UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
EDWARD A. BROOKS and )
CATHERINE Z. BROOKS, )
)
Plaintiffs, )
)
v. ) Case No. 6:10-cv-821-Orl-31GJK
)
SUNTRUST MORTGAGE, INC.; )
SUNTRUST BANK, N.A.; and )
PREMIER CONSTRUCTION, INC., )
)
Defendants. )
___________________________________ )
COMPLAINT
The Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS, hereby sue the
Defendants, SUNTRUST MORTGAGE, INC., SUNTRUST BANK, N.A., and PREMIER
CONSTRUCTION, INC., and further allege as follows:
I. JURISDICTION
1. The Plaintiffs bring this action pursuant to 18 U.S.C. § 1964(c), 15 U.S.C. § 1601,
et seq., 12 U.S.C. § 2602, et seq., and 15 U.S.C. § 1692, et seq., and this Court has jurisdiction
over the subject matter of this case pursuant to 28 U.S.C. § 1331.
2. This Court has supplemental jurisdiction over the state law claims stated herein by
Plaintiffs pursuant to 28 U.S.C. § 1367.
II. VENUE
3. Venue is proper before this Court pursuant to 28 U.S.C. § 1391 in that a
substantial amount of the events or omissions giving rise to the claims stated herein occurred in
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 1 of 39
2
Seminole County, Florida, and the property which is the subject of this action is located in
Seminole County, Florida.
III. PARTIES
4. The Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS
(collectively “Brooks”), are residents of Seminole County, Florida, and are otherwise sui juris.
Mr. Brooks had the talent and good fortune to sell a software company he started that had created
a program widely used by automotive dealerships. The Brooks invested over $500,000.00 of the
proceeds of this sale to acquire the land and build their dream home which is the subject matter
of this litigation. The Brooks intended this home purchase to be the reward for a job well done.
5. The Defendant, SUNTRUST MORTGAGE, INC. (“the Mortgage Co.”), is a
corporation organized and existing under the laws of the State of Virginia, and is authorized to
conduct business in the State of Florida. At all times material to this Complaint, the Mortgage
Co. contained multiple offices in the State of Florida.
6. The Mortgage Co. is the purported originating lender of the promissory note and
mortgage at issue in this matter and is engaged in the business of regularly extending or offering
to extend consumer credit for which a finance charge is imposed or which, by written agreement,
is payable in more than four installments.
7. The Defendant, SUNTRUST BANK, N.A. (“the Bank”), is a national banking
association organized and existing under the laws of the State of Georgia and does business
throughout the United States including multiple branches in the State of Florida. The Bank is the
alleged funding source of the transactions with Mr. and Mrs. Brooks.
8. The Defendant, PREMIER CONSTRUCTION, INC. (“PCI”), is a corporation
organized and existing under the laws of the State of Florida, which, at all material times to this
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 2 of 39
3
Complaint, maintained its principal places of busines in Orange and Seminole County, Florida.
At all times relevant hereto, Robert A. Mott (“Mott”) served as PCI’s President and Mr. Gregory
Campion (“Campion”) served as an officer and operating manager of PCI. Campion was
originally indicted on March 1, 2006 in the Northern District of Georgia for stealing cash from a
secure storage vault while employed by the U.S. Drug Enforcement Administration, and a later,
superseding indictment added the charges of tax evasion. Campion was convicted after pleading
guilty to certain charges in the indictment.
9. All conditions precedent to the filing of this action have been satisfied through
performance, waiver or otherwise.
IV. BACKGROUND
10. The activities of The Bank and The Mortgage Co. were part of a scheme
orchestrated by The Bank to conceal from regulators, shareholders and other stake-holders, its
insufficient capital adequacy; the threats of its risk-laden balance sheet and the unfettered desire
to continue making riskier construction loans without the capital adequacy or reserve
requirements to do so. The old adage in banking circles is: banking is now and will always be a
risk business. Therefore, the key to success both in operating a bank and supervising a banking
system is the management of risk. In short, risk equal rewards; that is, the more risks a bank
takes the greater potential rewards for the banking institutions. Banking institutions, however,
are the central vein of our financial intermediaries system; thus, regulators measure, monitor and
regulate the risk activities of banks as the failure of any banking institution may pose a
systematic threat to the overall banking system. This particular scheme of The Bank was
intended to circumvent this regulatory system by concealing the risk acitivities of The Bank from
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 3 of 39
4
regulators, but yet allowing The Bank to retain the financial and beneficial interest of these
activities.
11. Amongst others, “Tier I” and “Total Capital” are principle indicators of the
financial health of a banking institution as used by the Federal Reserve, The Bank’s primary
banking regulator, and essentially is a reflection of capital adequacy. Tier I capital is core
capital, meaning equity capital and reserves and is the financial indicator of capital considered
the most reliable and liquid. “Capital” at banking institutions is what provides protection against
unexpected losses. Specifically, Tier I Capital, is a measure of capital adequacy of a bank, and is
the ration of a bank’s core equity capital to its risk-weighted assets. Risk weighted assets is the
total of all assets held by the bank which are weighted for credit risk according to a formula
determined by the regulator. The Federal Reserve allows the Bank of International Settlements
(“BIS”) guidelines in setting asset risk weights (a/k/a “Basel II” guidelines). Assets like cash
and coins, which represent very little risk to a bank, usually have zero risk weight. Riskier
assets, like unsecured loans, might have a risk weight of 100%. The residential construction
loans involved in this lawsuit are weighed between these two at perhaps 50%; thus, for every
additional $1.00 outstanding on The Bank’s balance sheet stemming from residential
construction loans, The Bank was expected to set aside an additional .50 cents to maintain its
capital adequacy requirments. In other words, for every additional $1,000,000.00 The Bank
wanted to lend in riskier construction loans, it needed to set aside an additional $500,000 in
reserves to stay in compliance with Tier I Capital Adequacy measures. Otherwise, the financial
institutions has taken on risks that outmeasure its reserves and its ability to handle potential
defaults.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 4 of 39
5
12. At the times relevant to the loan in question, The Bank had reached the point
where based on its Capital Adequacy and Reserve ratios, it simply could not afford to take on
additional risks associated with construction loans. To circumvent these measures, The Bank
structured a construction loan funding mechaninsim whereby it could fund construction loans
“off its balance sheet” without trigerring the alert of either Regulators or its own stake-holders.
Specifically, The Bank schemed with its wholly owned subsidiary, The Mortgage Co., to act as a
“straw lender,” on behalf of The Bank, in regards to its construction loans. A “straw lender” is a
lending institution who, on behalf of a concealed funding source and under false pretenses
originates, documents and otherwise acts as a lender of a loan it does not fund and one to which
it has no financial or beneficial interest. In this case, The Mortgage Co. acted as the “straw
lender,” that is, The Mortgage Co.’s name reads as the Lender on all loan documents, closing
documents, and ancillary documents associated with construction loan. The Bank, however, is
the concealed funding source of these transactions. Despite not being a named party in any of
the loan documents, closing documents and/or any other ancillary documents, it is The Bank who
funded all of the construction draw checks, sent invoices, collected and converted to its benefit
all of the interest payments made and otherwise managed, serviced and now purports to collect
on the alleged Loan Documents. In short, The Bank retained all financial and beneficial interest
in the loan documents, yet, skirted regulatory obligations by not reporting these transactions on
its balance sheet.
