West Virginia Credit Repair Law
Article
6C. Credit Services Organizations
§ 46A-6C-1. Definitions
(1) "Buyer" means an individual who is solicited to
purchase or who purchases the services of a credit services organization as
defined in section two of this article.
(2) "Consumer reporting agency" has the meaning assigned
by Section 603(f), Fair Credit Reporting Act (15 U.S.C. Section 1681a(f)).
(3) "Extension of credit" means the "right to defer
payment of debt or to incur debt and defer its payment offered or granted primarily
for personal, family, household or agriculture purposes."
§ 46A-6C-2. Credit
services organization
(a) A credit services organization is a person who, with respect
to the extension of credit by others and in return for the payment of money or
other valuable consideration, provides, or represents that the person can or
will provide, any of the following services:
(1) Improving a buyer's credit record, history or rating;
(2) Obtaining an extension of credit for a buyer; or
(3) Providing advice or assistance to a buyer with regard to
subdivision (1) or (2) of this subsection.
(b) The following are
exempt from this article:
(1) A person authorized to make loans or extension of credit under
the law of this state or the United States who is subject to regulation and
supervision by this state or the United States, or a lender approved by the
United States secretary of housing and urban development for participation in a
mortgage insurance program under the National Housing Act (12 U.S.C. Section 1701, et seq.);
(2) A bank or savings and loan association whose deposit or accounts
are eligible for insurance by the federal deposit insurance corporation or the
federal savings and loan insurance corporation or a subsidiary of such a bank
or savings and loan association;
(3) A credit union doing
business in this state;
(4) A nonprofit organization exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986;
(5) A person licensed as
a real estate broker or salesman under the Real Estate Brokers License Act
acting within the course and scope of that license;
(6) A person licensed to
practice law in this state acting within the course and scope of the person's
practice as an attorney;
(7) A broker-dealer
registered with the securities and exchange commission or the commodity future
trading commission acting within the course and scope of that regulation;
(8) A consumer reporting
agency;
(9) A person whose primary business is making loans secured by
liens on real property;
(10) A person whose
primary business is the retail sale of automobiles and trucks: Provided, That the person is not extending credit for a buyer, excluding assignments; and
(11) A person licensed
to practice public accounting in this state acting within the course and scope
of the person's practice as an accountant.
§ 46A-6C-3. Prohibited
conduct
A credit services organization, a salesperson, agency or
representative of a credit services organization or an independent contractor
who sells or attempts to sell the services of a credit services organization
may not:
(1) Charge a buyer or
receive from a buyer money or other valuable consideration before completing
performance of all services the credit services organization has agreed to
perform for the buyer, unless the credit services organization has obtained in
accordance with section four of this article a surety bond in the amount
required by section four of this article issued by a surety company authorized
to do business in this state or established and maintained a surety account at
a federally insured bank or savings and loan association located in this state
in which the amount required is held in trust as required by section four of
this article;
(2) Charge a buyer or receive from a buyer money or other valuable
consideration solely for referral of the buyer to a retail seller who will or
may extend credit to the buyer if the credit that is or will be extended to the
buyer is substantially the same as that available to the general public from
other sources;
(3) Make or use a false
or misleading representation in the offer or sale of the services of a credit
services organization, including:
(A) Guaranteeing to
"erase bad credit" or words to that effect unless the representation
clearly discloses that this can be done only if the credit history is
inaccurate or obsolete; and
(B) Guaranteeing an
extension of credit regardless of the person's previous credit problem or
credit history unless the representation clearly discloses the eligibility
requirements for obtaining an extension of credit.
(4) Engage, directly or
indirectly, in an unfair or deceptive act, practice, or course of business in
connection with the offer or sale of the services of a credit services
organization;
(5) Make, or advise a
buyer to make a statement with respect to a buyer's credit worthiness, credit
standing, or credit capacity that is false or misleading or that should be
known by the exercise of reasonable care to be false or misleading, to a
consumer reporting agency or to a person who has extended credit to a buyer or
to whom a buyer is applying for an extension of credit;
(6) Advertise or cause
to be advertised, in any manner whatsoever, the services of a credit services
organization without filing a registration statement with the secretary of
state, unless otherwise provided by this chapter.
§ 46A-6C-4. Bond;
surety account
(a) This section applies to a credit services organization
required by section three of this article to obtain a surety bond or establish
a surety account.
(b) If a bond is obtained, a copy of it shall be filed with the
secretary of state. If a surety account is established, notification of the
depository, the trustee, and the account number shall be filed with the
secretary of state.
(c) The bond or surety account required must be in favor of the
state of the benefit of any person who is damaged by any violation of this
article. The bond or surety account must also be in favor of any person damaged
by such a violation.
(d) Any person claiming against the bond or surety account for a
violation of this article may maintain an action at law
against the credit services organization and against the surety or trustee. The
surety or trustee shall be liable only for damages awarded under section nine
of this article and not the punitive damages permitted under that section. The
aggregate liability of the surety or trustee to all persons damaged by a credit
services organization's violation of this chapter may not exceed the amount of
the surety account or bond.
(e) The bond or the surety account shall be in the amount of
fifteen thousand dollars.
(f) A depository holding money in a surety account under this
chapter may not convey money in the account to the credit services organization
that established the account or a representative of the credit services
organization unless the credit services organization or representative presents
a statement issued by the secretary of state indicating that section five of
this article has been satisfied in relation to the account. The secretary of
state may conduct investigations and require submission of information as
necessary to enforce this subsection.
§ 46A-6C-5.
Registration
(a) A credit services organization shall file a registration
statement with the secretary of state before conducting business in this state.
