McCoy et al v. Southern Energy Homes, Inc. et al
Filing
130
MEMORANDUM OPINION AND ORDER: The court GRANTS The Bank of New York Mellon Corporation's 78 MOTION for Summary Judgment and DENIES Plaintiffs' 122 MOTION for Relief from 118 Memorandum Opinion and Order. Signed by Senior Judge David A. Faber on 4/23/2012. (cc: counsel of record) (arb)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT BLUEFIELD
WANDA MCCOY, et al.,
Plaintiffs,
v.
CIVIL ACTION NO. 1:09-1271
SOUTHERN ENERGY HOMES, INC.,
et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is the motion for summary judgment
filed by defendant The Bank of New York Mellon Corporation
(“BNY”).
(Doc. # 78).
For reasons expressed more fully below,
that motion is GRANTED.
I.
Background
Plaintiffs Wanda McCoy (“McCoy”), Christopher Justice, and
Melinda Justice (collectively, “Plaintiffs”) filed this action on
October 1, 2009, asserting numerous claims relating to the
purchase of a manufactured home from Defendant J.E.B. Quality
Homes, Inc. (“J.E.B.”) on October 15, 1997.
On November 20,
2009, the case was removed to federal court on the basis of
diversity jurisdiction.
McCoy is the mother of Plaintiff Melinda
Justice, who is married to Plaintiff Christopher Justice. The
home was manufactured by Defendant Southern Energy Homes, Inc.
(“Southern Energy”). Bank of New York is named in this lawsuit as
the assignee of the underlying financing contract.1
At her deposition, Melinda Justice testified that she picked
out the manufactured home that is the subject of this litigation.
Deposition of Melinda Justice (hereinafter “M. Justice Depo. at
____”) at 8 (portions attached as Exhibit E to BNY’s Motion for
Summary Judgment and Exhibit 1 to Plaintiffs’ Response to BNY’s
Motion for Summary Judgment).
Mrs. Justice stated that she
looked at several other dealerships but eventually settled on the
home at J.E.B.
See id. at 11.
J.E.B. salesman Mark Hatfield.
At J.E.B., Justice dealt with
See id. at 10-12.
Of Mr.
Hatfield’s representations to her regarding the home, Mrs.
Justice testified:
Q:
What did the lot, the sales people, tell you about
the home?
A:
Like mom said, he was very outgoing. He was just
really friendly. I don’t know a lot about houses,
I just - - I knew I liked it. And he told us - I do remember him telling us about the roof
because it didn’t have the shingles and that was
something different. But I couldn’t see the roof
from where I was at. I didn’t care about the
roof. I couldn’t look up, so I didn’t care. And
I remember him saying that the roof had a warranty
on it, but that’s really all I recall.
Q:
You don’t remember how long the warranty was?
A:
Yes. Years later after we started having trouble,
we looked through what few papers we had. But
1
According to the Complaint, J.E.B. is defunct and
dissolved. First Amended Complaint at ¶ 8.
2
yeah, he told us that we had a 50-year warranty on
the roof.
Q:
A 50?
A:
Yes.
Q:
Who was that that said that?
A:
Mark Hatfield.
Q:
Told you that you had a 50-year warranty on a
roof?
A:
Yes.
* * *
Q:
So really it was basically your visual observation
that you relied on when you purchased the home?
A:
Yes, and of course, you know, I think anytime you
buy something, the salesperson always has a really
good sales pitch. I don’t remember it, but he was
- - he had lots of comments, you know, about what
a good home it was and how well it was built. The
quality of wood that they use, something - because I don’t understand any of that. But
something about the boards, and I don’t know what
an OSB board is, but that is not what is in the
floor.
I don’t know but he had lots of things to say.
Q:
Do you think some of them are false?
A:
Oh, yes.
Q:
Okay. Tell me which ones. Tell me which comments
he made about the home that you think are false?
A:
The roof, the warranty on the roof. As far as the
rest of it, I really don’t know, but . . .
M. Justice Depo. at 11-14.
3
Christopher Justice testified that he stopped at J.E.B. on
his way home from work on several occasions to view the home with
his wife.
Deposition of Christopher Justice (hereinafter “C.
Justice Depo. at ____”) at 17-23 (portions attached as Exhibit E
to BNY’s Motion for Summary Judgment and Exhibit 1 to Plaintiffs’
Response to BNY’s Motion for Summary Judgment).
According to Mr.
Justice, he and his wife were looking for a bigger home because
of their growing family.
See id. at 16.
dealing with Mark Hatfield from J.E.B.
Justice remembered
See id. at 17, 22.
As to
Hatfield’s representations to him about the quality of the home,
Christopher Justice testified:
Q:
Did he ever make any representations about the
quality of the home?
A:
He did, actually. I recall him bragging on the
roof, the metal, it was kind of a new thing, the
metal roof.
Q:
Do you remember specifically what he said?
A:
Just that they are nice roofs, those metal
roofing. I had never seen one or any of them.
Id. at 22-23.
Ultimately, the Justices decided to purchase the home and
Christopher Justice filled out a credit application.
20-21, 33-37.
See id. at
The Justices were later informed that they would
need a cosigner.
See id.
To that end, the Justices approached
4
John2 and Wanda McCoy, Melinda’s parents, who agreed to cosign
the loan.
See id. at 33-37.
In her deposition, Wanda McCoy testified that she thought
she was signing the paperwork in connection with the purchase of
the home as a cosigner, not a buyer.
Deposition of Wanda McCoy
(hereinafter “McCoy Depo. at ____”) at 6-10 (portions attached as
Exhibit E to BNY’s Motion for Summary Judgment and Exhibit 1 to
Plaintiffs’ Response to BNY’s Motion for Summary Judgment).
Mrs.
McCoy couldn’t remember if she had gone to the sales lot to look
at the home with her daughter.
See id. at 8.
She also doesn’t
remember the substance of any conversations she may have had with
the J.E.B. salesman.
See id. at 30-31.
According to Mrs. McCoy,
she and her husband told the J.E.B. salesman “that we were there
as cosigners.”
Id. at 7.
With one exception, Mrs. McCoy admits
that she and her husband signed the Installment Contract and all
of the other documents associated with the purchase of the home.
See id. at 31-36, 45, and 48.
The Purchase Contract related to the sale of the
manufactured home was signed by Wanda McCoy and John McCoy.
Exhibit A to BNY’s Motion for Summary Judgment.
See
The Justices’
signatures do not appear on the Purchase Contract.
See id.
The
Purchase Contract also indicates that the McCoys were not trading
in another home in connection with this purchase.
2
Mr. McCoy is deceased.
5
See id.
The
Purchase Contract states that the manufactured home was subject
to a “12 Month Limited Warranty by Factory.”
Id.
The Purchase
Contract also contains the following language: “THIS AGREEMENT
CONTAINS THE ENTIRE UNDERSTANDING BETWEEN YOU AND ME AND NO OTHER
REPRESENTATION OR INDUCEMENT, VERBAL OR WRITTEN, HAS BEEN MADE
WHICH IS NOT CONTAINED IN THIS CONTRACT.”