13. The scheme achieved the desired result in as much as it allowed The Bank to
retain the financial and beneficial interest to these riskier and higher interest rate loans. Yet by
originating these loans under the false pretense of The Mortgage Co., the loans remained offbalance
sheet as to state and federal regulators as well as share and stake holders. The scheme
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 5 of 39
6
resulted in a direct and immediate financial benefit to The Bank in multiple ways: a. First, it
allowed The Bank to reduce regulator interference and inquiries as to its business operations;
plainly stated, Regulators cannot detect risks that are hidden off a bank’s balance sheet; and b.
Second, it allowed The Bank to outperform its competitors by generating fees and interest
income that based on existing regulations neither The Bank nor its competitors could afford to
make.
V. COMMON ALLEGATIONS
14. At all times relevant hereto, Edward A. Brooks was married to Catherine Z.
Brooks.
15. On or about March 26, 2004, Brooks purchased an unimproved parcel of land in a
residential subdivision in Seminole County, Florida known as Heathrow Woods, more
specifically described as follows:
Lot 2 of HEATHROW WOODS PHASE 3, according to the Plat thereof as
recorded in Plat Book 53, Page(s) 96 through 98, of the Public Records of
Seminole County, Florida
(hereinafter the “Lot”). The Brooks paid $302,500.00 to purchase the land.
16. On May 5, 2005, Brooks entered into a written fixed fee contract with PCI for the
construction of a two-story, single family home in the amount of $1,800,000.00, which was to be
completed within a period of sixteen (16) months (the “Construction Contract”). The pool was
separately contracted by a specialty pool company. At all times relevant, Mott and Campion
owned and managed PCI.
17. Upon execution of the PCI Construction Contract, Brooks paid PCI $200,000.00
as a down-payment towards the contract price. Coupled, the Brooks made an initial investment
of over $500,000.00 to construct what they had hoped would be their dream home.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 6 of 39
7
18. The Construction Contract was to be funded by a combination of the $200,000.00
down-payment from the Brooks and bank financing in the amount of $1,600,000.00.
19. The general contractor, PCI, based on multiple multi-million dollar transactions,
had an on-going relationship with The Bank and The Mortgage Co. It was PCI that personlly
introduced Brooks to The Mortgage Co. and recommended that Brooks use the SunTrust entities
for their construction loan. Brooks had no pre-existing relationship with the SunTrust entities
and followed PCI’s suggestion that they enter into a loan relationship with this financial
institution. The closing of the construction loan took place at Premier’s offices, not SunTrust’s
place of business, during May, 2005.
20. In selling their construction lending services, The Mortgage Co. advised the
Brooks of their vast knowledge and experience in construction lending, the funding of
constriction loans and servicing construction loans. Based upon said representations, Brooks
selected The Mortgage Co. to provide the desired financing.
21. Pursuant to the parties’ discussion and the written agreements, The Mortgage Co.
was to provide the financing for the construction of the subject home in Heathrow Woods (the
“Project”). At no point was there any discussion of anyone else funding, participating, or having
anything to do with the financing of the loan, other than The Mortgage Co. Specifically, no
representation was ever made, either orally or in writing, that The Bank would actually be the
lender, servicer, manager, and collector of the subject transaction.
22. On May 18, 2005, to memorialize what Brooks thought was their oral and written
agreements with The Mortgage Co., Brooks executed a Note in favor of The Mortgage Co. in the
amount of $1,600,000.00 (the “Note”). The Note referenced that The Mortgage Co. had paid to
the Brooks $1,600,000.00 as consideration for the Note. On the same date, Brooks also executed
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 7 of 39
8
the alleged Mortgage securing the Note; said Mortgage was recorded at Official Records Book
5733, Page 436 in the Public Records of Seminole County, Florida. The Mortgage referred to
The Mortgage Co. as the “Lender.” The Mortgage Co. was also provided with a complete,
executed copy of the Construction Contract.
23. This lawsuit involves improprieties by The Mortgage Co., The Bank and PCI with
respect to the financing and construction of a custom home for Brooks.
24. Brooks had never before built a custom home and had never before had a
construction loan of any amount. They had never owned a multi-million dollar home, and had
never made a purchase as large as this one. The last home they owned, in Charlotte, North
Carolina, sold in late 2004 for $357,000.
25. Defendants, The Bank and The Mortgage Co., are part of the conglomerate
financial institution (hereinafter, the “SunTrust Entities”). The SunTrust Entities constitute a
substantial regional bank with vast experience in funding construction loans for residential and
commercial projects of this size and considerably larger. In consequence of its business, the
SunTrust Entities maintain internal protocols and policies with respect to construction loan
administration, which were violated during the construction of the subject Project.
26. Allegedly, Defendant PCI, is “one of Central Florida's finest builders… [whose]
award-winning homes can be found in many of the most exclusive developments throughout the
region.” Moreover, PCI, via its principals, repeatedly claimed to have, and apparently did have,
a close relationship with the SunTrust Entities and one of its former employees, Maureen
Prescott (“Prescott”). Ms. Prescott was the loan administrator for the Brooks’ construction
financing.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 8 of 39
9
27. As loan administrator, Prescott and/or her superiors at the SunTrust Entities
received, reviewed, and invariably approved, all draw requests from Mott or Campion on behalf
of PCI regardless of their merit or authenticity. Ms. Prescott, on behalf of the SunTrust Entities,
extended PCI, Mott and Campion business favors not normally encountered in an arms-length
transaction.
28. Pursuant to Paragraph 7 of the Construction Contract between Brooks and PCI,
“[a]ll changes in the Work, price and time for completion shall be evidenced by a change
order signed by Owner in the form attached as Exhibit ‘A’.” No change orders were ever signed
by Brooks.
29. The Construction Contract also called for completion of the Project within 16
months of the date the building permit was issued. The county building authority issued a permit
on November 21, 2005, such that the job should have been completed by March 21, 2007. The
house remains incomplete.
30. Exhibit “F” to the Contract consists of a draw schedule, listing 10 approved draws
to be paid when various stages of construction were reached. Eight of the ten draws were for the
even amount of 10% of the Contract amount. The Construction Contract stated that no
deviations from the draw schedule were authorized “unless agreed upon by both parties.”
Despite this explicit language, The Mortgage Co.’s loan administrator, Prescott, never followed
the draw schedule at any time throughout the contract period. In fact, as administered by
Prescott, The Bank paid the contractor 26 draws, not 10, for a job never completed.
31. Most draws were approved by The Mortgage Co. the same day they were
submitted. Excepting only the last draw, number 26, no invoices for work done at the project
were ever submitted to Brooks for comment or approval. Instead, The Bank paid the draws,
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 9 of 39
10
never even notifying Brooks of a payment until after it had occurred. Several times the SunTrust
Entities did not even notify them of a payment after the fact; in those instances, Brooks first
learned of substantial payments made by The Bank when they saw the earlier draw on later
payment documents, or when they requested from the SunTrust Entities a copy of their entire
loan file during Spring 2009.
