TCF Nat'l Bank v. Mkt. Intelligence, Inc.

• Decision Date: 04 February 2016
• Docket Number: No. 14–3519.,14–3519.
• Parties: TCF NATIONAL BANK, Plaintiff–Appellant v. MARKET INTELLIGENCE, INC.; Fidelity National Information Services, Inc.; LSI Appraisal, LLC ; Lender Processing Services, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

812 F.3d 701

TCF NATIONAL BANK, Plaintiff–Appellant

v.MARKET INTELLIGENCE, INC.; Fidelity National Information Services, Inc.; LSI Appraisal, LLC ; Lender Processing Services, Inc., Defendants–Appellees.

No. 14–3519.

United States Court of Appeals, Eighth Circuit.

Submitted: Oct. 20, 2015.

Filed: Feb. 4, 2016.

Brian Melendez, argued, Minneapolis, MN, for appellant.

Glenn R. Reichardt, argued, Washington, DC, (Donald G. Heeman, Randi Winter, Minneapolis, MN, Bruce H. Nielson, David T. Case, Washington, DC, on the brief) for appellee.

Before RILEY, Chief Judge, SMITH and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

This case concerns the statutes of limitations for fraud, contract, and negligence claims brought by TCF National Bank ("TCF") against Market Intelligence. ("Market"). The district court¹ granted Market's motion for summary judgment on all claims on the grounds that the period of limitations for each claim had expired. TCF argues that summary judgment was improper because the district court decided two determinative factual issues regarding the fraud claims' discovery by drawing inferences against TCF, the nonmoving party. Further, TCF argues the district court erred in failing to toll the periods of limitations based on fraudulent concealment. We hold that the district court properly held that TCF discovered sufficient facts so that the limitations period for TCF's fraud claims expired before TCF filed suit in September 2011. We further hold that the non-fraud claims accrued more than six years before TCF filed suit and that the limitations period was not tolled to prevent expiration prior to September 2011.² Thus, we affirm.

I.

A.

We view the facts in the light most favorable to TCF. See United States Commodity Futures Trading Comm'n v. Kratville, 796 F.3d 873, 891 (8th Cir.2015). TCF entered into a contract with Market under which TCF purchased Field Asset Verifications ("FAVs")³ for Minnesota properties from Market in 2002.⁴ FAVs, a less expensive alternative to home appraisals, were used by TCF for the purpose of making residential loans. Then-director of consumer lending for TCF in Minnesota, Timothy Meyer, negotiated the agreement after ordering 13 test FAVs prepared by Market within the state and recommending FAVs to superiors.⁵ Marketing materials stated that quality control for FAVS included "a 100% review process by qualified real estate analysts and appraisers." (Pl.'s Mot. for Summ. J., Ex. A, at 4.) These marketing materials included the representation that "[a]ll evaluations and appraisals are reviewed for quality as part of the MI process. Field work is reviewed and signed off by a qualified real estate appraiser." (Pl.'s Mot. for Summ. J., Ex. A, at 17.) The marketing materials were later changed to state that "[f]ield work is reviewed and signed off by ... qualified reviewers supervised by an experienced appraiser." Although Meyer could not recall which specific materials he viewed or relied on in his decision-making process, TCF states that its decision to purchase FAVs was dependent on these and similar statements guarantying 100% review by qualified real estate appraisers.

On August 29, 2002, Meyer sent a letter to Ted Mara, a customer service representative at Market, questioning a recent evaluation. Meyer wrote:

"Attached is a Field Asset Verification done by Market Intelligence in August 2002. This account was caught by one of my Regional Managers and raises some questions that I hope you can shed some light on.... A customer purchased the property one year ago for $149,000 and the county assessed tax value is $120,000. The customer estimated the property value at $235,000 and TCF subsequently ordered a FAV. The FAV came back at a value of $210,000. We acknowledge that Minnesota has had higher than normal appreciation as compared to other markets in the country, but given the significant value increase, my Regional Manager, at our own expense, ordered a full appraisal on the property which subsequently was completed and valued the property at $165,000. I would appreciate it if you could help us reconcile the significant difference between the FAV value and the appraisal. It seems unlikely that there would be this much disparity in the values, since in the FAV process, a real estate broker or appraiser is actually the one doing the driveby. I would appreciate a response in writing such that we can continue to have [a] comfort level with the quality of work that Market Intelligence does in our market."

