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

Filing 56

MEMORANDUM OPINION AND ORDER GRANTING 48 BANK OF AMERICA'S MOTION TO JOIN MOTIONS TO DISMISS, DENYING 42 43 DEFENDANTS' MOTIONS TO DISMISS AND DENYING 36 PLAINTIFFS' MOTION TO CERTIFY. Signed by Senior Judge Frederick P. Stamp, Jr. on 2/19/2014. (copy to counsel of record via CM/ECF) (nmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
THOMAS H. FLUHARTY, Trustee of the
Bankruptcy Estate of D. Kevin Coleman
and Diane M. Coleman and
D. KEVIN COLEMAN and DIANE M. COLEMAN,
Plaintiffs,
v.

Civil Action No. 5:13CV68
(STAMP)

QUICKEN LOANS, INC., TITLE SOURCE, INC.
and BANK OF AMERICA, N.A.,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING BANK OF AMERICA’S MOTION
TO JOIN MOTIONS TO DISMISS,
DENYING DEFENDANTS’ MOTIONS TO DISMISS
AND DENYING PLAINTIFFS’ MOTION TO CERTIFY
I.

Background

The plaintiffs filed the original complaint in this action
against defendants, Quicken Loans, Inc. (“Quicken Loans”), Title
Source, Inc. (“Title Source”), and Bank of America, N.A. (“Bank of
America”), alleging claims arising from the execution of two deeds
of trust, one on May 22, 2009 and the other on December 16, 2008 by
plaintiffs,

D.

Kevin

Coleman

plaintiffs”) with Quicken Loans.

and

Diane

M.

Coleman

(“Coleman

The Coleman plaintiffs executed

the deeds of trust to secure the payment of loans provided to them
by Quicken Loans on the same dates.

The deeds of trust granted

security interests in the residence of the Coleman plaintiffs.

Prior to the defendants filing any responsive pleadings, the
plaintiffs filed an amended complaint, which only added a page that
was previously missing from the original complaint. In the amended
complaint, the plaintiffs alleged six claims based on the West
Virginia Residential Mortgage Lender, Broker, and Servicer Act
(“WVRMBSA”), W. Va. Code § 31-17-1, et seq., and the West Virginia
Consumer

Credit

and

Protection

§ 46A-1-101, et seq.

Act

(“WVCCPA”),

W.

Va.

Code

As relief, the plaintiffs seek to recover

damages, including punitive damages, to cancel loans, to have deeds
of

trust

declared

of

no

further

force

and

effect,

and

the

plaintiffs seek attorneys’ fees and costs.
Count I of the amended complaint alleged that the plaintiffs
were not provided with signed documents, in violation of the
WVRMBSA.

Count II alleged that because Quicken Loans and Title

Source are each owned by the same parent corporation, any payment
made by Title Source in connection with the transactions was not a
payment to an “unrelated third party” and thus, such payments were
prohibited by the WVRMBSA.

Count III alleged that Quicken Loans’

and Title Source’s actions rendered the transaction with the
plaintiffs unconscionable.

Count IV alleged that Quicken Loans’

and Title Source’s actions created a false impression that the fees
were lawful in violation of the WVCCPA.
Quicken

Loans’

and

Title

Source’s

Count V alleged that

failure

to

disclose

their

relationship was a deceptive practice and unlawful within the

2

meaning of the WVCCPA.

Count VI alleged that Bank of America

acquired whatever interest existed in the purported loan and deed
of trust subject to the plaintiffs’ claims and, as a result, the
outcome of plaintiffs’ claims against Quicken Loans, with respect
to the validity of the loan and deed of trust, will bind Bank of
America.
After

the

plaintiffs

filed

the

amended

defendants filed separate responsive pleadings.

complaint,

the

Bank of America

filed an answer in response to the amended complaint, whereas
defendants Quicken Loans and Title Source filed motions to dismiss.
This Court granted Quicken Loans’ and Title Source’s motions to
dismiss as to Count I, II, IV, and V and denied the motions as to
Count III.

This Court, however, ordered the plaintiffs to file a

more definite statement as to Count III.

As a result of this

Court’s order on the motions to dismiss, the only remaining claims
in the complaint are Count III, which is the plaintiffs’ claim
alleging unconscionability and Count V, which is the plaintiffs’
claim asserting that Bank of America will be bound by the outcome
of their claims against Quicken Loans.
After this Court entered its order, the plaintiffs filed an
amended complaint in response to this Court’s order requiring a
more definite statement as to Count III. The plaintiffs also filed
a motion to certify a question to the West Virginia Supreme Court
of Appeals. Quicken Loans and Title Source responded in opposition

3

to the motion to certify and the plaintiffs replied.

