Litten et al v. Quicken Loans, Inc. et al

Filing 25

MEMORANDUM OPINION AND ORDER GRANTING THE DEFENDANTS MOTION TO DISMISS DKT. NO. 3 WITH PREJUDICE. Court GRANTS Quicken Loans motion to dismiss counts II-IV of the complaint WITH PREJUDICE. Signed by District Judge Irene M. Keeley on 11/12/2013. (Copy counsel of record via CM/ECF)(jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
CHRIS A. LITTEN and
SHEILA J. LITTEN
Plaintiffs,
v.

//

CIVIL ACTION NO. 1:13CV192
(Judge Keeley)

QUICKEN LOANS, INC.,
a corporation,
Defendant.

MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS [DKT. NO. 3] WITH PREJUDICE
In a number of recently filed lawsuits in this and other
districts, see, e.g., Mazza v. Quicken Loans, Inc., No. 1:12CV142
(N.D.W. Va. Aug. 26, 2013) (joint stipulation of dismissal); Alig
v. Quicken Loans, Inc., No. 5:12CV115 (N.D.W. Va. Oct. 9, 2012)
(order granting motion to remand); Bishop v. Quicken Loans, Inc.,
No. 2:09-1076, 2011 WL 1321360 (S.D.W. Va. Apr. 4, 2011), alleged
victims of “predatory lending” have sought relief from a common
lender, Quicken Loans, Inc. (“Quicken Loans”).
Here, Chris and Sheila Litten (collectively, the “Littens”)
sued Quicken Loans, alleging unconscionable contract (count I),
fraud (count II), illegal loan under W. Va. Code § 31-17-8(m)(7)
(count III), and illegal loan under W. Va. Code § 31-17-9 (count
IV).

See Pls.’ Compl., July 23, 2013, ECF No. 1-1.

The Littens

filed their complaint in the Circuit Court of Harrison County, West
Virginia, on July 23, 2013.

On August 26, 2013, Quicken Loans

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MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
timely removed the case to this Court and, on September 3, 2013,
filed a motion to dismiss counts II-IV of the complaint.

The

motion is fully briefed, and, for the reasons discussed below, the
Court GRANTS the motion.
I. STANDARD OF REVIEW
In reviewing the sufficiency of a complaint, a district court
“must accept as true all of the factual allegations contained in
the complaint.” Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th
Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007))
(internal quotations omitted). However, while a complaint does not
need detailed factual allegations, a plaintiff’s obligation to
provide the grounds of his entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.
U.S. 544, 555 (2007).

Bell Atl. Corp. v. Twombly, 550

Indeed, courts “are not bound to accept as

true a legal conclusion couched as a factual allegation.”
v. Allain, 478 U.S. 265, 286 (1986).

Papasan

In considering whether the

facts alleged are sufficient, “a complaint must contain ‘enough
facts to state a claim to relief that is plausible on its face.’”
Anderson, 508 F.3d at 188 (quoting Twombly, 127 S.Ct. at 1974).

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MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
“A motion to dismiss under Rule 12(b)(6) tests the sufficiency
of

a

complaint;

importantly,

it

does

not

resolve

contests

surrounding the facts, the merits of a claim, or the applicability
of defenses.”

Republican Party of N.C. v. Martin, 980 F.2d 943,

952 (4th Cir. 1992).

“But in the relatively rare circumstances

where facts sufficient to rule on an affirmative defense [e.g.,
that the plaintiff’s claim is time-barred] are alleged in the
complaint, the defense may be reached by a motion to dismiss filed
under Rule 12(b)(6),” so long as “all facts necessary to the
affirmative

defense

‘clearly

appear[]

on

the

face

of

the

complaint.’” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir.
2007) (emphasis in original) (quoting Richmond, Fredericksburg &
Potomac R.R. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993)).
Finally, on a motion to dismiss, the Fourth Circuit permits
courts to consider documents attached to the motion, “so long as
they are integral to the complaint and authentic.” Philips v. Pitt
Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (citing
Blankenship v. Manchin, 471 F.3d 523, 526 n.1 (4th Cir. 2006)); see
also Am. Chiropractic Ass’n v. Trigon Healthcare, Inc., 367 F.3d
212, 234 (4th Cir. 2004); Philips v. LCI Int’l Inc., 190 F.3d 609,
618 (4th Cir. 1999).

