Howley from Cills, Cummins and Gross on behalf of the Appellee City Mortgage. This is not a typical mortgage fraud case. City Mortgage made the plaintiffs three separate permanent modification offers out of the HAMP program, all of which the plaintiffs rejected as too expensive or not affordable. Nevertheless, despite city mortgages, good faith in offering them permanent loan modifications. The plaintiffs then sued City Mortgage, alleging fraud, consumer fraud, breach of contract and a stock. It was not a good faith, but the loan modifications you offered them, I think, were some of them are $60,000 a year, total payments. And this is a couple whose income for the year is 80,000. Your Honor, I'm not sure that that fact is actually in the record. I don't believe that. I thought it was pled. Is that right? I don't believe it was pled. You're on. Okay. And it's part of the reason that goes to the insufficiency of the pleading. The plaintiffs in their fraud and consumer fraud act claims they based them on two factual allegations, one of which is that City Mortgage told the plaintiffs to default in order to be qualified for a HAMP modification. The HAMP program requires that the plaintiffs submit a hardship affidavit in which they must affirm under oath that they are either in default or about to go into default. So, Your Honor, I would submit that that is not a misrepresentation, but in fact is consistent with what the HAMP program requires. In addition, on a pleading level, the allegation was that City Mortgage frauds and ugly induce the plaintiffs here to delukas to enter into a to default and misrepresented that they will receive a favorable loan. So, that's a fraud claim. And it would seem that that fraud claim you're saying that somehow it's preempted, but how fraud claims are not preempted by HAMP? At least most courts are still held back. None that I know of that have held the otherwise. Your Honor, getting beyond the decision to dismiss for failure to state a claim judge, Chester also concluded that the claims were preempted by HAMP based upon the end run theory of preemption. But the point is, we're sort of approaching from the state perspective. Let's assume we don't have to deal with preemption. And from the state law perspective, the problem you have here is that you've got a fraud claim against City Mortgage. And fraud claims I don't believe are preempted by HAMP. Well, Your Honor, Judge Chester concluded that they were in the House of. What support is there for that in any other court? There's trial court support throughout the country, Your Honor, for the end run theory of preemption, which means that because Congress did not expressly provide a remedy within hand. And end run theory rate fraud or end run theory rate other claims? I believe all claims, Your Honor. The trial court cases throughout the country do not distinguish between fraud or contract cases. I have a hard time looking at that tattoo. Other than the language about the secretary, which seems to me to stretch the text language of the secretary in the EES and then extrapolate that into some kind of congression intent to preempt. But I'm also skeptical that this is a situation where there is either it's certainly not expressed preemption unless you're lying upon the language about the secretary in EES. But even implied preemption, I just wonder how when it accomplishes that because in order if if a lender complies with HAMP, it would I assume get around the kinds of allegations that would lead to a murderous fraud or consumer length. So I don't see any conflict between providing with the federal statute or being in a situation where we're acting in a manner which is consistent with the federal statute, but make it impossible to comply with the state statute, which is the usual kind of implicit preemption that rises under conflict or obstruction preemption. I just have to be on this time. I have a hard time seeing it here. If he sent you lying upon Wigid, well, he sent the Chessler to lie upon Wigid. I just don't read that case that way. Your Honor, we do not rely upon Wigid. We think that Wigid is distinguishable. And Wigid, the seven circuit obviously concluded that end run preemption does not apply. Therefore, disagreeing with Judge Chessler's conclusion. But on HAMP, Your Honor, we would submit, and this was not argued below, but Judge Chessler obviously concluded that preemption applied. We believe that this court can find an alternative reason so long as Judge Chessler's reason was correct. Was that obstacle preemption apply, Syria, Your Honor? And that's because I thought your argument in your brief was that conflict preemption applies to state law claims if they require more than the loan modification HAMP procedure. That's correct, Your Honor. So you're now saying something different than that, aren't you? Well, no, it is that is the obstacle preemption prong of conflict preemption. And our argument is that if state law requires lenders to go further than HAMP requires, then there is a conflict between state law and Federal law. What's the conflict? Well, the conflict is that lenders will, lenders are incentivized to participate in HAMP by being paid $1,000 per loan modification. Okay. And they will conceivably withdraw from participating in the HAMP program if they have to worry about 50 different state laws potentially ensnaring them in lawsuits throughout the country. They want certainty of complying with the HAMP program