Id.
In connection with the purchase of the home, both John and
Wanda McCoy completed a credit application with BankAmerica.
Exhibit B to BNY’s Motion for Summary Judgment.
See
The credit
application indicates that the McCoys sought to borrow $60,270 to
purchase the manufactured home and planned to make a down payment
of $6,700.
See id.
The credit application bears the signatures
of both John and Wanda McCoy and is dated October 15, 1997.
id.
See
In connection with their credit application, credit checks
were completed on the McCoys.
Summary Judgment.
See Exhibit C to BNY’s Motion for
During her deposition, however, Mrs. McCoy
indicated that the amount of income attributable to her and her
husband on the Credit Application is overstated.
McCoy Depo. at
46-48.
A Retail Installment Contract was signed by John and Wanda
McCoy on October 14, 1997.3
Summary Judgment.
See Exhibit D to BNY’s Motion for
The Installment Contract indicates that the
3
The record does not explain why the Installment Contract
was dated a day earlier than the credit application.
6
amount to be financed by BankAmerica Housing Services was $60,270
to purchase a 1997 Southern Energy Model # SE653 manufactured
home, Serial No. PSE2L10022AB.
See id.
The Installment Contract
also lists John and Wanda McCoy as the only “buyers” of the
manufactured home.4
Finally, the Installment Contract indicates
that a down payment of $6,700 was being applied to the purchase
of the home.
See id.
The Certificate of Title prepared in
connection with the purchase, dated November 5, 1997, lists John
and Wanda McCoy as the owners of the home and BankAmerica Housing
Services as the first lienholder.
for Summary Judgment.
See Exhibit F to BNY’s Motion
The Justices acknowledge they were given a
copy of the contracts and documents related to the purchase of
the home.
M. Justice Depo. at 15.
Despite the documentary evidence to the contrary,
Christopher Justice testified that he traded in a single-wide
manufactured home towards the purchase of the new Southern Energy
home.
C. Justice Depo. at 13-14, 132-33.
The title history for
the Justices’ single-wide trailer shows that it was sold to
J.E.B. on March 11, 1998.
See Exhibit 2 to Plaintiffs’ Response
to BNY’s Motion for Summary Judgment.
Exhibit 2 also indicates
that the same trailer was subsequently sold by J.E.B. to Van and
Joyce Browning.
See id.
Wanda McCoy testified that the Down
4
The Installment Contract form contains space to list up to
four buyers. See id.
7
Payment Certification that she and her husband signed is false
because the McCoys did not make a cash down payment.
McCoy Depo.
at 45.
After the home was delivered to the Justices’ land,5 it sat
for approximately six weeks before J.E.B. completed the
installation.
38.
M. Justice Depo. at 16-17; C. Justice Depo. at 37-
After the manufactured home was set up, the Justices
presented J.E.B. with a punch list of things that needed to be
fixed.
M. Justice Depo. at 18; C. Justice Depo. at 56-59.
Eventually the repairs were made to the Justices’ satisfaction.
C. Justice Depo. at 59.
The Justices moved into the house in late November/early
December of 1997.
M. Justice Depo. at
17.
A roof cap that was
damaged during transportation was replaced after the Justices
moved into the house.
See id. at 19-22.
However, according to Melinda Justice, there were no other
problems from the time they moved into the home in 1997 until
2009.
See id. at 22.
Christopher Justice likewise testified
that after the initial repairs to the roof vent/cap were
completed, there were no problems with the roof until 2009.
C.
Justice Depo. at 47-48.
5
At the time the home was delivered, the land belonged to
the McCoys. After Mr. McCoy’s death, Mrs. McCoy deeded the land
to Chris and Melinda Justice. McCoy Depo. at 37.
8
The Justices testified that, in March of 2009, after they
had occupied the home for eleven years, they began to notice
“water infiltration and mold accumulation.”
24-27; C. Justice Depo. at 48-81.
M. Justice Depo. at
In his deposition, Lamar
Dickerson, testifying on behalf of Southern Energy, stated that,
in his opinion, the roof on the manufactured home was not
installed at Southern Energy’s factory.
Deposition of Lamar
Dickerson (hereinafter “Dickerson Depo. at ____”) at 21, 45, and
49 (portions attached as Exhibit 1 to Plaintiffs’ Response to
BNY’s Motion for Summary Judgment).
Mr. Dickerson also testified
that the gutters on the home were installed incorrectly.
at 46-47.
See id.
He further opined that the vents on the home were not
those used by Southern Energy.
See id. at 103.
BNY does not agree with plaintiffs claim’ that the home had
a defective roof or that the roof was improperly repaired.
See
Report of Francis Conlin (attached as Exhibit A to BNY’s Reply
Memorandum in Support of their Motion for Summary Judgment).
BNY further disputes plaintiffs’ contention that the sales
contract and loan documents prepared in connection with the
purchase of the home were incorrect because they omitted the
Justices and reflect that Wanda McCoy and her husband were the
only purchasers of the home.
Based on the foregoing, plaintiffs filed the instant lawsuit
asserting claims for revocation of acceptance and rejection by
9
cancellation (Counts One and Two), breach of warranty (Counts
Three, Four, and Five), breach of contract/breach of the implied
duty of good faith and fair dealing (Count Six), unfair and
deceptive trade practices (Count Seven), unconscionability (Count
Eight), fraud (Count Nine), negligence (Count Ten), and strict
product liability (Count Eleven) against defendants J.E.B., BNY,
and Southern Energy6.
On September 28, 2011, the court entered an order granting
in part and denying in part the motion to dismiss filed by Bank
of New York.
Counts Four (Breach of Implied Warranty of
Merchantability), Five (Breach of Implied Warranty of Fitness),
and Six (Breach of Contract) were dismissed as barred by the
UCC’s four-year statute of limitations.
The court also dismissed
plaintiffs’ claim for breach of the duty of good faith and fair
dealing, finding that such a claim does not provide an
independent cause of action under West Virginia law that is
separate and apart from a breach of contract claim.
Stand Energy
Corp. v. Columbia Gas Transmission Corp., 373 F. Supp.2d 631, 644
(S.D.W. Va. 2005).
The court found that plaintiffs’ claim for
breach of the duty of good faith and fair dealing was subsumed
within their breach of contract claim under the UCC and,
6
Plaintiffs accepted Southern Energy’s offer of judgment,
pursuant to Federal Rule of Civil Procedure 68. On September 1,
2011, the Clerk entered judgment against Southern Energy in the
amount of $20,000.00.
10
therefore, barred by the UCC’s four-year statute of limitations.
Finally, based on plaintiffs’ withdrawal of their negligence and
strict liability claims, Counts Ten and Eleven were dismissed.
In its motion for summary judgment, BNY argues that the
Complaint should be dismissed in its entirety.