32. The Mortgage Co. purported to operate under the terms of a Builder Direct
Disbursement Authorization, a SunTrust Entities form document, signed after the Loan
Agreement was executed. Curiously, the closing documents delivered to Brooks did not include
a copy of this document. Brooks also obtained a copy of the entire closing binder directly from
the closing attorney, and that binder likewise did not include a blank or executed copy of the
Builder Direct Disbursement Authorization. They obtained a copy of the Disbursement
Authorization only by finding it in their loan file in Spring 2009.
33. During the construction process, when difficulties arose with the builder, Brooks
repeatedly asked The Mortgage Co. if they could take control of the loan funds by disbursing pay
requests to the builder themselves. The Mortgage Co. advised Brooks that such an option was
not available to them. If Brooks had been given a copy of the Builder Direct Disbursement
Authorization, they would have seen that the representations made to them by The Mortgage Co.
were blatantly false. The agreement specifically states that it may be canceled “by written
notice, signed by the Borrower and directed to The Mortgage Co. sent certified mail, return
receipt requested.”
34. Rather than relying on the draw schedule provided by the Construction Contract,
The Mortgage Co. used their own draw and inspection schedules that listed in detail the
percentage of job completion assigned to specific categories of the work. The initial draw
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 10 of 39
11
percentages disclosed to Brooks by The Mortgage Co., and accompanying the first construction
draw for work performed through December 2005, remained in place for 14 months. Then,
mysteriously and without discussion or approval of Brooks, The Mortgage Co. changed the
percentages assigned to various work line items beginning in March 2007. By making those
changes, The Mortgage Co. was able to justify substantial further payments to PCI that would
have been precluded by their original percentage allocations.
35. All payment requests required “a waiver and release of lien…from Contractor and
each and every lienor performing Work on the project that has properly filed a ‘notice to
owner’.” The Mortgage Co. indifferently obtained general contractor, subcontractor and supplier
lien waivers, regularly disbursing in the absence of proper waivers. The SunTrust Entities’ loan
administration file, provided to Brooks in early 2009, is completely missing two general
contractor affidavits and partials waivers of lien, totaling about $100,000. It also convincingly
shows that The Mortgage Co. seldom obtained appropriate subcontractor or supplier partial
waivers of lien when draws were paid. At last count, subcontractor and supplier liens filed
against the home exceeded $60,000.00.
36. Of significant import, Brooks never signed any change orders. Indeed, PCI never
submitted any change orders to them. There was, accordingly, no legal justification for PCI to
increase the agreed contract price, nor for the SunTrust Entities to deviate from the draw
schedule for PCI.
37. One of the first documents Brooks received from The Mortgage Co. was a
disclosure form entitled “Information About Construction-Permanent Loan”, dated May 13,
2005. That document describes how the construction loan process is supposed to work, and the
eventual conversion of a construction loan to permanent financing.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 11 of 39
12
38. In discussing the construction loan process, The Mortgage Co. informed Brooks
that while the building process was underway, “Lender will make periodic disbursements of loan
principal based on the amount of construction completed.” The disclosure also told Brooks that
The Mortgage Co. would be charging them extra fees, including “A construction administration
fee to cover the Lender’s costs in performing construction disbursements” and “Inspection fees
for each disbursement to verify the improvements completed are appropriate to the disbursement
requested.”
39. The Mortgage Co. further agreed that “As construction progresses, the Lender
will make principal disbursements (draws). The amount disbursed will be determined by the
percentage of the construction work completed since the last disbursement or in accordance with
an approved draw schedule.” Despite these formal statements in the documents Brooks received
from The Mortgage Co. describing how the process was supposed to work, the SunTrust Entities
never followed these principles during loan administration.
40. The Loan Agreement itself also set forth many protections the Brooks, which they
relied upon in entering into a lending relationship with The Mortgage Co. At the top of the Loan
Agreement, The Mortgage Co. acknowledged that “Borrower has requested Lender to disburse
the proceeds of the Note in installments as the Improvements are constructed and Bank has
agreed to do so based upon certain terms and conditions.” Further, the Loan Agreement
provided that “all monies disbursed under this Agreement and the Note shall be used solely on
account of construction costs for the improvements on the Property and expenses for the
construction loan according to the plans and specs approved by the Lender, and no monies shall
be diverted to any other purpose.”
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 12 of 39
13
41. Consistent with the disclosure papers, SunTrust once more stated “loan proceeds
will be disbursed according to the draw schedule attached, upon Borrower’s request and upon
Bank’s approval.” Moreover, “Lender will only fund draws for completed work; no deposits or
funds for stored materials will be paid.” Finally, “All disbursements or draw requests are subject
to the Lender’s receipt of the appropriate documentation and are made at the Lender’s
discretion.”
42. The Direct Disbursement Authorization is completely inconsistent with the
primary expectation set out in the Loan Agreement that Brooks would be responsible for
requesting, approving, and paying construction draws. However, having taking over the
payment obligations, the SunTrust Entities necessarily assumed the duty to act with due care, and
in the best interest of Brooks, in paying the contractor.
43. The only instance where The Mortgage Co. sought prior approval from Brooks to
the pay a construction draw was very late in 2008 when it was obvious from their telephonic and
email complaints that Brooks were having severe problems with construction of their home and
with administration of the construction loan. At that time, The Mortgage Co. told Brooks they
had no choice but to pay that draw, so they authorized The Mortgage Co. to disburse to PCI the
sum of $33,709.06. That was the only payment during the entire job that Brooks authorized in
advance. All other payments were unilaterally made by The Mortgage Co.
44. As set forth more fully below, PCI regularly billed for work that The Mortgage
Co. knew to a certainty (based on bank internal inspection reports) had not yet been done; billed
for “deposits” on alleged construction materials in excess of $300,000 that were plainly
unjustified under the Construction Contract and under the loan documents; billed for “extra
work” which Brooks never agreed to pay and for which contractual change orders never were
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 13 of 39
14
tendered to them or executed by either them or PCI; billed and paid $22,400 for drywall work
which an invoice plainly shows on its face was for labor and materials supplied to an unrelated
project; overbilled and overpaid approximately $27,000 for a pool package which Brooks had
under contract for $72,899, but for which PCI billed and The Mortgage Co. paid an even
$100,000; and improperly billed and received from the SunTrust Entities an extra $32,000 based
solely on a letter from Mott, without any supporting documentation, fraudulently claiming the
contract and the construction loan had been increased by that sum.
45. By December 2008, more than 2 years after this 16 month construction project
should have been completed, the construction inspector retained by one of the SunTrust Entities
deemed the job 78.95% complete. Brooks contends that this level of completion was neither
accurate nor justified, and is disputed by the evaluation of a qualified contractor obtained by the
Brooks showing completion to be no greater than 65% at present. Nonetheless, The Mortgage
Co. and/or The Bank had paid out by then to PCI 95% of the entire loan amount.
