Edwards v. Flagstar Bank

• Decision Date: 19 July 2000
• Docket Number: No. 95-CV-73844.,95-CV-73844.
• Citation: 109 F.Supp.2d 691
• Parties: David EDWARDS, E. Stephanie Edwards, Gerald Paschal, and Lisa Paschal, Plaintiffs, v. FLAGSTAR BANK, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

109 F.Supp.2d 691

David EDWARDS, E. Stephanie Edwards, Gerald Paschal, and Lisa Paschal, Plaintiffs, v. FLAGSTAR BANK, Defendant.

No. 95-CV-73844.

United States District Court, E.D. Michigan, Southern Division.

July 19, 2000.

Stephen R. Tomkowiak, Southfield, MI, for Plaintiffs.

Randolph D. Phifer, Phifer, Phillips, Detroit, MI, Kathleen A. Lang, Rick A. Haberman, Dickinson, Wright, Detroit, MI, Francis R. Ortiz, Dickinson, Wright, Bloomfield Hills, MI, for Defendant.

DECISION ON POST-TRIAL MOTIONS^*

COHN, District Judge.

This is a housing discrimination case (mortgage lending) brought under sections 805 and 818 of the Fair Housing Amendment Act of 1988, 42 U.S.C. § 3605 and § 3617, and corresponding regulations promulgated by the Department of Housing and Urban Development pertaining to mortgage lending, 24 C.F.R. §§ 100.120 to 100.130, as well as the Civil Rights Act of 1866 and 1870, 42 U.S.C. § 1981 and § 1982, and section 504 of Michigan's Elliot-Larsen Civil Rights Act, M.C.L. § 37.2504.

In general, plaintiffs claim that they were the subjects of racial discrimination in the manner in which defendant Flagstar Bank (Flagstar), a mortgage bank, handled their mortgage loan applications or in the way the terms and conditions of their mortgage loans were set. The Memorandum and Order of August 14, 1998 briefly describes the background of the case.

Five sets of plaintiffs went to trial:

Audra Carson (Carson) claimed she was the victim of racial discrimination in the manner in which her application for a mortgage loan was handled. She did not close with Flagstar.

Paquita Davis-Friday (Davis-Friday) claimed she was the victim of racial discrimination in the manner in which her application for a mortgage loan was handled. She did not close with Flagstar.

Heath Thomas (Thomas) claimed he was the victim of racial discrimination in the manner in which his application for a mortgage loan was handled. He did not close with Flagstar.

David Edwards and E. Stephanie Edwards, his wife, (the Edwards) claimed they were the victims of racial discrimination in the manner in which their efforts to refinance their mortgage loan with Flagstar was handled. The Edwards eventually obtained a new mortgage loan from Flagstar.

Gerald Paschal and Lisa Paschal (the Paschals) claimed they were the victims of racial discrimination in the manner in which their application for a mortgage loan was handled. The Paschals were approved for a mortgage loan by Flagstar on terms considerably less favorable than for which they applied and eventually obtained a mortgage loan elsewhere.

Each of the plaintiffs is an African American.

Flagstar is a large banking institution operating in the Detroit metropolitan area and elsewhere and specializing in residential mortgage loans.

Plaintiffs' claims were tried to a jury in November of 1999. The jury returned a verdict in favor of Flagstar on the claims of Carson, Davis-Friday, and Thomas, and returned a verdict in favor of the Edwards and Paschals. Particularly, the jury found the Paschals proved by a preponderance of the evidence that their race or color was one of the reasons why they did not obtain a mortgage loan from Flagstar. The jury awarded the Paschals $250,000 in compensatory damages and $325,000 in punitive damages. As to the Edwards, the jury found that they proved by a preponderance of the evidence that their race and color was one of the reasons why they did not obtain a mortgage loan on their initial application with Flagstar. The jury awarded the Edwards $125,000 in compensatory damages.

II. The Pending Motion

Before the Court is Flagstar's motion for judgment as a matter of law, Fed. R.Civ.P. 50(b), or in the alternative for a new trial, Fed.R.Civ.P. 59, or in the alternative for a remittitur.

Briefly stated, Flagstar says that the evidence at trial was insufficient to support the jury's finding of racial discrimination and therefore it is entitled to a judgment as a matter of law. Alternatively, Flagstar says that at a minimum, it is entitled to a new trial because the evidence was insufficient both as to liability and damages, or says that a remittitur on damages is appropriate because the amounts awarded by the jury, both compensatory and punitive, were grossly excessive.

After a thorough review of the record, albeit short of that which would have occurred had the Court been the fact finder, as the Court is not retrying the case, the motion will be denied in all respects.