Prior to

responding to the motion to certify, Quicken Loans and Title Source
filed motions to dismiss the amended complaint.1

Bank of America

then moved to join in Quicken Loans’ and Title Source’s motion to
dismiss. The plaintiffs did not file any response in opposition to
Bank of America’s motion to join.

The plaintiffs did, however,

respond in opposition to the motion to dismiss.

For the reasons

more fully explained below, this Court grants Bank of America’s
motion to join, denies the defendants’ motion to dismiss, and
denies the plaintiffs’ motion to certify.
II.
A.

Applicable Law

Motion to Certify Question
West

Virginia

has

enacted

the

Uniform

Certification

of

Questions of Law Act, W. Va. Code § 51-1A-1, et seq., which
provides, in pertinent part:
The supreme court of appeals of West Virginia may answer
a question of law certified to it by any court of the
United States . . . if the answer may be determinative of
an issue in a pending cause in the certifying court and
if there is no controlling appellate decision,
constitutional provision or statute of this state.
W. Va. Code § 51-1A-3.

The West Virginia Supreme Court of Appeals

has recognized that the provisions of the Uniform Certification of

1

While both Quicken Loans and Title Source filed separate
motions to dismiss, Title Source’s motion merely states that it
joins in Quicken Loans’ motion. The parties do not make separate
arguments for dismissal and this Court will therefore, discuss the
motions as one.
4

Questions of Law Act are not mandatory.

Morningstar v. Black and

Decker Mtg. Co., 253 S.E.2d 666, 668 (W. Va. 1979).

Thus,

certification is discretionary both for the certifying court and
for the court requested to answer the certified question. The West
Virginia Supreme Court of Appeals has stated “[i]t is rather
apparent that where our State’s substantive law is clear, there is
no need to obtain certification under W. Va. Code, 51-1A-1, et
seq.”
B.

Id. at 669.
Motion to Dismiss
In assessing a motion to dismiss for failure to state a claim

under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
court must accept all well-pled facts contained in the complaint as
true.

Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591 F.3d

250, 255 (4th Cir. 2009). However, “legal conclusions, elements of
a cause of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule 12(b)(6)
purposes.”
(2009)).

Id. (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
This

Court

also

declines

to

consider

“unwarranted

inferences, unreasonable conclusions, or arguments.”

Wahi v.

Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26 (4th Cir.
2009).
It has often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement of the
claim for relief; it is not a procedure for resolving a contest

5

about the facts or the merits of the case.

5B Charles Alan Wright

& Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed.
1998).

The Rule 12(b)(6) motion also must be distinguished from a

motion for summary judgment under Federal Rule of Civil Procedure
56, which goes to the merits of the claim and is designed to test
whether there is a genuine issue of material fact.

Id.

For

purposes of the motion to dismiss, the complaint is construed in
the

light

essentially

most
the

favorable
court’s

to

the

inquiry

party
is

making

directed

the
to

claim

and

whether

the

allegations constitute a statement of a claim under Federal Rule of
Civil Procedure 8(a).

Id. § 1357.

A complaint should be dismissed “if it does not allege ‘enough
facts to state a claim to relief that is plausible on is face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“Facial

plausibility is established once the factual content of a complaint
‘allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Nemet Chevrolet,
591 F.3d at 256 (quoting Iqbal, 129 S. Ct. at 1949).

Detailed

factual allegations are not required, but the facts alleged must be
sufficient “to raise a right to relief above the speculative
level.”

Twombly, 550 U.S. at 555.

6

III.
A.

Discussion

Motion to Certify
The plaintiffs pose the following question for certification:

“Whether the violation of the West Virginia Residential Mortgage
Lender Act, W. Va. Code § 31-17-1, et seq., alleged in the instant
amended complaint would be barred by the applicable statute of
limitations?”

ECF No. 36 *1.

The plaintiffs assert that the

argument, which they made against such bar in opposition to Quicken
Loans’ and Title Source’s original motion to dismiss, was a
reasonable argument that may be adopted by the West Virginia
Supreme Court of Appeals.

Thus, the plaintiffs argue that this

Court should certify such question pursuant to West Virginia Code
§ 51-1A-3.
Quicken Loans and Title Source, however, argue that the
plaintiffs’ motion to certify is nothing more than an improper
attempt to re-litigate issues previously decided and to manufacture
an opportunity for an interlocutory appeal that is not available to
them.

Specifically, Quicken Loans and Title Source argue that the

plaintiffs’

motion

does

not

meet

the

requirements

of

the

certification statute, the motion is improper and untimely, and the
motion is not in the interests of judicial economy.
This Court finds the plaintiffs’ request for certification to
the Supreme Court of Appeals of West Virginia to be untimely and
such

question

fails

to

satisfy

7

the

requirements

of

the

certification statute.

