# Ortiz v. Wilmington Savings Fund Society, FSB

> District Court, S.D. West Virginia · August 1, 2019

URL: https://www.frixlaw.com/law-library/cases/10728549

## Case

- **Court:** District Court, S.D. West Virginia
- **Decided:** August 1, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10728549

## How later opinions describe it (automated extraction)

- holding that waiver is not automatic, but requires a showing of prejudice or unfair surprise
- noting that affirmative defenses may be pled in pre-trial motions and that the district court did not abuse its discretion by permitting defendant to raise an affirmative defense after the answer

## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON

BARBARA ORTIZ,

Plaintiff,

v. Civil Action No. 2:18-cv-1129

WILMINGTON SAVINGS FUND SOCIETY,
FSB d/b/a CHRISTINA TRUST AS
OWNER TRUSTEE OF THE
RESIDENTIAL CREDIT
OPPORTUNITIES TRUST III,
FCI Lender Services Inc., and
Dana Capital Group, Inc.,

Defendants.

ORDER

Pending are a motion for summary judgment, filed May
8, 2019 by defendants Wilmington Savings Fund Society, FSB
(“Wilmington”), and FCI Lender Services, Inc. (“FCI”), and the
Motion for Leave to File Amended Answer to Amended Complaint,
filed May 30, 2019 by Wilmington and FCI. Wilmington acquired
the mortgage loan in issue in 2017. FCI services the loan.
I. Background

In 2003, the husband of the plaintiff, Barbara Ortiz
(“Ortiz”), owed approximately $88,000 in real estate debt and
about $15,000 on a judgment lien that constituted a second lien
on the same real estate. Amended Compl. ¶ 8. Late that year,
Ortiz decided to refinance both debts, along with an unspecified

amount of unsecured debt, in an “overarching, refinancing debt”
(the “Loan”) with Fremont Investment & Loan Company (“Fremont”).
Plaintiff sought the Loan “primarily to enable negotiation of a
settlement of the second judgment lien” of approximately
$15,000. Id. ¶ 9. ECF No. 14 at 2 (citing Amended Compl. ¶
14).

Plaintiff entered into the Loan on January 26, 2004,
which amounted to $115,545, pursuant to an adjustable rate note
(“Note”) secured by a deed of trust in the same real estate
(“Deed of Trust”). See Note, ECF No. 5-1; Deed of Trust, ECF
No. 5-2; Ex. 1, Ortiz Dep. 50:1–4, 59:15–23. Under the terms of
the Note and Deed of Trust, plaintiff owed regular monthly
payments. See, e.g., Note § 3, ECF No. 5-1; Deed of Trust § 1,
ECF No. 5-2.

Plaintiff claims she was subjected to the practice of
“predatory lending” and was exploited by Fremont and Dana
Capital Group Inc. (“Dana Capital”), the Loan broker, and
wrongly persuaded into entering into an “unaffordable
refinancing secured by [her] home.” Amended Compl. 1.
Plaintiff claims to have requested a “fixed rate” loan, which,
according to her, “was accurately depicted on the loan
application.” Id. ¶ 22. However, the Loan she entered into was

an adjustable rate loan which provided that plaintiff’s interest
rate would not decrease below 8.99 percent, but could increase
to as much as 15.99 percent. Id. ¶ 36. Plaintiff paid monthly
installments on her Loan for fourteen years that varied in
amounts from month to month. ECF No. 33, Ex. 1, Ortiz Dep.
62:18–63:18; 103:5–12, attached as ex. 1.

Plaintiff further alleges that the settlement
statement allocated $8,000 to pay off the judgment lien of
$15,000, and Fremont and Dana Capital prepared a closing
document titled “Creditors to be paid off,” listing $8,000 as an
amount required to be paid off. Id. ¶ 42. Dana Capital
negotiated a settlement with the judgment creditor to pay $8,000
in exchange for a release of the judgment lien. Id. ¶ 43. She
asserts that the judgment lien was not paid with the Loan
proceeds until January 2006, but instead held in a trust account
for those two years. Id. ¶¶ 44-45. Plaintiff also alleges that
the failure to furnish the $8,000 to the judgment creditor
caused the judgment lien to take primary lien status over the
Fremont home loan. Id. ¶ 45.

