ROBERT C. CHAMBERS, Chief Judge.
Pending is Defendant Quicken Loans' Motion for Summary Judgment (ECF. No. 204), Defendant Wells Fargo Bank's Motion for Partial Summary Judgment (ECF No. 202), and Plaintiff's Motion for Leave to File Surreply (ECF No. 219). In her Surreply, Plaintiff also moves to "conform the pleadings to the evidence to clarify that Plaintiff raises two fraud claims, one in equity and one in law," under Federal Rule of Civil Procedure 15. Pl.'s Surreply 4, ECF No. 219-1.
Plaintiff's Motion for Leave to File Surreply is
Plaintiff's fraud claim that, during the loan-origination process, an agent of Quicken Loans misrepresented that the loan's interest rate would not rise and that Plaintiff relied upon that claim to her detriment is
On March 2, 2012, Plaintiff Janet Robinson brought this action in the Circuit Court of Cabell County, West Virginia, against Defendants Quicken Loans, Inc., ("Quicken Loans"), Wells Fargo Bank, N.A., ("Wells Fargo") and John Doe Holder. Compl., ECF No. 1-1. Quicken Loans, with the consent of Wells Fargo, removed the case to this Court on April 5, 2012. Notice Removal, ECF No. 1.
On April 18, 2013, Plaintiff filed an Amended Complaint, which removes Defendant John Doe Holder and alleges four counts of illegal loan practices relating to a November 2003 mortgage refinancing loan obtained from lender Quicken Loans and serviced by Wells Fargo. Am. Compl., ECF No. 146. In Count I, Plaintiff alleges that the agreement with Defendants for the adjustable home equity line of credit ("HELOC") was an unconscionable contract because it was induced by misrepresentations and suppressions and because it was an adjustable rate mortgage, increased Plaintiff's monthly loan payments, included an annual fee, and exceeded the value of her home. Id. ¶¶ 25-27. Under this count, Plaintiff seeks declaratory and injunctive relief, actual damages, a civil penalty, reasonable attorney's fees and costs, and "such other relief as may be equitable and just." Id. ¶ 27. In Count II, Plaintiff alleges that the loan was illegal under West Virginia law because Quicken Loans intentionally provided a mortgage loan to Plaintiff which exceeded the fair market value of her property, in violation of West Virginia Code § 31-17-8(m)(8). Id. ¶ 29. Under this count, Plaintiff seeks declaratory relief, the return of payments made on the loan, a penalty of $4,400, reasonable attorney's fees and costs, and "such other relief as
Quicken Loans filed the instant Motion for Summary Judgment, and Wells Fargo filed the instant Motion for Partial Summary Judgment. Plaintiff filed a Combined Response to both motions, ECF No. 210, and Quicken Loans filed a Response to Wells Fargo's motion, ECF No. 207. Both Defendants filed Replies to Plaintiff's Response in support of each's own motion. Wells Fargo's Reply, ECF No. 216; Quicken Loans' Reply, ECF No. 218. Plaintiff filed a Motion for Leave to File Surreply to Quicken Loans' Reply. ECF No. 219. In her attached Surreply, Plaintiff "moves to conform the pleadings to the evidence to clarify that [she] raises two fraud claims, one in equity and one in law, and that her equitable fraud claim relates to Quicken [Loan]'s misrepresentation that her rates would likely not rise, its misrepresentation that it would refinance her loan if they did rise, and its suppression of the impact and reality of the loan terms, including the adjustable rate and the interest only feature of the loan." Pl.'s Surreply 4, ECF No. 219-1. Quicken Loans filed its Opposition to Plaintiff's Motion for Leave to File Surreply, ECF No. 221. Quicken Loans then filed a Notice of Supplemental Authority in Support of Its Motion, ECF No. 233, and Plaintiff filed her Response to this Notice, ECF No. 234. Quicken Loans also filed a second Notice of Supplemental Authority in Support of Its Motion, ECF No. 236, and Plaintiff filed her Response to this second Notice, ECF No. 237. All motions are ripe for resolution.
To obtain summary judgment, the moving party must show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In considering a motion for summary judgment, the Court will not "weigh the evidence and determine the truth of the matter." Id. at 249, 106 S.Ct. 2505. Instead, the Court will draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
"[S]ummary judgment will not lie ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Summary judgment is appropriate, however, when the nonmoving party has the burden of proof on an essential
The parties contest the majority of the facts in this case, so the Court has conservatively determined the following undisputed facts for the purpose of the resolution of these summary judgment motions.