First, BNY
contends that the FTC Holder Rule, and its West Virginia
counterpart, prohibit plaintiffs from pursuing any claim against
BNY because the facts of this case do not support a claim for
rescission or restitution.
Next, BNY argues that the Justices do
not have standing to pursue claims under the UCC because they are
not “buyers” as that term is defined in W. Va. Code § 46-2103(1)(a).
BNY’s next argument is that plaintiffs’ claims under
the UCC are barred by the four-year statute of limitations.
BNY
also contends that plaintiffs’ claims under the West Virginia
Consumer Credit and Protection Act (“WVCCPA”) are barred by the
Act’s four-year statute of limitations.
BNY further contends
that the Justices are not “consumers” under the WVCCPA and,
accordingly, cannot pursue claims under that Act.
BNY also
contends that plaintiffs failed to follow the statutory
prerequisites for filing suit under the WVCCPA and that their
failure to do so mandates dismissal of those claims, Counts Seven
and Eight. Finally, BNY contends that, because plaintiffs cannot
establish fraud by clear and convincing evidence, it is entitled
to entry of judgment in its favor on the fraud claim.
11
II.
Standard of Review
Rule 56 of the Federal Rules of Civil Procedure provides:
The judgment sought shall be rendered
forthwith if the pleadings, depositions,
answers to interrogatories, and
admissions on file, together with the
affidavits, if any, show that there is
no genuine issue as to any material fact
and that the moving party is entitled to
a judgment as a matter of law.
The moving party has the burden of establishing that there is no
genuine issue as to any material fact.
477 U.S. 317, 323 (1986).
Celotex Corp. v. Catrett,
This burden can be met by showing that
the nonmoving party has failed to prove an essential element of
the nonmoving party's case for which the nonmoving party will
bear the burden of proof at trial.
Id. at 322.
If the moving
party meets this burden, according to the United States Supreme
Court, "there can be 'no genuine issue as to any material fact,'
since a complete failure of proof concerning an essential element
of the nonmoving party's case necessarily renders all other facts
immaterial."
Id. at 323.
Once the moving party has met this burden, the burden
shifts to the nonmoving party to produce sufficient evidence for
a jury to return a verdict for that party.
The mere existence of a scintilla of
evidence in support of the plaintiff's
position will be insufficient; there
must be evidence on which the jury could
reasonably find for the plaintiff. The
judge's inquiry, therefore, unavoidably
asks whether reasonable jurors could
12
find, by a preponderance of the
evidence, that the plaintiff is entitled
to a verdict . . . .
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
"If
the evidence is merely colorable, or is not significantly
probative, summary judgment may be granted."
III.
A.
Id. at 250-51.
Analysis
Assignee Liability
1.
The FTC Holder Rule
Pursuant to 16 C.F.R. § 433.2, every consumer installment
contract must include the following specific language:
ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS
SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE
DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS
OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE
PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE
DEBTOR SHALL NOT EXCEED THE AMOUNTS PAID BY THE
DEBTOR HEREUNDER.
16 C.F.R. § 433.2.
This language, commonly known as the “FTC
Holder Rule,” aims to “to abrogate the holder-in-due-course
status7 of financing companies with respect to retail installment
7
A “holder” is a person who is in
possession of a financial instrument made to
his order, or in blank. W. Va. Code 46–1–201
[1979]. If a “holder” takes that note for
value, in good faith, without notice that it
is overdue or has been dishonored or of any
defense against it or claim to it on the part
of any person, then the holder is a ‘holder
in due course’. W. Va. Code 46–3–302 [1963].
If one is a holder in due course, then
implicitly one has no knowledge of any claims
arising from the instrument or defenses
against the collection under that instrument.
13
sales contracts that the financing companies have purchased from
retail sellers.”
Rollins v. Drive-1 of Norfolk, Inc., Civil
Action No. 2:06cv375, 2006 WL 2519516, *2 (E.D. Va. Aug. 29,
2006).
The policy rationale behind the Holder Rule is
that financing companies are in a much better
position to evaluate the risks of dealing with
certain sellers than are individual consumers,
and therefore are better suited to bear the risk
that a given seller will have engaged in wrongful
business practices.
Id.
(citing 40 Fed. Reg. 53,505, 53,524 (1975)).
The
installment contract at issue herein contains the Holder Rule
language.
The Holder Rule “acts as a shield for consumers,
protecting them from creditors by allowing non-payment when a
seller has defrauded the consumer in some way.”
Crews v.
Altavista Motors, Inc., 65 F. Supp.2d 388, 390 (W.D. Va. 1999).
However, in certain limited circumstances the Holder Rule “can
also be used as a sword” allowing a buyer to maintain an
affirmative action against an assignee.
Id.
The commentary to
the Holder Rule makes clear that a buyer will be able to
Once a holder is, in fact, a holder in due
course, the only valid defenses against him
are: infancy, incapacity, duress, illegality
of the transaction, fraud in the factum, or
bankruptcy discharge on the part of the
maker. W. Va. Code 46–3–305 [1963].
One Valley Bank of Oak Hill, Inc. v. Bolen, 425 S.E.2d 829, 831
fn.2 (W. Va. 1992).
14
affirmatively assert claims against a holder only “where a
seller’s breach is so substantial that a court is persuaded that
rescission and restitution are justified.”
Reg. 53,505, 53,524 (1975)).
Id. (citing 40 Fed.
In examining the effect of the FTC
Holder Rule in another case, this court concluded that “the FTC
holder rule permits consumers to assert affirmatively against a
subsequent holder of a note those claims that the consumer has
against the original lender . . . where the seller’s breach is so
substantial that a court is persuaded rescission and restitution
are justified.”
Boggess v. Lewis Raines Motors, Inc., 20 F.
Supp.2d 979, 982 (S.D.W. Va. 1998) (Haden, J.).
Numerous courts
have likewise limited use of the Holder Rule to those situations
where the buyer’s claim is asserted as a defense to a suit by the
creditor unless the facts of the case support a claim for
rescission or restitution.
See, e.g., Rollins at *5; Comer v.
Person Auto Sales, Inc., 368 F. Supp.2d 478, 490-91 (M.D.N.C.
2005); Crews at 390-91.
In determining whether rescission or restitution are
justified, the critical inquiry is whether “the seller’s breach
renders the transaction practically worthless to the consumer.”
Irby-Greene v. M.O.R., Inc., 79 F. Supp.2d 630, 635-36 (E.D. Va.
2000).
In the context of a contract for the sale of an
automobile, courts have found that if the buyer continues to use
the vehicle, “sustaining an affirmative claim under the FTC
15
Holder Rule may be difficult.”
Comer at 490.
As the Comer court
aptly noted, “to find the FTC Holder Rule available to consumers
without the limitations [discussed above] . . . is to make the
creditor an absolute insurer or guarantor of the seller’s
performance.”
Id. at 490-91.
Given that the Justices continue
to live in the manufactured home, it cannot be said that the
transaction is “practically worthless” and, therefore, the facts
of this case do not support a claim for rescission or
restitution.