This Court issued an order concerning

plaintiffs’ question on November 7, 2013.

In such order, this

Court found that the statute of limitations applicable to Count I
and II of the plaintiffs’ complaint barred the plaintiffs’ claims
under the WVRMBSA.

Thus, there is no longer any “pending cause”

that would allow this Court to certify such question to the West
Virginia

Supreme

§ 51-1A-3.

Court

of

Appeals

under

West

Virginia

Code

Further, the plaintiffs had the opportunity to request

certification of this issue prior to this Court’s order, but the
plaintiffs chose not to do so.

See Dowell v. State Farm and Cas.

Auto. Ins. Co., 774 F. Supp. 996, 1001 (S.D. W. Va. 1991) (“The
Plaintiff made calculated and deliberate decisions not to move for
certification before entry of judgment or appeal the judgment
thereafter.

Hence, we do not find extreme hardship that would

compel granting relief inasmuch as the Plaintiff knowingly and
voluntarily passed over the means to protect his interest in
litigation . . . .”).

Accordingly, the plaintiffs’ motion for

certification to the West Virginia Supreme Court of Appeals must be
denied.
B.

Motion to Dismiss
In the defendants’ motion to dismiss, they argue that the

plaintiffs did not provide this Court with sufficient facts to
state

a

claim

complaint.

for

Under

unconscionability
West

Virginia

8

in

law,

Count

III

finding

a

of

their

contract

unenforceable based upon unconscionability requires findings of
some level of both procedural and substantive unconscionability and
is

based

upon

a

finding

of

a

high

degree

of

“inequities,

improprieties, or unfairness” in both the procedure of the creation
of the contract, and in the contents of the contract itself. Brown
v. Genesis Healthcare Corp., 729 S.E.2d 217, 226-27 (W. Va. 2012)
(hereinafter “Brown II”).
First, this Court notes that the plaintiffs’ assertion in
paragraph

42A

of

their

amended

complaint

that

procedural

unconscionability alone supports a cause of action is without
merit. The West Virginia Supreme Court of Appeals stated in Credit
Acceptance Corp. v. Front, that while the author of the opinion,
separate from the majority, questioned the need for establishing
both procedural and substantive unconscionability, the case did not
present the proper opportunity for such an analysis.
556, 564 n.8 (2013).

745 S.E.2d

This was in no way a determination that West

Virginia law no longer required a finding of both procedural and
substantive unconscionability, but merely a statement from the
author

of

the

opinion

established in Brown II.

that

he

questioned

the

current

law

Brown II has not been overruled by the

West Virginia Supreme Court of Appeals, and the author of Credit
Acceptance concedes as much.

Accordingly, both procedural and

substantive

must

unconscionability

unconscionability claim.

9

be

proven

to

establish

an

Second, plaintiffs’ assertion in paragraph 42 of their amended
complaint that United States Life Credit Corp. v. Wilson, stood for
the proposition that a violation of specific provisions of West
Virginia law is sufficient to find unconscionability is also
without merit.

See 301 S.E.2d 169.

In Wilson, the West Virginia

Supreme Court of Appeals found that the loan contracts involved
were unconscionable without taking into account the facts involved
in the execution of the contracts, as the contract required the
waiver of certain statutory rights.

301 S.E.2d 172-73.

The

plaintiffs in this matter are not alleging that the contracts at
issue required the waiver of any statutory rights, but instead they
are

alleging

that

because

the

defendants

allegedly

committed

violations of West Virginia law, the contracts are unconscionable.
This Court does not read Wilson for the proposition that any
violation

of

West

unconscionability.

Virginia

law

amounts

to

a

finding

of

Instead, as other courts have found, Wilson

seems to stand for the proposition that the required waiver of
certain statutory rights constitutes unconscionability. Mallory v.
Mortgage America, Inc., 67 F. Supp. 2d 601, 612-13 (S.D. W. Va.
1999).

As such, Wilson is inapplicable to the facts at issue.

The plaintiffs also cite Calvary SPV I, LLC v. Morrisey, 752
S.E.2d 356 (W. Va. 2013), in support of their argument that
unconscionability can be found by finding a violation of specific
provisions of West Virginia law.

This Court does not read Calvary

10

as asserting such a proposition, nor does it read Calvary in
conjunction with Mallory as asserting such a proposition. The West
Virginia Supreme Court of Appeals in Calvary examined the subpoena
powers of the West Virginia Attorney General.