Plaintiff is a high school graduate who purchased her home for $15,000 in 1995. The sellers provided $5,000 for improvements to the home, and improvements were made with this money. Plaintiff entered into multiple home loans, and during 2001, her monthly loan payment was $582. In the fall of 2003, Plaintiff and Quicken Loans discussed refinancing the loan(s) on Plaintiff's home. Plaintiff's goal was to lower her payments. Quicken Loans provided Plaintiff with loan disclosures. Plaintiff's car loan was added to the Quicken Loans refinance loan. To obtain a valuation of Plaintiff's home, Quicken Loans used an automated valuation service. The final loan was a home equity line of credit ("HELOC") loan for around $81,000, with a variable interest rate capped at 18%. The first ten years of payments were interest only. As part of the loan, Plaintiff was also to be charged an annual $75 fee.
The loan was transferred from Quicken Loans to Wells Fargo. Beginning July 2004, Plaintiff's interest rate increased and, consequently, her loan payments increased. In the fall of 2005, Plaintiff contacted Quicken Loans to try to refinance her loan. At that time, Quicken Loans conducted an appraisal of Plaintiff's home that valued the property at approximately $53,000. Quicken Loans refused to refinance the loan because Plaintiff's home value was lower than the amount she owed on her loan.
In support of entering summary judgment against Plaintiff, Quicken Loans argues that:
Wells Fargo adopts the arguments made in Quicken Loans' Motion for Summary Judgment. Wells Fargo's Mem. Supp. Mot. Part. Summ. Judg. 4 n. 2, ECF No. 203. Quicken Loans' Motion will be addressed first as to both Defendants, and then the Court will address Wells Fargo's Partial Summary Judgment Motion as to Wells Fargo alone.
Defendants argue that Plaintiff's unconscionable contract claim (Count I) fails as a matter of law because the agreement at issue was neither the result of an unconscionable procedure nor is it substantively unconscionable.
Under West Virginia law, an unconscionable contract claim must demonstrate two types of unconscionability: procedural and substantive. State ex rel. Johnson Controls, Inc. v. Tucker, 229 W.Va. 486, 494-95, 729 S.E.2d 808 (2012). "Procedural unconscionability is concerned with inequities, improprieties, or unfairness in the bargaining process and formation of the contract." Id. at 495, 729 S.E.2d 808 (internal quotation marked omitted). "Substantive unconscionability involves unfairness in the contract itself and whether a contract term is one-sided and will have an overly harsh effect on the disadvantaged party." Id. (internal quotation marked omitted). The showing required for each of the two types of unconscionability is not set in stone:
Id. (internal quotation marks omitted).
As clarified by the Supreme Court of Appeals of West Virginia:
Tucker, 229 W.Va. at 495, 729 S.E.2d 808 (internal quotation marks omitted).
Although no single, precise definition of substantive unconscionability exists, the general inquiry is whether "the terms of a contract are unreasonably favorable to the more powerful party." Id.;
"[A]n analysis of whether a contract term is unconscionable necessarily involves an inquiry into the circumstances surrounding the execution of the contract and the fairness of the contract as a whole." Pingley v. Perfection Plus Turbo-Dry, LLC, 231 W.Va. 553, Syl. Pt. 6, 746 S.E.2d 544 (2013) (internal quotation marks omitted). "A determination of unconscionability must focus on the relative positions of the parties, the adequacy of the bargaining position, the meaningful alternatives available to the plaintiff, and the existence of unfair terms in the contract." Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 386, 729 S.E.2d 217 (2012) (internal quotation marks omitted).
Plaintiff argues that numerous material issues of fact are in genuine dispute, including whether Plaintiff was confused by the loan documents and could not understand them, whether Quicken Loans reassured Plaintiff during the origination of the loan that her payments would not increase or that it would refinance the loan if the payments did change,
Defendants argue that Plaintiff's illegal loan claim (Count II) is time-barred under the two-year statute of limitations in West Virginia Code § 55-2-12, even when applying the discovery rule.
