ASU Civil Justice Clinic secures $250,000 settlement in foreclosure rescue scheme case

Wednesday, July 21, 2010

Bob Dauber
The Civil Justice Clinic at the Sandra Day O’Connor College of Law at Arizona State University has announced a $250,000 settlement with Fidelity National Title Insurance Co., the largest title company in the United States. The settlement resolves allegations related to a “foreclosure rescue” scheme, and marks the culmination of a journey for a group of former homeowners, who began the lawsuit as strangers and now consider each other family, promising a backyard barbeque in the near future.

The agreement represents the largest settlement attained by the Clinic in its 41-year history, and settles a lawsuit filed in May 2009 in Maricopa County Superior Court.

“This case shows just how much a law school can achieve when it is engaged with the world,” said Dean Paul Schiff Berman of the College of Law. “Clients who literally had nothing at the start won a large settlement, students learned how to be caring and competent attorneys, and justice was served. What could better demonstrate the productive role the Sandra Day O’Connor College of Law plays in this community?”

Plaintiffs Armando and Lydia Moreno, Rudy and Maria Hernandez, Jose Garcia, Jeff Egelhoff and Dennis and Kenna Cumbley served as a support system for each other during the long journey.

“Without the clinic we would all be homeless,” Rudy Hernandez said. “We can breathe now.”

Added Lydia Moreno, “We became a little family, and (the clinic staff and student attorneys) were our guardian angels.”

The voyage began in 2006 when Peter Hou, a self-proclaimed “foreclosure relief specialist,” according to the lawsuit, targeted the families because they had at least $30,000 of equity in their homes, and were facing imminent foreclosure or were in financial distress.

Former Civil Justice Clinic student Andy Gaona, second from right, assists, from left, Rudy Hernandez, Jose Garcia and Armando Moreno, plaintiffs in a large settlement of a foreclosure rescue scheme lawsuit. The case was pursued and negotiated by the Clinic faculty and students. (Photo by Andrea Esquer)
According to court documents, Hou convinced the homeowners that, if they refinanced their home loans with him, they would not lose their homes, and any foreclosure procedures would stop. Hou or one of his associates had the homeowners sign blank documents that were used later to create false warranty deeds and give title to the homes to Hou’s company. He then would create a sham “sale” of the home, using Fidelity to secure a new mortgage in the name of a “straw buyer.” In each case, Fidelity turned the proceeds from the new mortgage over to Hou.

The settlement does not constitute a finding or an admission of wrongdoing.

One family’s story

The Cumbleys were planning to use the equity in their house to put their teenaged daughter, Sissy, through college. She was about to graduate from high school and planning to attend ASU.

According to court documents, the Cumbleys had received a foreclosure notice shortly before Hou approached them about refinancing their home. Dennis Cumbley signed documents believing the refinance would allow him to pay off certain debts, and still provide him with $30,000 in cash from the equity in his home. In reality, those documents included trust documents that Hou used to convey title of their house to a “straw buyer.” Hou was able to skim nearly $90,000 from the property without the Cumbleys’ knowledge and consent.

“One day you have your castle, and then it is gone,” said Dennis Cumbley, whose family has had to move several times since Hou absconded with the equity. “Now we rent.”

After the Cumbleys lost their home, the stress was overwhelming, said Kenna Cumbley, particularly the impact on their daughter. “She was unable to attend school events – like the senior trip. But this experience has made (all of us) stronger, more responsible.”

Sissy Cumbley currently attends Phoenix College, and plans to transfer to ASU.

Student attorneys work for justice

Clinical Professor Bob Dauber, second from left, and Andy Gaona, a 2010 law school graduate who worked in the Civil Justice Clinic, far right, pose with Clinic clients who shared $250,000 in a settlement with Fidelity National Trust Insurance Co. related to a "foreclosure rescue" scheme. It was the largest settlement in the Clinic's 41-year history. (Photo by Andrea Esquer)
This case took almost three years to resolve, and in that time the clients experienced a transition from one student team to another.

“I’m going to miss those calls when the case transitioned to new students,” said Kenna Cumbley. “The students were very knowledgeable. They put us first, and I was always at ease with the student attorneys.”

Two students who handled the final leg of this marathon case were Andy Gaona and MacKenzie Deal, who graduated from the College of Law in May. They said the experience was invaluable.

“This case took over my life from the moment it was assigned to me,” Gaona said. “It was a marathon, and a true ‘David v. Goliath’ case because we were going after the biggest title company in the U.S.”

The case finally went to mediation, and Gaona served as the lead negotiator for the plaintiffs. “It is not a perfect settlement, but we helped our clients recover about three-fourths of the equity lost in this scheme,” he said. “It feels good.”

Deal, who served as co-counsel, said the case gave her a better understanding of the litigation process. “I can say I helped obtain a $250,000 settlement,” she said proudly.

The Civil Justice Clinic

“This case exemplifies the Clinic’s two main goals: providing a quality educational experience for the students who work on the cases, and serving the community by providing quality representation to people who may not otherwise be able to afford an attorney,” said Clinical Professor Bob Dauber, the Clinic’s faculty supervisor. “In this case, it was a long journey – undertaken by 15 students and four faculty members – to reach the end and achieve our goals.”

The Civil Justice Clinic provides pro-bono legal services in civil and administrative proceedings involving employment related disputes such as unemployment insurance, leave, wage and hour, and discrimination claims, housing and credit protections for military families, and other matters.

For more information about the ASU Civil Justice Clinic, go to For information on avoiding foreclosure rescue schemes, visit the Attorney General’s Foreclosure Resource Center at

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