Neither party calls into question the

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MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
authenticity of the documents attached to Quicken Loans’ motion.1
Furthermore, it is incontrovertible that documents, including the
loan agreement, loan application, and deed of trust, are integral
to the Littens’ claims.

Therefore, this Court may properly

consider them without converting Quicken Loans’ motion into one for
summary judgment.
II. FACTUAL BACKGROUND
The Court construes the following factual allegations in the
light most favorable to the Littens. In 2000, Mr. Litten built a
family home without borrowing any money.

Id. at ¶ 5. In 2003,

using the home as collateral, he borrowed approximately $80,000 at
a fixed interest rate of 7.5% from Citifinancial, Inc., in order to
pay medical bills and other debts.

Id. at ¶ 7.

The family began

making monthly payments of $547.39, which included both principal
and interest.

Id.

In April 2007, an agent for Quicken Loans contacted the
Littens, offering to refinance their loan.

Id. at ¶ 8.

After

multiple telephone solicitations, the Littens eventually discussed

1

Without calling the documents’ authenticity into question, the
Littens suggest that Quicken Loans must affirmatively prove their
authenticity before this Court considers them. The Fourth Circuit has
determined otherwise. See Blankenship, 471 F.3d at 526 n.1 (“[W]e may
consider the article even at the Rule 12(b)(6) stage, as . . .
Blankenship does not dispute its authenticity.”).

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MEMORANDUM OPINION AND ORDER GRANTING THE
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refinancing of their mortgage with the Quicken Loans agent. The
agent allegedly guaranteed a 4.75% interest rate and stated that
“the principal and interest payment would be about $575 per month.”
Id. at ¶ 9.
After their conversation, the Littens submitted the necessary
paperwork and, one month later, were approved for the refinanced
loan.

Id. at ¶ 10-11.

The agent called to congratulate the

Littens on their approval and told them the closing on the loan
would take place in two weeks.

Id. at ¶ 11.

disclosed no additional terms to the Littens.

Otherwise, the agent
Id. at ¶ 12.

As promised, the closing took place at the Littens’ home two
weeks later.

Id. at ¶ 13.

According to the complaint, it “was

done in a rushed and hurried fashion,” the Littens “were not
allowed time to read the documents or afforded an opportunity to
ask questions,” and “the closing agent would only tell [the
Littens] the title of the document and instruct them where to sign
and/or initial.”

Id.

The Littens further allege that the closing

agent failed to explain the terms of the loan or indicate that the
actual terms differed from those guaranteed by the soliciting
agent.

Id. at ¶ 14.

When the closing agent left, he took all the

signed documents, leaving the Littens with nothing.

5

Id. at ¶ 15.

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MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
It was several months later before the Littens received copies of
the closing documents they had signed.

Id.

The complaint fails to allege on which date the Littens
realized that the actual terms of their loan differed from the
terms guaranteed by the soliciting agent.

Nevertheless, the loan

provided for monthly payments of $576.88 for ten years at a 6.75%
interest rate, beginning on August 1, 2007.

Id. at ¶ 16.

Unknown

to the Littens, the $576.88 payments included interest only, with
no reduction to principal.

Id.

At the end of the initial ten-year

period, the monthly payment amount was to increase by more than
$200.

Id. at ¶ 18.

Based on these terms, the total cost of the

loan amounted to $259,795.20, as compared to a total cost of
$197,000 for the Littens’ previous loan. Id. Quicken Loans earned
$3000 from the transaction.

Id. at ¶ 19.

III. DISCUSSION
A. Count II: Fraud Claim
Quicken Loans argues that the Littens’ fraud claim is timebarred.

Federal courts sitting in diversity apply state statutes

of limitations to state law claims.