In Dunn v. Rockwell, the Supreme Court of Appeals of West Virginia laid out a five-step analysis for determining whether a cause of action is time-barred. 225 W.Va. 43, 53, 689 S.E.2d 255 (2009). First, the Court must identify the applicable statute of limitations for the cause of action. Id. Second, "the court (or, if material questions of fact exist, the jury) should identify when the requisite elements of the cause of action occurred." Id. "Third, the discovery rule should be applied to determine when the statute of limitation began to run by determining when the plaintiff knew, or by the exercise of reasonable diligence should have known, of the elements of a possible cause of action...." Id. Fourth, if the discovery rule does not apply, then the Court must "determine whether the defendant fraudulently concealed facts that prevented the plaintiff from discovering or pursuing the cause of action."
Plaintiff's illegal loan claim is brought under West Virginia Code § 31-17-8(m)(8), which states in pertinent part:
Defendant argues that, because there is no statute specifically designating the operative statute of limitations period for a claim under § 31-17-8(m)(8), the two-year, catch-all statute of limitations period contained in West Virginia Code § 55-2-12 governs. Section 55-2-12 states:
Plaintiff argues that the appropriate statute of limitations for a claim under § 31-17-8(m)(8) is either the statute of limitations for consumer claims under West Virginia Code § 46A-5-101(1) or the statute of limitations for contract claims under West Virginia Code § 55-2-6. Section 46A-5-101(1) [consumer claims] states in pertinent part:
Section 55-2-6 [contract claims] states:
The Court will address each of the possible statutes of limitation in turn.
The statute of limitations for consumer claims under § 46A-5-101(1) does not apply to Plaintiff's illegal loan claim under § 31-17-8(m)(8) by the very terms of § 46A-5-101(1). When defining the instances in which each of the two statutes of limitation apply, § 46A-5-101(1) states that "no action pursuant to this subsection may be brought" within the applicable time period. W. Va.Code § 46A-5-101(1) (emphasis added). Plaintiff brings this illegal loan claim under § 31-17-8(m)(8), which is part of the West Virginia Residential Mortgage Lender, Broker and Servicer Act ("Mortgage Lender Act"), W. Va.Code §§ 31-17-1 et seq. Plaintiff did not properly bring this claim under any portion of §§ 46A et seq., which encompasses the West Virginia Consumer Credit and Protection Act ("WVCCPA").
The statute of limitations for contract claims under § 55-2-6 does not apply to Plaintiff's illegal loan claim under § 31-17-8(m)(8) because the illegal loan claim sounds in tort — not contract — law. Litten, No. 1:13-cv-192, at *16-20. Plaintiff's Complaint states that "Defendant Quicken intentionally provided a mortgage loan to Plaintiff exceeding the fair market value of the property, in violation of West Virginia Code section 31-17-8(m)(8)." Am. Compl. ¶ 29 (emphasis added). Plaintiff alleges no breach of a contract term; rather, she alleges a breach of an extra-contractual duty imposed upon the relationship between the parties by the West Virginia legislature; this indicates that the claim sounds in tort. See Pancake House, Inc. v. Redmond By & Through Redmond, 239 Kan. 83, 86, 716 P.2d 575 (1986) ("Where the act complained of is a breach of specific terms of the contract without any reference to the legal duties imposed by law upon the relationship created thereby, the action is contractual. Where the essential claim of the action is a breach of a duty imposed by law upon the relationship ... and not of the contract itself, the action is in tort.") (cited with approval by Hall v. Nichols, 184 W.Va. 466, 469, 400 S.E.2d 901 (1990)). Additionally, the use of the word "intentionally" in the Complaint strongly supports an action sounding in tort. See Litten, No. 1:13-cv-192, at *19 (citing Globe Ref. Co. v. Landa Cotton Oil Co., 190 U.S. 540, 547, 23 S.Ct. 754, 47 L.Ed. 1171 (1903) ("The motive for the breach commonly is immaterial in an action on the contract.")). Finally, although § 31-17-8(m)(8) provides the legal theory behind Count II, Plaintiff requests in the Complaint that this Court declare the loan agreement here unenforceable using § 31-17-17, which states, "If any primary or subordinate mortgage loan is made in willful violation of the provisions of this article, except as a result of a bona fide error, such loan may be cancelled by a court of competent jurisdiction." W. Va.Code § 31-17-17(a) (emphasis added). By using the word "willful," the legislature indicates that — at least in regard to this particular remedy — it contemplated violations of the Mortgage Lender Act, W. Va.Code §§ 31-17-1 et seq., to sound in tort law, not contract law. Litten, No. 1:13-cv-192, at *19. Thus, the statute of limitations for contract claims under § 55-2-6 does not apply to Plaintiff's illegal loan claim.