46. The job is currently lying fallow, without a contractor, and woefully incomplete.
Numerous subcontractors and suppliers have since filed liens totaling tens of thousands of
dollars, for whose work the SunTrust Entities had previously paid PCI but for which they
negligently failed to obtain lien waivers. As a result, Brooks did not receive the expected legal
documents they could use to defend against the lien claims, and they now face the unpleasant
prospect of paying twice for some of the work.
47. According to certain estimates Brooks have gathered, their house presently
requires approximately $853,000 in additional funds to be completed in accordance with the
terms of the original Construction Contract, assuming all work in place was properly done.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 14 of 39
15
However, that assumption is incorrect; much of the work is defective and will need to be
repaired or completed redone.
48. The Brooks contend the following:
a. They were deceived by The Mortgage Co. when told that The Mortgage Co. had
vast knowledge in funding and managing construction loans, in as much as The Mortgage Co.
did not fund, service, manage, and/or collect on this construction loan. In fact, The Mortgage
Co. has had absolutely nothing to do with this construction loan other than participate as a straw
lender on behalf of The Bank and the SunTrust Entities, including SunTrust Commercial Credit;
b. That they were deceived by The Mortgage Co. when told, both orally and in the
loan documents, that The Mortgage Co. was the Lender in the transaction. We now know that
The Bank was the Lender in the subject transaction. Moreover, upon information and belief we
know that there is a concealed and secret agreement for The Mortgage Co. to refinance out The
Bank at the end of the construction period. It is at this point, that The Mortgage Co. will become
the servicer of the subject mortgage transaction.
c. That the SunTrust Entities should have strictly complied with the loan documents
and not paid for work that simply had not been done or that the Loan Agreement otherwise made
clear would not be funded;
d. That The Mortgage Co. and/or The Bank are purported experts in loan
administration of construction projects, and had the SunTrust Entities exercised the slightest care
in administering this loan the outcome would have been far different.
e. Additionally during the construction process, the Brooks began to notice
irregularities in what they thought was their agreement with The Mortgage Co. Amongst them:
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 15 of 39
16
i. Their monthly interest invoices sent to them came did not come from The
Mortgage Co., the lender of record in all of the loan documents; rather, the
statements came from SunTrust Commercial Credit; which we now know
is a The Bank entity;
ii. The invoices requested that payments be made payable to SunTrust
Commercial Credit;
iii. Interest payments made by the Brooks were credited to this SunTrust
Commercial Credit account; the payments were not credited to the loan
the Brooks had signed up for with The Mortgage Co.
iv. The invoices requested that payments be made payable to an account
number different than the loan account number referenced in the subject
matter loan documents; we now know that there was a separate loan
account and account number created at SunTrust Commercial Credit;
v. The construction draw checklist was being originated from The Bank;
vi. The construction completion schedule came from The Bank;
vii. The construction inspections forms came from The Bank;
49. In summary, the Brooks began to notice that The Mortgage Co. had nothing to do
with their construction loan; that in fact, it was The Bank who appeared to be servicing the loan
and SunTrust Commercial Credit who was invoicing, collecting, and converting loan payments
that destined to be applied to the Brooks loan account with The Mortgage Co.
50. The current circumstances are dire. Brooks do not have the money to complete
the home, as The Mortgage Co. and The Bank wasted hundreds of thousands of dollars of their
construction loan by dereliction of their legal obligations to Brooks. The Brooks have been
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 16 of 39
17
forced to carry the excess overhead of two houses for four years because the SunTrust Entities
did not perform their legal and contractual obligations, as required by Federal and State law.
They own a virtually unsalable asset, an expensive but incomplete custom home in an area of the
country awash in homes for sale.
51. The Mortgage Co. and/or The Bank incompetently administered the Brooks
construction loan and grievously harmed the Brooks family.
COUNT I – VIOLATION OF 18 U.S.C. § 1962 (RACKETEER INFLUENCED AND
CORRUPT ORGANIZATIONS ACT) AS TO SUNTRUST MORTGAGE
AND SUNTRUST BANK
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
52. The Mortgage Co. and The Bank acted in concert pursuant to a common design
and plan to induce the Plaintiffs to enter into the mortgage transaction on May 18, 2005.
53. The Mortgage Co. and The Bank illegally, maliciously and wrongfully conspired
with one another for The Mortgage Co. to originate mortgage loans under false pretences, but for
The Bank to be the concealed funding source of the mortgage transaction.
54. A conspiracy existed between The Mortgage Co. and The Bank, a national
banking association.
55. Construction loans are generally portfolio products,, in as much as they require
capital to fund loans over extended periods of time (they cannot be packaged and quickly resold
in the secondary market). Therfore, the construction loan market is generally dominated by
regional and local banks; that is, institutions with liquid assets that can be committed over
extended periods of time. Conversely, because of this requirement that liquid capital be
committed over extended periods of time, mortgage bankers such as The Mortgage Co., Inc.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 17 of 39
18
(enteties designed to originate, package and resell mortgage loans) do not generally participate in
this market.
56. The Bank, an entity with the requisite liquid capital to commit over extended
periods of time, consipired with The Mortgage Co., a mortgage banker, for The Mortgage Co. to
make loans on its behalf.
57. The conspiracy consisted of:
a. Step 1: The Mortgage Co. secured executed mortgage Notes and Mortgages
under the false pretences of acting as a “Lender” from a customer seeking
construction financing;
b. Step 2: Upon information and belief, The Mortgage Co. then utilized the
good-will (or value) of these Notes and Mortgages to create “credit” at SunTrust
Commercial Credit (an entity of The Bank). In essence, The Mortgage Co.
obtains a loan from SunTrust Commercial Credit by pledging the loan documents
it secured from the borrower in exchange for SunTrust Commercial Credit
funding on its obligation.
IMPORTANTLY: SunTrust Commercial Credit funds directly to the borrower.
Unlike the more widely accepted methodology in the world of securitirized
lending whereby the funding source would fund the broker and the broker would
then fund to the borrower; here, SunTrust Commercial Credit does not fund to
The Mortgage Co., rather, SunTrust Commercial Credit funds directly to the
borrower. The Mortgage Co. never funds a single penny.
c. Step 3: SunTrust Commercial Credit invoices directly to the borrower
(without there being any privity contractual or otherwise between it and the
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 18 of 39
19
Borrower) for the interest due, collects on the invoices and applies the borrowers
interest payments to the loan account created by The Mortgage Co.;
d. Step 4: Upon completion of the home and issuance of certificate of
occupancy, The Mortgage Co. refinances the loan at SunTrust Commercial Credit
and takes out SunTrust Commercial Credit; and
e. Step 5: Now with a packageable loan in hand; that is, a completed whole
loan, The Mortgage Co. as any other mortgage banker sells the Note and the
Mortgage into the secondary market and retains the servicing rights to the loan.
58. The conspiracy benefitted The Bank in as much as it allowed it to fund riskier
construction loans as off-balance sheet transactions. In doing so, The Bank would circumvent
Safety and Soundness state and federal banking regulations. Further, it allowed The Bank to
fund loans it simply could not afford to fund, thus, allowing it to generate illicit profits that it
could not have generated had it acted and abided by regulatory guidelines. Lastly, it allowed The
Bank to deceive the financial markets and its shareholders in as much as its financials and its
balance sheet did not account for the risks associated with these transactions that were hidden off
its balance sheet.
