Chapter 4 Home Sales, Brokerage, and Repairs. 4.1 Complaint for Damages and Cancellation Regards Sale of Mobile Home

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1 Chapter 4 Home Sales, Brokerage, and Repairs 4.1 Complaint for Damages and Cancellation Regards Sale of Mobile Home [court]north CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION, LINCOLN COUNTY [plaintiff]kathy WALLIS and JAMES JOHNSON, Plaintiffs [vs.] [defendant]ambrose MOBILE HOMES, INC., and VILLANOVA MORTGAGE AND FINANCE, INC., Defendants COMPLAINT AND MOTION FOR PRELIMINARY INJUNCTION INTRODUCTION This an action for misrepresentation, fraud, negligence, unconscionability, unjust enrichment, and unfair trade practices relating to the sale and financing of a mobile home. Plaintiffs have rescinded the contract and/or revoked their acceptance of the mobile home. They now seek the return of their down payment and all other payments made toward the purchase price of the mobile home, as well as other consequential and punitive damages and injunctive relief. PARTIES 1. Plaintiffs are citizens and residents of Lincoln County, North Carolina. 2. Defendant Ambrose Mobile Homes, Inc., (hereinafter "Ambrose") is a North Carolina corporation licensed to do business in North Carolina and doing business in Mecklenburg County. 3. Defendant Villanova Mortgage and Finance, Inc., (hereinafter "Villanova") is a Tennessee corporation licensed to do business in North Carolina and doing business in Mecklenburg County. 4. Defendant Ambrose's primary business is the sale of mobile homes. 5. Defendant Villanova provides "on-the-lot" financing for mobile homes sold by defendant Ambrose. 6. Defendant Ambrose's sale of a mobile home to plaintiffs is a "consumer credit sale" as defined by N.C. Gen. Sta. 25A Defendant Ambrose is a "seller" as defined by N.C. Gen. Stat. 25A Defendant Villanova is a "holder" of the instrument of indebtedness as defined by N.C. Gen. Stat. 25A-25.

2 9. At all times relevant to this action, defendants, in the ordinary course of their business as sellers and financiers of mobile homes, engaged in acts and practices affecting commerce within the meaning of N.C. Gen. Stat FACTS 10. Plaintiff Jamie Johnson inherited approximately $23, from the estate of her deceased grandmother on October 8, 1994, her eighteenth birthday. 11. In anticipation of receiving this inheritance, plaintiff Johnson and her mother, plaintiff Wallis, decided to invest it in a home for themselves. 12. At that time, plaintiffs were renting a house and receiving Section 8 Rental Assistance which subsidized their rental payment. 13. In September 1994, plaintiffs went to defendant Ambrose's place of business in Charlotte, North Carolina seeking to purchase a mobile home. 14. Plaintiffs informed defendant Ambrose's agent, Teresa Norman, that they could make a large down payment from the inheritance, but that they could only afford very low monthly payments due to their limited income. 15. At that time, plaintiffs' household income was only $ per month, including $ in Supplemental Security Income (SSI) for plaintiff Wallis, $ in Aid to Families with Dependent Children (AFDC) to plaintiff Wallis for plaintiff Johnson, and $ from plaintiff Johnson's part-time employment. 16. Plaintiffs fully disclosed this financial information to defendants in writing in their loan application. 17. At that time, plaintiff Johnson was an 18 year old high school senior. Plaintiffs informed defendants and defendants should have known that the AFDC benefits for plaintiff Johnson were to terminate upon her graduation in June Plaintiff Wallis receives SSI due to a severe mental impairment. 19. Sometime in late September 1994, plaintiffs selected a 1995 Fleetwood Coronado mobile home to purchase from defendant Ambrose. 20. Defendant Ambrose's agent represented to plaintiffs that if they made a down payment of approximately $15, on the mobile home, then their monthly payments would be approximately $ In reliance on defendant Ambrose's representation, plaintiffs made a $14, down payment on the mobile home on November 8, Plaintiffs had previously paid defendant Ambrose $ "to hold the mobile home" earlier that month. 22. Defendant Villanova, through its business arrangement with defendant Ambrose, financed the remainder of the purchase price of the mobile home. 23. On December 23, 1994, defendant Ambrose presented plaintiffs with a retail installment sales contract and financing statement for the mobile home that indicated monthly installment payments of $ The terms of the written contract were materially different from the terms of the oral agreement previously entered into by the parties and relied upon by plaintiffs. 25. Plaintiffs repeatedly objected to the payment terms of the proffered contract because they knew that it was more than they could afford on their limited income. 26. Despite plaintiffs' protest to the contrary, defendant Ambrose's agent represented to plaintiffs' that their income was sufficient to meet this obligation.