Given that neither § 55-2-6 nor § 46A-5-101(1) provides the statute of limitations period for § 31-17-8(m)(8), the two-year, catch-all statute of limitations period contained in § 55-2-12 governs. Next, the Court must identify when the requisite elements of the cause of action occurred. Section 31-17-8(m)(8) states that "no primary or subordinate mortgage lending transaction may[] contain terms which[][s]ecure a primary or subordinate mortgage loan in a principal amount that... exceeds the fair market value of the property." Here, when the loan agreement was consummated at closing, it contained terms which allegedly violated
Dunn, 225 W.Va. at 52-53, 689 S.E.2d 255 (internal quotation marks omitted). Further,
Id. at 53, 689 S.E.2d 255. "Where a plaintiff knows of his injury, and the facts surrounding that injury place him on notice of the possible breach of a duty of care, that plaintiff has an affirmative duty to further and fully investigate the facts surrounding that potential breach." McCoy v. Miller, 213 W.Va. 161, 165, 578 S.E.2d 355 (2003).
Defendant argues that when Plaintiff was unable to convince Quicken Loans to refinance her home in the fall of 2005, she knew or should have known the basis of her illegal loan claim — that Quicken Loans may have lent her more money than her home was worth — or that she was at least on notice of her claim and, thus, had an affirmative duty to further investigate. Plaintiff argues that 1) in 2005, Quicken Loans did not tell her at what value her home had been appraised during the refinance investigation by Quicken Loans and 2) she did not know nor should she have known of her injury — that her home was overvalued by Quicken Loans in 2003 to give her a loan larger than its true worth — until she received a retroactive appraisal in 2011, stating that her home had been worth only $34,000 in 2003.
The reasonableness of Plaintiff's lack of inspection as to whether she had suffered an injury is most appropriately a question of fact to be resolved by the fact-finder. See, e.g., Famous Knitwear Corp. v. Drug Fair, Inc., 493 F.2d 251, 253 (4th Cir.1974) ("[T]he question of the reasonableness of a third party's reliance on a principal's manifestations of the apparent authority of his agent are essentially questions of fact."); Heartland, L.L.C. v. McIntosh Racing Stable, L.L. C. 219 W.Va. 140, 150, 632 S.E.2d 296 (2006) (where a "condition must be performed or abandoned within a reasonable time ... the reasonableness of any delay should be resolved by a jury" (citation omitted)). In summary judgment, the Court must not weigh the evidence, and it must draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Here, a reasonable fact finder could agree with Plaintiff that the discovery rule tolls the statute of limitations in this case until Plaintiff received the results of her retroactive appraisal in 2011. It is possible that Plaintiff, acting reasonably, did not realize in 2005 that she had suffered the requisite injury for her illegal loan claim upon hearing that Quicken Loans would not refinance her home — two years after the initial loan was made and without being provided with the substantially lower appraisal value from 2005 —, perhaps thinking that the value of her home had
Defendants argue: 1) Plaintiff's "fraud claim" (Count III) is time-barred under the two-year statute of limitations in West Virginia Code § 55-2-12, even when applying the discovery rule; 2) laches does not apply to Plaintiff's "fraud claim," or even if it does, the claim is also time-barred under laches; and alternatively, 3) Plaintiff fails, as a matter of law, to satisfy her burden of proving her "fraud claim" by clear and convincing evidence because Plaintiff fails to provide evidence of justifiable reliance. After clarifying what claims Plaintiff asserts in Count III, the Court will address each argument in turn.
