Patricia Ostolaza-Diaz v. Countrywide Bank, N.A.

Filing 920100112

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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 08-1567 PATRICIA OSTOLAZA-DIAZ; JOSE LUIS DIAZ-GOYES, a/k/a Jose L. Ostolaza, Plaintiffs - Appellants, v. COUNTRYWIDE BANK, N.A.; COUNTRYWIDE HOME LOANS; ALLIED HOME MORTGAGE CAPITAL CORPORATION; ANTHONY FALCONE; SAMUEL I. WHITE, P.C., Trustee, Defendants Appellees, and COLONIAL TITLE COMPANY; KIM TAESONG, Defendants. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Claude M. Hilton, Senior District Judge. (1:08-cv-00078-CMH-JFA) Argued: October 29, 2009 Decided: January 12, 2010 Before NIEMEYER and DUNCAN, Circuit Judges, and Benson E. LEGG, United States District Judge for the District of Maryland, sitting by designation. Affirmed by unpublished opinion. Judge Legg wrote the opinion, in which Judge Niemeyer and Judge Duncan joined. ARGUED: Martin Carroll Conway, PESNER KAWAMOTO CONWAY, PLC, McLean, Virginia, for Appellants. William Paul Childress, III, HUNTON & WILLIAMS, LLP, Richmond, Virginia; Cameron Scott Matheson, LECLAIR RYAN, PC, Richmond, Virginia, for Appellees. ON BRIEF: Harry M. Johnson, III, HUNTON & WILLIAMS, LLP, Richmond, Virginia, for Appellees Countrywide Bank, N.A., and Countrywide Home Loans; Paul D. Anders, Tara L. Elgie, LECLAIR RYAN, PC, Richmond, Virginia, for Appellees Allied Home Mortgage Capital Corporation and Anthony Falcone. Unpublished opinions are not binding precedent in this circuit. 2 LEGG, District Judge: Patricia Ostolaza-Diaz and Jose Luis Diaz-Goyes appeal the district court's dismissal of certain claims arising out of the refinancing of their home. Specifically, they challenge the dismissal of their state-law claims for fraud and intentional infliction of emotional distress. Because we find that Ms. Ostolaza-Diaz and Mr. Diaz-Goyes did not reasonably rely upon Defendants' allegedly false representations, we conclude that they cannot establish a prima facie case for fraud. find no merit in their claim we for intentional the We likewise of infliction emotional distress. Thus, affirm district court's dismissal of the case. I. We view the facts in the light most favorable to plaintiffs, the non-prevailing party below. Patricia Ostolaza- Diaz and Jose Luis Diaz-Goyes ("Appellants") are home owners in Fairfax County, Virginia. Prior to the events giving rise to this case, their home was secured by two mortgage loans and a home equity line of credit provided by Bank of America. In March of 2006, Defendant Anthony Falcone -- an employee of Allied Home Mortgage Capital Corporation -- placed an unsolicited telephone call to Appellants and represented himself as a Bank of America loan officer. During that call, Falcone informed 3 Appellants that he could refinance their mortgages with Bank of America using a new loan product that would allow them to reduce their monthly payments, saving them thousands of dollars over the life of the loan. In reliance on Falcone's representations, Appellants completed and submitted a loan application. They thought that In reality, Loans, Inc. Falcone was a representative of Bank of America. Falcone was representing Countrywide Home Appellants also thought that the refinancing would reduce their monthly mortgage would payment. leave In them reality, with as Falcone knew, the refinancing greatly increased monthly payments that they could not afford. 1 At closing, Appellants the were Truth presented in with all relevant documents, statement. including Lending Act disclosure These documents stated the actual amounts Appellants Nonetheless, would be obligated to pay under their new loan. Appellants executed the loan documents. Because Appellants were unable to afford their mortgage payments, Countrywide eventually initiated a foreclosure action against them. Appellants originally brought suit in the Circuit Court for Fairfax 1 County, Virginia stating claims for: (i) common law Under the terms of the Countrywide loan product, Appellants first monthly mortgage payment was $2,699.17. The subsequent payments were $4,028.67 per month. Appellants' previous mortgage payments had been $2320.00 per month. 