59. Safety and Soundness banking regulations would have required that The Bank set
aside increased reserves or raise additional capital in order to account for the increased risks that
riskier mortgage products, such as construction loans, represented to the balance sheet and
overall soundness of The Bank’s capital position.
60. The Bank knew that its capital position could be compromised due to the risks
associated with its construction loan portfolio and opted to engage in this civil conspiracy in
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 19 of 39
20
order to continue originating these riskier mortgage loans, generate the fees and returns
associated with them, yetavoid alerting federal and state banking regulators.
61. The conspiracy benefitted The Mortgage Co. by allowing it, under false pretenses,
to originate construction loans, wich would have required liquid capital, without the requisite
capital (utilizing instead the capital of the phantom lender, its affiliated entity, The Bank) yet
earn the high fees at the front end of the loans to consummate these transactions.
62. The conspiracy intended to conceal the identity of the true funding source and
benefit The Bank and The Mortgage Co. were the direct and proximate result of damages to
Brooks, including but are not limited to, increased finance charges, excessive loan expenses and
interest rates, injury to credit reputation, and loss of other credit opportunities.
63. The Brooks have retained the undersigned law firm to prosecute this action, and
have agreed to pay them a reasonable fee. Pursuant to the provisions of 18 U.S.C. § 1964,
Brooks is entitled to recover its reasonable attorneys’ fees and costs from the Defendants, The
Bank and The Mortgage Co..
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC. and SUNTRUST BANK, N.A.,
rescinding the subject mortgage, awarding compensatory damages, plus reasonable attorneys’
fees and costs, and for any such further relief that this Court deems just and proper.
COUNT II – VIOLATION OF 18 U.S.C. § 1962 (RACKETEER INFLUENCED AND
CORRUPT ORGANIZATIONS ACT) AS TO SUNTRUST MORTGAGE AND
PREMIER CONSTRUCTION, INC.
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 20 of 39
21
64. A conspiracy existed between The Mortgage Co. and PCI for the mutual
pecuniary benefit of both parties to the conspiracy.
65. The Mortgage Co. reviewed and approved financing for the construction of the
Project based upon the fixed fee construction contract between PCI and Brooks for the
construction of the Project on the Lot.
66. A fixed fee construction contract allows owners, such as the Brooks, to fix a
budget for construction of a dwelling. The cost of materials, as well as labor, are certain at the
time the contract is executed. Such contracts can be amended by change order, signed by all
parties to the construction contract, which changes the contract price either up or down.
67. The contract between Brooks and PCI was a fixed fee contract, obligating PCI to
complete the construction of the Brooks home for the sum of $1,800,000.00.
68. The Mortgage Co. required Brooks to execute an authorization for direct
disbursements to PCI throughout construction of the Project under the auspices of expediting the
process for the benefit of the Brooks. Disbursements were to be made to PCI based upon a draw
schedule reflecting payment equivalent to the percentage of work completed by PCI at the time
the disbursement was made.
69. Only two entities, The Mortgage Co. and PCI, benefitted from the secrecy of
direct disbursements. The Mortgage Co. made disbursements to PCI, knowing that PCI had not
completed the work contained in the application for payment.
70. The Mortgage Co. also made disbursements to PCI based upon payment
applications containing invoices from other construction projects that were in progress
simultaneous to the Brooks Project.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 21 of 39
22
71. During the construction of the Project, PCI and Brooks never executed one
change order.
72. The Mortgage Co. notified Brooks that the construction loan proceeds were
completely exhausted, however, the Project was no more than 65% complete. Brooks retained
an expert to evaluate the project and to provide them with an estimate of cost to complete the
project. Brooks was advised that an additional $853,000.00 was needed to complete the Project.
73. The Mortgage Co. and PCI benefitted from disbursement of proceeds on the
Project that were never applied to the construction of Brooks’ family home.
74. As a direct and proximate result of the conspiracy between The Mortgage Co. and
PCI, the Brooks suffered damages, including but are not limited to, indebtedness without the
contemplated value thereof, rent payments for a temporary residence for 5 years (and
continuing), interest payments to The Bank for 5 years, increased finance charges, excessive loan
expenses and interest rates, injury to credit reputation, and loss of other credit opportunities.
75. The Brooks have retained the undersigned law firm to prosecute this action, and
have agreed to pay them a reasonable fee. Pursuant to the provisions of 18 U.S.C. § 1964,
Brooks is entitled to recover its reasonable attorneys’ fees and costs from the Defendants, The
Bank and The Mortgage Co..
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC. and PREMIER CONSTRUCTION,
INC., awarding compensatory damages, plus reasonable attorneys’ fees and costs, and for any
such further relief that this Court deems just and proper.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 22 of 39
23
COUNT III – VIOLATION OF REAL ESTATE SETTLEMENT PROCEDURES ACT
AS TO SUNTRUST MORTGAGE AND SUNTRUST BANK
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
76. The transaction between Plaintiff and The Mortgage Co. is a federally regulated
mortgage loan within the meaning of the Real Estate Settlement Procedures Act (“RESPA”),
found at 12 U.S.C. § 2602, et seq.
77. The activities of The Mortgage Co. in this transaction are settlement services
within the meaning of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2602(3).
78. As part of the transaction, Brooks paid fees to The Mortgage Co. and The Bank
for various settlement services in conjunction with the federally related mortgage loan.
79. The Mortgage Co. retains a security instrument against the Project. The terms of
the security instrument and the obligations arising thereunder were influenced by the fees paid
for the various settlement services.
80. The Mortgage Co. violated RESPA by accepting fees, kickbacks or other things
of value from The Bank pursuant to an agreement or understanding, by and between the two,
whereby The Mortgage Co. would originate loans under its name that The Bank would fund in
concealment.
81. The agreement that mortgage business would, under false pretenses, be originated
by The Mortgage Co. but that would actually be funded in concealment by The Bank is in
violation of 12 U.S.C. § 2607(a) and 24 C.F.R. § 3500.14(b) in as much as giving or accepting a
portion, split, or percentage of charges made or received for the rendering of real estate
settlement services in connection with a transaction involving federally related mortgage loan
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 23 of 39
24
other than for services actually performed is in violation of 12 U.S.C. § 2607(b) and 24 C.F.R. §
3500.14(c).
82. The Bank violated RESPA by accepting fees, kickbacks or other things of value
from The Mortgage Co. pursuant to an agreement or understanding that business incident to or a
part of a real estate settlement service involving federally related mortgage loans would be
referred to The Bank by The Mortgage Co. in violation of 12 U.S.C. § 2607(a) and 24 C.F.R. §
3500.14(b). The agreement violated RESPA in as much as giving or accepting a portion, split, or
percentage of charges made or received for the rendering of real estate settlement services in
connection with a transaction involving federally related mortgage loans other than for services
actually performed in violation of 12 U.S.C. § 2607(b) and 24 C.F.R. § 3500.14(c).
83. As a direct and proximate result of these violations of RESPA, The Mortgage Co.
and The Bank caused damages to the Plaintiffs, and are liable to Plaintiffs for monetary damages
in the amount of three times the amount of any and all settlement services paid directly or
indirectly by Plaintiff pursuant to 12 U.S.C. § 2607(d)(2) and costs under 12 U.S.C. §
2607(d)(5).
