Vincent Howard and our Rancho Cucamonga predatory lending attorneys were interested to see a case involving allegations that various actors in the mortgage lending world misled a buyer about his chances of making rental income. Mark Wolgin, the plaintiff in Wolgin v. Experian Information Systems et al., bought a condo on Mississippi's Gulf Coast in 2006, with plans to rent it. Like many home purchasers from that era, however, he quickly found himself underwater when the market took a downturn, and his rental income decreased. His lawsuit in Jackson County alleged that the broker for the sale, Robin Spence doing business as The Power Broker Inc., misled him about various material matters. He also sued two credit reporting agencies for reporting negative credit information about him that was related to the condo.
Wolgin's purchase agreement included a clause making arbitration mandatory for "any controversy, claim, action or inaction arising out of, or relating to, the purchase set out herein." His 2009 lawsuit alleged that The Power Broker and others misled him about the state of the condo, the rental market in the area and how the property would be managed. He also alleged negligence and invasion of privacy by the credit reporting agencies. Both Experian and TransUnion successfully moved to dismiss, arguing that Wolgin's claims were preempted by the Fair Credit Reporting Act. The Power Broker, meanwhile, moved to dismiss and compel arbitration based on the purchase agreement. The trial court granted the arbitration but stayed it in order to conduct discovery on which of Wolgin's allegations were included in the purchase agreement. Power Broker appealed that order; Wolgin appealed the dismissal of the credit agencies.
The Mississippi Supreme Court upheld the dismissal of the credit agencies, but sent the Power Broker claims directly to arbitration, without discovery on the scope of the purchase agreement. The Fair Credit Reporting Act expressly preempts state law, including state-court claims of negligence and invasion of privacy, like the ones Wolgin made. Using definitions elsewhere in federal law, Wolgin argued that he is not a "consumer," but rather someone who made a business transaction. The high court found these portions of law did not apply to the situation.
On the arbitration issue, the court noted that Mississippi law says to resolve doubts about whether to use arbitration by using arbitration. Analyzing the facts in Wolgin's complaint rather than its "legal labels," the high court found that Wolgin's allegations all stemmed from the purchase agreement because he alleged he was misled into buying the property. And even if some stemmed from a property management agreement, the court said, the arbitration agreement encompasses "all claims." Thus, the trial court had no authority to order discovery, the high court said. It reversed that portion of the trial court's decision and ordered a stay pending arbitration on remand.
Vincent Howard and our Anaheim predatory lending lawyers would have been interested to see some of Wolgin's claims developed. Given the year of his condo purchase, 2006, Wolgin undoubtedly bought at or near the height of the market. Now that the market has crashed, it's well known that some people saw the bubble as an opportunity to make money by deceiving unsophisticated buyers with inflated promises. It's not clear that this is what happened to Wolgin--his case against Power Broker was not decided on its merits, and any examination of those merits is now compelled to be decided in private arbitration. But our Redlands predatory lending attorneys have read other cases where the facts support the buyer's allegations of fraud. At Howard Law, P.C., we're proud to represent people who are victims of legal violations and misleading, fraudulent conduct as they attempt to correct the resulting financial disasters.
Led by partner Vincent Howard, Howard Law represents Californians of all backgrounds who are seeking to stop a predatory lender, cancel a bad loan or stop an unfair foreclosure. To tell us your story and learn more about us, call us today at 1-800-872-5925 or send us a message online.