2.
West Virginia Code § 46A-2-102
The West Virginia counterpart to the FTC Holder Rule is
found at West Virginia Code § 46A-2-102.
That section provides:
[A]n assignee of any such instrument, contract or
other writing shall take and hold such
instrument, contract or other writing subject to
all claims and defenses of the buyer or lessee
against the seller or lessor arising from that
specific consumer credit sale or consumer lease
of good or services. . . .
* * *
A claim or defense which a buyer or lessee may
assert against an assignee of such instrument,
contract or other writing under the provisions of
this section may be asserted only as a matter of
defense to or setoff against a claim by the
assignee: Provided, That if a buyer or lessee
shall have a claim or defense which could be
asserted under the provisions of this section as
a matter of defense to or setoff against a claim
by the assignee were such assignee to assert such
claim against the buyers or lessee, then such
buyer or lessee shall have the right to institute
and maintain an action or proceeding seeking to
obtain the cancellation, in whole or in part, of
the indebtedness evidenced by such instrument,
16
contract or other writing or the release, in
whole or in part, of any lien upon real or
personal property securing the payment thereof.
W. Va. Code § 46A-2-102 (1) and (3).
The language of the statute
itself makes clear that a buyer’s ability to assert an
affirmative claim against an assignee is not subject to the same
limitations found in the FTC Holder Rule.
Indeed, West
Virginia’s highest court has specifically acknowledged:
The buyer can assert a claim of defective product
as a defense to the assignee’s suit to collect
the balance owed. Ordinarily, this must be done
as a defense or setoff to the assignee’s claim.
However, if the assignee does not institute suit,
the buyer may do so to obtain cancellation of the
debt.
Chrysler Credit Corp. v. Copley, 428 S.E.2d 313, 316 (W. Va.
1993) (emphasis added).
BNY is correct that Copley does not discuss the FTC
Holder Rule.
However, the authorities cited by BNY in their
discussion of the FTC Holder Rule do not mention W. Va. Code §
46A-2-102 or Copley.
Neither party mentions the obvious point:
the FTC Holder Rule is not identical to West Virginia’s rule,
codified at W. Va. Code § 46A-2-102.
For this reason, the
authorities cited by BNY discussing the FTC Holder Rule are of
limited value in ascertaining the scope of § 46A-2-102,
especially in light of Copley.
Specifically, West Virginia Code
§ 46A-2-102(3) and Copley permit a plaintiff to assert an action
17
seeking cancellation of a debt even if the assignee does not
institute suit.
Based on the foregoing, the court concludes that, to the
extent plaintiffs rely on the FTC Holder Rule to assert their
claims against BNY, BNY is entitled to judgment in its favor.
However, BNY’s motion for summary judgment is denied to the
extent it argues that W. Va Code § 46A-2-102 does not permit
plaintiffs to pursue their claims against BNY.
B.
Standing of Justices
BNY contends that the Justices do not have standing to
pursue their UCC claims (Counts One and Two) because they are not
“buyers” as that term is defined in W. Va. Code § 46-2-103(1)(a).
In Count One, plaintiffs seek to revoke acceptance of the
manufactured home.
West Virginia Code § 46-2-608, the operative
section, provides that a “buyer may revoke his acceptance of a
lot or commercial unit whose nonconformity substantially impairs
its value to him if he has accepted it . . . .”
In the
alternative, in Count Two, plaintiffs seek to reject the contract
pursuant to W. Va. Code § 46-2-601.
That section allows a
“buyer” to reject goods “if the goods or the tender of delivery
fail in any respect to conform to the contract. . . .”
W. Va.
Code § 46-2-601.
The West Virginia UCC defines “buyer” as “a person who
buys or contracts to buy goods.”
18
W. Va. Code § 46-2-103(1)(a).
Notwithstanding the Justices’ claims to the contrary, the
Purchase Contract at issue herein demonstrates that the Justices
were not parties to that contract.
The Justices, as the parties
“claiming a breach, ha[ve] the burden of proving the contract’s
existence.”
Harman Investments, Ltd. v. Shah Safari, Inc., No.
C10-0216RSL, 2010 WL 3522517, *2 (W.D. Wash. Sept. 7, 2010).
They cannot meet their burden to show they were parties to the
contract to buy the home at issue in light of the written
evidence that suggests otherwise.
Cf. id. at 3 (“In this case,
none of the documents identifies [defendant] as the purchaser or
buyer. . . . In sum, there is no evidence that [defendant]
contracted to buy goods or that the parties agreed its role
encompassed being a buyer.”); Reece v. Yeager Ford Sales, Inc.,
184 S.E.2d 727, 731 (W. Va. 1971)(“As Ford, the manufacturer, was
not the seller of the automobile and was not a party to the
contract of sale of the automobile by Yeager to the plaintiff,
the plaintiff is not entitled to rescission of the sale as
against Ford in this proceeding.”).8
8
Based on the foregoing, the
Specifically, the Justices cannot show there was a meeting
of the minds between the Justices and J.E.B., the seller, that
the Justices would in fact be the buyers of the home. Even if
the Justices testify that they were the true buyers of the home,
they cannot meet their burden to show that J.E.B. was in
agreement given the documentary evidence to the contrary. “[T]he
UCC has not obviated the basic requirement of a meeting of the
minds to form a contract.” Harman Investments, Ltd. v. Shah
Safari, Inc., No. C10-0216RSL, 2010 WL 3522517, *2 (W.D. Wash.
Sept. 7, 2010).
19
court concludes that the Justices were not “buyers” under the UCC
and, therefore, they do not have standing to pursue Counts One
and Two.
C.
UCC Statute of Limitations
BNY next argues that all plaintiffs’ UCC claims are
barred by the statute of limitations.
The manufactured home at
issue in this litigation was purchased on October 15, 1997, and
this lawsuit was filed almost twelve years later.
The statute of limitations applicable to claims brought
pursuant to the UCC is four years.
That section provides:
(1) An action for breach of any contract for sale
must be commenced within four years after the
cause of action has accrued. By the original
agreement the parties may reduce the period of
limitation to not less than one year but may not
extend it.
(2) A cause of action accrues when the breach
occurs, regardless of the aggrieved party's lack
of knowledge of the breach. A breach of warranty
occurs when tender of delivery is made, except
that where a warranty explicitly extends to
future performance of the goods and discovery of
the breach must await the time of such
performance the cause of action accrues when the
breach is or should have been discovered.
W. Va. Code § 46-2-725.
The court earlier dismissed Counts Four (Breach of
Implied Warranty of Merchantability), Five (Breach of Implied
20
Warranty of Fitness), and Six (Breach of Contract) as barred by
the four-year statute of limitations.9
1.
Revocation of Acceptance10
West Virginia Code § 46-2-608, the operative section,
provides in pertinent part:
9
Plaintiffs have moved for relief from this Order, arguing
that the court’s decision was “clearly wrong.” (Docs. #122 and
123). Plaintiffs’ argue that the decision in Chrysler Credit
Corp. v. Copley, 428 S.E.2d 313, 316 (W. Va. 1993), renders the
UCC’s statute of limitations irrelevant. Plaintiffs misread
Copley.