84. The Brooks have retained the undersigned law firm to prosecute this action, and
have agreed to pay them a reasonable fee. Pursuant to the provisions of RESPA, Brooks is
entitled to recover its reasonable attorneys’ fees and costs from the Defendants, The Bank and
The Mortgage Co.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC. and SUNTRUST BANK, N.A.,
awarding compensatory damages, treble damages, plus reasonable attorneys’ fees and costs, and
for any such further relief that this Court deems just and proper.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 24 of 39
25
COUNT IV – VIOLATION OF FAIR DEBT COLLECTION PRACTICES ACT AS TO
SUNTRUST BANK AND SUNTRUST MORTGAGE
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
85. By virtue of the agreement or understanding between The Mortgage Co. and The
Bank, for The Mortgage Co. to originate the mortgage loans, and for The Bank to fund those
loans in order to avoid federal capital reserve regulations, The Mortgage Co. and SunTrust knew
or should have known that they did not have the right to collect on the alleged debt, much less
threaten foreclosure proceedings.
86. The Mortgage Co. and The Bank have not ceased their efforts to collect and
enforce the subject mortgage and note, despite their invalidity and unenforceability.
87. The Brooks have retained the undersigned law firm to prosecute this action, and
have agreed to pay them a reasonable fee. Pursuant to the provisions of the Fair Debt
Collections Practices Act, Brooks is entitled to recover its reasonable attorneys’ fees and costs
from the Defendants, The Bank and The Mortgage Co..
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC. and SUNTRUST BANK, N.A.,
awarding compensatory damages, plus reasonable attorneys’ fees and costs, and for any such
further relief that this Court deems just and proper.
COUNT V – NEGLIGENT MISREPRESENTATION
AS TO SUNTRUST MORTGAGE AND PCI
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 25 of 39
26
88. The Mortgage Co. and PCI, jointly and severally, made false representation to the
Plaintiffs that included, but are not limited to the following:
(a) That Plaintiffs were recipients of a properly collateralized equity loan that
would safely be available in accordance with the terms and conditions of the loan documents;
(b) That for Plaintiffs, The Mortgage Co.’s loan secured by the Lot and the
Project were an appropriate and dependable manner to harness a home’s equity as a retirement
asset while inadequately and/or improperly disclosing facts, terms and/or conditions
contradicting the representations of The Mortgage Co.;
(c) That The Mortgage Co. intended to originate and fund the loan consisting
of the construction proceeds;
(d) That The Mortgage Co. owns and holds a Note which is secured by a valid
mortgage in the name of The Mortgage Co.;
(e) That the construction by PCI was being completed according to the draw
scheduled;
(f) That the construction of the Project would be complete within the budget
provided by PCI and agreed to by The Mortgage Co..
89. At the time Defendants made these representations they were acting in the normal
course of business which had a financial interest in acting as described.
90. Defendants’ representations were accordingly false and negligently supplied.
91. Defendants intended that the Plaintiffs would rely on such false representations,
and that the Plaintiffs would be induced to act based upon those same false representations.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 26 of 39
27
92. Plaintiffs paid The Mortgage Co., The Bank and PCI for secured loans based
upon the representations made by The Mortgage Co. and PCI as stated herein. At all times
material to this Complaint, Plaintiffs did not know the representations were false.
93. Plaintiffs justifiably relied on the representations made by The Mortgage Co. and
PCI.
94. As a direct and proximate result of Defendants’ misrepresentations, the Plaintiffs
were injured and damaged as follows: Plaintiffs invested money in purchasing The Mortgage
Co.’s financial product which did not provide the benefits represented; Plaintiffs suffered
financially from the actions of the Defendants by having a principle retirement asset rendered
illiquid, encumbered and incomplete; Plaintiffs lost alternative, attractive investment
opportunities in the belief that The Mortgage Co.’s financial product and PCI would perform as
represented.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC. and PREMIER CONSTRUCTION,
INC., awarding compensatory damages, plus interest, costs, and for any such further relief that
this Court deems just and proper.
COUNT VI – BREACH OF FIDUCIARY DUTY
AS TO SUNTRUST MORTGAGE
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
95. The Mortgage Co. was a fiduciary to Plaintiffs and owed a fiduciary duty to
Plaintiffs. A fiduciary duty arose by the counseling and/or advising by The Mortgage Co., to the
Plaintiffs, relative to their financial requirements, accepting fees and gaining business in
providing a secured loan while pursuing the appearance of acting in Plaintiffs’ best interest as a
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 27 of 39
28
financial institution having superior acumen and expertise and using a contract of adhesion for
Defendant’s purpose and to Plaintiffs’ detriment.
96. The Mortgage Co. willingly accepted and proactively initiated involvement in
managing and/or advising Plaintiffs about their financial circumstances, offering financial advice
and touting The Mortgage Co.’s construction loan products and trust that Plaintiffs could
properly repose in The Mortgage Co..
97. The Mortgage Co. owed Plaintiffs a duty to properly and legally disclose all
reasonably foreseeable circumstances affecting Plaintiffs in their dealings with The Mortgage
Co. and to act reasonably and with full disclosure in the exercise of its rights or prerogative
pursuant to the loan documents.
98. The Mortgage Co. breached its fiduciary duties to Plaintiffs by acting contrary to
the requirements of a fiduciary under the circumstances hereof and as described herein,
proximately causing damages to the Plaintiffs.
99. The conduct of The Mortgage Co. as described herein was so of a character that
was wanton, reckless, malicious and/or intentionally despicable so as to justify and warrant the
assessment of compensatory and punitive damages for the Plaintiffs.
100. As a direct and proximate result of Defendants’ breach of fiduciary duty, the
Plaintiffs were injured and damaged as follows: Plaintiffs invested money in purchasing The
Mortgage Co.’s financial product which did not provide the benefits represented; Plaintiffs
suffered financially from the actions of the Defendants by having a principle retirement asset
rendered illiquid, encumbered and incomplete; Plaintiffs lost alternative, attractive investment
opportunities in the belief that The Mortgage Co.’s financial product and PCI would perform as
represented.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 28 of 39
29
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC., awarding compensatory damages,
plus interest, costs, and for any such further relief that this Court deems just and proper.
Plaintiffs reserve the right to seek the imposition of punitive damages against the Defendant.
COUNT VII – VIOLATION OF FLA. STAT. § 713.35
AS TO PREMIER CONSTRUCTION, INC.
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
101. PCI made false representation to the Plaintiffs that included, but are not limited to
the following:
(d) That the construction by PCI was being completed according to the draw
schedule;
(e) That PCI was to complete the Project within the fixed price budget of
$1,800,000.00;
(f) That PCI was applying for and receiving draws from The Bank and/or The
Mortgage Co. for work that was not completed on the Brooks Project and/or work that was
completed on another project in progress by PCI;
(g) That the representations of work completed in the payment applications
were actually performed prior to making such payment applications;
(h) That PCI had no unlawful, fraudulent, or other relationship to The
Mortgage Co. that would function to the detriment of the Plaintiffs.