3 27. Defendant Ambrose did not offer to return plaintiffs' down payment when they objected to the terms of the written contract. 28. Having already paid $14, to defendant Ambrose and believing that they had no other choice, plaintiffs unwillingly signed the written contract. 29. Plaintiffs' loan application showed on its face that they did not have sufficient income to support the loan agreement entered into with defendant Villanova. 30. Defendant Villanova's extension of credit to plaintiffs violated its own internal guidelines for the approval of such loans. 31. Defendant Villanova's agent, John Kilmer, has admitted that plaintiffs did not have sufficient income to support the loan and that defendant made a mistake in approving it. 32. After entering the contract with defendants and in reliance on it, plaintiffs surrendered their Section 8 voucher. 33. Under the terms of the written contract, plaintiffs' first installment payment was due on February 1, On or about April 1, 1995, plaintiffs paid $ to defendant Villanova and they have made no further payments on the contract. 35. On June 16, 1995, defendant Villanova sent plaintiffs a notice of default and right to cure default. 36. On June 26, 1995, defendant Villanova sent plaintiffs a notice of default and right to cure default. 37. On July 6, 1995, plaintiffs, through counsel, rescinded the contract and/or revoked their acceptance of the mobile home. 38. Plaintiffs are now financially eligible for Section 8 Rental Assistance, but none is currently available and the waiting list for such assistance in Lincoln County is one to two years. 39. Foreclosure/repossession of plaintiffs' mobile home will render plaintiffs homeless and cause them substantial and irreparable harm. 40. Plaintiffs do not have an adequate remedy at law. 41. It is established public policy that very low-income households should pay no more than thirty percent (30%) of their monthly income for shelter, including rental and utilities. United States Housing Act of 1937, 42 U.S.C. 1437a(a). 42. Under the parties' original contract, plaintiffs agreed to pay $ per month or twenty-six percent (26%) of their projected income for the mobile home. 43. Under the terms of the written contract, plaintiffs were obligated to pay $ per month or forty-two percent (42%) of their projected income for the mobile home. 44. In addition to their payment under the written contract, plaintiffs pay $ per month to site their mobile home, a total of sixty-two percent (62%) of their projected income. 45. In addition to their mobile home and land payments, plaintiffs pay $ per month for electricity, a total of seventy-six percent (76%) of their projected income. 46. Plaintiffs are now paying $ for their mobile home and land payments and utilities, a total of ninety-eight percent (98%) of their current actual income. 47. Given plaintiffs' debt-to-income ration, foreclosure/repossession of their mobile home due to nonpayment was inevitable. FIRST CLAIM FOR RELIEF MISREPRESENTATION

4 48. Plaintiffs reallege and incorporate by reference paragraphs 1 through 47 above. 49. The amount of the monthly installment payments on the contract was a material term of the agreement between the parties. 50. Defendant Ambrose's representation as to the amount of the monthly installment payments induced plaintiffs to enter into the 51. Defendant Ambrose's representation as to the amount of the installment payments on the contract was false. 52. Plaintiffs justifiably relied on defendant Ambrose's agent's representation as to the amount of the installment payments in entering into the contract and making their down payment. 53. Plaintiffs now stand to lose all amounts paid on the mobile home due to its imminent foreclosure/repossession. 54. Plaintiffs are entitled to recover their actual and consequential damages resulting from defendant Ambrose's misrepresentation. SECOND CLAIM FOR RELIEF FRAUD 55. Plaintiffs reallege and incorporate by reference paragraphs 1 through 47 above. 56. Defendant Ambrose's agent knew or should have known that its representation as to the amount of the monthly installment payments on the contract was false. 57. Defendant Ambrose intended to induce plaintiffs to act based on its misrepresentation. 58. Plaintiffs reasonably relied on defendant's misrepresentation in making their down payment and entering into the contract. 59. Plaintiffs now stand to lose all amounts paid on the mobile home due to its imminent foreclosure/repossession. 60. Plaintiffs are entitled to recover their actual, consequential, and punitive damages resulting from defendant Ambrose's fraud. THIRD CLAIM FOR RELIEF NEGLIGENCE 61. Plaintiffs reallege and incorporate by reference paragraphs 1 through 47 above. 62. Defendant Villanova had a duty to process plaintiffs' loan application with reasonable care. 63. Defendant Villanova owed plaintiffs a duty of reasonable care in evaluating their ability to pay any loan extended to them. 64. Defendant Villanova breached its duty of care to plaintiffs by lending them the remainder of the contract price despite their patent inability to pay the obligation. 65. Plaintiffs were damaged by defendant Villanova's breach of its duty of care. 66. Plaintiffs' damages were the foreseeable result of defendant Villanova's breach. 67. Plaintiffs are entitled to actual, consequential, and punitive damages resulting from defendant Villanova's negligence. FOURTH CLAIM FOR RELIEF UNCONSCIONABILITY