In Count III of the Complaint, Plaintiff alleges two separate fraud claims;
Now, Plaintiff alleges that she raises "two fraud claims, one in equity and one in law." Pl.'s Surreply 2, 4. According to Plaintiff, her claim in law is that Quicken Loans misrepresented to Plaintiff that
Plaintiff cannot now constructively amend her Complaint through representations in her reply briefs to Defendants' Motions for Summary Judgment. Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 617 (4th Cir.2009) ("[A] plaintiff may not raise new claims after discovery has begun without amending his complaint."); Samosky v. United Parcel Serv., 944 F.Supp.2d 479 (S.D.W.Va.2013) (The "complaint cannot be construed so liberally so as to deprive [the defendant] of notice."). Unlike Plaintiff's unconscionable course of conduct claim — which must simply state the standard short, plain statement of the claim supported by only enough factual assertions to make the claim plausible, as required by Federal Rule of Civil Procedure 8 —, each fraud claim asserted in federal court must meet a higher pleading standard in order to give defendants adequate notice of the claim, as required by Rule 9(b). Fed.R.Civ.P. 9(b) ("In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake."). "General allegations are insufficient and enough facts must be set out to apprise the adversary as to what acts are relied upon as constituting fraud...." New York, N.H. & H.R. Co. v. New England Forwarding Co., 119 F.Supp. 380, 382 (D.R.I.1953) (emphasis added). "A complaint utterly fails Rule 9(b)'s requirement ... when it makes only the most general of allegations that defendants misrepresented material facts and fails to allege any specific fraudulent statements...." DDR Const. Servs., Inc. v. Siemens Indus., Inc., 770 F.Supp.2d 627, 658 (S.D.N.Y.2011) (internal quotation marks omitted) (brackets and ellipses omitted); see also Rodenhurst v. Bank of Am., 773 F.Supp.2d 886, 896 (D.Haw.2011) ("Plaintiffs' general averments of alleged fraud fail to identify `the who, what, when, where, and how' of the purported misconduct. The ... Complaint ... fail[s] to assert `particularized allegations of the circumstances constituting fraud' such as the time, place, and nature of the alleged fraud, and how each Defendant participated
In line with the requirements of Rule 9(b), each of the two fraud claims identified in the Complaint by the Court is based upon a specific alleged misrepresentation of a key fact by Quicken Loans during the loan-origination process: 1) that the loan's interest rate would not rise and 2) that Plaintiff's home had a value of $84,350 when, in reality, its value was only $33,500. In order to ground Plaintiff's new conglomerate fraud "claim in equity" in the Complaint, the Court must either somehow cram it all into the specific misrepresentation in the Complaint that the loan's interest rate would not rise or allow an end-run around Rule 9(b) by reading the new allegations (the misrepresentation about refinancing and the suppression of the interest-only feature of the loan) into the generalized allegation that Quicken Loans "suppressed from Plaintiff the true terms of the loan and the risks associated with the actual loan terms." The first makes no sense, and the second ignores Rule 9(b). The Court will not rewrite the Complaint as a result of Plaintiff's briefing on summary judgment motions.
The Court will also not ignore the fact that, in the Complaint, the relief requested for each of Plaintiff's fraud claims is grouped under Count III without differentiating which relief (legal or equitable) applies to which claim. In the absence of any indication that the relief requested for the fraud claims attaches to only one or the other of the fraud claims, both types of relief apply to both claims. Again, the Court will not rewrite the Complaint as a result of Plaintiff's briefings on summary judgment motions.
Plaintiff asserts that her theory of the two fraud claims, one in equity and one in law, as outlined in her Surreply are already supported by the Complaint, but in the alternative, she "moves to conform the pleadings to the evidence." Pl.'s Surreply 4. Plaintiff's Surreply was the improper venue to move to amend the pleadings. Regardless, Plaintiff has failed to meet the standard required of her to successfully amend her Complaint at this late point in time.
The West Virginia Supreme Court of Appeals dictates that "if a particular cause of action sounds in both equity and law, then a trial court should apply a statute of limitation to that particular cause of action." Dunn, 225 W.Va. at 55, 689 S.E.2d 255 (emphasis removed); see also Mountain State Coll. v. Holsinger, 230 W.Va. 678, 686-87, 742 S.E.2d 94 (2013) ("Because the circuit court granted judgment as a matter of law on the respondents' fraudulent inducement claim on the basis that the claim was time-barred, the respondents did not have an equitable claim for fraudulent inducement."). Thus, the appropriate statute of limitations — and not the equitable defense of laches — will apply to each fraud claim.
The applicable statute of limitations for a cause of action under fraud is the two-year, catch-all statute of limitations period contained in West Virginia Code § 55-2-12. Trafalgar House Const., Inc. v. ZMM, Inc., 211 W.Va. 578, 583, 567 S.E.2d 294 (2002) ("Under West Virginia law, claims in tort for negligence, professional negligence, and misrepresentation (fraudulent or negligent) are governed by a two-year statute of limitation." (citing W. Va.Code § 55-2-12)).