See Walker v. Armco Steel

Corp., 446 U.S. 740, 753 (1980). To determine whether an action is

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MEMORANDUM OPINION AND ORDER GRANTING THE
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time-barred, the Supreme Court of Appeals of West Virginia has
outlined a five-step analysis that courts should follow:
First, the court should identify the applicable statute
of limitation for [the] cause of action. Second, the
court . . . should identify when the requisite elements
of the cause of action occurred. 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
. . . . Fourth, if the plaintiff is not entitled to the
benefit of the discovery rule, then determine whether the
defendant fraudulently concealed facts that prevented the
plaintiff from discovering or pursuing the cause of
action. Whenever a plaintiff is able to show that the
defendant fraudulently concealed facts which prevented
the plaintiff from discovering or pursuing the potential
cause of action, the statute of limitation is tolled.
And fifth, the court or the jury should determine if the
statute of limitation period was arrested by some other
tolling doctrine.
Syl. Pt. 5, Dunn v. Rockwell, 689 S.E.2d 255, 258 (W. Va. 2009).
Here, the parties’ primary dispute revolves around the first step
of the analysis -- the applicable statute of limitations.

Quicken

Loans argues that, pursuant to W. Va. Code 55-2-12, the statute of
limitations is two years.

The Littens, on the other hand, contend

that, because they pled their fraud claim in equity, it is subject
to a laches defense, rather than the statute of limitations.
Again, Dunn provides the applicable law: “Where a suit based
on fraud is not for damages but seeks to rescind a writing or
impose a trust or other equitable relief, it is not a common law
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MEMORANDUM OPINION AND ORDER GRANTING THE
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action for fraud but is equitable in nature.

Consequently, the

doctrine of laches is applicable rather than any specific statute
of limitations period.”

Syl. Pt. 7, Dunn, 689 S.E.2d at 258.

However, as Dunn continues, “[t]his is not to say that there is no
time limit for filing an equitable cause of action.”
n.11.

Id. at 267

“Laches applies to equitable demands where the statute of

limitation does not.”

Syl. Pt. 2, Condry v. Pope, 166 S.E.2d 167,

167 (W. Va. 1969).
“Laches is a delay in the assertion of a known right which
works to the disadvantage of another.”

Syl. Pt. 2, Bank of

Marlinton v. McLaughlin, 17 S.E.2d 213, 214 (W. Va. 1941).

But

“[m]ere delay will not bar relief in equity on the ground of
laches.”

Syl. Pt. 1, State ex rel. Smith v. Abbot, 418 S.E.2d 575,

576 (W. Va. 1992).

Instead, the West Virginia Supreme Court “has

consistently emphasized the necessity of a showing that there has
been a detrimental change of position in order to prove laches.”
Dunn, 689 S.E.2d at 267 (citing Maynard v. Board of Educ. of Wayne
Cnty., 357 S.E.2d 246, 253 (W. Va. 1987); Syl. Pt. 3, Carter v.
Price, 102 S.E. 685 (W. Va. 1920)).
Count II of the complaint requests that the Court enjoin the
further enforcement of the loan and security instrument, and order
a set-off, restitution, and other equitable relief.
8

Compl. at

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MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
¶ 33.

The Littens intentionally pled their fraud claim in equity,

rather than for damages.

Thus, under West Virginia law, laches,

rather than a statute of limitations, applies.

Therefore, “[o]ur

analysis . . . is at an end, and we need not consider the remaining
steps in our five-step analysis.”

Dunn, 689 S.E.2d at 267.

That

said, the Court must analyze whether laches bars the fraud claim.
For laches to bar a claim, the defendant must establish a
detrimental change of position as a result of a plaintiff’s delay
in bringing the action.

See White v. Daniel, 909 F.2d 99, 102 (4th

Cir. 1990) (“Laches imposes on the defendant the ultimate burden of
proving ‘(1) the lack of diligence by the party against whom the
defense is asserted, and (2) prejudice to the party asserting the
defense.”) (citing Costello v. United States, 365 U.S. 265, 282
(1961)).