As stated earlier, West Virginia Code § 46A-2-102(3) and
Copley permit a plaintiff to assert an action seeking
cancellation of a debt even if the assignee does not institute
suit. Copley goes on to hold that “where a consumer is sued for
the balance due on a consumer transaction, any asserted defense,
setoff, or counterclaim available under the CCPA may be asserted
without regard to any limitation of actions. . . .” Copley at
316; see also W. Va. Code § 46A-5-102 (“Rights granted by this
chapter may be asserted as a defense, setoff or counterclaim to
an action against a consumer without regard to any limitation of
actions.”). “This waiver of the statute of limitations for a
buyer when sued for the balance due in a consumer transaction is
one of the unique features of the CCPA.” Id. at 316.
Copley is clear: only where a buyer/consumer is asserting
claims in defense to a suit against him does the waiver of
statute of limitations come into play. There is no waiver where,
as here, the buyer is not being sued for the balance due in a
consumer transaction.
Accordingly, plaintiffs’ motion for
relief from order is DENIED.
10
Revocation of acceptance under the UCC, when coupled with
a request for cancellation of the contract under W. Va. Code
§ 46-2-711(1), approximates the same result as an action for
rescission under prior law. It is generally recognized that the
UCC has rejected the use of the term rescission. City Nat’l Bank
of Charleston v. Toyota Motor Sales, 384 S.E.2d 374, 379 n.2 (W.
Va. 1989).
21
(1) The buyer may revoke his acceptance of a lot
or commercial unit whose nonconformity
substantially impairs its value to him if he has
accepted it
(a) on the reasonable assumption that its
nonconformity would be cured and it has not been
seasonably cured; or
(b) without discovery of such nonconformity if
his acceptance was reasonably induced either by
the difficulty of discovery before acceptance or
by the seller's assurances.
(2) Revocation of acceptance must occur within a
reasonable time after the buyer discovers or
should have discovered the ground for it and
before any substantial change in condition of the
goods which is not caused by their own defects.
It is not effective until the buyer notifies the
seller of it.
Plaintiffs’ have directed the court to no authority that
indicates the four-year statute of limitations for claims under
the UCC does not apply to claims for revocation of acceptance.
Indeed, given the nature of a claim for revocation of acceptance,
it makes perfect sense that the statute of limitations governing
claims for breach of contract and breach of warranty under the
UCC should also control the time within which a buyer must bring
a claim for revocation of acceptance.
See Highway Sales, Inc. v.
Blue Bird Corp., 504 F. Supp.2d 630, 642-43 (D. Minn. 2007) (“[A]
revocation-of-acceptance claim is a type of breach-of-contract
claim; it is essentially a delayed rejection of nonconforming
goods by the buyer . . .
Accordingly, Highway Sales’s
revocation-of-acceptance claim is subject to the four-year
22
statute of limitations found in UCC § 2-725(1). . . .”); Snyder
v. Boston Whaler, Inc., 892 F. Supp. 955, 959 (W.D. Mich. 1994)
(“[P]laintiff’s warranty claims are time-barred.
Plaintiff’s
revocation claim is barred as well, because plaintiff’s right to
revoke is based upon a finding that defendants breached a
warranty.”).
Based on the foregoing, the court finds that plaintiffs’
claim for revocation of acceptance (Count One) is barred by the
UCC’s four-year statute of limitations.11
2.
Rejection by Cancellation
According to W. Va. Code § 46-2-207, “[a]cceptance of
goods by the buyer precludes rejection of the goods accepted. . .
.”
It is clear that plaintiffs have “accepted” the manufactured
home because the Justices have been living in it continuously for
approximately 14 years.
See Dixie Appliance Co. v. Bourne, 77
S.E.2d 879, 880, Syllabus Pt. 2 (W. Va. 1953) (“Acts of a buyer
of goods consistent only with ownership thereof, in absence of
11
Even if the claim were not time-barred, it is clear that
plaintiffs would not be able to prevail. Revocation of
acceptance must occur before there has been “any substantial
change in condition of the goods which is not caused by their own
defects.” W. Va. Code § 46-2-608. The undisputed evidence is
that the Justices have lived in the manufactured home since 1997.
Cf. Shreve v. Casto Trailer Sales, Inc., 149 S.E.2d 238, 243 (W.
Va. 1966 (“If a buyer keeps the property and treats it as
acceptable under the sale thereof, such as was done in the case
at bar by living in the mobile home for four or five months and
making several monthly payments, it would be construed as a
waiver of his right to rescind and as accepting the property
under the contract.”).
23
explanation of such acts, constitute acceptance of the goods by
the buyer.”).
must fail.
Accordingly, any attempt to now reject the home
In any event, a rejection by cancellation claim would
be barred by the UCC’s four-year statute of limitations.
3.
Breach of Express Warranty
Breach of warranty claims are also subject to the fouryear statute of limitations and, in general, “[a] breach of
warranty occurs when tender of delivery is made.”
46-2-725(2).
W. Va. Code
§
There is, however, a future performance exception
to the statute of limitations that provides “where a warranty
explicitly extends to future performance of the goods and
discovery of the breach must await the time of such performance,
the cause of action accrues when the breach is or should have
been discovered.”
Id.
Plaintiffs contend that, prior to purchasing the home,
Melinda Justice was informed that the roof had a 50-year warranty
and, therefore, the future performance exception applies.
However, the Purchase Agreement provides that the only warranty
was a 12-month limited warranty and does not mention a 50-year
warranty.
Under West Virginia’s parol evidence rule, “[t]erms
with respect to which the confirmatory memoranda of the parties
agree or which are otherwise set forth in a writing intended by
the parties as a final expression of their agreement with respect
to such terms as are included therein may not be contradicted by
24
evidence of any other prior agreement or of a contemporaneous
oral agreement.”
W. Va. Code § 46-2-202; see also McCormick v.
Jordon, 63 S.E. 778, 779 (W. Va. 1909) (“It is well settled that
you cannot alter or deny a written contract by oral evidence.”).
For this reason, the future performance exception is not
implicated and the breach of express warranties claim is timebarred.
D.
Standing of Justices to Pursue WVCCPA Claims
In its motion for summary judgment, BNY argues that the
Justices do not have standing to pursue Counts Seven and Eight
which arise under the WVCCPA because they are not consumers under
the terms of that Act.
The provision creating a private cause of
action under the WVCCPA is § 46A–5–101(1), which pertinently
provides:
If a creditor has violated the provisions of this
chapter applying to collection of excess charges,
. . . [or] illegal, fraudulent or unconscionable
conduct . . ., the consumer has a cause of
action to recover actual damages. . . .
“Consumer” is defined as “a natural person who incurs debt
pursuant to a consumer credit sale or a consumer loan.”
Code § 46A–5–102(12).