and being sure that they're not going to be sued under the New Jersey Consumer Fraud Act or any consumer fraud act throughout the country. But I think we're mixing apples and oranges. When you said that some records go the other way, that's with regard to respect to field preemption. And then conflict preemption, you're saying that you're not relying on the seven circuit case, why good, why God, whatever. And but then your brief seems to say, no, you are any time that a state law claim requires a state law provision requires more than is required under HAMP. That's conflict preemption. That's correct, Your Honor. We don't think, I can't- That's what your brief said, but you said something different just a moment ago, didn't you? I can't stand before your Honor and rely upon Wage, because it concluded differently than Judge Chessler. So we think the case is factually in opposite in any event. Our argument here, Your Honor, is that the obstacle preemption prong of conflict preemption applies because the plaintiffs here are saying, city mortgage, you need to go beyond what HAMP requires, you need to give us a quote favorable loan modification end quote. And our position is, Your Honor, we complied with HAMP. We offered them three separate permanent loan modifications. But the failure, it's more than that, the failure is to provide a favorable modification, wouldn't give rise to a cause of action. That's correct. What they were saying is rise to the cause of action is in manner in which the loan modifications were procured to listed and communicate. But HAMP does not necessarily require that notice consumer fraud law. I can't imagine a federal law saying that if you commit fraud in handling it in some way that that state law claim is preempted. I mean, how so? But Your Honor, what again, I go back to the pleading and what they're saying here is you offered us, you offered, you complied with HAMP. You offered us three permanent loan modifications, but you didn't, you need to offer us a better permanent loan modification. And in connection with negotiating the permanent loan modifications, you made me speak to 10 different representatives. And if state law requires a mortgage loan servicer to go beyond what HAMP requires, and they concede that city mortgage complied with HAMP, then we submit that that would be conflict preemption. Because if we're in the HAMP rubric and we comply with HAMP, we can't then have to worry about complying with state law, which they argue requires us to do more than what HAMP requires. Does HAMP require the person to say you should default? Well, the borrowers need to submit a hardship affidavit that when they- Sotomayor, that this HAMP require that the person say you have an option of defaulting. They need to certify either their indifault or about to go into default. And that's through a the form 45. That's a little different than saying you should default. And the reason they're there is because they fear very much they're about, they're on the verge of going into default like any minute. But HAMP doesn't require that you should default. It just says that you should- the idea is to go to them before you default, isn't it? Either I'm in trouble. I've lost my job, whatever it might be, and I need to work something out here. That's correct, Runner. But obviously there needs to be either a default or an impending default in order to be considered for a HAMP modification. Lenders aren't going to be soliciting their consumers for modifications unless there's some indication that- that the loan is in trouble, that the loan is about to go into default. So again, HAMP does require that the borrowers either be in default or about to go into default. And we would submit that that's not a misrepresentation what the borrowers were allegedly told in this case. Got it. Good. Good day. On to this briefs you, duty of good faith and fair dealing. In the Wigod case, the Seven Circuit, a lot of their claim to survive the 12-6 motion because although the bank offered claim of a TPP, they didn't offer a one that they could have. It wasn't permanent. It wasn't useful. Here the delukas are saying the same thing. We got the runner-on. We never got anything that was any better than what we had with Quicken. Now the pleadings indicate that Sharon's son of Quicken dealing with her, they knew that the delukas were only making $80,000. So you, where you said it was not in the record, is it not in the records that you knew your clients knew? Because it's in the pleadings that they were making $80,000. That fact is in the record you're on, I believe what Chief Judge McKee was asking me was what their yearly mortgage payments would be in total. And I'm not sure that that is in the record. On the breach of the implied cover. If you knew that they were making $80,000, why isn't a breach of good faith, fair dealing for you to go all this way and not offer them anything they can afford? And they can't pay 60 grand or whatever they're not making it kind of money. So why is that not fair dealing or a fund fair deal? Well, you're on, it's not unfair dealing because my client's city mortgage complied with hemp. There is a waterfall process, there's an analysis that a mortgage servicer is required to go through. They ran that, they ran the calculations and they offered the delukas three separate permanent loan modifications. So I would submit that it can't be bad faith if my client complied with the hemp regulations. And the