Real Property – Mortgages – Consumer Protection – Attorneys – Preference Form – Prepopulated

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Mosley v. Quicken Loans, Inc. (Lawyers Weekly No. 002-124-16, 10 pp.) (J. Michelle Childs, J.) 1:16-cv-00384; D.S.C.

Holding: It is hard to imagine how the defendant-lender could have ascertained the plaintiff-borrower’s preference for an attorney if defendant essentially told plaintiff what his preference was by providing him with an already completed form.

The court denies defendant’s motion to dismiss plaintiff’s claim that defendant violated S.C. Code Ann. § 37-10-102; however, the court grants defendant’s motion to dismiss plaintiff’s claim for relief under § 37-10-105(c).

Plaintiff alleges that, when he applied for a real estate loan from defendant, defendant provided him with a prepopulated attorney preference checklist, which prevented him from choosing any attorney to represent him in the transaction.

Although defendant’s attorney-preference form informs the borrower of the right to counsel as required by § 37-10-102, defendant’s form fails to ascertain the preference of the borrower if it is already prepopulated with “I/we will not use the services of legal counsel” before defendant is informed by the borrower of his selection.

The legislative intent of the attorney-preference statute is to protect borrowers by giving them the option to select their own counsel to assist them during the closing of the transaction. Plaintiff’s allegations indicate that he was deprived of a meaningful choice in selecting his attorney for this transaction in violation of § 37-10-102.

Plaintiff also seeks relief under § 37-10-105(c), which allows a court to grant relief including attorneys’ fees and a declaration of unenforceability if the agreement or transaction is found to have been unconscionably induced. Plaintiff’s allegations do not support a finding that the parties’ loan agreement was unconscionable at the time it was made. Further, there is no allegation that plaintiff chose to apply for the loan based on statements or conduct by defendant regarding plaintiff’s ability to choose an attorney for closing. Accordingly, plaintiff has not stated a claim for unconscionable inducement.

Motion granted in part and denied in part.