W. Va.
This definition makes clear that the
Justices are not consumers under the WVCCPA.
are not in debt to BNY.
Simply put, they
Accordingly, they do not have an express
cause of action under the WVCCPA.
See Bishop v. Quicken Loans,
Inc., Civil Action No. 2:09-1076, 2011 WL 1321360, *11 (S.D.W.
25
Va. Apr. 4, 2011) (Copenhaver, J.); see also In re Spurlock,
Civil Action No. 3:10-1252, 2011 WL 2469830, *6 (S.D.W. Va. June
17, 2011) (“Although Mrs. Spurlock asserts she has a marital
interest in the house, it does not mean she is a consumer for
purposes of the loan.
As Mrs. Spurlock did not sign for the
loan, she cannot assert a claim as a consumer.”) (Chambers, J.);
Cather v. Seneca-Upshur Petroleum, Inc., Civil Action No.
1:09CV139, 2010 WL 3271965, *7-8 (N.D.W. Va. Aug. 18, 2010)
(“While the plaintiffs, as they must, concede that they do not
qualify as `consumers’ under the WVCCPA’s definition, they
contend that such status is irrelevant because the scope of W.
Va. Code § 46A-6-104 is not limited to claims by consumers. . . .
Because the plaintiffs in this case are . . . not `consumers’ as
defined in W. Va. Code §§ 46A-6-102(2) or 46A-1-102, the WVCCPA
does not provide them with a legal remedy in this case.”);
Mem.
Op. and Order at 4, Payne v. Green Tree Servicing, LLC, No. 2:05cv-00293 (S.D.W. Va. Mar. 7, 2006) (“Ms. Payne clearly is not a
consumer pursuant to the WVCCPA.
She is not in debt to the
defendant, nor has the defendant ever accused her of being
indebted to it.”) (Goodwin, J.).
Based upon the foregoing, the court GRANTS BNY’s motion
for summary judgment on Counts Seven and Eight as to the
Justices.
26
E.
WVCCPA Statute of Limitations
BNY also argues that any claims under the WVCCPA are
time-barred under the four-year statute of limitations found in
West Virginia Code 46A-5-101 which provides:
With respect to violations arising from consumer
credit sales or consumer loans made pursuant to
revolving charge accounts or revolving loan
accounts, or from sales as defined in article six
[§ 46A-6-101 et seq.] of this chapter, no action
pursuant to this subsection may be brought more
than four years after the violations occurred.
With respect to violations arising from other
consumer credit sales or consumer loans, no
action pursuant to this subsection may be brought
more than one year after the due date of the last
scheduled payment of the agreement.
Relying on Dunlap v. Friedman’s, Inc., 582 S.E.2d 841 (W.
Va. 2003), plaintiffs counter that the transaction at issue is a
closed-ended credit transaction and, therefore, their action is
still timely because it was brought within one year of the last
scheduled payment.
Plaintiffs are correct that the WVCCPA claims are not
time barred.
In Dunlap v. Friedman’s, Inc., 582 S.E.2d 841, 846
(W. Va. 2003), the West Virginia Supreme Court of Appeals held
that a consumer who is party to a closed-ended credit
transaction, resulting from a “sale” as defined in WVCCPA, may
bring any necessary action within either the four-year period
commencing with the date of the transaction or within one year of
27
due date of last payment, whichever is later.12
Accordingly,
plaintiffs’ WVCCPA claims are not time-barred.
F.
Failure to Follow WVCCPA Prerequisites
BNY contends that plaintiffs failed to follow the
statutory prerequisites for filing suit under the WVCCPA and that
their failure to do so mandates dismissal of those claims, Counts
Seven and Eight.
The court agrees.
See Stanley v. Huntington
Bank, Civil Action No. 1:11CV54, 2012 WL 254135, *7 (N.D.W. Va.
Jan. 27, 2012) (“This Court agrees that . . . the plaintiff’s
failure to comply with the mandatory prerequisite set forth in
Section 46A-6-106(b) bars her from bringing a claim.”).
West Virginia Code § 46A-6-106(b) provides:
Notwithstanding the provisions of subsection (a)
of the this section, no action may be brought
pursuant to the provisions of this section until
the consumer has informed the seller or lessor in
writing and by certified mail of the alleged
violation and provided the seller or lessor
twenty days from receipt of the notice of
violation to make a cure offer. . . .
12
Whether or not one agrees with the result, the holding in
Dunlap is clear. As the dissenting opinion in Dunlap noted: “In
this proceeding, the majority found that a consumer who is a
party to a closed-end credit transaction may choose between two
different statutes of limitation under the West Virginia Consumer
Credit and Protection Act (hereinafter “WVCCPA”): either the
four-year period commencing with the date of the transaction or
within one year of the due date of the last payment, whichever is
later.” Dunlap v. Friedman’s, Inc., 582 S.E.2d 841, 846 (W. Va.
2003) (Davis, J., dissenting) (internal quotations and citations
omitted). Given this straightforward pronouncement by West
Virginia’s highest court on the statute of limitations issue,
BNY’s failure to even mention Dunlap in its reply brief is
troubling.
28
W. Va. Code § 46A-6-106(b).
Plaintiffs admit they did not send
the mandatory notice required by the statute.
They attempt to
justify their failure to do so by contending that (1) because
they are suing BNY as the assignee rather than the seller, they
are not required to comply with the requirements found in W. Va.
Code § 46A-6-106(b); and 2) because JEB is a dissolved
corporation it is impossible to provide the mandatory notice.
“[C]ourts must construe statutes as written, [and] not
add words of their own choosing.”
Ignacio v. United States, No.
10-2149, 2012 WL 887594, *2 (4th Cir. Mar. 16, 2012) (quoting
Barbour v. Int’l Union, 640 F.3d 599, 623 (4th Cir. 2011) (en
banc) (Agee, J., concurring in the judgment)).
In this case,
plaintiffs cannot get around the plain language of the statute
which contains no exceptions to the requirement that notice be
provided to the seller before bringing an action under the
WVCCPA.
Mylan Pharm., Inc. v. FDA, No. Civ. A. 104CV242, 2005 WL
2411674, *6 (N.D.W. Va. Sept. 29, 2005) (“Simply, when the words
of a statute are unambiguous, `judicial inquiry is complete.’”).
As the Supreme Court has stated:
[I]n interpreting a statute a court should always
turn first to one, cardinal canon before all
others. We have stated time and again that
courts must presume that a legislature says in a
statute what it means and means in a statute what
it says there.
Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253-54 (1992).
29
Given that federal courts must apply state law as it
exists, see Burris Chem., Inc. v. USX Corp., 10 F.3d 243, 247
(4th Cir. 1993), plaintiffs fail to indicate which West Virginia
statute or decision of the West Virginia Supreme Court of Appeals
alters the plain language of W. Va. Code § 46A-6-106(b) to create
the exceptions to the mandatory notification provision they argue
should apply in this case.
