Summary
granting summary judgment to defendant on claims "for personal benefit only" based on the CFA and other state statutes
Summary of this case from Benincasa v. the Lafayette Life Insu. Co.Opinion
Civ. File No. 02-505 (PAM/SRN).
July 23, 2003.
MEMORANDUM AND ORDER
This matter is before the Court on Defendants' Motion for Summary Judgment on all of Plaintiff's claims. For the following reasons, the Court grants the Motion. Plaintiff also moves to strike the affidavit of Laurie Marrone. The Court denies the Motion to Strike.
BACKGROUND
On February 18, 2000, Plaintiff Anitra Davis met with a representative of Defendant U.S. Bancorp, d/b/a U.S. Bank National Association ("US Bank"). Davis sought to acquire a residential loan from US Bank. Following the meeting, Davis applied for a Federal Housing Administration ("FHA") loan. Cendant Mortgage Services ("Cendant") performed application processing and underwriting services for US Bank, and Davis submitted her loan application to Cendant. Cendant determined that Davis qualified for a 30-year FHA mortgage in the amount of $77,330 and provide Davis with a "Final Commitment" offering this financing to her. However, Davis was unable to find property that she desired at this price.
In April and May of 2000, Davis and her real estate agent contacted US Bank to inquire about converting the FHA loan into a conventional loan through the Minnesota Housing Finance Agency ("MHFA"). US Bank notified Davis that she was qualified for and pre-approved for a conventional loan. The pre-approval was subject to final verification by the loan underwriters, and the notification provided to Davis expressly warned that "[t]his letter is not to be construed as a commitment letter, but a credit pre-approval based on an in-file credit report." (Nuss Aff. Ex. 11.) On May 18, 2000, Davis successfully bid on a residential property and scheduled a closing for July 20, 2000. Subsequently, Davis paid a non-refundable application fee to US Bank in the amount of $375 to cover the costs of a conventional loan application. Cendant determined that they could not convert the FHA loan into a conventional loan, but continued to offer the FHA loan instead. To obtain the FHA loan, Davis would have to arrange for an FHA appraisal of the property. However, the property owner refused to allow an FHA appraiser on the premises because he did not want to sell the home with FHA financing. As a result, Davis ultimately was unable to purchase the property.
On February 4, 2002, Davis filed suit against Defendants, alleging nine separate claims in her Complaint. As styled by Davis, they are:
1. A violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1961(e), based on untimely delivery of adverse action notice;
2. A violation of the Minnesota Mortgage Originator and Servicer Licensing Act, Minn. Stat. § 58.13, based on allegedly misleading advice given by US Bank to Davis;
3. Intentional misrepresentation and constructive fraud based on allegedly misleading advice given by US Bank to Davis;
4. Negligent misrepresentation and actual fraud based on allegedly misleading advice given by US Bank to Davis;
5. A violation of the Minnesota Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69;
6. A violation of the Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.44;
7. A violation of section 8.31 of the Minnesota Statutes because US Bank charged Davis an application fee;
8. A violation of sections 8.31 and 58.13 of the Minnesota Statutes because US Bank charged Davis an application fee and failed to refund the fee when the mortgage loan did not close; and
9. A common-law fraud claim that US Bank falsely qualified applicants for MHFA mortgages.
US Bank moves for summary judgment on each of the claims. In addition, Davis moves to strike the affidavit of Laurie Marrone.
DISCUSSION
Initially, the Court denies the Motion to Strike. Davis argues that Defendants failed to disclose Laurie Marrone as a person who had information and evidence concerning the case. In response, Defendants make two arguments. First, they argue that no violation of the Federal Rules of Civil Procedure occurred because they were not aware of the existence of Laurie Marrone until May 2003. Second, Defendants argue that Laurie Marrone's employer, Cendant, occupies a crucial role in this litigation. Davis was aware of Cendant's role throughout the discovery period, but failed to conduct any third-party discovery of Cendant.
Both of Defendants' arguments have ample support in the record, and each argument could independently support a denial of Davis's Motion. Thus, the Court denies Davis's Motion to Strike.