delukas couldn't afford the payment that the calculations that were concluded based on the calculations. We complied, we offered them three permanent loan modifications. I don't believe we were required to do anything more than that. It is curious how that water level process could come up with this kind of a number. Even the fact that we're in the net asset value and all kinds of things that go into that waterfall, I guess it's a four-step process or four-factor process. For that process to result in this kind of a number, it's, you wonder what good the process is. I believe in the record, it's that the trial period plan payments were approximately $2,500 a month. And that's $30,000 a year. So I'm not sure that they try to get to 31% of monthly income. That's the goal in a hemp analysis. I'm not sure that $2,500 is unreasonable if somebody is making $80,000 a year as is alleged. But the complaint does not allege what the delukas were making at the time that they were offered the loan modifications. They say they were making $80,000 at the time the loans were originated by quicken. So that fact is missing. Thank you. Mr. Hart, you have a few minutes. Good morning, Your Honours and I have pleased the court. David Hart on behalf of the so-called quicken defendants in this matter. I have to start with, I think perhaps we've gotten a little bit downstream and we need to sort of put this whole situation into context here. What has been pled by the plaintiffs in their amended complaint is that they were in financial distress. And I say that with emphasis because it was recited three times in the amended complaint. The plaintiffs were in financial distress. The plaintiffs, the appellants herein, set out to find a new loan to replace a loan that was in place at that time. And the reason we know this is because we know how the money is worth. What was the unconscionable behavior that the delukas alleged in their amended complaint with respect to the New Jersey Consumer Fraud Statue? Is I understand that there were three things alleged. One, that their questions were deflected. Two, that they were rushed through at closing. This is in connection with the original loan. Yes, this is what the complaint says. I certainly don't. I'm not asserting these as being truth, but only that they're alleged. And three, that during the closing of the loan transaction, husband and wife plaintiffs were in separate rooms. At plaintiffs place of business. Now that's what I understand is the unconstitutional practice that's been alleged. And really what did you, what are you alleging that they are led that they claim for the first time on appeal then? Well initially if you read the complaint and in the proceedings in the trial court, the discussion was about fraud, state court fraud, common law fraud. Now the terms perhaps, the terms unconscionable commercial practice had been stated somewhere, but that isn't what this case was about. Now, before your honor is the appellate level, that apparently is what the case is about. What does the Account One of the amended complaint seems to make a fraud accusation, doesn't it, right? It makes a fraud accusation, absolutely. But the case wasn't about in at the motion hearing and in the motion papers for the rule 12 motion. It wasn't the emphasis was not on an unconscionable commercial practice. But really take that as what's at play here in order for there to be an unconscionable commercial practice. What has to be played is a lack of good faith, a lack of honesty in fact, and a lack of observance of fair dealing. And that's the Cox v. Sears, Sears Rosebuck case that's cited by the appellants here. But more, in addition to that, there has to be an ascertainable loss. And probably most importantly for us now, there has to have been a causal nexus played between this unlawful or unlawful. Now, assume for the moment that obviously you're without conceding this, anything. That they do go to a quick and employee. And the quick and employee says that, yeah, you're making 80. That's times three of that. Let's say it's 240. And that'll get you alone for the type of this house that you want. What kind of claim would you have if that were true? Well, we've cited some one in our brief and there was a discussion both at the lower court and now again here today. That isn't the loan application is a representation of the borrower. It is not a representation of the lender. But if the borrower, in my example, again, you're not conceding this. If in my example, the person, the employee suggests to them that you should, you can triple this and get this kind of loan. What sound does if the employee is being at least complicit if the deluca's agreed to do that? Wouldn't that be the case? I mean, you're right. I would never concede anything. But why is it your does? Perhaps that is the case, Your Honor. However, the instance here is you've got borrower to resigning a loan application. Making a representation is under some pretty clear language that we're doing this. We're representing to you. These are truthful assertions. And that's what the loan application does. These are the kind of things that got, for example, countrywide and deep kimchi. I mean, they were doing maybe slightly worse than ninja loans, no income, no jobs or no assets. But here, you're inflating the income. Wouldn't that seem to fit into the same type of claims that would have been made against, for example, countrywide? I would contend that even