Neither Quicken Loans’ brief nor its oral argument

asserted any detrimental change in position caused by the Littens’
delay.

Nevertheless, the law supplies it.

“Under
applicable

equitable
to

principles

analogous

‘presumption of laches.’

actions

the
at

statute

law

is

of

used

limitations
to

create

a

This principle ‘presumes’ that an action

is barred if not brought within the period of the statute of
limitations and is alive if brought within the period.”

Tandy

Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365 (6th Cir. 1985).
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MEMORANDUM OPINION AND ORDER GRANTING THE
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Some courts agree with the Sixth Circuit’s bright-line principle.
See, e.g., Ashley v. Boyle’s Famous Corned Beef Co., 66 F.3d 164,
169 n.3 (8th Cir. 1995) (“But even when applying laches to an
equitable claim, courts apply a presumption that the action is not
barred if brought within the statute of limitations period for
‘analogous’ actions at law.”), overruled on other grounds by Rowe
v. Hussman Corp., 381 F.3d 775, 782 n.6 (8th Cir. 2004). Others,
however, view the analogous statute of limitations more as a
benchmark. See, e.g., DeSilvio v. Prudential Lines, Inc., 701 F.2d
13, 15 (2d Cir. 1983) (“In analyzing whether a party is guilty of
laches, a district court may not mechanically apply the local
statute of limitations.”).
Although the Fourth Circuit has not addressed the issue in
recent years, several short per curiam opinions from the 1960s
indicate its willingness to presume prejudice as a result of
laggardness in bringing an equitable action.

See Riddick v.

Baltimore Steam Packet Co., 374 F.2d 870, 871 (4th Cir. 1967) (per
curiam)

(recognizing

a

“presumption

of

prejudice”);

Davis

v.

Nelson, 285 F.2d 214, 215 (4th Cir. 1960) (per curiam) (“As this
delay

of

nearly

seven

years

exceeds

any

possibly

applicable

limitations period, it became the duty of the libellant to plead
and

prove

facts

negativing

a

presumption
10

of

prejudice

from

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MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
inexcusable delay.

The presumption would be against prejudice if

suit had been brought during the legal period of limitations.”).
But see Giddens v. Isbrandtsen Co., 355 F.2d 125, 128-29 (4th Cir.
1966) (reversing the district court’s application of laches because
“Giddens’ dereliction alone did not establish laches” and because
“the shipowner presented no proof of prejudice beyond the inference
arising from the procrastination”).
Although the Fourth Circuit has not spoken directly to the
issue, this district has adopted the Tandy presumption on three
occasions.

See Heavner v. Quicken Loans, Inc., No. 3:12CV68, 2013

WL 2444596, *5 (N.D.W. Va., June 5, 2013); May v. Nationstar
Mortg., LLC, No. 3:12CV43, 2012 WL 3028467, *7 (N.D.W. Va., July
25, 2012); In re Consolidation Coal Co., 228 F. Supp. 2d 764, 76869 (N.D.W. Va. 2001).
In Consolidation Coal, 228 F. Supp. at 766, the plaintiffs
suffered personal injuries on ships owned by Consolidation Coal
Company.

The

injuries

occurred

on

March

20,

1998,

but

the

plaintiffs did not sue until December 22, 2000 -- more than two
years, but less than three, after the claim accrued.

Id.

Because

claims under admiralty law are subject to laches, the court had to
determine the analogous statute of limitations.

The plaintiffs

lobbied for the three-year statute of limitations found in 46
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MEMORANDUM OPINION AND ORDER GRANTING THE
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U.S.C. § 763a, while the defendants proposed the two-year statute
of limitations set out in W. Va. Code § 55-2-12.

Id. at 768.

Ultimately, the court applied the three-year limitations period
from 46 U.S.C. § 763a, id. at 769, situating the plaintiffs’ filing
date within the analogous limitations period. For this reason, the
court imposed a burden on the defendants to prove unreasonable
delay and prejudice in order to successfully assert a laches
defense.