The registration statement shall contain:
(1) The name and address of the credit services organization; and
(2) The name and address of any person who directly or indirectly
owns or controls ten percent or more of the outstanding shares of stock in the
credit services organization.
(b) The registration statement shall also contain either:
(1) A full and complete disclosure of any litigation or unresolved
complaint filed with a governmental authority of this state relating to the
operation of the credit services organization; or
(2) A notarized
statement that states that there has been no litigation or unresolved complaint
filed with a governmental authority of this state relating to the operation of
the credit services organization.
(c) The credit services organization shall update the statement
not later than the ninetieth day after the date on which a change in the
information required in the statement occurs.
(d) Each credit services organization registering under this
section shall maintain a copy of the registration statement in the files of the
credit services organization. The credit services organization shall allow a
buyer to inspect the registration statement on request.
(e) The secretary of state may charge each credit services
organization that files a registration statement with the secretary of state a
reasonable fee not to exceed one hundred dollars to cover the cost of filing.
The secretary of state may not require a credit services organization to
provide information other than that provided in the registration statement. All
fees and moneys collected by the secretary of state pursuant to the provisions
of this article shall be deposited by the secretary of state as follows:
One-half shall be deposited in the state fund, general revenue and one-half
shall be deposited in the service fees and collections account established by
section two, article one, chapter fifty-nine of this code for the operation of
the office of the secretary of state. The secretary of state shall dedicate
sufficient resources from that fund or other funds to provide the services
required in this article.
(f) The bond or surety account shall be maintained until two years
after the date that the credit services organization ceases operations.
§ 46A-6C-6. Disclosure
statement
(a) Before executing a contract or agreement with a buyer or
receiving money or other valuable consideration, a credit services organization
shall provide the buyer with a statement in writing, containing:
(1) A complete and detailed description of the services to be
performed by the credit services organization for the buyer and the total cost
of the services;
(2) A statement explaining the buyer's right to proceed against
the bond or surety account required by section three of this article;
(3) The name and address of the surety company that issued the
bond, or the name and address of the depository and the trustee, and the
account number of the surety account;
(4) A complete and accurate statement of the buyer's right to
review any file on the buyer maintained by a consumer reporting agency, as
provided by the Fair Credit Reporting Act (15 U.S.C. Sec. 1681 et seq.);
(5) A statement that the
buyer's file is available for review at no charge on request made to the
consumer reporting agency within thirty days after the date of receipt of
notice that credit has been denied, and that the buyer's file is available for
a minimal charge at any other time;
(6) A complete and
accurate statement of the buyer's right to dispute directly with the consumer
reporting agency the completeness or accuracy of any item contained in a file
on the buyer maintained by that consumer reporting agency;
(7) A statement that
accurate information cannot be permanently removed from the files of a consumer
reporting agency;
(8) A complete and
accurate statement of when consumer information becomes obsolete, and of when
consumer reporting agencies are prevented from issuing reports containing
obsolete information; and
(9) A complete and
accurate statement of the availability of nonprofit credit counseling services.
(b) The credit services organization shall maintain on file, for a
period of two years after the date the statement is provided, an exact copy of
the statement, signed by the buyer, acknowledging receipt of the statement.
§ 46A-6C-7. Form and
terms of contract
(a) Each contract between the buyer and a credit services
organization for the purchase of the services of the credit services organization
must be in writing, dated, signed by the buyer, and must include:
(1) A statement in type
that is boldfaced, capitalized, underlined, or otherwise set out from
surrounding written materials so as to be conspicuous, in immediate proximity
to the space reserved for the signature of the buyer, as follows: "You,
the buyer, may cancel this contract at any time before midnight of the third
day after the date of the transaction. See the attached notice of cancellation
form for an explanation of this right";
(2) The terms and
conditions of payment, including the total of all payments to be made by the
buyer, whether to the credit services organization or to another person;
(3) A full and detailed
description of the services to be performed by the credit services organization
for the buyer, including all guarantees and all promises of full or partial
refunds, and the estimated length of time, not to exceed one hundred eighty
days, for performing the services; and
(4) The address of the
credit services organization's principal place of business and the name and
address of its agent in the state authorized to receive service or process.
(b) The contract must have attached two easily detachable copies
of a notice of cancellation. The notice must be in boldfaced type and in the
following form:
"Notice of Cancellation
You may cancel this
contract, without any penalty or obligation, within three days after the date
the contract is signed.
If you cancel, any payment made by you under this contract will be
returned within ten days after the date of receipt by the seller of your
cancellation notice.
To cancel this contract, mail or deliver a signed dated copy of
this cancellation notice, or other written notice to:
(name of seller) at (address of seller) (place of business) not
later than midnight (date)
I hereby cancel this transaction.
(date)
(purchaser's signature)"
(c) The credit services organization shall give to the buyer a
copy of the completed contract and all other documents the credit services
organization requires the buyer to sign at the time they are signed.
(d) The breach by a credit services organization of a contract
under this article, or of any obligation arising from this article, is an
unfair or deceptive act or practice.
§ 46A-6C-8. Waiver
(a) A credit services organization may not attempt to cause a
buyer to waive a right under this article.
(b) A waiver by a buyer of any part of this article is void.
§ 46A-6C-9. Action for
damages
(a) A buyer injured by a violation of this article may bring any
action for recovery of damages. The damages awarded may not be less than the
amount paid by the buyer to the credit services organization, plus reasonable
attorney's fees and court costs.
(b) The buyer may also be awarded punitive damages.
§ 46A-6C-10. Criminal
penalty
A person who violates the provisions of this article is guilty of
a misdemeanor, and, upon conviction thereof, shall be fined not less than one
thousand dollars, imprisoned in the county jail not more than one year, or both
fined and imprisoned.
