West Virginia Supreme Court Reverses Bench Verdict Voiding Mortgage and Remands $2M Punitive Damage Award
On appeal of a bench verdict in an inflated appraisal case, the West Virginia Supreme Court reversed the trial court ruling that voided the mortgage and awarded $2.1 million in punitive damages against the originator of an individual residential mortgage. The Supreme Court ruled that the trial court did not have authority under the West Virginia Consumer Credit and Protection Act (“WVCCPA”)to cancel the debt because it was a secured loan.
Under the WVCCPA, the court can only cancel secured loans that are “regulated,” meaning that they have interest rates higher than 18%. The Supreme Court explained that a loan based on a “willfully” inflated appraisal could be voided under section 31-17-17(a), but plaintiff had only proven negligence. The Court also found that the trial court erred by declining to offset the award of compensatory damages and attorneys’ fees by the amount of the appraiser’s settlement, which was $700,000. Additionally, the Court remanded the punitive damages award because the trial court failed to conduct the required analysis before imposing punitive damages. Quicken Loans, Inc. v. Brown, No. 11-0910, 2012 W. Va. LEXIS 902 (Nov. 21, 2012).
We will continue to monitor this case for any post-appeal or other proceedings on remand.
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