As a result of the aforementioned events, the judgment
creditor began collecting on the debt in May 2004. Id. ¶ 47.
In April 2005, the judgment creditor sought to utilize what had
become its primary lien status to foreclose on plaintiff’s
property. Id. ¶ 48. Plaintiff quickly retained an attorney, at
a cost of $2,000.00, to negotiate the payoff of the judgment
lien for the original amount of the judgment. Id. ¶ 48.
Plaintiff paid $7,262.02 of the settlement in August 2005 to the
judgment creditor; however, “defendant continued to refuse to
release the remaining $8,000.00 to pay off the judgment lien.”

Id. ¶ 49. The judgment creditor brought suit against plaintiff
and lender in January 2006, and lender “finally relented and
released the $8,000.00 to the judgment creditor.” Id. ¶ 50.
Approximately thirteen years later on May 31, 2017,
Wilmington became the owner of the Note, Deed of Trust, and
Ortiz’s debt through a series of assignments. Id. ¶ 5;

Countercl. ¶ 5-7; Assignments of Deed of Trust, ECF Nos. 5-4 to
5-5. Although Ortiz owed regular monthly payments under the
Note and Deed of Trust, she failed to furnish some of them
timely. ECF No. 32 at Aff. of Ron McMahan; Countercl., Ex. A,
B. According to the defendants, “it has been approximately
sixteen months since Plaintiff last made a full, timely payment”
- since May 18, 2017. ECF No. 13 at Aff. of Ron McMahan ¶ 9.
She has been in default on the Loan since at least December 11,
2017. Id. at Aff. of Ron McMahan ¶ 10. As a result, she
breached the terms of the Note and Deed of Trust, triggering the
Loan’s acceleration and the lender’s option to exercise its

power of sale. Countercl., Ex. 2 at 15; Deed of Trust § 22, ECF
No. 5-2.
On December 14, 2017, Wilmington served notice to
execute a foreclosure sale of the property. See, e.g., Aff. of
Ron McMahan ¶ 11, ECF No. 13-1; Demand, ECF No. 13-8.
Thereafter on April 9, 2018, Ortiz instituted a lawsuit in

Fayette County Circuit Court, alleging various contractual
defenses of unconscionability and fraud and affirmative claims
of fraud and excessive late fees. See Amended Compl. The
claims “were variously pleaded against Wilmington [holder] as
well as Defendants FCI (servicer) and Dana Capital Group, Inc.
(broker).” ECF No. 33 (citing Amended Compl.).
The complaint consists of six counts:
Count I, Contract Defense - Unconscionable Broker
Agreement (as to Broker Dana Capital only);

Count II, Fraud as a Contract Defense – Loan Agreement
(Loan Servicer/Holder);

Count III, Unconscionability as a Contract Defense to
the Loan Agreement (Loan Servicer/Holder);

Count IV, Fraud as a Contract Defense and for Damages
(as to all defendants); and

Count VI, Excessive Late Fees (Loan Servicer/Lender).
The court notes that Count V has been voluntarily dismissed by
the plaintiff.
Defendants Wilmington and FCI removed the action to
this court on July 9, 2018, and Wilmington brought counterclaims
of breach of contract and declaratory judgment, seeking to
exercise its power of sale. See Countercl. Wilmington moved
for summary judgment on the counterclaim which sought
foreclosure. The motion is denied by order entered
contemporaneously herewith.
Wilmington and FCI now seek summary judgment on the
claims made against them, asserting that Counts II, III, and IV
are time barred, and that plaintiff has failed to create a
genuine issue of material fact under Count VI that FCI and
Wilmington charged excessive late fees.
II. Legal Standard

A party is entitled to summary judgment “if the
pleadings, the discovery and disclosure materials on file, and
any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c). Material facts are
those necessary to establish the elements of a party’s cause of
action. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).