§ 46A-6C-11. Burden of
proving exemption
In an action under this article, the burden of proving an
exemption under section two of this article is on the person claiming the
exemption.
§ 46A-6C-12. Remedies
cumulative
The remedies provided by this
article are in addition to other remedies provided by law.
Case Law
I identified several cases
construing the Act.
Herrod v.
Brown v. Mortgagestar, Inc., 194 F.Supp.2d 473 (S.D.
Supreme Court of Appeals of
Orville ARNOLD and Maxine
Arnold Plaintiffs,
v.
UNITED COMPANIES LENDING CORPORATION, a corporation, and Michael T. Searls, an
individual, Defendants.
Submitted Sept. 16, 1998.
Decided Dec. 11, 1998.
Borrowers
filed suit against lender and loan broker, seeking declaratory judgment that
arbitration agreement, signed as part of loan transaction, was void and
unenforceable. The Circuit Court,
Certified questions answered.
[1] KeyCite Notes
30 Appeal and
Error
30XVI Review
30XVI(F) Trial
De Novo
30k892 Trial De
Novo
30k893 Cases
Triable in Appellate Court
30k893(1) k. In
General. Most Cited Cases
The appellate standard of review of questions of law answered and
certified by a circuit court is de novo.
[2] KeyCite Notes
30 Appeal and
Error
30V Presentation and Reservation in Lower Court of Grounds of Review
30V(E) Cases
and Questions Reserved or Certified
30k307 Nature
and Grounds of Reservation or Certification
30k308 k.
Nature of Questions in General. Most Cited Cases
In a certified case, the Supreme Court of Appeals will not
consider certified questions not necessary to a decision of the case.
[3] KeyCite Notes
25T Alternative
Dispute Resolution
25TII Arbitration
25TII(B) Agreements to Arbitrate
25Tk131 Requisites and Validity
25Tk134 Validity
25Tk134(6) k.
Unconscionability. Most Cited Cases
(Formerly 33k6.2 Arbitration)
Arbitration agreement contained in consumer loan contract subject
to the Consumer Credit and Protection Act (CCPA) was unconscionable and, thus,
void and unenforceable; lender was a national corporation and borrowers were
elderly, unsophisticated consumers, loan broker did not make any other loan
option available to borrowers, borrowers were not represented by legal counsel
during transaction, and arbitration agreement waived borrowers' right of access
to courts, while preserving lender's right of access to courts. Code, 46A-1-101 et seq. , 46A-5-101(1), 46A-2-121.
[4] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk3 License
and Regulation in General
92Bk3.1 k. In
General. Most Cited Cases
92B Consumer
Credit KeyCite Notes
92BI In General
92Bk17 k.
Effect of Violation of Regulations or Lack of License. Most Cited Cases
The legislature, in enacting the Consumer Credit and Protection
Act (CCPA), sought to eliminate the practice of including unconscionable terms
in consumer agreements covered by the Act and, to further this purpose, the
legislature created a cause of action for consumers and imposed civil liability
on creditors who include unconscionable terms in consumer agreements. Code, 46A-1-101 et seq. , 46A-5-101(1), 46A-2-121.
[5] KeyCite Notes
95 Contracts
95I Requisites
and Validity
95I(A) Nature
and Essentials in General
95k1 k. Nature
and Grounds of Contractual Obligation. Most Cited Cases
A determination of unconscionability must focus on the relative
positions of the parties, the adequacy of the bargaining position, the
meaningful alternatives available to the challenging party, and the existence
of unfair terms in the contract.
[6] KeyCite Notes
25T Alternative
Dispute Resolution
25TII Arbitration
25TII(B) Agreements to Arbitrate
25Tk131 Requisites and Validity
25Tk134 Validity
25Tk134(6) k.
Unconscionability. Most Cited Cases
(Formerly 33k6.2 Arbitration)
Where an arbitration agreement entered into as part of a consumer
loan transaction subject to the Consumer Credit and Protection Act (CCPA)
contains a substantial waiver of the borrower's rights, including access to the
courts, while preserving the lender's right to a judicial forum, the agreement
is unconscionable and, therefore, void and unenforceable as a matter of law. Code, 46A-1-101 et seq. , 46A-5-101(1), 46A-2-121.
[7] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk16 k.
Disclosure Requirements; Statements and Receipts. Most Cited Cases
Loan broker was obligated under the credit service organization
provisions of the Consumer Credit and Protection Act (CCPA) to provide
prospective borrowers with a written contract containing a description of
services to be performed, to give them an opportunity to consider and cancel
the agreement, and to inform them of the costs of the broker's services. Code, 46A-6C-1 et seq., 46A-6C-6(a)(1), 46A-6C-7.
[8] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk3 License
and Regulation in General
92Bk4 k.
Particular Businesses or Transactions. Most Cited Cases
A loan broker is a “credit service organization,” for purposes of
the Consumer Credit and Protection Act (CCPA). Code , 46A-6C-2.
[9] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk3 License
and Regulation in General
92Bk4 k.
Particular Businesses or Transactions. Most Cited Cases
A prospective borrower is a “buyer” for purposes of credit service
organization provisions of the Consumer Credit and Protection Act (CCPA). Code, 46A-6C-1.
[10] KeyCite Notes
361 Statutes
361VI Construction and Operation
361VI(A) General Rules of Construction
361k187 Meaning
of Language
361k190 k.
Existence of Ambiguity. Most Cited Cases
If the language of an statutory enactment is clear and within the
constitutional authority of the lawmaking body which passed it, courts must
read the relevant law according to its unvarnished meaning, without any
judicial embroidery.
[11] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk16 k.