5 68. Plaintiffs reallege and incorporate by reference paragraphs 1 through 47 above. 69. At the time the parties entered into the contract, defendant Ambrose knew or should have known that there was no reasonable probability of payment of the obligation in full by plaintiffs. 70. There is a gross disparity between the value received by plaintiffs and the consideration paid to the defendant Ambrose. 71. But for plaintiffs' $14, down payment, defendant Ambrose would never have entered into this contract. 72. Enforcement of the contract against plaintiffs would be unconscionable pursuant to N.C. Gen. Stat. 25A The contract between the parties is void as a matter of public policy. 74. Plaintiffs are entitled to either the return of all monies paid on this contract or to keep the mobile home without any further payments. FIFTH CLAIM FOR RELIEF UNJUST ENRICHMENT 75. Plaintiffs reallege and incorporate by reference paragraphs 1 through 47 above. 76. Defendants' actions constitute an inequitable assertion of power and position against plaintiffs and offend the established public policy of North Carolina. 77. Defendants' actions are unfair, unethical, deceptive, and illegal practices in violation of N.C. Gen. Stat Defendants' unfair and deceptive trade practices include, but are not limited to: (a) misrepresentation and/or fraud in the formation of the contact for the sale of the mobile home; (b) (c) (d) failing to exercise due care in processing plaintiffs' loan application; entering into the contract with plaintiffs when there was no reasonable probability of full payment of the obligation; and failing to provide plaintiffs with adequate value for the consideration paid. 79. Defendants' unfair and deceptive trade practice damaged plaintiffs. 80. Plaintiffs are entitled to recover treble their actual damages and attorneys' fees resulting from defendants' unfair and deceptive trade practices pursuant to N.C. Gen. Stat , PRAYER FOR RELIEF WHEREFORE, plaintiffs pray that the court: 1. Issue a preliminary injunction enjoining any action to repossesses plaintiffs' mobile home during the pendency of this action pursuant to Rule 65 of the North Carolina Rules of Civil Procedure, N.C. Gen. Stat. 1A-65;

6 Date: 2. Award plaintiffs their actual and consequential damages resulting from defendant Ambrose's misrepresentation; 3. Award plaintiffs their actual, consequential, and punitive damages resulting from defendant Villanova's negligence; 4. Award plaintiffs their actual, consequential, and punitive damages resulting from defendant Villanova's negligence; 5. Void the unconscionable contract between the parties and award plaintiffs either all amounts paid or allow them to keep the mobile home without any further payments pursuant to N.C. Gen. Stat. 25A-43(a); 6. Award plaintiffs the difference between the amount paid and the value received under the contract between the parties to avoid the unjust enrichment of defendants; 7. Award plaintiffs treble the sum of their actual damages resulting from defendants' violation of N.C. Gen. Stat pursuant to N.C. Gen. Stat ; 8. Tax the costs of this action against defendants, including plaintiffs' reasonable attorneys fees incurred in the prosecution of this action pursuant to N.C. Gen. Stat ; 9. Award plaintiffs a trial by jury on all issues so triable; and 10. Grant any other further relief which the court deems just and proper. [Attorneys for Plaintiffs]