Under West Virginia law, the essential elements of a fraud claim are "(1) that the act claimed to be fraudulent was the act of the defendant or induced by him; (2) that it was material and false; [3] that plaintiff relied upon it and was justified under the circumstances in relying upon it; and [4] that he was damaged because he relied upon it." Bowens v. Allied Warehousing Servs., Inc., 229 W.Va. 523, 530, 729 S.E.2d 845 (2012). For each fraud claim, the Court will identify when the requisite elements of the cause of action occurred, and then taking into account the discovery rule, the Court will determine when the statute of limitations began to run.
Plaintiff alleges that, during the loan-origination process, an agent of Quicken Loans misrepresented that the loan's interest rate would not rise, that Plaintiff relied upon that representation when she entered into the HELOC agreement, and that she suffered damages as a result when her interest rate increased. Plaintiff did not suffer damages — the final element of fraud to occur for this claim — until the loan's interest rate rose in July 2004. If the statute of limitations began to run at this point, then Plaintiff would be barred from filing her claim after July 2006 by the two-year statute of limitations. The discovery rule applies to this claim; however, even under the discovery rule, plaintiff knew or, by the exercise of reasonable diligence, should have known of the elements of her claim by July 2004. Since she signed the HELOC agreement in the fall of 2003
Plaintiff alleges that, during the loan-origination process, an agent Quicken Loans misrepresented that Plaintiff's home had a value of $84,350 when, in reality, its value was only $33,500, that Plaintiff relied upon that representation when she entered into the HELOC agreement, and that she suffered damages as a result. Upon entering into the contract with Quicken Loans in fall of 2003, all of the elements of this claim had been established. However, the discovery rule also applies to this claim.
Defendants again argue that when Plaintiff was unable to convince Quicken Loans to refinance her home in the fall of 2005, she knew or should have known the basis of her misrepresentation of home value fraud claim or that she was at least on notice of her claim and, thus, had an affirmative duty to further investigate. Plaintiff again responds that she did not know nor should she have known of her injury until she received a retroactive appraisal in 2011, stating that her home had been worth only $34,000 in 2003. Here, again, a reasonable fact finder could agree with Plaintiff that the discovery rule tolls the statute of limitations on this claim until Plaintiff received the results of her retroactive appraisal in 2011. For the same reasons outlined in the illegal loan claim section of this Order, Defendants are not entitled to judgment as a matter of law regarding Plaintiff's misrepresentation of home value fraud claim in Count III.
Defendants further argue that Plaintiff fails, as a matter of law, to satisfy her burden of proving her "fraud claim" by clear and convincing evidence because Plaintiff fails to provide evidence of justifiable reliance. Since the misrepresentation of interest rates fraud claim has been dismissed as time-barred, the Court will only address the misrepresentation of home value fraud claim in this section.
Defendants argue that Plaintiff presents no evidence that Quicken Loans made any representations about the value of the property at all during the loan-origination process, let alone that Plaintiff relied upon such representations. Plaintiff contends that this fact is in dispute, as Plaintiff explicitly remembers reading the "indicated value of $84,305" which was provided by Quicken Loans to Plaintiff on or around November 6, 2003, several weeks before the loan's closing and that she relied upon this value in entering into the loan agreement. Pl.'s Combined Resp. 25-26 & Ex. P. Defendants then argue that all of the quotes from Plaintiff's deposition which are cited by Plaintiff in her Response are misrepresentations and point to other sections of the deposition which contradict the
Defendants finally argue that Plaintiff's joint venture claim (Count IV) is derivative of the other claims in the Complaint; thus, it must also fail if all of the other claims fail. Since only one claim out of the four other claims in the Complaint failed, the Court need not address this argument.
In its Motion for Partial Summary Judgment, Defendant Wells Fargo argues that:
The Court will address each argument in turn.
Wells Fargo argues that joint venture and agency are not recognized, stand-alone causes of action; thus, Count IV should be dismissed; however, Wells Fargo offers no citations in support of this claim. Id. at 1. The Court's analysis will, thus, be brief.