Disclosure Requirements; Statements and Receipts. Most Cited Cases
Credit service organization provisions of the Consumer Credit and
Protection Act (CCPA) impose various duties upon a loan broker in his or her
dealings with prospective borrowers, including the duty to provide a written
contract which meets the contractual requirements set forth in provision
governing the form and terms of contract between a buyer and a credit services
organization for purchase of services of the credit services organization; such
a contract must contain, among other things, a full and detailed description of
the services to be performed, a conspicuous statement informing the borrower of
his or her right to cancel the contract for up to three days after the date of
the transaction, and the terms and conditions of payment, including the total
of all payments to be made by the borrower, whether to the loan broker or to
another person. Code, 46A-6C-1 et seq., 46A-6C-6(a)(1), 46A-6C-7.
[12] KeyCite Notes
65 Brokers
65IV Duties and
Liability to Principal
65k19 k. Nature
of Broker's Obligation. Most Cited Cases
Where a loan broker acts as a true broker, and not a mere
middleman, the broker is under a legal obligation to disclose to prospective
borrowers all facts within his knowledge which are or may be material to the
transaction for which he is employed or which might influence their action in
relation to such transaction.
[13] KeyCite Notes
65 Brokers
65IV Duties and
Liability to Principal
65k19 k. Nature
of Broker's Obligation. Most Cited Cases
A broker must act with the utmost good faith towards his principal
and is under a legal obligation to disclose to his principal all facts within
his knowledge which are or may be material to the transaction in which he is
employed or which might influence the action of his principal in relation to
such transaction.
[14] KeyCite Notes
65 Brokers
65II Employment
65k7 k.
Appointment or Employment. Most Cited Cases
Existence of an agency relationship between a loan broker and
prospective borrowers is fact dependent, and absent proof that the borrowers
had the right to, or did, exert some degree of control over the conduct of the
broker, no agency can be found to exist.
[15] KeyCite Notes
308 Principal
and Agent
308I The
Relation
308I(A) Creation and Existence
308k7 Appointment of Agent
308k9 k.
Agreements for Appointment. Most Cited Cases
308 Principal
and Agent KeyCite Notes
308I The
Relation
308I(A) Creation and Existence
308k14 Implied
Agency
308k14(2) k.
Conduct of Parties in General. Most Cited Cases
Proof of an express contract of agency is not essential to the
establishment of the relation; it may be inferred from facts and circumstances,
including conduct.
[16] KeyCite Notes
308 Principal
and Agent
308I The
Relation
308I(A) Creation and Existence
308k1 k. Nature
of the Relation in General. Most Cited Cases
One of the essential elements of an agency relationship is the
existence of some degree of control by the principal over the conduct and
activities of the agent.
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Syllabus
by the Court
1. “The appellate standard of review of questions of law answered
and certified by a circuit court is de novo.” Syl. pt. 1, Gallapoo
v. Wal-Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996).
2. “ ‘ “In a certified
case, this Court will not consider certified questions not necessary to a
decision of the case.” Syllabus Point 6, West
Virginia Water Serv. Co. v. Cunningham, 143 W.Va. 1, 98
S.E.2d 891 (1957).’ Syllabus Point 7, Shell
v. Metropolitan Life Ins. Co., 181 W.Va. 16, 380 S.E.2d 183 (1989).” Syl. Pt. 5, Anderson
v. Moulder, 183 W.Va. 77, 394 S.E.2d 61 (1990).
3. “ ‘The legislature in
enacting the West Virginia Consumer Credit and Protection Act, W.Va.Code,
46A-1-101, et seq., in
1974, sought to eliminate the practice of including unconscionable terms in
consumer agreements covered by the Act. To further this purpose the
legislature, by the express language of W.Va.Code,
46A-5-101 (1), created a cause of
action for consumers and imposed civil liability on creditors who include
unconscionable terms that violate W.Va.Code,
46A-2-121 in consumer
agreements.’ Syl. pt. 2, U.S.
Life Credit Corp. v. Wilson, 171 W.Va. 538, 301 S.E.2d 169 (1982).” Syl. pt. 1, Orlando
v. Finance One of West Virginia, Inc., 179 W.Va. 447, 369
S.E.2d 882 (1988).
4. “A determination of
unconscionability must focus on the relative positions of the parties, the
adequacy of the bargaining position, the meaningful alternatives available to
the plaintiff, and ‘the existence of unfair terms in the contract.’ ” Syl. pt.
4, Art's
Flower Shop, Inc. v. Chesapeake and Potomac Tel. Co., 186 W.Va. 613, 413
S.E.2d 670 (1991).
5. Where an arbitration
agreement entered into as part of a consumer loan transaction contains a
substantial waiver of the borrower's rights, including access to the courts,
while preserving the lender's right to a judicial forum, the agreement is unconscionable
and, therefore, void and unenforceable as a matter of law.
6. “If the language of
an enactment is clear and within the constitutional authority of the law-making
body which passed it, courts must read the relevant law according to its
unvarnished meaning, without any judicial embroidery.” Syl. pt. 3, in part, West
Virginia Health Care Cost Review Auth. v. Boone Mem. Hosp., 196 W.Va. 326, 472
S.E.2d 411 (1996).
7. “A broker must act
with the utmost good faith towards his principal and is under a legal
obligation to disclose to his principal all facts within his knowledge which
are or may be material to the transaction in which he is employed or which
might influence action of his principal in relation to such transaction.” Syl.
Pt. 2, Moore
v. Turner, 137 W.Va. 299, 71 S.E.2d 342 (1952).
8. “ ‘One of the
essential elements of an agency relationship is the existence of some degree of
control by the principal over the **857
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conduct
and activities of the agent.’ Syl. Pt. 3, Teter v. Old Colony
Co., 190 W.Va. 711, 441
S.E.2d 728 (1994).” Syl. pt. 2, Thomson v. McGinnis, 195 W.Va. 465, 465 S.E.2d 922 (1995).