A genuine issue of material fact exists if, in viewing
the record and all reasonable inferences drawn therefrom in a
light most favorable to the non-moving party, a reasonable fact-
finder could return a verdict for the non-movant. Id. The
moving party has the burden of showing - “that is, pointing out
to the district court - that there is an absence of evidence to
support the nonmoving party’s case.” Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986). If the movant satisfies this burden,
then the non-movant must set forth specific facts as would be

admissible in evidence that demonstrate the existence of a
genuine issue of fact for trial. Fed. R. Civ. P. 56(c); id. at
322-23. A party is entitled to summary judgment if the record
as a whole could not lead a rational trier of fact to find in
favor of the non-movant. Williams v. Griffin, 952 F.2d 820, 823
(4th Cir. 1991).

III. Discussion
A. Motion to Amend

The defendants filed on May 30, 2019 a contested
motion to amend their answer to include the affirmative defense
of laches. A defendant’s failure to assert the affirmative
defense of laches in its answer can, in some instances, result
in waiver. See Fed. R. Civ. P. 8(c). However, “there is ample
authority in this Circuit for the proposition that absent unfair
surprise or prejudice to the plaintiff, a defendant's
affirmative defense is not waived when it is first raised in a

pre-trial dispositive motion.” Brinkley v. Harbour Recreation
Club, 180 F.3d 598, 612 (4th Cir. 1999) (citing Peterson v.
Airline Pilots Ass'n, 759 F.2d 1161, 1164 (4th Cir. 1985)
(holding that waiver is not automatic, but requires a showing of
prejudice or unfair surprise); American Recovery Corp. v.
Computerized Thermal Imaging, Inc., 96 F.3d 88, 96 (4th Cir.
1996) (evaluating prejudice to plaintiff when considering
timeliness of affirmative defense of arbitration); Polsby v.
Chase, 970 F.2d 1360, 1364 (4th Cir. 1992) (noting that
affirmative defenses may be pled in pre-trial motions and that
the district court did not abuse its discretion by permitting
defendant to raise an affirmative defense after the answer);
vacated and remanded on other grounds, 507 U.S. 1048 (1993)).

Wilmington took one deposition on January 7, 2019,
being that of the plaintiff. The central focus of that entire
line of questioning was the passage of time between the date of
the closing and the filing of this lawsuit in April 2018, and
more particularly, why plaintiff waited fourteen years to bring
legal action. See Barbara Ortiz Dep. 61:10–12, 62:15–63:21,
64:24–65:20, 67, 98:11–99:22, 115:20-119:9, ECF No. 37, attached
as Ex. 1. Since then the plaintiff was given an opportunity to
respond to the merits of laches and statute of limitations
arguments in briefing her responses to Wilmington’s motion for

summary judgment and motion to amend, and she did in fact
respond to those arguments.
The plaintiff has been on notice, from an early stage
of this case, of the defendants’ intent to raise timeliness as a
defense strategy pursuant to the affirmative defenses of the
statute of limitations and repose listed in their answer to the

amended complaint. Answer & Countercl. ¶ 3, p. 12, ECF No. 5
(“Plaintiff’s claims are barred in whole or in part by any and
all applicable statutes of limitations or repose.”). Under the
circumstances, the plaintiff is unable to show either surprise
or undue prejudice by the defendants’ failure to include the
laches defense in their answer. As hereinafter more fully
developed, the parties addressed the question of timeliness
throughout the course of this litigation, and the plaintiff has
not been unfairly prejudiced by the defendants’ inadvertent
omittance. Consequently, the defense of laches was not waived,
the motion to amend the answer to include it is granted, the

answer is deemed amended accordingly, and the court will
consider the defense of laches on the merits.
B. Counts II, III, and IV

The defendants claim that Counts II (Fraud as a
Contract Defense), III (Unconscionability as a Contract
Defense), and IV (Fraud as a Contract Defense and for Damages)
are untimely. Counts II and III seek equitable relief that is
subject to a laches defense. Count IV seeks both equitable
relief and damages at law and is subject, respectively, to a
laches defense and a statute of limitations defense.