Id. at 770 (“Because this Court has found that the

plaintiffs have filed their claims for breach of express and
implied warranties within the analogous statutory period, the
burden or proving unreasonable delay and prejudice falls on the
defendants.”).
rule

that

Implicit in the court’s decision is the corollary

defendants

asserting

laches

bear

no

burden

of

demonstrating prejudice when the plaintiff filed the claim outside
the analogous limitations period.

In such instances, prejudice is

presumed.
Two cases demonstrate this point.

In May, 2012 WL 3028467 at

*1-2, the court considered facts similar to those in the instant
case.

Regretting having entered into a loan with Nationstar in

November 2004, May filed a complaint in March 2012, alleging, inter
alia, unauthorized practice of law by Nationstar’s closing agent.
Id. at *1-2, 7.

After concluding that May could not state a claim
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for unauthorized practice of law, the court dismissed the agent as
a named defendant, which created complete diversity and the basis
on which to deny May’s motion to remand.

Id. at *7.

With that

issue decided, the court engaged in a laches analysis to determine
whether the unauthorized claim was also time-barred. Id. Applying
the analogous two-year statute of limitations, the court explained
that, “[b]ecause May failed to file the instant action until almost
eight years after the closing, this [c]ourt presumes that Chambers
would be prejudiced by allowing May to seek equitable relief on a
claim for the unauthorized practice of law.”

Id.

One year later, the same issue arose again in Heavner, 2013 WL
2444596 at *5.

Many of the facts in Heavner are identical to those

in this case, including the fact that the defendant was Quicken
Loans.

Heavner, the plaintiff, alleged that, in closing on the

loan transaction in August 2007, Quicken Loans engaged in fraud,
the unlawful practice of law, predatory lending, and other unlawful
conduct.

Id. at *1.

After Heavner filed his complaint on June 25,

2012, Quicken Loans moved to dismiss all the claims.

Id. at *2.

As in May, the court addressed whether the unlawful practice of law
claim was time-barred and, in so doing, provided an interchangeable
analysis. Id. at *5. “Plaintiff waited almost five years after he
executed the loan documents at issue before filing this action.
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MEMORANDUM OPINION AND ORDER GRANTING THE
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This

[c]ourt

presumes

that

Defendant

Quicken

Loans

would

be

prejudiced by allowing Plaintiff to seek equitable relief on a
claim for the unauthorized practice of law.”

Id.

The Court finds the reasoning in May and Heavner persuasive.
Here, the analogous statute of limitations for fraud claims is two
years.

See W. Va. Code § 55-2-12; see also CSX Transp., Inc. v.

Gilkison, No. 5:05CV202, 2008 WL 858176, *4 (N.D.W. Va., Mar. 28,
2008) (citing Alpine Prop. Owners Ass’n, Inc. v. Mountaintop Dev.
Co., 365 S.E.2d 57, 66 (W. Va. 1987)). Although the Littens’ fraud
claim accrued on the date of closing in the summer of 2007, under
the “discovery rule,” see Syl. Pt. 2, Gaither v. City Hosp., Inc.,
487 S.E.2d 901, 903 (W. Va. 1997), the statute of limitations was
tolled until the Littens should have discovered the fraud through
reasonable diligence.
The complaint alleges that the Littens received a copy of all
signed closing documents several months after the closing date.
See Compl. at ¶ 15.

These included the note, the deed of trust,

the loan application, the settlement statement, the federal truth
in lending statement, the monthly payment letter, and the notice of
the right to cancel.

See Def.’s Mem. in Supp. of Mot. to Dismiss,

Exs. 1-7, Sept. 3, 2013, ECF No. 4.

By reasonable diligence, the

Littens should have culled the actual terms of the loan from the
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MEMORANDUM OPINION AND ORDER GRANTING THE
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documents when they received them and could have concluded that
Quicken Loans had defrauded them.