Daniel F. Hedges,
Esq., Mountain State Justice, Inc.,
W. Michael Moore,
Esq., Rita Massie Biser,
Esq., Kay, Casto, Chaney, Love & Wise, Charleston, West Virginia, Attorneys
for Defendant United Companies Lending Corporation.
McCUSKEY,
Justice:
This Court is presented with
three certified questions from the
1.
Whether a circuit court, upon being presented with a consumer credit contract
requiring compulsory arbitration, should bifurcate the proceedings or otherwise
make an initial determination as to the validity of the compulsory arbitration
clause prior to proceeding with the remainder of the underlying substantive
issues in the case.
2.
Whether this compulsory arbitration clause in the context of a form document
signed by a consumer in a consumer credit context which contains substantial
waiver of substantive rights while preserving to the creditor a judicial forum
is so one-sided as to be void as a matter of law.
3.
Whether a loan broker owes a fiduciary duty to prospective borrowers (a) to
provide a written agreement describing the services and agreements between
them, (b) to give them an opportunity to consider and cancel the agreement, (c)
to inform them of the cost of the broker's services, (d) to disclose the loan
options and risks available to them, and (e) to act as an agent of the borrower
and not of the lender.
The
circuit court answered each of these questions in the affirmative.
I.
Factual and Procedural Background
On
September 17, 1996, Michael Searls came to the residence of Orville and Maxine
Arnold, an elderly couple living in
FN1. A
“Service Contract Agreement,” dated September 17, 1996, and attached to the
Amended Complaint, contains handwritten markings which substantiate the fact
that Searls received a $50.00 “application fee” from the
Thereafter,
Searls procured a loan for the
At the loan closing, United Lending had the benefit of legal
counsel, while the
The arbitration agreement
stated, in ordinary type, that “all ... legal controversies *233
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[that are not resolved by mediation] ... relating to the extension
of credit (the ‘Loan’) by Lender to Borrower ... including ... the validity and
construction of this arbitration provision shall be resolved solely and
exclusively by arbitration.” “In addition, the agreement conspicuously stated
in all capital letters:
THE
ARBITRATION WILL TAKE THE PLACE OF ANY COURT PROCEEDING INCLUDING A TRIAL
BEFORE A JUDGE AND JURY DAMAGES SHALL BE LIMITED TO ACTUAL AND DIRECT DAMAGES
AND SHALL IN NO EVENT INCLUDE CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR TREBLE
DAMAGES AS TO WHICH BORROWER AND LENDER EXPRESSLY WAIVE ANY RIGHT TO CLAIM TO
THE FULLEST EXTENT PERMITTED BY LAW.
Returning
to regular type, the agreement continued: “The award rendered by the
arbitration shall be final, nonappealable and judgment may be entered upon it
... in any court having jurisdiction,” and the “arbitration proceedings are
confidential.” However, application of the agreement was expressly limited by
the following language:
[T]his
Agreement to ... arbitrate shall not apply with respect to either (i) the
Lender's right ... to submit and to pursue in a court of law any actions
related to the collection of the debt; (ii) foreclosure proceedings ...,
proceedings pursuant to which Lender seeks a deficiency judgment, or any
comparable procedures allowed under applicable law pursuant to which a lien
holder may acquire title to the Property which is security for this loan and
any related personal property ... upon a default by the Borrower under the
mortgage loan documents; or (iii) an application by or on behalf of the
Borrower for relief under the federal bankruptcy laws of [sic] any other
similar laws of general application for the relief of debtors .... FN2
FN2. Virtually this same language was set forth in paragraph 26 of the Deed of
Trust, which the record indicates was signed by the
Sometime between January and May of 1997, the
On July 10, 1997, the
II.
Standard of Review
[1]
In Syllabus Point 1 of Gallapoo v. Wal-Mart Stores, Inc., 197 W.Va. 172, 475 S.E.2d 172 (1996), this Court held: “The appellate standard of review of questions
of law answered and certified by a circuit court is de novo.” Accord King v. Lens Creek Ltd. Partnership, 199 W.Va. 136, 140, 483 S.E.2d 265, 269 (1996).
III.
Discussion
A.
Certified Question One
[2]
Certified question one,
as formulated by the circuit court, presents the following query:
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Whether a circuit court, upon being presented with a consumer
credit contract requiring compulsory arbitration, should bifurcate the
proceedings or otherwise make an initial determination as to the validity of
the compulsory arbitration clause prior to proceeding with the remainder of the
underlying substantive issues in the case.
After
careful review and deliberation, this Court concludes that certified question
one, as formulated by the circuit court, is unnecessary to the decision of this
case. To the extent that certified question one involves the issue of the
validity of the arbitration agreement, that issue is fully addressed by
certified question two, which we answer below. “ ‘In a certified case, this
Court will not consider certified questions not necessary to a decision of the
case.’ Syllabus Point 6, West Virginia Water Serv. Co. v.
Cunningham, 143 W.Va. 1, 98
S.E.2d 891 (1957), Syllabus Point 7, Shell v. Metropolitan Life Ins. Co., 181 W.Va. 16, 380 S.E.2d 183 (1989).” Syl. pt. 5, Anderson v. Moulder, 183 W.Va. 77, 394 S.E.2d 61 (1990). Therefore, we dispense
with certified question one without further discussion.
B.
Certified Question Two
[3]
In considering certified
question two, this Court finds it necessary to reframe the issue, at the
outset, so that we can fully address the law that is involved.FN3 We reformulate the question as follows:
FN3. This
Court's authority to modify a certified question was addressed in Syllabus
Point 3 of Kincaid v. Mangum, 189 W.Va. 404, 432 S.E.2d 74 (1963):
When a certified question is not framed so that this Court is able to fully
address the law which is involved in the question, then this Court retains the
power to reformulate questions certified to it under both the Uniform
Certification of Questions of Law Act found in W.Va.Code, 51-1A-1, et. seq.