As a federal court sitting in
diversity, this court is bound to apply the statute as written
and cannot create exceptions to a West Virginia statute even if
it were to conclude the legislature’s failure to do so was an
oversight.
See MCI Construction, LLC v. Hazen and Sawyer, P.C.,
213 F.R.D. 268, 272 (M.D.N.C. 2003) (“This Court cannot extend or
create North Carolina law and it will be up to the courts of
North Carolina or the North Carolina General Assembly to make any
necessary changes or interpretation to create an exception . . .
.”); Recreation Servs., Inc. Benefit Plan v. Utah Mortgage Co.,
735 F. Supp. 856, 861 (N.D. Ill. 1990) (“Since this court
presides over this case solely by its diversity jurisdiction, the
court hesitates to create exceptions to Illinois statutes absent
some argument that the Illinois Supreme Court would concur.”).
Plaintiff’s assertion that they are excepted from
providing the required notice because BNY is an assignee rather
than a seller is without merit.
The statute does not create an
assignee exception nor does the law regarding assignee rights
30
suggest one is appropriate.
“When there is an assignment of
contract rights, the assignee obtains its rights from the
assignor and, thus, stands in the shoes of the assignor and
acquires the same rights and liabilities as if it had been an
original party to the contract.”
Women in Military Service for
America Memorial Foundation, Inc. v. Hartford Fire Ins. Co., 21
Fed. Appx. 186, 192, 2001 WL 1334179, *4 (4th Cir. Oct. 30,
2001); see also State v. Scott Runyon Pontiac-Buick, Inc., 461
S.E.2d 516, 526 n.14 (W. Va. 1995) (“In essence, the assignee is
standing in the shoes of the seller.”); Lightner v. Lightner, 124
S.E.2d 355, 362 (W. Va. 1962) (“[An] assignee acquires no greater
right than that possessed by his assignor, and he stands in his
shoes.”); Lemley v. Phillips, 169 S.E.2d 789, 790 (W. Va. 1933)
(“In general, an assignee stands in the shoes of his assignor.”).
Plaintiffs’ argument that they are excused from providing
notice to the seller because it would be impossible to do so
fares no better.
The statute does not create such an exception
nor have plaintiffs shown conclusively that providing notice to
JEB was impossible.
A “federal court[] sitting in diversity
rule[s] upon state law as it exists and do[es] not surmise or
suggest its expansion.”
Burris Chem., Inc. v. USX Corp., 10 F.3d
243, 247 (4th Cir. 1993).
31
Based on the foregoing, the court GRANTS BNY’s motion for
summary judgment as to Counts Seven and Eight.13
13
Even if Mrs. McCoy was not barred from bringing her claims
based upon her failure to comply with W. Va. Code § 46A-6-106(b),
her claims under the WVCCPA would still be subject to dismissal.
Mrs. McCoy testified that she remembers very little about the
transaction at issue in this case. Specifically, she testified:
Q:
Can you or do you remember that the transaction
wherever you decided to purchase the manufactured
home?
A:
You know, vaguely. I remember being there as a
cosigner, me and my husband and Melinda - - and I
was telling Chris yesterday I don’t remember him
being there, but that is nothing strange for me.
I am not good at remembering a lot of things.
* * *
Q:
Did you go with Melinda and her husband to look at
the home?
A:
I don’t remember.
I’m sorry.
* * *
Q:
How did you become involved, who approached you?
A:
Me and my husband - - it all happened really fast.
The day we were in the office and after that, I
swear, I don’t know what took place, but I do
remember vaguely, I did sign, but I just remember
signing the papers as a cosigner.
Q:
Did anybody - - did they run a credit application
for you, do you remember that? Where they took
down your financial information and your job
history and things like that?
A:
I’m sorry.
I don’t remember.
I don’t remember.
* * *
Q:
Do you remember the substance of any conversations
32
E.
Common Law Fraud and Misrepresentation
With respect to their fraud and misrepresentation claims,
plaintiffs assert the following:
64.
Defendant Dealer informed Plaintiffs that
the manufactured home was a good quality
home and that they would take care of any
problems Plaintiffs experienced with the
home.
65.
The information conveyed to Plaintiffs as
outlined specifically above was false.
66.
Plaintiffs relied upon Defendant’s
representations in making their decision to
purchase the new manufactured home.
67.
Plaintiffs were justified in relying upon
Defendant’s representations in making their
decision to purchase the new manufactured
home.
First Amended Complaint ¶¶ 64-67.
that you had with Mr. Hatfield?
A:
No, ma’am.
That’s horrible.
Q:
You think that you did talk to him when you were
purchasing the home?
A:
You know, I don’t remember what he said. If I
remember what he said, I am sure I would remember
what I said, but, no, I do not remember our
conversation that day.
McCoy Depo. at 6-9, 31. Because Mrs. McCoy cannot provide any
details about her dealings with J.E.B., she cannot prove her
claims as a matter of law. See Jones v. Home Loan Investments,
F.S.B., 718 F. Supp.2d 728, 737 (S.D.W. Va. 2010) (dismissing
plaintiff’s WVCCPA claim because the plaintiff “state[d] that she
does not remember any of the transactions regarding the formation
of the loan.”).
33
In its motion for summary judgment, BNY argues that
plaintiffs cannot prevail on their claim for fraud and
misrepresentation because: 1) Wanda McCoy cannot remember the
substance of any conversations she had with JEB about the quality
of the home; 2) the Justices were not damaged by any alleged
fraud because they are not obligated on the contract; and 3)
plaintiffs cannot prove materiality or reliance.
Under West Virginia law, the essential elements in a
cause of action for fraud are: (1) that the act claimed to be
fraudulent was the act of the defendant or induced by him; (2)
that it was material and false; that plaintiff relied upon it and
was justified under the circumstances in relying upon it; and (3)
that he was damaged because he relied upon it.
Tri-State Asphalt
Products, Inc. v. McDonough Co., 391 S.E.2d 907, 912 (W. Va.
1990) (quoting Lengyel v. Lint, 280 S.E.2d 66, Syl. pt. 1 (W. Va.
1981)).
Allegations of fraud must be established by clear and
convincing proof.
See id.
According to the United States Court
of Appeals for the Fourth Circuit: “[t]he burden of proving fraud
is unquestionably heavy, Hunt v. Hunt, Trustee, 91 W. Va. 685,
114 S.E. 283, and it is also well established that one cannot
rely blindly upon a representation without suitable investigation
and reasonable basis. Buena Vista Co. v. Billmyer, 48 W. Va. 382,
34
37 S.E. 583.”
Elk Refining Co. v. Daniel, 199 F.2d 479, 482 (4th
Cir. 1952).
And where both parties to a contract have equal
means and opportunity to acquire information, so
that by ordinary diligence either may rely on his
own judgment, they will be presumed to have done
so, and if not, they must abide by the
consequences of their own folly or carelessness.
Tri-State Asphalt at 912-13 (quoting Jones v. McComas, 115 S.E.
456 (W. Va. 1922)).
