Wooley v. Ygrene Energy Fund, Inc.

Ygrene Energy Fund, Inc. (Ygrene) (defendant) provided homeowners with a type of home-improvement loan called a Property Assessed Clean Energy (PACE) loan. Homeowners used PACE loans to finance environmental upgrades, such as installing solar panels. PACE loans operated differently from other types of loans in that borrowers repaid the loans by paying increased property taxes. The increased amount in property taxes was determined by an annual special tax assessment. Additionally, a lien was attached to the property until the borrower had satisfied the obligation. Because a lien was attached to the property, the Federal Housing Finance Agency (FHFA) instructed lenders not to purchase homes or refinance mortgages with attached PACE liens. As a result, borrowers were forced to prepay the obligations prior to selling or refinancing their homes along with the attached prepayment penalties. Homeowners who opted to pursue Ygrene’s PACE loans were provided with a written agreement and notice of rights, both of which disclosed that the FHFA “appeared” to have instructed lenders not to purchase properties or refinance mortgages with attached PACE liens and that borrowers pursuing selling or refinancing “may” need to prepay the obligation. After borrowers of Ygrene’s PACE loans were forced to prepay the obligations and the attached prepayment penalties, a national class-action lawsuit, which included California and Florida subclasses, was filed in federal district court against Ygrene on the ground that Ygrene had engaged in fraudulent or deceptive practices. Among the plaintiffs in the class-action lawsuit were Grachian Smith and Mary Loudenslager-Smith (plaintiffs). The Smiths had a PACE lien attached to their Florida home and claimed that the written disclosure was insufficient to warn them that the loan would likely need to be prepaid prior to selling their home. The Smiths also claimed that the contractors Ygrene had hired to persuade homeowners to pursue PACE loans had made statements contradicting the disclosures. Ygrene moved to dismiss the Smiths’ complaint on the ground that the written disclosure was sufficient. Ygrene also argued that the Smiths and others involved in the class-action suit had not provided sufficient evidence of the contractors’ contradicting statements. The district court considered the motion.