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Taylor v. Gorilla Capital, Inc.

United States District Court, D. Oregon

October 23, 2018

DAVID NORMAN TAYLOR, and DEBRA LEE TAYLOR; Plaintiffs,
v.
GORILLA CAPITAL, INC., JOHN HELMICK, and CTC ESCROW Co. dba CASCADE ESCROW; Defendants.

          OPINION AND ORDER

          MICHAEL MCSHANE UNITED STATES DISTRICT JUDGE.

         Plaintiffs David and Debra Taylor received a loan backed by a deed of trust on their home. They bring this action against the alleged broker, lender, and escrow agent involved in the making of the loan. I previously granted Defendants' motion to dismiss the fraud claim without prejudice. Plaintiffs filed an amended complaint reasserting the same four claims against Defendants Gorilla and Helmick. Defendants only move to dismiss Plaintiffs' amended fraud claim.[1]Because the amended complaint fails to allege sufficient facts to support a fraud claim, the motion to dismiss is granted.

         BACKGROUND[2]

         The Taylors' son was involved in an auto finance business with Jeremy Cruz. Am. Compl. ¶ 11; ECF No. 22. Cruz had, at a point in the past, worked for Defendant Gorilla Capital (“Gorilla”), a corporation that makes or invests in mortgage loans. Am. Compl. ¶ 9. Gorilla Capital is run by Defendant John Helmick (“Helmick”), “a sophisticated lender, broker and real estate ‘flipper' who has run Gorilla since 1993.” Am. Compl. ¶ 15. Helmick and Cruz are close friends. Am. Compl. ¶ 9.

8.
Sometime on or about May 27, 2015, a Jeremy Cruz contacted Gorilla Capital and Helmick about a loan related to his business, Eugene Auto Finance. He proposed that Defendants give Plaintiffs a loan secured by a third lien on their principal residence but with the proceeds being used for purposes as directed by Cruz and Helmick. Cruz negotiated the loan's terms.
10.
On or about July 6, 2015, a loan was closed in escrow at Cascade Title for $90, 000 with Helmick as the lender. The proceeds went partly to certain creditors of Eugene Auto Finance, and $39, 800.35 was distributed to Cruz personally. Within days, Cruz lent $35, 000 of the loan proceeds to Gorilla Capital.
11.
Immediately after closing, Taylor was contacted by their son, a business partner with Cruz. He advised them that the payments to Eugene Auto Finance creditors were not as he agreed with Cruz, and that the distribution to Cruz should have been capital for Eugene Auto Finance. Taylor immediately went back to Cascade Escrow to rescind the loan. The closing occurred around 5 pm PST and Taylor found the doors locked. A Cascade employee came out to talk to Taylor and advised them to call the next day. The next day, Taylor called Cascade Escrow and demanded that the loan be rescinded. Cascade Escrow employees told Taylor that the loan already funded and could not be rescinded.
14.
Taylor never provided a loan application, made any financial disclosures nor provided evidence of an ability to repay the loan. The loan is an asset based loan, relying only on the value of the collateral and the right to foreclose, and not on the borrowers [sic] ability to repay the loan.
18.
Taylor never made a single payment to Helmick and never ratified the loan after rescinding the loan. Taylor received no benefit from the loan nor [sic] consideration for pledging the Property as collateral for the loan.

Am. Compl. 3-6.

In addition to the allegations included above, the Taylors ...

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