(Defs.' Mot. for Summ. J., Ex. 8.) Following the letter, Meyer received a call from Mara "describing this as an aberration, reassuring [Meyer] on the quality review process that they have reinforcing the soundness of their work." Neither party could provide further details of the call's contents. TCF claims that the language used in the call specifically referenced Market's materials that state that all field work will be signed off by qualified real estate appraisers. Meyer was satisfied with Market's response and continued to use Market's FAVs.

By 2004, TCF had begun to notice "significant discrepancies between FAV and appraisal values for many properties, with FAV values being consistently higher." When TCF conducted full appraisals for borrowers seeking to refinance their loans, it discovered that the full appraisals provided property values lower than the FAVs used in earlier loans, despite the fact that property values were generally increasing. Meyer "became concerned about whether or not using ... FAV[s] was an appropriate way to value properties." He began tracking instances in which there were disparities in values, and in 2004, he shared the information with TCF's credit quality area. Doug Powers, an employee of TCF's credit quality area, then delivered a memorandum to Meyer on July 8, 2004, stating that "FAVs are the one[ ]s that had a majority of values in excess of 100%" of independently appraised value, and that the "reasons for the disparity are unclear, but may include ... [d]ifferent models used by Market Intelligence for the two studies [an alternative evaluation method and FAV]." (Defs.' Mot. for Summ. J., Ex. 10.) The memorandum concluded that "[t]here is no obvious evidence of this but the large difference in results beg [s] the question." (Defs.' Mot. for Summ. J., Ex. 10.)

Meyer "just no longer trusted the FAV values." (Meyer Dep. 63). However, TCF did not follow up with Market, because Meyer had "already had a conversation about [his] concerns ... in a prior year, and at that point ... [his] conclusions were based on fact, where there w[ere] so many disparities in values that [he] lost confidence and [he] really wasn't interested in hearing another confidence speech or slick sales pitch about why that was still a good thing to use." (Meyer Dep. 64). Meyer states that the July 8, 2004 memorandum ultimately led to TCF terminating the contract. By February 11, 2005, TCF stopped ordering FAVs and terminated TCF and Market's agreement, effective June 11, 2005.

TCF claims that it later discovered that many of Market's FAVs were grossly overestimated and that Market would sometimes ignore comparable sales in the same area or building, ignore properties' tax-assessed values, fail to consider property conditions viewable from the street, and rely on property owners' own assessments in its FAVs. TCF also claims that had Market not inflated property values, TCF would not have made certain mortgage loans. In 2008, an attorney for TCF sent a letter to Market threatening legal action for breach of contract based on the differences in FAV values and appraisals. The letter stated, "I believe that the facts [in the spreadsheets] clearly establish that the appraisals obtained through Market Intelligence under the contract attached as Tab 1 were the result of gross negligence." (Defs.' Mot. for Summ. J., Ex. 13.) In 2010, a TCF employee prepared an analysis of 6 FAVs supplied by Market and concluded that they all exhibited evidence of gross negligence.

B.

On September 21, 2011, TCF filed the underlying complaint against Market and its potential successors in liability. After several claims were dismissed, TCF amended its complaint. Market moved to dismiss, but the court denied the motion as to all claims. At the time of the summary judgment order at issue, TCF's claims against Market were (1) fraudulent inducement; (2) negligent appraisal; (3) breach of contract; (4) breach of the covenant of good faith and fair dealing; (5) fraud; and (6) consumer fraud. Market sought summary judgment on all claims, arguing all were barred by the six-year statute of limitations under Minnesota law. TCF also filed a motion to dismiss all of Market's affirmative defenses and for partial summary judgment.

The district court granted Market's motion for summary judgment on all claims and denied TCF's motion. The district court found that each claim was barred by the six-year statute of limitations. Regarding fraud, the court found that even if the basis for the claim was unknown to TCF, "no reasonable jury could conclude that failing to investigate the problems with FAVs after becoming aware of additional, numerous, discrepancies in 2004 and 2005 was reasonably diligent, or that Meyer's inquiry to Mara demonstrated reasonable diligence in light of TCF's 2004 and 2005 concerns," and that had TCF investigated the FAVs, "the evidence suggests that ... it likely would have revealed the fact that appraisers were not involved in the quality review process." As to the contract claim, the district court found that any breach would have occurred while the contract was in place, and thus before July 2005. Regarding the negligence claims, the court found that "some" damage occurred when TCF received each negligently performed value estimation, thus, similar to the contract claims, the limitations period began running while the contract was in place. The court concluded that none of the contract or negligence claims...