Federal courts sitting in diversity apply state
statutes of limitations to state law claims. See Walker v.
Armco Steel Corp., 446 U.S. 740, 753 (1980). To determine
whether an action is time-barred, the Supreme Court of Appeals
of West Virginia has outlined a five-step analysis that courts
should follow:
First, the court should identify the applicable
statute of limitation for [the] cause of action.
Second, the court . . . should identify when the
requisite elements of the cause of action occurred.
Third, the discovery rule should be applied to
determine when the statute of limitation began to run
by determining when the plaintiff knew, or by the
exercise of reasonable diligence should have known, of
the elements of a possible cause of action . . . .
Fourth, if the plaintiff is not entitled to the
benefit of the discovery rule, then determine whether
the defendant fraudulently concealed facts that
prevented the plaintiff from discovering or pursuing
the cause of action. Whenever a plaintiff is able to
show that the defendant fraudulently concealed facts
which prevented the plaintiff from discovering or
pursuing the potential cause of action, the statute of
limitation is tolled. And fifth, the court or the jury
should determine if the statute of limitation period
was arrested by some other tolling doctrine.
Syl. Pt. 5, Dunn v. Rockwell, 689 S.E.2d 255, 258 (W. Va. 2009).
“Where a suit . . . is not for damages but seeks to
rescind a writing or impose a trust or other equitable relief,
it is not a common law action for fraud but is equitable in
nature. Consequently, the doctrine of laches is applicable
rather than any specific statute of limitations period." Syl.
Pt. 7, Dunn, 689 S.E.2d at 258. “This is not to say that there
is no time limit for filing an equitable cause of action." Id.
at 267 n.11. "Laches applies to equitable demands where the
statute of limitation does not." Syl. Pt. 2, Condry v. Pope,
166 S.E.2d 167, 167 (W. Va. 1969).
"Laches is a delay in the assertion of a known right
which works to the disadvantage of another." Syl. Pt. 2, Bank
of Marlinton v. McLaughlin, 17 S.E.2d 213, 214 (W. Va. 1941).
But "[m]ere delay will not bar relief in equity on the ground of
laches." Syl. Pt. 1, State ex rel. Smith v. Abbot, 418 S.E.2d
575, 576 (W. Va. 1992). Instead, the West Virginia Supreme
Court "has consistently emphasized the necessity of a showing
that there has been a detrimental change of position in order to

prove laches." Dunn, 689 S.E.2d at 267 (citing Maynard v. Board
of Educ. of Wayne Cnty., 357 S.E.2d 246, 253 (W. Va. 1987); Syl.
Pt. 3, Carter v. Price, 102 S.E. 685 (W. Va. 1920)). For laches
to bar a claim, the defendant must establish a detrimental
change of position as a result of a plaintiff's delay in
bringing the action. See White v. Daniel, 909 F.2d 99, 102 (4th
Cir. 1990) ("Laches imposes on the defendant the ultimate burden
of proving '(1) the lack of diligence by the party against whom
the defense is asserted, and (2) prejudice to the party
asserting the defense.") (citing Costello v. United States, 365
U.S. 265, 282 (1961)).

The defendants claim that a “presumption of laches”
based on the analogous statute of limitations for the claims in
issue should be applied. Id. "Under equitable principles the
statute of limitations applicable to analogous actions at law is
used to create a 'presumption of laches.' This principle
'presumes' that an action is barred if not brought within the
period of the statute of limitations and is alive if brought
within the period." Tandy Corp. v. Malone & Hyde, Inc., 769
F.2d 362, 365 (6th Cir. 1985).

“When federal courts, in the exercise of their
equitable power, consider laches, they are guided by the
limitations period that they would borrow for actions at law and
presume that if an equitable claim is brought within the
limitations period, it will not be barred by laches.” Lyons
P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 799 (4th
Cir. 2001), abrogated in part by Petrella v. Metro-Goldwyn-
Mayer, Inc., 134 S. Ct. 1962 (2014), (citing, among others,
Tandy 769 F.2d at 365-66).