102. At the time Defendant made these representations they were acting in the normal
course of business which had a financial interest in acting as described.
103. Defendant’s representations were accordingly false and negligently supplied.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 29 of 39
30
104. Defendants intended that the Plaintiffs would rely on such false representations,
and that the Plaintiffs would be induced to act based upon those same false representations.
105. Plaintiffs paid PCI, through loans from The Bank and/or The Mortgage Co., for
construction of the Project. At all times material to this Complaint, Plaintiffs did not know the
representations were false.
106. Plaintiffs justifiably relied on the representations made by PCI.
107. As a direct and proximate result of Defendants’ false statements, the Plaintiffs
were injured and damaged as follows: Plaintiffs invested money to construct a substantial family
home, and encumbered the property by loans and mortgages to obtain such construction.
108. PCI exhausted all of the construction proceeds, i.e. $1,600,000.00, and left the
structure in a state requiring an additional $853,000.00 to complete construction, despite the fact
that no change orders were ever made.
109. The Brooks have retained the undersigned law firm to prosecute this action, and
have agreed to pay them a reasonable fee. Pursuant to Fla. Stat. § 713.29, Brooks is entitled to
recover its reasonable attorneys’ fees and costs from PCI.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against PREMIER CONSTRUCTION, INC., awarding compensatory
damages, plus reasonable attorneys’ fees, interest, costs, and for any such further relief that this
Court deems just and proper.
COUNT VIII – VIOLATION OF 12 C.F.R. § 226.5b(f) et. seq.
(REGULATION Z OF THE TRUTH IN LENDING ACT)
AS TO SUNTRUST MORTGAGE AND SUNTRUST BANK
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 30 of 39
31
110. Regulation Z is a legal requirement implementing the Truth In Lending Act
(“TILA”), that prescribes standards of conduct by which a mortgage loan as existed for Plaintiffs
pursuant to the Note and mortgage, may be terminated, suspended, or reduced by The Mortgage
Co. and/or The Bank. Pursuant to Regulation Z, The Mortgage Co. and/or The Bank and their
subsidiaries and/or agents may prohibit additional extensions of credit or reduce a borrowers’
credit limit only pursuant to a limited number of specific circumstances including, for example,
during a period in which the consumer is in default of a material obligation of the underlying
agreement. See § 226.5b(f)(3)(vi)(c).
111. Pursuant to TILA, inter alia, when the circumstances specified as justification for
the creditor’s action ceases to exist, credit privileges must be reinstated. 12 C.F.R. pt. 226, Supp.
I, commentary to § 226.5b(f)(3)(vi), comment 2. The Mortgage Co. and/or The Bank were
responsible in accordance with Regulation Z for providing this information to Plaintiffs ensuring
that credit terminated, suspended, or reduced was restored as soon as reasonably possible after
the condition described by the creditor’s as justification for its actions ceases to exist. Id. at
comment 4. In these instances, there were no such reasons as to Plaintiffs or such reasons ceased
to exist.
112. Regulation Z also requires that The Mortgage Co. and/or The Bank investigate
any conditions concerning Plaintiffs frequently enough to be certain that the purported condition
justify the termination, suspension and/or reduction of credit was factually based and applied.
Alternatively, a creditor, including The Mortgage Co. and The Bank, may shift the duty to the
consumer to request reinstatement of adverse credit activities directed at Plaintiffs only upon
notice of the facts to the consumer prior to initiating adverse action against such borrower.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 31 of 39
32
113. As related herein, Plaintiffs received at the most a request for “updated” financial
information from The Mortgage Co. which was immediately and/or inappropriately acted upon
by The Mortgage Co. against Plaintiffs without the required notice, without the required
reinstatement information and done so by SunTrust as a pretext to eliminate its credit
obligations. In actuality, Plaintiffs’ credit was not suspended but terminated without a realistic
or the legally required opportunity for reinstatement.
114. The actions of The Mortgage Co. and/or The Bank in suspending and/or
terminating Plaintiffs secured loan pursuant to the Note and mortgage violated the procedures
and requirements of Regulation Z. The Defendants’ disregard of the requirements of Regulation
Z was a necessary ruse to terminate the lending obligation to Plaintiffs to create the appearance
of a stronger capital base and capital ratio.
115. Defendants are liable for at least the specified statutory amount specified for
violation for Regulation Z.
116. The Brooks have retained the undersigned law firm to prosecute this action, and
have agreed to pay them a reasonable fee. Pursuant to the provisions of the Truth In Lending
Act, Brooks is entitled to recover its reasonable attorneys’ fees and costs from the Defendants,
The Bank and The Mortgage Co..
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC. and SUNTRUST BANK, N.A.,
awarding statutory damages, awarding compensatory damages, plus reasonable attorneys’ fees
and costs, and for any such further relief that this Court deems just and proper.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 32 of 39
33
COUNT IX – BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING AS TO SUNTRUST MORTGAGE
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
117. The rule of law is well-settled in Florida, in that every contract includes an
implied covenant of good faith and fair dealing requiring that no party to contract will do
anything which will have the effect of destroying or impairing the rights of the other party to
receive the benefits conferred by the contract.
118. This covenant applies to both performance and enforcement of the contract and is
particularly applicable to the instances described herein where one party is invested with a
discretionary power affecting the rights of another and, as such, must be exercised with the
greatest good faith. See Restatement (Second) of Contracts § 205.
119. Defendant’s actions as described herein were not for a proper, permissible or
legally legitimate reason permitted by the contract between Plaintiffs and The Mortgage Co. but,
rather were intended to work a forfeiture of Plaintiffs’ bargained for consideration in derogation
of their contractual rights and the money paid thereafter.
120. The Mortgage Co. violated this covenant by, inter alia, knowingly disbursing
money to PCI when the payment application was patently false, knowingly approving payment
applications submitted by PCI when the work alleged to have been completed therein was not
completed, failing to adequately monitor and inspect the progress of the Project, willfully
neglecting to adequately monitor and inspect the progress of the Project, exhausting all of the
construction loan proceeds when the Project was no more than 65% complete at the time said
funds were exhausted, and otherwise intentionally or negligently mismanaging the construction
loan proceeds.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 33 of 39
34
121. As a direct and proximate result of the breach by The Mortgage Co., the Brooks
suffered damages, including but are not limited to, indebtedness without the contemplated value
thereof, rent payments for a temporary residence for 5 years, interest payments to The Bank for 5
years, increased finance charges, excessive loan expenses and interest rates, injury to credit
reputation, and loss of other credit opportunities.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against SUNTRUST MORTGAGE, INC., awarding compensatory damages,
plus interest, costs, and for any such further relief that this Court deems just and proper.
COUNT X – BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING AS TO PREMIER CONSTRUCTION, INC.
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
122. The rule of law is well-settled in Florida, in that every contract includes an
implied covenant of good faith and fair dealing requiring that no party to contract will do
anything which will have the effect of destroying or impairing the rights of the other party to
receive the benefits conferred by the contract.
123. This covenant applies to both performance and enforcement of the contract and is
particularly applicable to the instances described herein where one party is invested with a
discretionary power affecting the rights of another and, as such, must be exercised with the
greatest good faith. See Restatement (Second) of Contracts § 205.
