Robinson v. Quicken Loans Inc.

• Decision Date: 24 December 2013
• Docket Number: Civil Action No. 3:12–0981.
• Citation: 988 F.Supp.2d 615
• Parties: Janet R. ROBINSON, Plaintiff, v. QUICKEN LOANS INC.; Wells Fargo Bank, N.A., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

988 F.Supp.2d 615

Janet R. ROBINSON, Plaintiff,

v.QUICKEN LOANS INC.; Wells Fargo Bank, N.A., Defendants.

Civil Action No. 3:12–0981.

United States District Court, S.D. West Virginia.

Dec. 24, 2013.

Daniel F. Hedges, Jennifer S. Wagner, Daniel T. Lattanzi, Mountain State Justice, Inc., Charleston, WV, for Plaintiff.

Bradley W. Harrison, Gregory V. Jolivette, Jr., Jaci L. Overmann, Jonathan B. Leiken, P. Nikhil Rao, Tracy K. Stratford, Jones Day, Cleveland, OH, Carrie Goodwin Fenwick, James A. Kirby, III, Joseph M. Ward, Thomas R. Goodwin, Victoria L. Wilson, Goodwin & Goodwin, Charleston, WV, Jeremy Cook Hodges, Matthew D. Patterson, Nelson Mullins Riley & Scarborough, Columbia, SC, for Defendants.

MEMORANDUM OPINION AND ORDER

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 GRANTED. However, Plaintiff's request in her Surreply to “conform the pleadings to the evidence” is DENIED. Defendant Quicken Loans' Motion for Summary Judgment is GRANTED in part and DENIED in part. Defendant Wells Fargo Bank's Motion for Partial Summary Judgment is DENIED.

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 DISMISSED as time-barred.

I. Background

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 may be equitable and just.” Id. In Count III, Plaintiff alleges that Quicken Loans engaged in fraud during the lending process by misrepresenting to Plaintiff that her interest rate would not rise and that her home had a value of $84,350 when its true value was only $33,500, and by suppressing from Plaintiff the true terms of the loan and the risks associated with the true terms. Id. ¶¶ 31–37. Under this count, Plaintiff seeks actual damages, punitive damages, reasonable attorney's fees and costs, and “such other relief as may be equitable and just.” Id. ¶ 37. In Count IV, Plaintiff alleges both a joint venture and an agency relationship between Quicken Loans and Wells Fargo, with Quicken Loans acting as Wells Fargo's agent in the case of the agency relationship. Id. ¶¶ 39–46. Under this count, Plaintiff seeks joint and several liability between the two defendants regarding all other counts. Id. ¶ 46.

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.

II. Standard for Summary Judgment

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 element of his or her case and does not make, after adequate time for discovery, a showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of evidence” in support of his position. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. Summary judgment is also appropriate when the inquiry involves a pure question of law. Taft v. Vines, 70 F.3d 304, 316 (4th Cir.1995), vacated en banc on different grounds,83 F.3d 681 (4th Cir.1996).

III. Undisputed Facts

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.¹ In the summer of 2006, Plaintiff's interest rate reached 10.2% and her monthly payment reached $704 per month.

IV. Quicken Loans' Motion for Summary Judgment

In support of entering summary judgment against Plaintiff, Quicken Loans argues that:

1. 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 (Quicken Loans' Mem. Supp. Mot. Summ. Judg. 16–19, ECF No. 205)

2. Plaintiff's illegal loan claim (Count II) is time-barred under the two-year st...