In addition, several short per curiam opinions from
the Fourth Circuit Court of Appeals indicate its willingness to
presume prejudice as a result of dilatoriness in bringing an
equitable action. See Riddick v. Baltimore Steam Packet Co.,
374 F.2d 870, 871 (4th Cir. 1967) (per curiam) (recognizing a
"presumption of prejudice"); Davis v. Nelson, 285 F.2d 214, 215

(4th Cir. 1960) (per curiam) ("As this delay of nearly seven
years exceeds any possibly applicable limitations period, it
became the duty of the libellant to plead and prove facts
negativing a presumption of prejudice from inexcusable delay.
The presumption would be against prejudice if suit had been
brought during the legal period of limitations.").

In applying the presumption of prejudice where the
equitable action is not brought within the statute of
limitations period, defendants note that Counts II and IV are
for fraud, and assert that the analogous statute of limitations
should be two years pursuant to W. Va. Code § 55-2-12, which
provides that:
[e]very personal action for which no limitation is
otherwise prescribed shall be brought: (a) Within two
years next after the right to bring the same shall
have accrued, if it be for damage to property; (b)
within two years next after the right to bring the
same shall have accrued if it be for damages for
personal injuries; and (c) within one year next after
the right to bring the same shall have accrued if it
be for any other matter of such nature that, in case a
party die, it could not have been brought at common
law by or against his personal representative.
Id. They further claim that the analogous statute of
limitations for plaintiff’s Count III unconscionability claim
should be four years pursuant to W. Va. Code § 46A-5-101(1),
which provides:
If a creditor or debt collector has violated the
provisions of this chapter applying to collection of
excess charges . . . illegal, fraudulent or
unconscionable conduct . . . the consumer has a cause
of action to recover: (a) Actual damages; and (b) a
right in an action to recover from the person
violating this chapter a penalty of $1,000 per
violation: Provided, That the aggregate amount of the
penalty awarded shall not exceed the greater of
$175,000 or the total alleged outstanding
indebtedness. With respect to violations arising from
consumer credit sales, consumer leases or consumer
loans, or from sales as defined in article six of this
chapter, no action pursuant to this subsection may be
brought more than four years after the violations
occurred: Provided further, That no action pursuant to
this subsection to set aside a foreclosure sale of any
real estate securing a consumer loan may be brought
more than one year after the foreclosure sale is
final.
Id. (emphasis in original).
Defendants contend that, even if this court chooses
not to apply the presumption of prejudice in this case, they
have at this juncture successfully shown (1) lack of diligence
by the plaintiff and (2) prejudice to them. See Costello, 365
U.S. at 282. Defendants claim to have detrimentally changed
positions as a result of plaintiff’s delay in bringing this
action inasmuch as they were unable to obtain the payment
history of the Loan prior to when Kirkland Financial acquired it
on June 25, 2015, and were thereby prevented from developing a
holder in due course defense. Further, they assert that, even
if relevant witnesses from 2003 to 2004 could be found, the
“recollection of events” of witnesses from that long ago “are
bound to be faded and of little use.” See ECF No. 33 (citing
Powell v. Bank of Am., N.A., 2012 U.S. Dist. LEXIS 48753, at *18
(S.D. W. Va. 2012)); ECF No. 33 at Ortiz Dep. 61:10–12; 67:11–
23, attached as Ex. 1 (plaintiff herself could not remember
which attorney handled the Loan closing “during which she was
purportedly duped and defrauded”).

Plaintiff appears to have intentionally pled Counts II
and III for equitable relief only, even though both W. Va. Code
§ 55-2-12 and W. Va. Code § 46A-5-101(1) permit a party to seek
damages, should one so choose. See Amended Compl. ¶¶ 70, 77.
Count IV, on the other hand, was pled for equitable relief as
well as for actual and punitive damages. Id. ¶ 85.

As noted, the analogous statute of limitations for
claims under W. Va. Code § 55-2-12 is two years. The alleged
fraud here occurred during the Loan origination process, which
plaintiff generally alleges took place between the months of
December 2003 and February 2004. Amended Compl. 3. Thus, the
statute of limitations as to the fraud claims of Counts II and
IV would have accrued on a date no later than February 29, 2004.