Thus, the analogous statute of

limitations would have expired sometime in September 2009. The
Littens, however, delayed filing their complaint until almost four
See White, 909 F.2d at 102 (“[T]he defendant ‘is

years later.

aided by the inference of prejudice warranted by the plaintiff’s
delay.’ . . . Clearly the greater the delay, the less the prejudice
required to show laches.”) (quoting Giddens, 355 F.2d at 128).
Therefore,

applying

the

Tandy

presumption,

the

fraud

claim,

although equitable, is time-barred. Because that claim is timebarred, the Court need not address whether it was sufficiently
pled.
B. Counts III-IV: Illegal Loan Claims
In counts III and IV of the complaint, the Littens allege that
Quicken

Loans

violated

two

sections

of

the

West

Virginia

Residential Mortgage Lender, Broker and Servicer Act (the “Mortgage
Lender Act”), W. Va. Code §§ 31-17 et seq.

In particular, the

Littens allege violations of §§ 31-17-8(m)(7) and 31-17-9.
Section 31-17-8(m)(7) provides that,
[i]n making any primary or subordinate mortgage loan, no
licensee may, and no primary or subordinate mortgage
lending transaction may, contain terms which . . .
[r]equire terms of repayment which do not result in
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MEMORANDUM OPINION AND ORDER GRANTING THE
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continuous monthly reduction of the original principal
amount of the loan.
Section 31-17-9 requires lenders at the time of closing to “furnish
to the borrower a complete and itemized closing statement.”
Furthermore, under § 31-17-18, the penalties and remedies embodied
in the Mortgage Lender Act are “cumulative with other applicable
provisions of this code, including, but not limited to, the
consumer protection laws in chapter forty-six-a of this code.”
Quicken Loans argues that the Littens’ illegal loan claims are
time-barred under the two-year statute of limitations found in §
55-2-12. The Littens counter with two arguments. First, they urge
the Court to engraft the one-year statute of limitations from §
46A-5-101(1) onto violations of § 31-17 et seq.

Alternatively,

they assert that the ten-year statute of limitations applicable to
written contracts under W. Va. Code § 55-2-6 should apply here.
The Court turns first to the issue of whether to apply the
ten-year statute of limitations for contracts to the Littens’
illegal loan claims.

West Virginia Code § 55-2-6 states in

relevant part:
Every action to recover money, which is founded upon an
award, or on any contract . . . shall be brought within
the following number of years next after the right to
bring the same shall have accrued, that is to say: . . .
if it be upon an award, or upon a contract in writing,
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signed by the party to be charged thereby, or by his
agent, but not under seal, within ten years . . . .
The Littens argue that “[c]ounts III and IV for illegal loan
contract are clearly claims found on contract.” Pls.’ Resp. Br. 9,
Sept. 17, 2013, ECF No. 7.

They further argue that “[c]ontract

remedies are available for violations of the [Mortgage Lender
Act].”

Id.

In its reply, Quicken Loans asserts that the ten-year

statute of limitations in § 55-2-6 applies only to breach of
contract claims and that the Littens’ allegations are based in
tort.
This Court has previously addressed the issue of which statute
of limitations to apply to a statutory claim pursuant to § 55-2-6
or § 55-2-12.

See Thomas v. Branch Banking & Trust Co., 443 F.

Supp. 2d 806, 813-15 (N.D.W. Va. 2006). The plaintiff in Thomas had
sued the defendant bank under Article 9 of the Uniform Commercial
Code (the “UCC”), W. Va. Code § 46-9-207, for breach of a secured
party’s duty to preserve collateral.

443 F. Supp. 2d at 808.

As

here, the parties disagreed as to whether § 55-2-6 or § 55-2-12
applied.

