## Facts

- Robert Carroll refinanced his home through a broker acting for Fremont Investment & Loan; Litton Loan Servicing LP serviced the loan.
- The Carrolls alleged defendants falsified income and property value information on the loan application to obtain approval.
- The loan allegedly had an adjustable rate and high payments that defendants knew the Carrolls could not afford.
- The Carrolls alleged they were taken advantage of due to disabilities and that the loan terms were unconscionable.
- The dispute was complicated by an earlier lawsuit and a purported settlement agreement that defendants argued released all claims.
- The Carrolls contended the settlement did not reflect their understanding and was not fully executed.
- Defendants moved to dismiss or, alternatively, for summary judgment.

## Issues

1. Whether an earlier purported settlement agreement was enforceable and barred the Carrolls’ claims at the motion-to-dismiss or summary-judgment stage.
2. Whether the complaint pleaded District of Columbia consumer-protection claims and common-law fraud with sufficient particularity to survive dismissal.
3. Whether allegations supported claims premised on responsibility for brokers and intermediaries, including negligent supervision and related vicarious-liability theories.
4. Whether conspiracy and aiding-and-abetting theories were supported by nonconclusory factual allegations.

## Decision

- The court granted the motions to dismiss in part and denied them in part, and denied the motions for summary judgment.
- The court refused to enforce the purported settlement as a complete bar at this stage, finding insufficient clear evidence of intent to be bound and unresolved factual disputes about execution and mutual assent.
- The court held the Carrolls plausibly and sufficiently alleged that defendants falsified key application data and steered them into an unaffordable loan, allowing consumer-protection and fraud-based claims to proceed.
- The court allowed negligent supervision and related claims to proceed based on allegations that defendants were responsible for misconduct by agents involved in originating the loan.
- The court dismissed conspiracy and aiding-and-abetting claims for lack of specific factual support beyond conclusory assertions.

## Legal Principles

- A settlement or release will not defeat claims on the pleadings or limited summary-judgment record absent clear evidence of mutual assent and intent to be bound; fact disputes about execution and understanding generally require discovery.
- Fraud and consumer-protection claims can satisfy heightened pleading standards when the complaint identifies concrete misrepresentations or falsifications (e.g., income and valuation) and ties them to the challenged loan terms and resulting harm.
- Claims based on supervision or responsibility for agents may proceed when the complaint plausibly alleges an agency relationship and misconduct within the scope of the agents’ loan-origination activities.
- Conspiracy and aiding-and-abetting theories require factual allegations showing agreement or knowing assistance; labels and generalized assertions of acting “in concert” are insufficient.

## Conclusion

The court permitted the case to proceed on core predatory-lending theories—consumer-protection, fraud, and negligent supervision—while rejecting an early settlement-based bar and dismissing inadequately pleaded conspiracy and aiding-and-abetting claims.


Carroll v. Fremont Inv. & Loan, 636 F. Supp. 2d 41 (D.D.C. 2009)