III. The Trial

This was a long, complex, and hotly contested case. The trial extended over 14 days. Thirteen witnesses testified in plaintiffs' case, including Carson, Davis-Friday, Thomas, Gerald Paschal and E. Stephanie Edwards, loan officer employees of Flagstar, the chief financial officer of Flagstar, Calvin P. Bradford (Bradford), an expert in reviewing and comparing mortgage loan files, Marvin M. Wing (Wing), an expert in econometrics, Clifford C. Schrupp (Schrupp), the director of the Fair Housing Center of metropolitan Detroit, and a tester.

Plaintiffs introduced scores of documents into evidence, including plaintiffs' application files with Flagstar, other customer files of mortgage loans with Flagstar, correspondence and guidelines, underwriting standards, testing data and data provided to the government by Flagstar under the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. §§ 2801 et seq., commonly known as HMDA data. The customers' files consisted of applications, credit reports, employment verifications, approval and rejection letters, conditional approval letters, internal correspondence, memoranda and the like.

Flagstar called 16 witnesses, including underwriters, processors, loan officers, branch managers, senior executives in charge of underwriting and compliance, Dr. Edward Rothman, an expert in statistics, and an appraiser. Flagstar's exhibits, by and large, were similar to the exhibits introduced by plaintiffs.

IV. The Rule and Law Generally

A. Motion for Judgment as a Matter of Law: Fed.R.Civ.P. 50(b)

The principles governing a motion for judgment as a matter of law are best stated by the Court of Appeals for the Sixth Circuit in Morelock v. NCR Corporation, 586 F.2d 1096, 1104 (6th Cir.1978), as follows:

The issue raised by a motion for judgment n.o.v. is whether there is sufficient evidence to raise a question of fact for the jury .... [T]he trial court may neither weigh the evidence, pass on the credibility of witnesses nor substitute its judgment for that of the jury.

. . . . .

The motion should not be granted unless the Court, after so viewing the evidence, "is of the opinion that it points so strongly in favor of the movant that reasonable minds could not come to a different conclusion. ...," Id. at 1104-05.

B. Motion for a New Trial: Fed.R.Civ.P. 59

1. The Sufficiency of the Evidence

The principle governing a motion for a new trial is best stated in Wright and Miller, as follows:

It may be doubted whether there is any verbal formula that will be of much use to trial courts in passing on motions of the type now being considered. Necessarily all formulations are couched in broad and general terms that furnish no unerring litmus for a particular case. On the other hand, the trial judge does not sit to approve miscarriages of justice. The judge's power to set aside the verdict is supported by clear precedent and common law and far from being a denigration or a usurpation of a jury trial, has long been regarded an integral part of jury by trial as we know it. On the other hand, a decent respect for the collective wisdom of the jury and for the function entrusted to it in our system, certainly suggests that in most cases the judge should accept the findings of the jury, regardless of its own doubts on the matter. Probably all that the judge can do is balance these conflicting principles in light of the facts of the particular case. If, after having given full respect to the jury's findings, the judge on the entire evidence is left with a definite and firm conviction that a mistake has been committed, it is to be expected that he will grant a new trial.

11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2806 (2d ed.1995). See also Clay. v. Ford Motor Co., 215 F.3d 663, 672 (6th Cir.2000) (holding that "a district court must compare and weigh the opposing evidence and it must set aside the verdict if it determines that the verdict is against the clear weight of the evidence.") (citation omitted).

2. The Size of the Verdict

Wright and Miller is also instructive as to the size of a verdict, stating as follows:

A motion under Rule 59 is an appropriate means to challenge the size of the verdict. The Court always may grant relief if the verdict is excessive or inadequate as a matter of law, but this is not to limit the Court's power. It may also grant a new trial if the size of the verdict is against the weight of the evidence.

This is merely a special application of the general power of the trial court to set aside a verdict that is against the weight of the evidence, and the general principles developed in the preceding section are applicable to a motion on this ground. The court is not free to set aside the verdict merely because the judge might have awarded a different amount of damages, but it may do so if the proceedings have been tainted by appeals to prejudice or if the verdict in the light of the evidence is so unreasonable that it would be unconscionable to permit it to stand. The phrase "shocks the conscious of the court," among others, is much used in the cases but adds very little by way of guidance. The power exists from the trial judge whether the verdict is unreasonably high or unreasonably low.

There is a difference, however, that must be noted. If the Court finds that the verdict is unreasonably high, it may condition denial of a motion for a new trial on plaintiff's consent to a remittitur. If the verdict is...