A. Standard of Review
Defendants move for summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, which provides that such motions shall be granted only if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). When considering a motion for summary judgment, the Court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the non-moving party. Enter. Bank v. Magna Bank, 92 F.3d 740, 747 (8th Cir. 1996).
The burden of demonstrating that there are no genuine issues of material fact rests on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party has carried its burden, the non-moving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik v. County of LeSueur, 47 F.3d 953, 957 (8th Cir. 1995).
B. Federal Claim
In Count One, Davis alleges that US Bank violated the ECOA, 15 U.S.C. § 1691(e), and a federal regulation that accompanies § 1691(e). Section 1691(e) requires creditors and would-be creditors to provide notice to applicants of a decision not to approve the application. 12 C.F.R. § 202.9 specifies what information a notice of adverse action must include. The parties dispute two issues. First, in her Complaint, Davis primarily alleges that she never received the notice of adverse action and that therefore, US Bank violated the notice requirements of the ECOA. Second, Davis alleges that US Bank's notice was untimely, and that therefore, US Bank violated the notice provisions of the ECOA. (Compl. ¶ 94.)
US Bank presents evidence that on August 22, 2000, it sent an adverse action notice to Davis. However, Davis denies ever receiving this notice. US Bank contends that it satisfied the notice requirements of the statute, because "the ECOA does not require that an applicant actually receive a properly dispatched notice." (Defs.' Supp. Mem. at 24 n. 7.) The Court agrees.
The statute obligates the creditor to provide notice, but does not expressly require actual notice:
Each applicant against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor. A creditor satisfies this obligation by
(A) providing statements of reasons in writing as a matter of course to applicants against whom adverse action is taken; or
(B) giving written notification of adverse action which discloses (i) the applicant's right to a statement of reasons within thirty days after receipt by the creditor of a request made within sixty days after such notification, and (ii) the identity of the person or office from which such statement may be obtained.15 U.S.C. § 1691(d)(2). Further, courts recognize a rebuttable presumption that a properly mailed document is received. Kerr v. Charles F. Vatterott Co., 184 F.3d 938, 947 (8th Cir. 1999); see also Dusenbery v. United States, 534 U.S. 161, 170-71 (2002) (due process does not require proof of actual notice); Morse v. Internal Revenue Serv., 635 F.2d 701, 703 (8th Cir. 1980) (notice provisions of Internal Revenue Code, 26 U.S.C. § 6212, 6901, do not require actual receipt). In this case, Davis has presented no evidence to rebut that presumption.
Therefore, the Court finds that US Bank provided notice of adverse action to Davis. Davis also challenges the timeliness of US Bank's adverse action notice. Defendants dispute this allegation. The record reveals that Davis first applied for a loan in February 2000. US Bank offered Davis a 30-year FHA loan in the amount of $77,330 in March 2000. Davis subsequently requested that Defendants convert the FHA loan into a conventional loan. On July 20, 2000, Cendant, on behalf of US Bank determined that it could not change the terms of the original FHA loan. At this time US Bank continued to offer the FHA loan, and contacted Davis to give her a counter-offer. (Compl. ¶¶ 60-74.) Defendants correctly rely on 12 C.F.R. § 202.9(a), which states that "[a] creditor shall notify an applicant of action taken within. . . . (iv) 90 days after notifying the applicant of a counter-offer if the applicant does not expressly accept or use the credit offered." Therefore, the adverse action notice, sent on August 22, 2000, satisfies the timeliness requirements of notice. Accordingly, Davis's ECOA claim lacks merit.
Pursuant to 28 U.S.C. § 1367, this Court may exercise supplemental jurisdiction over the remaining state statutory and common-law claims. The remaining state claims arise out of the same facts as the federal claim and do not raise any novel or complex legal issues. Therefore, the Court will proceed to consider the remaining claims.