As also noted, the analogous statute of limitations as
to the Count III unconscionability claim brought under the West
Virginia Consumer Credit and Protection Act (“WVCCPA”) is four
years. The statute provides that in the context of a consumer
loan, no action may be brought more than four years after the
violation occurred. In the present case, the alleged violation
– unconscionability as a contract defense to the loan agreement
– took place at the time the Loan was entered into by the
parties. See Amended Compl. ¶¶ 71-77. Thus, the statute of
limitations as to Count III would have begun to toll on the date
of the closing, which took place on January 26, 2004.

Consequently, the statute of limitations as to Counts
II, III, and IV would have expired long before the filing of
this lawsuit in 2018.

Application here of the presumption of prejudice would
render the plaintiff’s Count II fraud as a contract defense
claim, and Count III unconscionability claim as well as the
equitable portion of Count IV, time barred. That is, the
limitations period began to toll on January 26, 2004, while
plaintiff did not bring this action until April 9, 2018.

The court, however, need not apply the presumption
inasmuch as the court reaches the same conclusion in applying
the traditional laches analysis of delay and detrimental change
of position as a result of the delay. The plaintiff waited
fourteen years to file this lawsuit, despite having obtained the
appraisal report shortly after closing, despite having made
inconsistent monthly payments for years as a result of the
variable interest rate, and despite having hired an attorney to
review and help correct part of the Loan transaction in 2005.
Amended Compl. ¶ 29; ECF No. 33, Facsimile from Ortiz to
Fremont, attached as Ex. 2 (May 13, 2004); Ex. 3, Letter from
Fremont (May 13, 2004). The passage of time between the date of
the Loan origination and the filing of this lawsuit has made it
impossible for Wilmington to obtain the full payment histories
of the Loan from prior lenders. ECF No. 32, Aff. of Ron McMahan
¶ 7.

Wilmington aptly claims to have been unable to develop
a holder in due course (“HDC”) defense as a result of the
plaintiff’s failure to bring suit in a timely fashion. If a
transferee qualifies as an HDC, it is immune to “virtually all
defenses.” See One Valley Bank v. Bolen, 425 S.E.2d 829, 831
(W. Va. 1992). Where a transferee does not qualify as an HDC in
its own right, the “shelter” rule applies, which means that the

transferee can take “shelter” under the transferor’s HDC status
pursuant to W. Va. Code § 46-3-203(b). Under this subsection,
where a negotiable instrument is transferred, any rights of the
transferor, including HDC rights, transfer to the transferee.
This means that both the HDC rights and transferee’s shelter
rights can be transferred under this rule. Id.

The court notes that the plaintiff raises the
discovery rule in her responsive brief to the defendants’ motion
to amend. “The statute of limitation[s] beg[ins] to run . . .
when the plaintiff knew, or by the exercise of reasonable
diligence should have known, of the elements of a possible cause
of action.” Dunn, 689 S.E.2d at Syl. pt. 5. Plaintiff claims
she learned of the elements of a possible cause of action when a
retrospective appraisal was obtained in 2018, at which time she
became aware of what the actual market value of her home was at
the time of the Loan origination. ECF No. 40 at 5. Thus, she
asserts that the statute of limitations accrued in August 2018,

rather than at the time of the closing. This argument is
without merit.
Ortiz testified that she suspected her home was worth
no more than $60,000 at the time she entered into the Loan
agreement. Ortiz Dep. 49:14-24, ECF No. 44, ECF No. 37,
attached as Exhibit 1. Within one year of the Loan’s

origination, plaintiff hired an attorney to evaluate the Loan
and its origination process. ECF No. 40 at 5. She made
multiple monthly payments on the loan that varied in amount due
the adjustable interest rate, and made those payments for years
without question or complaint, despite asserting that she
understood the interest rate as fixed. The Note that plaintiff
signed is titled “Adjustable Rate Note.” Accordingly, even if
the plaintiff claims to have been unaware of the violative
conduct until April 2018, she, by reasonable diligence, should
have been on notice of it more than a decade ago. Thus, the
discovery rule does not aid the plaintiff.
Accordingly, the court finds that laches bars the
assertion of Counts II, III, and the equitable relief sought in
Count IV against Wilmington and FCI. Plaintiff also seeks
damages for fraud in Count IV, triggering the two-year statute
of limitations period pursuant to W. Va. Code § 55-2-12, which
began to toll on a date no later than February 29, 2004. Thus,