Whether an arbitration agreement entered into as part of a
consumer loan transaction containing a substantial waiver of the consumer's
rights, including access to the courts, while preserving for all practical
purposes the lender's right to a judicial forum, is void as a matter of law.
The
FN4. Both parties raise the issue of whether the arbitration agreement is governed by the Federal Arbitration Act, 9 U.S.C. § et. seq. Resolution of that issue is not necessary in the matter before us.
“Unconscionability”
is a general contract law principle, based in equity, FN5 which is deeply ingrained in both the statutory and decisional law of
FN5. As stated in Syllabus Point 1 of Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986), “[u]nconscionability is an equitable principle, and the determination of whether a contract or a provision therein is unconscionable should be made by the court.”
(1) With respect to a
transaction which is or gives rise to a consumer credit sale, consumer lease or
consumer loan, if the court as a matter of law finds:
(a)
The agreement or transaction to have been unconscionable at the time it was
made, or to have been induced by unconscionable conduct, the court may refuse
to enforce the agreement, or
(b)
Any term or part of the agreement or transaction to have been unconscionable at
the time it was made, the court may refuse to enforce the agreement, or may
enforce the remainder of the agreement without the unconscionable term or part,
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term
or part as to avoid any unconscionable result.
The
[4]
“ ‘The legislature in enacting
the West Virginia Consumer Credit and Protection Act, W.Va.Code, 46A-1-101, et seq., in 1974, sought to eliminate the practice of
including unconscionable terms in consumer agreements covered by the Act. To
further this purpose the legislature, by the express language of W.Va.Code, 46A-5-101(1), created a cause of action for consumers and imposed civil
liability on creditors who include unconscionable terms that violate W.Va.Code, 46A-2-121 in consumer agreements.’ Syl. pt. 2, U.S. Life Credit Corp. v. Wilson, 171 W.Va. 538, 301 S.E.2d 169 (1982).” Syl. pt. 1, Orlando v. Finance One of West
Virginia, Inc., 179 W.Va. 447, 369
S.E.2d 882 (1988). Although the CCPA
contains no definition of “unconscionable,” this Court has previously looked to
the definition furnished by the drafters of the Uniform Consumer Credit Code,
which contains provisions concerning unconscionability that are identical to W. Va.Code § 46A-2-121(1)(a), (b) (1996):
The
drafters of the Uniform Consumer Credit Code explained that the principle of
unconscionability “is one of the prevention of oppression and unfair surprise
and not the disturbance of reasonable allocation of risks or reasonable
advantage because of superior bargaining power or position.” See Uniform Consumer Credit Code, § 5.108 comment 3, 7A U.L.A. 170 (1974). The drafters stated:
The basic test is whether, in the light of the background and
setting of the market, the needs of the particular trade or case, and the
condition of the particular parties to the conduct or contract, the conduct
involved is, or the contract or clauses involved are so one sided as to be
unconscionable under the circumstances existing at the time the conduct occurs
or is threatened or at the time of the making of the contract.
Orlando, 179 W.Va. at 450, 369 S.E.2d at 885.
The
parameters of the defense of unconscionability are further illuminated by this
passage from Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986), where this Court quoted the Restatement (Second) of Contracts:
A
bargain is not unconscionable merely because the parties to it are unequal in
bargaining position, nor even because the inequality results in allocation of
risks to the weaker party. But gross inadequacy in bargaining power, together
with terms unreasonably favorable to the stronger party, may confirm
indications that the transaction involved elements of deception or compulsion
or may show that the weaker party had no meaningful, no real alternative, or
did not in fact assent or appear to assent to the unfair terms.
Id. at 604, 346 S.E.2d at 753 (emphasis omitted).
Moreover,
in Syllabus Point 3 of Board of Educ. of Berkeley County v.
W. Harley Miller, Inc., 160 W.Va. 473, 236
S.E.2d 439 (1977), this Court stated:
[W]here
a party alleges that the arbitration provision was unconscionable, or was
thrust upon him because he was unwary and taken advantage of, or that the
contract was one of adhesion, the question of whether an arbitration provision
was bargained for and valid is a matter of law for the court to determine by
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parties, and the nature of the undertakings covered by the
contract.
Syl.
pt. 1, Art's Flower Shop, Inc. v. Chesapeake
and Potomac Tel. Co., 186 W.Va. 613, 413
S.E.2d 670 (1991) (“limitation of
liability” clause held void for unconscionability).
[5]
Based on these precepts,
this Court held in Syllabus Point 4 of Art's Flower Shop, supra, that “[a] determination of unconscionability must focus on the
relative positions of the parties, the adequacy of the bargaining position, the
meaningful alternatives available to the plaintiff, and ‘the existence of
unfair terms in the contract.’ ”
Applying
the rule announced in Art's Flower Shop, supra,leads us to the inescapable conclusion that the arbitration
agreement between the Arnolds and United Lending is “void for
unconscionability” as a matter of law.FN6 See id. at 618, 413 S.E.2d at 675. Indeed, the kind of
agreement here at issue was aptly caricatured by this Court in Miller, supra, as “the contract between the rabbits and foxes.” The Miller Court stated:
FN6. We want
to dispel the notion, which appears to have arisen in this case, that there are
two distinct issues termed “procedural unconscionability” and “substantive
unconscionability,” either one of which can invalidate a contract. This Court
addressed the same misperception in Troy Mining Corp., supra, stating:
V & R also argues on appeal that the circumstances in which the 1979
contract were executed raise a separate issue of “procedural
unconscionability,” or overall unconscionability based on unfairness or
inequities in the bargaining process .... [W]e do not see it as an entirely
separate “second bite” at the unconscionability apple. Whether a particular
term in a contract is unconscionable often depends on the circumstances in
which the contract was executed or the fairness of the contract as a whole, and
therefore our analysis necessarily includes an inquiry beyond the face of the
contract .... [T]he question of “procedural unconscionability” is an essential
part of any determination of whether a particular clause or contract is
unconscionable. A finding that the transaction was flawed, however, still
depends on the existence of unfair terms in the contract. A litigant who
complains that he was forced to enter into a fair agreement will find no relief
on grounds of unconscionability.
