Couple to Get $1 Million for Loan Damages

A retired Long Beach couple have been awarded $1 million in punitive damages by a jury that found that an Orange County loan brokerage firm let them borrow more money than they could be expected to repay on their fixed $500 monthly income.

The Long Beach Superior Court jury deliberated four days before ordering First Alliance Mortgage Co. of Santa Ana and its loan service agency, First Alliance Services Corp., to pay $500,000 each to retirees Elmer and Myrtle Rogers.

The couple, who have been struggling along on disability checks since Elmer Rogers, 62, suffered a stroke in 1977, were also awarded actual damages of $20,000 for emotional distress and $65,000 for the company’s failure to adequately explain the automobile loans it made seven years ago.

Myrtle Rogers, 74, saying she was happy with the Wednesday verdict though weary from the long dispute, said it was a case of a loan company’s “trying to get more money in order to take my house away from me.”

The Rogerses’ lawyer, Patrick T. Madden of Long Beach, said the loan company failed to explain the terms of the original loan, then restructured the loan twice when the Rogerses were unable to make large balloon payments. Over three years, the monthly payments increased from $206 to $400 a month, sending the Rogerses deeper into debt.

Brian Chisick, owner of the nine-branch loan company, called the verdict unfair and said his firm acted on the highest standards in making the loan to the Rogerses.

“We’re shocked, we’re outraged and we’re very disappointed and we will appeal it to the California Supreme Court if necessary,” Chisick said. “And above all, we are guilty of no wrongdoing.”

An auto dealership referred the Rogerses to First Alliance in 1980 when their granddaughter wanted to buy a Toyota but could not qualify for a loan. Madden said the Rogerses borrowed $16,500 over one year even though their income was limited to the $500 a month and they never would be able to make the payments.

The loan officer never told the couple that they would lose their modest olive-green home, which they bought in 1969, if they defaulted, Madden said. Elmer Rogers, a former laborer, dropped out of school after the sixth grade and Myrtle Rogers, a former nurse’s aide, has only a ninth-grade education.

Chisick argued that his officers had explained the loan orally and in writing and that it was approved because the granddaughter, Janice Fearance, told them that she expected to win a $20,000 insurance settlement from the death of her husband and to use it to pay off the loan.

Received Only $8,000

Fearance received only $8,000 from her settlement, Madden said, and applied none of it to her grandparents’ loan.

The Rogerses paid $206 a month in interest on the one-year loan, then faced the balloon payment of $16,500. First Alliance then arranged a second one-year loan of $22,400, representing a 42% interest rate.

Chisick said the interest payments would have been 19% if the loan was paid on time.

The Rogerses took out a third loan but had to stop payment when they were unable to manage the $400-a-month payments. Chisick said foreclosure proceedings were begun, and the Rogerses filed suit in 1984, effectively stopping the proceeding.

“After we couldn’t make payment, I thought they were going to pick the (granddaughter’s) car up, not the house,” Myrtle Rogers said.

Said attorney Madden: “This is a case where the loan company should have passed (up) the loan.”