Id. at 810. In Thomas, the court examined West Virginia

case law, observing that, in determining whether a statutory claim
should be governed by the contract or tort limitations period, the
West Virginia Supreme Court’s decisions are split. Compare Plumley
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v. May, 434 S.E.2d 406, 410 (W. Va. 1993); Jones v. Tri-Cnty.
Growers, Inc., 366 S.E.2d 726, 729 (W. Va. 1988); Lucas v. Moore,
303 S.E.2d 739, 741 (W. Va. 1983); Western v. Buffalo Min. Co., 251
S.E.2d 501, 504 (W. Va. 1979), with Wilt v. State Auto. Mut. Ins.
Co., 506 S.E.2d 608, 610 (W. Va. 1998); Taylor v. Ford Motor Co.,
408 S.E.2d 270, 274 (W. Va. 1991).

Despite this, “[t]he central

inquiry is whether the legislature intended recovery to consist of
damages arising from a contractual relationship between the parties
or,

instead,

to

include

the

possibility

traditionally associated with tort actions.”

of

winning

damages

Thomas, 443 F. Supp.

2d at 813.
Applying that inquiry, Thomas focused on language from the
UCC, which allowed damages that would put a plaintiff “in as good
a position as if the other party had fully performed,” noting that
such language is “the typical standard of recovery for contract
claims.” Id. at 814 (quoting W. Va. Code § 46-1-106). The decision
explains that the unavailability of attorneys’ fees under the UCC
was consistent with common law rules for contract cases.
443 F. Supp. 2d at 814.

Thomas,

Finally, it observed that “[t]hese

considerations lead toward the conclusion that Thomas’s U.C.C.
claim is contractual in nature and therefore is governed by § 55-26.”

Id.
18

LITTEN, ET AL. V. QUICKEN LOANS

1;13CV192

MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
Here,

the

Littens

allege

that

Quicken

Loans

“willfully

required terms of repayment which do no result in continuous
monthly reduction of the original principal amount” in violation of
W. Va. Code § 31-17-8(m)(7), Compl. at ¶ 35 (emphasis added), and
“willfully failed to provide Plaintiffs with signed copies of the
closing documents” in violation of W. Va. Code § 31-17-9, Compl. at
¶ 37 (emphasis added).

Their reliance on the adverb “willfully”

indicates that the illegal loan claims are tortious in nature:
omission of the willfulness element would not affect contract
damages.

See Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S.

540, 547 (1903) (“The motive for the breach commonly is immaterial
in an action on the contract.”).
Turning to the statutes, § 31-17-9 prohibits the omission of
a physical act, namely, providing a closing statement to the
borrower.

Such violations are ex-contractu.

Although § 31-17-

8(m)(7) prohibits certain terms in the loan agreement, § 31-1717(a) provides that voidance of the loan is appropriate only when
it

is

“made

article.”

in

willful

Again,

violation

“willful”

of

the

indicates

provisions

that

the

of

this

legislature

contemplated violations of the Mortgage Lender Act as tortious
rather than contractual.

Also, the Mortgage Lender Act’s language

of intent is contrary to the expectation damages provision from the
19

LITTEN, ET AL. V. QUICKEN LOANS

1;13CV192

MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
UCC noted in Thomas.

Moreover, § 31-17-17(c) includes attorneys’

fees and costs in the statutory damages available upon violation of
the Mortgage Lender Act.

As this Court noted in Thomas, 443 F.

Supp. 2d at 814, “[t]he unavailability of . . . an award of
attorneys’ fees [] would be consistent with the common law rules
generally barring such remedies in contract cases.”

See also

McCormick v. Allstate Ins. Co., 475 S.E.2d 507, 513 (W. Va. 1996)
(“[A]ttorney fees are not ordinarily recoverable in simple actions
on a contract.”).

Therefore, the Littens’ illegal loan claims are

not subject to the ten-year limitations period from § 55-2-6.
In the alternative, the Littens propose a statutory grafting
scheme, suggesting that the Court superimpose the statute of
limitations from the West Virginia Consumer Protection Act (the
“WVCPA”), W. Va. Code § 46A-1-101 et seq., onto the Mortgage Lender
Act.

Section 46A-5-101(1) of the WVCPA applies to “violations

arising from other consumer credit sales or consumer loans.”