4 fraud, (ii) intentional infliction of emotional distress, (iii) violation of the Truth in Lending Act, and (iv) violation of the Real Estate Settlement Procedures Act. Defendants removed the case to the Eastern District of Virginia, where the district court dismissed each of the claims. Appellants now appeal the dismissal of their state-law fraud and intentional infliction of emotional distress claims. II. Appellants' complaint includes claims for both actual and constructive fraud. 2 To establish fraud under Virginia law, a plaintiff must demonstrate: (i) a false representation, (ii) of a material fact, (iii) made intentionally and knowingly, (iv) with an intent to mislead, and (v) reliance by the misled party, (vi) which results in damage to the misled party. Deusen v. Snead, 247 Va. 324 (1994). Failure See Van to plead See reasonable reliance is fatal to a common law fraud claim. Metrocall of Del. v. Cont'l Cellular Corp., 246 Va. 365, 374 (1993). "Constructive fraud differs from actual fraud in that the misrepresentation of material fact is not made with the intent to mislead, but is made innocently or negligently although resulting in damage to the one relying on it." ITT Hartford Group v. Va. Fin. Assocs,. Inc., 258 Va. 193, 204 (1999). 5 2 In this case, Appellants are, as a matter of law, unable to show that they reasonably relied upon Falcone's or any other Defendant's representations. At closing, they were presented with documents that unambiguously spelled out the terms of the loan and contradicted Falcone's oral statements. In Virginia, an individual "may not reasonably rely upon an oral statement when he has in his possession a contrary statement in writing." Foremost Guaranty Corp. v. Meritor Savings Bank, 910 F.2d 118, 126 (4th Cir. 1990); see also, Calhoun v. Exxon Corp., 1995 WL 473981, at * 3 (4th Cir. Aug. 11, 1995) (same). Stated another way, "Plaintiffs cannot be heard to complain when they failed to read the relevant documents." 238, 245 (4th Cir. 2009). Because Appellants were presented with multiple documents, including a Truth in Lending Act disclosure statement, that laid out the true terms of their loan, they cannot now contend that they reasonably the relied upon any false did not oral err representation. when dismissing Johnson v. Washington, 559 F.3d Accordingly, District Court Appellants' fraud claims. III. In claims, addition to contesting argue that the the dismissal district of their fraud in Appellants court erred dismissing their claim for intentional infliction of emotional 6 distress. In Virginia, a plaintiff bringing a claim for intentional infliction of emotional distress must allege facts showing that: (i) the wrongdoer's conduct was intentional or reckless, (ii) the conduct was outrageous and intolerable, (iii) the alleged wrongful conduct and emotional distress are causally connected, Prison and (iv) the distress Va. is severe. (2007). See In Ogunde order v. to Health Servs., 274 55, 65 satisfy the second element, the alleged improper conduct must be "so outrageous in character, and so extreme in degree, as to be regarded as atrocious, and utterly intolerable in a civilized community." Russo v. White, 241 Va. 23, 26 (1991). Here, while Falcone's actions were clearly improper, they fail to satisfy the "outrageousness" requirement. Assuming that Appellants are correct in their allegation that Falcone made "intentional Countrywide and "gave material [them] a false loan representations" they could not and that the afford," actions still do not rise to the level of actionable conduct. See, e.g., Harris v. Kreutzer, 271 Va. 188, 204 (2006) (holding that allegations that a defendant "verbally abused [plaintiff], raised his voice to her, stated she was `putting on a show,' and accused her of being a faker and malingerer" did not equate to the type of outrageous behavior necessary to sustain a claim of intentional infliction of emotional distress). As a result, the 7 District Court did not err when dismissing Appellants' claim for intentional infliction of emotional distress. IV. In sum, we conclude that the district court erred neither in dismissing Appellants' fraud claims nor in dismissing their claim for intentional infliction of emotional distress. We therefore affirm the judgment of the district court. AFFIRMED 8

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