Specifically, the

court examined whether it was permissible for the Attorney General
to

seek

an

injunction

for

violations

unconscionable conduct or agreements.

of

the

WVCCPA,

or

for

The court did not hold that

a violation of the WVCCPA was the equivalent to a finding of
unconscionability, nor was that even an issue in the case.

Thus,

this Court finds that Calvary is also inapplicable to the facts at
issue in this matter.
This Court, however, does find that the plaintiffs have cited
sufficient facts to withstand the defendants’ motion to dismiss.
As to unconscionability, the WVCCPA provides that:
(1) With respect to a transaction which is or gives rise
to a consumer credit sale, consumer lease or consumer
loan, if the court as a matter of law finds:
(a) The agreement or transaction to have been
unconscionable at the time it was made, or to
have been induced by unconscionable conduct,
the court may refuse to enforce the agreement,
or
(b) Any term or part of the agreement or
transaction to have been unconscionable at the
time it was made, the court may refuse to
enforce the agreement, or may enforce the
remainder of the agreement without the
unconscionable term or part, or may so limit
the application of any unconscionable term or
part as to avoid any unconscionable result.
W. Va. Code § 46A-2-121.

While the WVCCPA does not define

unconscionability, the West Virginia Supreme Court of Appeals has
11

relied on the definition provided in the Uniform Consumer Credit
Code. Quicken Loans, Inc. v. Brown, 737 S.E.2d 640, 656-57 (W. Va.
2012).

The drafters of the Uniform Consumer Credit Code stated

that:
[t]he basic test is whether, in the light of the
background and setting of the market, the needs of the
particular trade or case, and the condition of the
particular parties to the conduct or contract, the
conduct involved is, or the contract or clauses involved
are so one sided as to be unconscionable under the
circumstances existing at the time the conduct occurs or
is threatened or at the time of the making of the
contract . . . The particular facts involved in each
case are of utmost importance since certain conduct,
contracts or contractual provisions may be unconscionable
in some situations but not in others.
Uniform Consumer Credit Code, § 5.108 cmt. 3 (1974).
As

stated

above,

a

party

claiming

that

a

contract

is

unconscionable must demonstrate both procedural and substantive
unconscionability under West Virginia law. Brown II, 729 S.E.2d at
227.

“Procedural unconscionability is concerned with inequities,

improprieties,

or

unfairness

formation of the contract.”

in

the

bargaining

process

and

Id. (quoting Syl. pt. 17, Brown v.

Genesis Healthcare Corp., 724 S.E.2d 250 (W. Va. 2011) (hereinafter
“Brown I”)). “Substantive unconscionability involves unfairness in
the contract itself and whether a contract term is one-sided and
will have an overly harsh effect on the disadvantaged party.”
(quoting Syl. pt. 19, Brown I).

12

Id.

Further, this Court must note that “[u]nconscionability claims
should but rarely be determined based on the pleadings alone with
no opportunity for the parties to present relevant evidence of the
circumstances surrounding the consummation of the contractual
relationship.”

Mallory, 67 F. Supp. 2d at 612 (citation omitted).

As the court in Mallory stated, the record needs to be fully
developed “because whether a meaningful choice is present in a
particular case can only be determined by consideration of all the
circumstances surrounding the transaction.”

Id.

The WVCCPA

specifically states that “[i]f it is claimed or appears to the
court that the agreement or transaction or any term or part thereof
may be unconscionable, the parties shall be afforded a reasonable
opportunity to present evidence as to its setting, purpose and
effect to aid the court in making the determination.”

W. Va. Code

§ 46A-2-121(2).
In analyzing the facts asserted in the light most favorable to
the plaintiffs, this Court finds that the plaintiffs have stated a
plausible claim of unconscionability.

The plaintiffs have alleged

generally that the lending transactions were both procedurally and
substantively unconscionable.

Specifically, they assert that they

were not provided signed documents at the time of closing, and that
by assessing fees for a related entity in violation of West
Virginia law, the defendants overcharged the plaintiffs and failed
to permit market forces to establish the best market price for

13

services necessary to complete a real estate closing.

While

discovery may prove that the plaintiffs cannot establish procedural
and substantive unconscionability, the plaintiffs have at this
time, stated a claim to relief that is plausible on its face.
IV.

Conclusion

For the reasons stated above, Bank of America, N.A.’s motion
to join Quicken Loans, Inc.’s and Title Source, Inc.’s motion to
dismiss (ECF No. 48) is GRANTED, Quicken Loans, Inc.’s and Title
Source, Inc.’s motion to dismiss (ECF Nos. 42 and 43) are DENIED,
and plaintiffs’ motion to certify (ECF No. 36) is DENIED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

February 19, 2014

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

14