the most unsophisticated borrower understands the more they make, the more money they can borrow. And that is clear. So when a borrower goes and signs an application for a loan, and we've cited law on the briefs in this matter, this is a representation of the borrower. They're making that statement. So no, I don't believe that that would constitute the basis for the claim here. But I think we need to focus, though, on the notion that there needs to be a causal nexus between an unconscionable practice, if it exists. Apparently, it's in the pled here. And an ascertainable loss. And the reason that is a key point here is because it hasn't in pled. And that's really the most important part, at least for a rule 12 motion. But more importantly, for in the bigger picture, it doesn't exist. The plaintiffs here, the loan that they received here paid off $593,000 to their existing underlying loan. $17,000 for American Express. $17,000 to another credit card. $16,000 to some thousand to the state for taxes. So not only is there not an ascertainable loss, if anything, this loan and question benefited the plaintiffs, but there can be no nexus between an unconscionable practice, because there isn't one pled here. And so notwithstanding whether, and your honor, I get the point that you're taking, that if perhaps an employee of a lender said, hey, let's get together, we're going to figure out a way to misstate all the facts here and get you a loan, which I'm going sort of off on a tangent. Even if that occurred, this loan benefited the plaintiffs. It didn't occasion a loss, and most importantly, no nexus between any unconscionable practice and any ascertainable loss, has in any way been pled here. And so the grant of the motion below was appropriate, and your honors should affirm that. Really. Thank you. Thank you. Thank you. Your honors, I just had two brief points. You know, we ended up with Mr. Hart, pretty much where we ended up, or were at one point with you, what, how were they harmed? What is the causal relation between the action and a purported harm to the delukus? Well, ultimately, your honor, if they cannot get any relief with this case that they filed, ultimately, the likelihood of them losing their house and not being able to stay in that home becomes a definite, not even probability it will happen. But when they got the loan initially, were they harmed? And I would not say initially, your honor. Well, then... Yeah, that, that, we had to pull the quick hand used, but you were putting it. They weren't harmed initially. When did the harm keep in and what caused it? I would say the harm occurred when these appellants realized that they were, they had no choice but to default to save their home. The conduct of the sentence remained the same. The contract you had based on your claim on was the same before and after that harm. Because it was stuck me this morning that, usually in the situation of fraud, the remedy that saw is rescission. Now, you're not asking for rescission inside because why are you not? But why doesn't that go exactly to Mr. Hart's argument? That you don't really want rescission here, because rescission doesn't help you, but that puts you in an even deeper hole. But the fact that rescission is not a remedy that would help your clients, why doesn't that basically prove the point that Mr. Hart and to us, or Mr. Hollier making? That is that the client's benefitter from the loan. And if it was a benefit, then what is the cause of the next? Well, in terms of the amount of the loan and it paying off previous stats, the allegation is that this loan was used as a debt consolidation tool. So in effect, if they would not have consolidated all their debts, they could have followed chapter 7, bankruptcy to get rid of all their unsecured debt. But that is another issue that's really in the complaint. And that's not an option now. I think since the rear-rich has skyrocketed to where it is today, chapter 13 would in no way be an option. No, he's making 7, a 13, probably wouldn't be. And your honor is the only other point I would make. I find it interesting that today, when the homeowner does apply for a ham or it has modification, very quickly, the lender will ask you to sign or execute a 4,506 T form, which with a couple weeks, will get that lender confirmation of what the individual makes. So even if it were just an error, let's say the Internet does not. Because then you are doing that, making the fraud is not the clients, but the founders. The other ones were the fraud, by the misrepresentations, by relying upon an inflated income and inflated assets. What you just said does not advance your cause that much. It's basically Mr. Hart was arguing about who the victim is. Well, ultimately, if these homeowners and other homeowners in the same situation are in extending the credit and aren't being put in the home to begin with, I think another way of looking at this, you're being given this opportunity, this American dream, here's a mortgage, go buy a house, and you're in this home that you're creating a home over years and you're used to it. If you weren't giving that opportunity in the first place, then you're not losing it. But here you're being given this opportunity through this reckless lending. You're in the home and then now it's, I mean, it is 2020 hindsight, unfortunately. Thank you, thank you very much. Thank you. Have a good day. Thank you, Madam. The advisory, thank you all. Very rest in the tragic case