Counts II, III, and the equitable portion of IV are barred by
laches and the damages at law portion of Count IV is barred by
the two-year statute of limitations. Consequently, Counts II,
III, and IV are dismissed.
C. Count VI

In Count VI, plaintiff seeks relief from Wilmington
and FCI as the current holder and servicer of the Loan for
charging excessive late fees. She claims the defendants
“repeatedly charged late fees” in violation of West Virginia
law. Amended Compl. ¶ 97. The applicable West Virginia
statute, W. Va. Code § 46A-3-113(1), mandates as to non-
precomputed consumer loans that late fees may not exceed the

greater of “[f]ive percent of the unpaid amount of the
installment, not to exceed $30.”
In looking to the record, there is no evidence that
either Wilmington or FCI charged the plaintiff excessive late
fees. The “Demand Loan Payoff” record of FCI which details the
history of charges made by FCI to the plaintiff, including late
fees, shows that plaintiff was charged late fees amounting to no
more than the equivalent of thirty dollars each month. ECF No.
32, Aff. of Ron McMahan, attached as Ex. 4 at FCI Demand Loan
Payoff, attached as Ex. 1. The “Demand Loan Payoff” form is
authorized by Ron McMahan, CEO of American Mortgage Investment

Partners Management, LLC, a company that maintains business
records of Wilmington and FCI. He attests to the fact that,
after Wilmington acquired plaintiff’s Loan, she was not charged
more than a monthly thirty dollar fee for late payments, as
evidenced by the payment history, i.e., the “Demand Loan Payoff”
form, of FCI. See Aff. of Ron McMahan ¶¶ 4, 10.

On five of the six dates that plaintiff claims the
“defendants” assessed excessive late fees, the sum of $56.15 is
said to have been charged on August 21, 2015, September 26,
2016, December 5, 2016, March 20, 2017, and May 18, 2017. ECF
No. 32, Aff. of Ron McMahan, attached as Ex. 4 at FCI Demand
Loan Payoff, attached as Ex. 1. The plaintiff was actually
charged those late fees by Kirkland Financial, as shown by the
Loan history detailed in the FCI Demand Loan Payoff form. See
id. Notably, Wilmington did not acquire the Loan from Kirkland
until May 31, 2017, at which time FCI apparently became the
servicer.
Plaintiff has provided no authority to support her
position that FCI and Wilmington should be held liable for the
violation of W. Va. Code § 46A-3-113(1) by Kirkland Financial in
charging excessive late fees to the plaintiff. Instead, she
urges that a document showing that FCI charged, on one occasion,
a late fee on November 17, 2017 of $56.07 for the transactional

period from November 11, 2017 to January 11, 2018 evidences that
FCI charged the plaintiff an excessive late fee. Under the
terms of the Loan, plaintiff owed monthly installments. A
single charge of $56.07 over a transactional period of two
months, from November 11, 2017 to January 11, 2018, at a time
when overdue payments aggregated at least $10,150.65 and the
plaintiff had not, during Wilmington’s ownership of the Loan,
made a single full timely payment was not a violation of the
statute. Accordingly, plaintiff has failed to demonstrate a
question of material fact as to whether FCI and Wilmington
charged excessive late fees to the plaintiff. The defendants

are entitled to judgment as a matter of law on Count VI.
Iv. Conclusion

For the foregoing reasons, it is ORDERED that the
defendants’ Motion for Leave to File Amended Answer to Amended
Complaint be, and hereby is, granted.

It is further ORDERED that the defendants’ motion for
summary judgment be, and hereby is, granted, and that Counts II,
III, IV, and VI be, and hereby are, dismissed.

The Clerk is requested to transmit copies of this
order to all counsel of record and any unrepresented parties.

ENTER: August 1, 2019

- Bb,
Jo . Copenhaver, Jr.
Senior United States District Judge

23

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10728549. Public record. Not legal advice.