124. Defendant’s actions as described herein were not for a proper, permissible or
legally legitimate reason permitted by the contract between Plaintiffs and PCI but, rather were
intended to work a forfeiture of Plaintiffs’ bargained for consideration in derogation of their
contractual rights and the money paid thereafter.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 34 of 39
35
125. PCI violated this covenant by, inter alia, falsifying payment applications to The
Mortgage Co. requesting money for work not performed, providing fraudulent payment
applications to The Mortgage Co., utilizing the Brooks’ construction loan proceeds to pay for
work performed on other projects that PCI had simultaneous to the Brooks Project, and
otherwise failing to fulfill their obligations under the Construction Contract in good faith.
126. Although all of the construction loan proceeds, $1.8 Million, have been
exhausted, only 65% of the Project is complete and completion will require an additional
$853,000.00.
127. As a direct and proximate result of the breach by PCI, the Brooks suffered
damages, including but are not limited to, indebtedness without the contemplated value thereof, a
property with no real market value, rent payments for a temporary residence for 5 years, interest
payments to The Bank for 5 years, increased finance charges, excessive loan expenses and
interest rates, injury to credit reputation, and loss of other credit opportunities.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against PREMIER CONSTRUCTION, INC., awarding compensatory
damages, plus interest, costs, and for any such further relief that this Court deems just and
proper.
COUNT XI – BREACH OF CONTRACT
AS TO PREMIER CONSTRUCTION, INC.
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
128. There exists a contract between the Plaintiffs and PCI for the construction of a
single family home on the Lot in Heathrow Woods for the fixed price of $1,800,000.00. A copy
of the Construction Contract is attached hereto as Exhibit “A.”
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 35 of 39
36
129. All proceeds under the Construction Contract have been paid to PCI, i.e.
$1,800,000.00, however, the Project is only 65% complete, and will require an additional
$853,000.00 to finish.
130. No change orders were executed by Plaintiffs and PCI which would have
permitted an increase in the contract price, nor were any change orders executed which would
have decreased the contract price. Section 7 of the Construction Contract states, in pertinent
part, as follows:
The parties agree that Owner may order and Contractor shall perform changes in
the Work or the Project consisting of additions, deletions or other revisions. The
price and time for completion of the Work shall be adjusted accordingly. All
changes in Work, price and time for completion shall be evidenced by a
change order signed by Owner in the form attached as Exhibit “A”.
(emphasis added).
131. Upon disbursement and exhaustion of all contract proceeds to PCI, the single
family home contemplated by the Construction Contract should have been contemplated.
However, to date, the house remains only 65% complete and there are no additional funds to
complete the home.
132. The Plaintiffs indebted themselves in order to comply with the terms of this
Construction Contract. The Plaintiffs have performed all of their obligations under the
Construction Contract.
133. PCI has breached the Construction Contract by failing to complete construction of
the home, by falsifying payment applications to The Mortgage Co. requesting money for work
not performed, providing fraudulent payment applications to The Mortgage Co., utilizing the
Brooks’ construction loan proceeds to pay for work performed on other projects that PCI had
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 36 of 39
37
simultaneous to the Brooks Project, and otherwise failing to fulfill their obligations under the
Construction Contract in good faith.
134. As a direct and proximate result of the breach by PCI, the Brooks suffered
damages, including but are not limited to, indebtedness in the amount of $1.78 Million without
having received the contemplated value thereof, a property with no tangible market value,
payment of rent for a temporary residence for 5 years since the contemplated home was never
completed, interest payments to The Bank for 5 years, increased finance charges, excessive loan
expenses and interest rates, injury to credit reputation, and loss of other credit opportunities.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against PREMIER CONSTRUCTION, INC., awarding compensatory
damages, plus interest, costs, and for any such further relief that this Court deems just and
proper.
COUNT XII – RESCISSION OF MORTGAGE AND NOTE
AS TO SUNTRUST MORTGAGE
The Plaintiffs hereby incorporate each and every allegation contained in Paragraphs 1
through 51 above, as if fully set forth herein, and further alleges as follows:
135. On or about May 18, 2005, Brooks executed and delivered to The Mortgage Co.
an Adjustable Rate Note in the amount of $1,600,000.00. On or about May 18, 2005, Brooks
executed and delivered to The Mortgage Co. a Mortgage securing the Note with the Lot in
Heathrow Woods.
136. On or about December 16, 2008, Brooks entered into a Loan Modification
Agreement with The Mortgage Co., which purportedly increased the amount of the loan
proceeds from The Mortgage Co. to $1,751,890.00, in order to pay property taxes and other
related expenses.
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 37 of 39
38
137. The Mortgage Co. made misrepresentations of material fact to Brooks prior to the
execution and delivery of the original Note and Mortgage, as well as the execution and delivery
of the Loan Modification Agreement, upon which Brooks justifiably relied to their detriment.
138. The Mortgage Co. has encumbered the Lot, which is owned by Brooks, based
upon the representation that The Mortgage Co. was lending money to Brooks for the
construction of a single family home on the Lot in Heathrow Woods.
139. In fact, it was The Bank who was actually lending money to Brooks for the
construction, but did so using a straw-man to avoid capital reserve requirements imposed by the
Federal banking regulations.
140. No consideration was given by The Mortgage Co. which would permit them the
legal right to encumber the Lot, as they did not provide any of the funds that were delivered to
PCI and/or Brooks for the construction of the single family home on the Lot.
141. Furthermore, upon information and belief, The Mortgage Co. utilized this loan to
the Brooks in order to facilitate an illegal relationship with PCI, whereby PCI and/or The
Mortgage Co. were receiving incentives and kickbacks.
142. In fact, it appears that The Mortgage Co. knew, prior to authorizing the subject
loan, that the proceeds would be used to pay for improper and/or illegal payments to PCI and/or
The Mortgage Co., and not for the benefit of Brooks.
143. Brooks justifiably relied on the misrepresentations of The Mortgage Co., and title
to the Lot has now been encumbered by an entity, to wit: The Mortgage Co., who did not have
the legal right to do so.
WHEREFORE, the Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS,
demand judgment against the Defendant, SUNTRUST MORTGAGE, INC., rescinding the
Case 6:10-cv-00821-GAP-GJK Document 1 Filed 05/20/10 Page 38 of 39
39
Adjustable Rate Note, Mortgage, and Loan Modification Agreement, and granting any such
further relief that this Court deems just and proper.
DEMAND FOR JURY TRIAL
The Plaintiffs, EDWARD A. BROOKS and CATHERINE Z. BROOKS, demand a trial
by jury of all issues so triable of right by a jury.
DATED this 20th day of May, 2010.
_/s/ Aldo G. Bartolone, Jr._____________
ALDO G. BARTOLONE, JR.
Florida Bar No. 173134
BARTOLONE & BATISTA, LLP
8010 Sunport Drive, Suite 120
Orlando, Florida 32809
Telephone: (407) 251-9476
Facsimile: (407) 251-9479
E-mail: agb@bartolonelaw.com
Attorneys for Edward & Catherine Brooks