Northern District of California Denies Motion to Dismiss Claims of Negligent Oversight of Loan Origination Employee
On March 31, the Northern District of California denied a Michigan-based mortgage company’s motion to dismiss a Louisiana resident’s amended complaint alleging that the company was negligent in hiring and supervising a branch manager later indicted for wire and mail fraud. Theime v. Cobb, et al., No. 13-cv-03827, 2013 WL 1477718 (N.D. Cal. Mar. 31, 2015). According to the amended complaint, a California branch manager for the mortgage company separately originated and arranged residential bridge loans under a fictitious business name and solicited money from investors, including the plaintiff, to fund the loans. The Plaintiff alleged that the activities of selling second mortgage bridge loans took place in the Defendant’s California offices using some of Defendant’s resources and that the Defendant ultimately condoned the employee’s bridge loan activities. In denying the mortgage company’s motion to dismiss, the court relied on allegations that the company was aware of and encouraged the branch manager’s separate bridge loan activity and that the manager paid her staff to work in the company’s offices and commingled offices and services.