176 W.Va. at 603-04, 346 S.E.2d at 753.
In
real life we can envisage arbitration provisions being imposed upon consumers
in contract situations where consumers are totally ignorant of the implications
of what they are signing, and where consumers bargain away many of the
protections which have been secured for them with such difficulty at common
law.
160 W.Va. at 486, 236 S.E.2d at 447. The scenario envisioned in Miller is now before us. The relative positions of the parties, a
national corporate lender on one side and elderly, unsophisticated consumers FN7 on the other, were “grossly unequal.” See Art's Flower Shop, 186 W.Va. at 618, 413 S.E.2d at 675. In addition, there is no evidence that the loan broker made any
other loan option available to the
FN7. According to the pleadings, Mr. Arnold is 69 years old with a fifth grade education, and Mrs. Arnold is 63 years old with an eighth grade education.
Given
the nature of this arbitration agreement, combined with the great disparity in
bargaining power, one can safely infer that the terms were not bargained for
and that allowing such a one-sided agreement to stand would unfairly defeat the
Finally,
the terms of the agreement are “unreasonably favorable” to United Lending. Id. United Lending's acts or omissions could seriously damage the
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preservation of United Lending's rights “is inherently inequitable
and unconscionable because in a way it nullifies all the other provisions of
the contract.” 160 W.Va. at 480, 236 S.E.2d at 443.
[6]
Accordingly, under the
circumstances of this action, we hold that where an arbitration agreement
entered into as part of a consumer loan transaction contains a substantial
waiver of the borrower's rights, including access to the courts, while
preserving the lender's right to a judicial forum, the agreement is
unconscionable and, therefore, void and unenforceable as a matter of law.
C.
Certified Question Three
[7]
The third and final
question certified to this Court concerns the legal duties of loan brokers
relative to prospective borrowers. As set forth previously, the third certified
question submitted by the circuit court is as follows:
Whether a loan broker owes a fiduciary duty to prospective
borrowers (a) to provide a written agreemen
FN8. See footnote 3, supra.
Whether
a loan broker owes a duty to prospective borrowers: (a) to provide a written
contract containing a description of the services to be performed, (b) to give
them an opportunity to consider and cancel the agreement, (c) to inform them of
the cost of the broker's services, and (d) to disclose the loan options and
risks available to them.
Whether
a loan broker acts as an agent of prospective borrowers.
[8]
[9]
Both the Arnolds and
United Lending recognize that the Legislature has imposed certain duties upon a
loan broker in relation to prospective borrowers. Indeed, the West Virginia
Consumer Credit and Protection Act contains an entire article pertaining to
“credit services organizations,” and as defined in that article, the term
“credit services organizations” includes loan brokers.FN9 See W. Va.Code § 46A-6C-1 et seq. (1991). Pursuant to W. Va.Code § 46A-6C-6 (1991), before executing a
contract with a buyer,FN10 or receiving money or other valuable consideration, a credit
services organization must furnish the buyer with a written statement
containing “[a] complete and detailed description of the services to be
performed by the credit services organization for the buyer and the total cost
of the services.” W. Va.Code § 46A-6C-6(a)(1) (1991). Moreover, W. Va.Code § 46A-6C-7 (1991) FN11 mandates a **863
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written contract for the services of a credit services
organization and prescribes the contractual form and terms, including a
conspicuous statement informing the consumer of his or her right to cancel the
contract for up to three days after the date of the transaction. See W. Va.Code § 46A-6C-7(a)(1) (1991). The contract must also
contain “[a] full and detailed description of the services to be performed” and
“[t]he terms and conditions of payment, including the total of all payments to
be made by the buyer, whether to the credit services organization or to another
person.” W. Va.Code § 46A-6C-7(a)(2)-(3) (1991).
FN9. A “credit services organization” is defined, in relevant part, as “a person who, with respect to the extension of credit by others and in return for the payment of money or other valuable consideration, ... provides, or represents that the person can or will provide, any of the following services: ... (2) Obtaining an extension of credit for a buyer.” W. Va.Code § 46A-6C-2 (1991).
FN10. The
term “buyer” is defined in Article 6C as “an individual who is solicited to
purchase or who purchases the services of a credit services organization.” W. Va.Code § 46A-6C-1 (1991). We find that this definition includes “prospective borrowers.”
FN11. W. Va.Code § 46A-6C-7 (1991) provides:
(a) Each contract between the buyer and a credit services organization for the
purchase of the services of the credit services organization must be in
writing, dated, signed by the buyer, and must include:
(1) A statement in type that is boldfaced, capitalized, underlined, or
otherwise set out from surrounding written materials so as to be conspicuous,
in immediate proximity to the space reserved for the signature of the buyer, as
follows: “You, the buyer, may cancel this contract at any time before midnight
of the third day after the date of the transaction. See the attached notice of
cancellation form for an explanation of this right”;
(2) The terms and conditions of payment, including the total of all payments to
be made by the buyer, whether to the credit services organization or to another
person;
(3) A full and detailed description of the services to be performed by the
credit services organization for the buyer, including all guarantees and all
promises of full or partial refunds, and the estimated length of time, not to
exceed one hundred eighty days, for performing the services; and
(4) The address of the credit services organization's principal place of
business and the name and address of its agent in the state authorized to
receive service or process.