C. State Statutory Claims
In Counts II and V through IX, Davis alleges that US Bank violated the Minnesota Mortgage Originator and Servicer Licensing Act, Minn. Stat. § 58.13, the Minnesota Prevention of Consumer Fraud Act, Minn. Stat. § 325F.69, the Uniform Deceptive Trade Practices Act, Minn. Stat. § 325D.44, and the general provisions of section 8.31 of the Minnesota Statutes. To bring a cause of action under those statutes, Davis must satisfy the requirements of the Private Attorney General Statute, Minn. Stat. § 8.31, subd. 3a. Specifically, Davis must show that her causes of action benefit the public. See Tuttle v. Lorillard Tobacco Co., Civ. No. 99-550, 2003 WL 1571584, at *5-6 (Minn. Mar. 3, 2003) (Magnuson, J.) (citing Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn. 2000)). Because the damages that Davis requests are for personal benefit only, Davis cannot meet this requirement, and her claims must be dismissed. Id., at 6; see also, Pecarina v. Tokai Corp., No. 01-1655, 2002 WL 1023153, at *5 (Minn. May 20, 2002) (Montgomery, J.).
D. Common-Law Fraud Claims
In Counts III, IV, and IX, Davis raises common-law fraud claims against US Bank. To state a claim for common-law fraud, Davis must surmount "a high threshold of proof" and show that:
[(1)] there was a false representation regarding a past or present fact, [(2)] the fact was material and susceptible of knowledge, [(3)] the representer knew it was false or asserted it as his or her own knowledge without knowing whether it was true or false, [(4)] the representer intended to induce the claimant to act or justify the claimant in acting, [(5)] the claimant was induced to act or justified in acting in reliance on the representation, [(6)] the claimant suffered damages, and [(7)] the representation was the proximate cause of the damages.Martens v. Minn. Mining Mfg. Co., 616 N.W.2d 732, 747 (Minn. 2000). Further, "[a] misrepresentation may be made by an affirmative statement that is itself false or by concealing or not disclosing certain facts that render facts disclosed misleading." Heidbreder v. Carton, 645 N.W.2d 355, 367 (Minn. 2002) (citing M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992)).
In this case, Davis alleges that US Bank made various fraudulent representations to her. First, Davis alleges that Defendants told her that she had obtained a conventional loan. However, the record contains no evidence that US Bank made such a representation. Instead, in a letter dated May 18, 2000, US Bank notified Davis that she was qualified for and pre-approved for a conventional loan. US Bank unambiguously conditioned this pre-approval on a final verification by the loan underwriters. In fact, the notification expressly warned that "[t]his letter is not to be construed as a commitment letter, but a credit pre-approval based on an in-file credit report." (Nuss Aff. Ex. 11.) Based on this record, no reasonable juror could conclude that US Bank represented to Davis that she had obtained final approval for a conventional loan.
Likewise, Davis fails to establish the requisite elements of common-law fraud with respect to a second, unrelated statement. Davis claims that US Bank informed her that the debt repayment program in which she participated would not "interfere with [her] obtaining a home loan." (Davis Aff. ¶ 3 (emphasis added).) Ultimately, Davis's attempt to convert the FHA loan into a conventional loan was unsuccessful because of her participation in the debt repayment program. First, the statement is literally true. Throughout the entire process, Davis had been approved for a home loan, albeit an FHA loan rather than a conventional loan. The repayment program did not interfere with her obtaining that loan. However, even assuming that US Bank stated that the repayment program would not affect Davis's chances of obtaining a conventional loan, nothing in the record supports the allegation that US Bank knew that such a representation was false. Nor does Davis present any evidence to show that US Bank should have known that the repayment program could affect her chances of obtaining a conventional loan. Finally, nothing in the record suggests that Davis's participation in the repayment program was a but-for or proximate cause of Cendant's denial of her conventional loan application.
None of the other statements on which Davis bases her common-law fraud claims amount to common-law fraud. The Court concludes that these claims do not have sufficient support in the record to survive summary judgment.
CONCLUSIONS
Davis has failed to create a question of fact with respect to any of her claims. Accordingly, after review of the record, files, and proceedings herein, IT IS HEREBY ORDERED that:
1. Plaintiff's Motion to Strike (Clerk Doc. No. 35) is DENIED; and
2. Defendants' Summary Judgment Motion (Clerk Doc. No. 46) is GRANTED.