For

such violations, the statute provides a one-year limitations period
that begins to run on “the due date of the last scheduled payment.”
The loan in this case is secured by a thirty-year note, finally due
and payable on July 1, 2037.

Thus, under § 46A-5-101(1), the

Littens’ time for filing an illegal loan claim would extend to July
1, 2038.

The Littens attempt to connect § 46A-1-101 et seq. with
20

LITTEN, ET AL. V. QUICKEN LOANS

1;13CV192

MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
§ 31-17-1 et seq. by pointing to § 31-17-18, which sets forth the
penalties and remedies for violations of the Mortgage Lender Act.
It explains that such penalties and remedies are “not exclusive,
but are cumulative with other applicable provisions of this code,
including, but not limited to, the consumer protection laws in
chapter forty-six-a of this code.”
Initially, the Court notes that the Littens present a novel
argument; neither this Court, its sister districts, nor the West
Virginia Supreme Court of Appeals has addressed whether violations
of the Mortgage Lender Act are subject to the § 46A-5-101(1)
limitations period. Noting that “[t]he cardinal rule of statutory
interpretation

is

to

first

identify

the

legislative

intent

expressed in the promulgation at issue,” In re Clifford K., 619
S.E.2d 138, 146 (W. Va. 2005), the Court turns to the Littens’
proposition.
The Littens have not presented, nor can the Court find, any
evidence indicating that the West Virginia legislature intended to
subject claims under one body of legislation (the Mortgage Lender
Act) to the limitations period of an entirely different body of
legislation (the WVCPA). The time limitation contained in the last
sentence of § 46A-5-101(1) is demonstrably applicable only to
“action[s] pursuant to this subsection.”
21

LITTEN, ET AL. V. QUICKEN LOANS

1;13CV192

MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
On the whole, the statute does three things.

First, it

specifies certain types of provisions found in Chapter 46A, for
which a violation might occur.

Second, it classifies those

provision types into three broad categories: (i) consumer credit
sales or consumer loans made pursuant to revolving charge accounts
or revolving loan accounts; (ii) sales; and (iii) other consumer
credit

sales

categories,

or
the

consumer

loans.

statute

provides

Third,
a

for

the

four-year

first

two

statute

of

limitations, while providing a one-year limitation period for the
third.
apply,

At bottom, however, for these periods of limitations to
the

“creditor

[Chapter 46A].”

[must

have]

violated

W. Va. Code § 46A-5-101(1).

the

provisions

of

Despite the Littens’

novel argument, the reference to the WVCPA in § 31-17-18 does
little more than clarify that borrowers may bring actions and be
awarded damages under both the Mortgage Lender Act and the WVCPA.
Having eliminated § 55-2-6 and § 46A-5-101(1) as viable
limitations periods for the Littens’ illegal loan claims, the Court
is left with the two-year statute of limitations in § 55-2-12. The
Littens’ claims accrued when Quicken Loans allegedly required terms
of repayment that did not reduce the principal of their loan,
actions that occurred at the closing on June 6, 2007.

As noted,

the discovery rule tolls the statute of limitations until the
22

LITTEN, ET AL. V. QUICKEN LOANS

1;13CV192

MEMORANDUM OPINION AND ORDER GRANTING THE
DEFENDANT’S MOTION TO DISMISS WITH PREJUDICE
plaintiffs knew or should have known of the alleged injury.
Therefore, the statute did not begin to run until the Littens
received the closing documents around September 2007, and it
expired two years thereafter. Having sat on their hands until July
2013, the Littens missed their statutory opportunity to file an
illegal loan claims by nearly four years. The Littens claims are
thus time-barred and the Court need not address whether those
claims were sufficiently pled.
IV. CONCLUSION
As discussed, the Court concludes that counts II-IV of the
Littens’ complaint are time-barred. Accordingly, it GRANTS Quicken
Loans’ motion to dismiss counts II-IV of the complaint

WITH

PREJUDICE.
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: November 12, 2013.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

23