The majority of the allegedly fraudulent statements
relied upon by plaintiffs are too vague to establish a cause of
action for fraud.
For example, in the Complaint, plaintiffs
contend that JEB represented the manufactured home at issue was
“a good quality home.”
First Amended Complaint ¶ 64.
During his
deposition, Christopher Justice testified that JEB informed him
that metal roofs are “nice roofs.”
C. Justice Depo. at 22-23.
Expressions of opinion that are of a vague and general character
cannot make out a claim for fraud.
See, e.g., Miller v.
PremierCorp., 608 F.2d 973, 981 (4th Cir. 1979) (“[A]n unspecific
and false statement of opinion such as occurs in puffing
generally cannot constitute fraud.”). See also Lewis v. Trustmark
Ins. Co., 1999 WL 486665 (4th Cir. 1999).
As the West Virginia
Supreme Court of Appeals has stated:
Upon the authorities it may be laid down as a
general rule that an expression of opinion or
belief, if it is nothing more than this, and if
so intended and understood, is not a
representation of fact, and, though false, does
35
not amount to fraud. A person ordinarily has no
right to rely upon such a statement, and if he does so he cannot
treat it as fraud, either for the purpose of maintaining an
action of deceit, or for the purpose of rescinding a contract at
law or in equity. To furnish grounds for an action of deceit the
representation must be of a matter susceptible of approximately
accurate knowledge and must be in form and substance an assertion
importing knowledge on the part of the speaker. A statement
which by reason of its form or subject-matter amounts merely to
an expression of opinion is not actionable, for it is one upon
which reliance cannot safely be placed.
McCormick v. Jordon, 63 S.E. 778, 780 (W. Va. 1909).
For this reason, fraud claims based upon allegations of
“good quality” and the like are routinely rejected.
See, e.g.,
Lambert v. Downtown Garage, Inc., 553 S.E.2d 714, 717 (Va. 2001)
(“[C]ommendatory statements, trade talk, or puffing, do not
constitute fraud because statements of this nature are generally
regarded as mere expressions of opinion.”); Watson v. Avon Street
Business Center, Inc., 311 S.E.2d 795, 798 (Va. 1984) (“In the
case before us, the only express representations concerning the
roof were made by Zerkel, the sellers’ agent, to the effect that
it was a `25-year roof’ and `a good roof.’
These statements . .
. are typical seller’s talk, expressions of opinion insufficient
to frame a jury issue in an action for deceit.”).
The only statement arguably specific enough to support a
claim for fraud/misrepresentation is the alleged “50-year
warranty”.
However, given that the Purchase Agreement promised
only a 12-month warranty, any reliance on the alleged oral
promise of a 50-year warranty was not justified.
36
Relying on the
Restatement (Second) of Torts, the Supreme Court of Appeals of
West Virginia has recognized that “[t]he recipient of a
fraudulent misrepresentation is not justified in relying upon its
truth if he knows that it is false or its falsity is obvious to
him.”
Kidd v. Mull, 595 S.E.2d 308, 316 (W. Va. 2004) (quoting
Restatement (Second) of Torts § 541 (1977)); see also C.J.S.
Fraud § 55 (2012) (“A reliance on oral representations is
unjustifiable for purposes of a fraud claim where a written
agreement states a fact contradictory to the claimed
representation.”); AM. JUR. 2d Fraud and Deceit § 264 (2012)
(“Thus, where an alleged misrepresentation is explicitly
addressed and negated in a written agreement signed by the
parties, any reliance on a contrary oral assertion is
unreasonable as a matter of law.”).
Furthermore, plaintiffs have failed to prove by clear and
convincing evidence that the alleged misrepresentations about the
roof had anything to do with the purchase of the home.
According
to Melinda Justice: “And he told us - - I do remember him telling
us about the roof because it didn’t have the shingles and that
was something different.
I was at.
But I couldn’t see the roof from where
I didn’t care about the roof.
I didn’t care.
I couldn’t look up, so
And I remember him saying that the roof had a
warranty on it, but that’s really all I recall.”
Depo. at 11-12 (emphasis added).
37
M. Justice
In their brief in response to BNY’s Motion for Summary
Judgment, plaintiffs contend: “Presumably, the dealer (who is in
a better position to know) knew about the defective roof,
concealed the defect from Plaintiffs in order to make a sale, all
the while telling Plaintiffs that it would take care of any
defects.”
Plaintiffs’ Response to BNY’s Motion for Summary
Judgment at 11-12.
Even assuming that the roof was defective
when it was sold to the Justices (and this is a disputed issue),
plaintiffs have offered no evidence to support their assertion
that J.E.B. knew about any alleged defects.
Furthermore, West
Virginia’s highest court has made clear on more than one
occasion, “[f]raud is never presumed and when alleged it must be
established by clear and distinct proof.”
Gerver v. Benavides,
530 S.E.2d 701, 705 (W. Va. 2000) (quoting Bennett v. Neff, 42
S.E.2d 793, Syllabus Point 5 (W. Va. 1947)).
Based on the
foregoing, this court cannot “presume” the existence of fraud.
Finally, as to Mrs. McCoy, it is obvious that plaintiffs
cannot establish a case of fraud by clear and convincing evidence
as to any of the elements.
In her deposition, Mrs. McCoy
testified that she could not remember her conversations with
J.E.B. related to the purchase of the home.
Therefore, she
cannot claim in this proceeding that she relied to her detriment
on a false representation if she cannot even remember any
representation made to her.
See Basham v. Gen. Shale Prods.
38
Corp., 989 F.2d 491, 1993 WL 65086, at *4 (4th Cir. Mar. 10,
1993) (affirming summary judgment on fraud claim based upon the
appellants’ concession that they “cannot now, fifteen years or
more after the sales, remember what conversations occurred
between the . . .
sellers and themselves”).
Accordingly, BNY is
entitled to summary judgment on the fraud claims of Mrs. McCoy.
To the extent that plaintiffs have attempted to assert
new fraud claims in their response to BNY’s motion for summary
judgment, their attempt fails.
“A plaintiff cannot rely on a
response to a motion for summary judgment to act as an amendment
to correct deficiencies in a complaint challenged by a
defendant’s motion for summary judgment.”
Martin v. Mathena,
Civil Action No. 7:11-cv-00010, 2012 WL 43609, *6 (W.D. Va. Jan.
9, 2012); see also Barclay White Skanska, Inc. v. Battelle Mem’l
Inst., 262 Fed. Appx. 556, 2008 WL 238562, *6 (4th Cir. Jan. 29,
2008) (and authorities cited therein).
IV.
Conclusion
Based on the foregoing, BNY’s motion for summary judgment
was GRANTED.
Plaintiffs’ Motion for Relief from Order, (doc. #
122), is DENIED.
The Clerk is directed to send copies of this Memorandum
Opinion and Order to all counsel of record.
IT IS SO ORDERED this 23rd day of April, 2012.
39
ENTER:
David A. Faber
Senior United States District Judge
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