The Court assumes that Wells Fargo argues that joint venture and agency are not recognized cause of actions based on the reasoning of Dunn, 225 W.Va. 43, 689 S.E.2d 255. In Dunn, the West Virginia Supreme Court of Appeals held that "civil conspiracy [under West Virginia law] is not a per se, stand-alone cause of action; it is instead a legal doctrine under which liability for a tort may be imposed on people who did not actually commit a tort themselves but who shared a common plan for its commission with the actual perpetrator(s)." Id. at 57, 689 S.E.2d 255 (emphasis in original). The argument would be that joint venture and agency, like civil conspiracy, are also theories of liability and, therefore, also not causes of action. However, subsequent cases have dealt with the issue of Dunn's application to joint venture and agency claims, and have held that joint venture and agency are causes of action. The defendant in Croye v. GreenPoint Mortg. Funding, Inc., 740 F.Supp.2d 788 (S.D.W.Va.2010), pointed to Dunn's reasoning to support the argument that joint venture is not a cause of action. That court responded:
Id. at 799; see also Proffitt v. Greenlight Fin. Services, No. 2:09-cv-1180, 2011 WL 1485576, at *4 (S.D.W.Va. Apr. 19, 2011) (finding, based on Croye, that joint venture and agency claims could proceed as causes of action, where the plaintiffs had also brought an unconscionable conduct claim); Holmes v. Runyan & Assoc., Inc., No. 2:09-cv-0679, 2010 WL 2218698, at *2-3 (S.D.W.Va. June 2, 2010) (rejecting the analogy to Dunn and finding that joint venture is a permissible claim). Agency is a permissible claim as well. Proffitt, 2011 WL 1485576, at *4.
Thus, Wells Fargo's argument that joint venture and agency are not recognized, stand-alone causes of action — and, thus, Count IV must be dismissed — fails.
Wells Fargo argues that Plaintiff's evidence that Wells Fargo was engaged in a joint venture with Quicken Loans is insufficient as a matter of law.
As defined by the West Virginia Supreme Court of Appeals,
Cunningham v. Herbert J. Thomas Mem'l Hosp. Ass'n, 230 W.Va. 242, Syl. Pt. 10, 737 S.E.2d 270 (2012) (internal quotation marks omitted). Further,
Id. at 253, 737 S.E.2d 270 (internal quotation marks omitted). "An agreement, express or implied, for the sharing of profits is generally considered essential to the creation of a joint adventure...." Armor v. Lantz, 207 W.Va. 672, 678, 535 S.E.2d 737 (2000) (internal quotation marks omitted) (declining to find a joint venture between local and visiting counsel, in part because the fee agreement involved only the payment of a flat fee from the latter to the former). Joint venturers should also have "equal control over the common commercial pursuit," though "the control required... is not actual physical control, but the legal right to control the conduct of the other with respect to the prosecution
Wells Fargo argues that Plaintiff's evidence of a joint venture relationship between Wells Fargo and Quicken Loans is inadequate, such that no reasonable trier of fact could find for Plaintiff. Plaintiff alleges that Wells Fargo and Quicken Loans entered into a contract with one another — the Home Equity Seller Guide and Purchase Agreement — to engage in a single business enterprise — that is, the sale a particular first-lien HELOC product. She further alleges that Wells Fargo developed the loan program and the contract and marketed it to Quicken and that, once the agreement was entered, Wells Fargo relied on Quicken Loans' expertise to underwrite and originate the loans through delegated authority.
Given that the test for joint venture is multi-factored such that no one factor controls and given the fact-intensive nature of the inquiry into whether a joint venture exits, the Court cannot say with certainty that no reasonable trier of fact could find for Plaintiff. Thus, Wells Fargo's argument that Plaintiff's evidence of a joint venture between Wells Fargo and Quicken Loans is insufficient as a matter of law fails.
Wells Fargo argues that Plaintiff cannot establish that Defendants were engaged in a principal-agent relationship or that, in the alternative, Quicken Loans, as Wells Fargo's agent, exceeded the scope of its authority when it originated Plaintiff's loan.
"An agent ... is a representative of his principal in business or [in] contractual relations with third persons...." Harper v. Jackson Hewitt, Inc., 227 W.Va. 142, 154, 706 S.E.2d 63 (2010) (internal quotation marks omitted). "One of the essential elements of an agency relationship is the existence of some degree of control by the principal over the conduct and activities of the agent." Id.
"[O]ne must examine the facts of a particular case to determine whether an agency relationship exists." Harper, 227 W.Va. at 154, 706 S.E.2d 63 (internal quotation marks omitted). "Proof of an express contract of agency is not essential to the establishment of the relation. It may be inferred from facts and circumstances, including conduct." Id. at 154, 706 S.E.2d 63 (internal quotation marks omitted). "[W]here [a] factual conflict exists regarding the degree of control exercised and the nature of the relationship thereby created, jury resolution is warranted." Id. at 155, 706 S.E.2d 63 (internal quotation marks omitted).
"Since an agent acts for his principal in a representative capacity, the principal, rather than the agent, is ordinarily bound by contracts entered into on his behalf by his agent when the making of such contracts is within the scope of the agent's actual or apparent authority." State ex rel. Clark v. Blue Cross Blue Shield of W. Virginia, Inc., 203 W.Va. 690, 714, 510 S.E.2d 764 (1998) (internal quotation marks omitted).
Plaintiff argues that Quicken Loans was acting as Wells Fargo's agent in originating the first-lien HELOCs, as shown by the allegations that Wells Fargo developed the program guidelines, reviewed the operations of Quicken Loans prior to entering into the agreement whereby Quicken Loans originated these loans,
The test for an agency relationship is not clear-cut; no one factor controls. Plaintiff's evidence of implied agency is not overwhelming, but neither is it a mere scintilla. At the summary judgment stage, the Court must not weigh the evidence, and it must draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Given the fact-intensive nature of the inquiry into whether an agency relationship exits, the Court cannot say with certainty that no reasonable trier of fact could find for Plaintiff. Thus, Wells Fargo's argument that Plaintiff's evidence of an agency relationship between Wells Fargo and Quicken Loans is insufficient as a matter of law fails.
Wells Fargo argues, in the alternative, that Quicken Loans, as Wells Fargo's agent, exceeded the scope of its authority when it originated Plaintiff's loan. This argument is based upon Wells Fargo's contention that, when using an automated valuation model ("AVM") to determine the value of the collateral to a loan originated pursuant to Wells Fargo and Quicken Loans' agreement, Quicken Loans was required by the Seller Guide to use the middle value out of the three values calculated by the AVM. Quicken Loans used the highest value in originating Plaintiff's loan. Quicken Loans disputes that the Seller Guide controls in this situation, arguing that there was likely a negotiated variance to the Seller Guide in 2003 which allowed for the use of the highest AVM value. Given that there is clearly a genuine issue as to a material fact here, the issue of whether Quicken Loans exceeded the scope of its authority when it originated Plaintiff's loan is inappropriate for summary judgment.
Wells Fargo argues that, given that it is not directly liable for Counts I, II, and III, any claims dismissed against Quicken Loans must be dismissed against Wells Fargo. This argument need not be reviewed by the Court here since Wells Fargo joined in Quicken Loans' Motion for Summary Judgment. Only one claim in Counts I, II, and III was dismissed pursuant to either Motion — the misrepresentation of interest rates fraud claim — and it was dismissed against both Quicken Loans and Wells Fargo.
Wells Fargo argues that, if Count IV is dismissed, Plaintiff's recovery against Wells Fargo for Counts I, II, and III is limited to the enforceability of the note and the deed of trust. Since Count IV survives Wells Fargo's Motion for Partial Summary Judgment, this argument is moot.
Plaintiff's Motion for Leave to File Surreply, ECF No. 219, is
For the reasons above, Defendant Quicken Loans' Motion for Summary Judgment, ECF. No. 204, is
Plaintiff's fraud claim that, during the loan-origination process, an agent of Quicken Loans misrepresented that the loan's interest rate would not rise and that Plaintiff relied upon that claim to her detriment is
The Court
Plaintiff's request for amendment here is occurring before trial, so Rule 15(b)(2) is inapplicable. Rule 15(a)(2), under the heading "Amendments Before Trial," is more appropriate: "[A] party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." However, "after the deadlines provided by a scheduling order have passed, the good cause standard [of Rule 16(b)] must [also] be satisfied to justify leave to amend the pleadings." Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298 (4th Cir.2008). "[T]he touchstone of `good cause' under Rule 16(b) is diligence." Marcum v. Zimmer, 163 F.R.D. 250, 255 (S.D.W.Va.1995). "Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party's reasons for seeking modification. If that party was not diligent, the inquiry should end." Id. at 254 (emphasis omitted) (internal quotation marks omitted). Here, Plaintiff offers no good cause for amending her Complaint more than one year after the Scheduling Order's September 11, 2012, deadline for filing amended pleadings. Thus, her motion to "conform the pleadings to the evidence" is