(b) The contract must have attached two easily detachable copies of a notice of
cancellation. The notice must be in boldfaced type and in the following form:
“Notice of Cancellation
You may cancel this contract, without any penalty or obligation, within three
days after the date the contract is signed.
If you cancel, any payment made by you under this contract will be returned
within ten days after the date of receipt by the seller of your cancellation
notice.
To cancel this contract, mail or deliver a signed dated copy of this
cancellation notice, or other written notice to: (name of seller) at (address
of seller) (place of business) not later than midnight (date)
I hereby cancel this transaction.
(date)
(purchaser's signature)”
(c) The credit services organization shall give to the buyer a copy of the
completed contract and all other documents the credit services organization
requires the buyer to sign at the time they are signed.
[10]
In Syllabus Point 3, in
part, of West Virginia Health Care Cost Review
Auth. v. Boone Mem. Hosp., 196 W.Va. 326, 472
S.E.2d 411 (1996), this Court held: “If
the language of an enactment is clear and within the constitutional authority
of the lawmaking body which passed it, courts must read the relevant law
according to its unvarnished meaning, without any judicial embroidery.” FN12
FN12. See also State ex rel. Riffle v. Ranson, 195 W.Va. 121, 126, 464 S.E.2d 763, 768 (1995) (“Once the Legislature indicates its preference by the enactment of a statute, the Court's role is limited. Our duty is to interpret the statute, not to expand or enlarge upon it.”); State ex rel. Frazier v. Meadows, 193 W.Va. 20, 24, 454 S.E.2d 65, 69 (1994) ( “Courts are not free to read into the language what is not there, but rather should apply the statute as written.”).
[11]
The duties referenced in subparts (a), (b), and (c) of
the certified question, as reframed by this Court, are clearly delineated by
the foregoing statutory provisions. The constitutional authority of the
Legislature in enacting these statutes is not in dispute. It is, therefore,
incumbent upon this Court to read the relevant statutory language according to
its “unvarnished meaning.” Thus, we find that W. Va.Code § 46A-6C1 et
seq. (1991) imposes various duties upon a loan broker in his or her
dealings with prospective borrowers, including the duty to provide a written
contract which meets the contractual requirements set forth in W. Va.Code § 46A-6C-7 (1991). Pursuant to W. Va.Code § 46A-6C-7 (1991), such a contract
must contain, among other things, a full and detailed description of the
services to be performed, a conspicuous statement informing the borrower of his
or her right to cancel the contract for up to three days after the date of the
transaction, and the terms and conditions of payment, including the total of
all payments to be made by the borrower, whether to the loan broker or to
another person. Thus, we answer subparts (a), (b), and (c) of the certified
question in the affirmative.
[12]
Subpart (d) of certified
question three, as modified, presents an issue not addressed by statutory law:
Does a loan broker owe a duty to prospective borrowers to disclose the loan
options and risks available to them? The answer to this question turns upon whether
the loan broker is acting as a true “broker” or merely as a “middleman” with
respect to the subject transaction, a distinction that is well established
under the common law. The determination of this issue requires a thorough
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pertinent
facts. Ultimately, if a loan broker is acting as a “broker” in the strictest
sense, the duty of disclosure exists. But if a loan broker acts as a mere
“middleman,” the law imposes no duty of disclosure. Having given this short
answer to subpart (d) of the certified question, we now proceed to discuss more
fully the legal principles involved.
The
term “broker” has been variously defined. In Moore v. Turner, 137 W.Va. 299, 71 S.E.2d 342 (1952), this Court recited the following definitions of a “broker:”
“A
broker is one who is engaged for others, on a commission, in negotiating
contracts relative to property with the custody of which he has no concern; * *
*.” 12 C.J.S., Brokers, Section 1. “Every person whose business it is to negotiate purchases and
sales of property with the custody of which he has no concern, neither with the
original possession nor the delivery, is a broker.” Lawrence Gas Company v. Hawkeye Oil
Company, 182 Iowa 179, 165
N.W. 445, 8 A.L.R. 192. “A broker is a
fiduciary required to exercise fidelity and good faith toward his principal in
all matters within the scope of his employment.” 8 Am.Jur., Brokers, Section 86. Some additional definitions of a broker are: “A person employed
to sell property for another * * *.” Abraham v. Wasaff, 111 Okla. 165, 239 P. 138; a person “whose
business it is to bring buyer and seller together.” Keys v. Johnson, 68 Pa. 42; and “ * * * a middleman
whose business it is to bring seller and buyer together.” Ryan v. Walker, 35 Cal.App. 116, 169 P. 417.
Id. at 31, 71 S.E.2d at 349-50.
Significantly,
this Court noted in Moore that “there is a well defined distinction between a middleman and
a broker,” and “ ‘a middleman is not subject to the rules governing brokers.’ ” Id. at 312-13, 71 S.E.2d at 350. This Court described “
‘ “a broker employed as a mere middleman,” ’ ” as “ ‘ “one engaged not to
negotiate a sale or purchase, but simply to bring two parties together and
permit them to make their own bargain.” ’ ” Id. at 314, 71 S.E.2d at 350. Expounding upon the
distinction between a “broker” from a “middleman,” we stated:
“ ‘A broker is simply a middleman ... when he has no duty to
perform but to bring the parties together, leaving them to negotiate and
come to an agreement themselves without any aid from him. If he takes, or contracts to take, any part in the negotiations, however, he cannot be
regarded a mere middleman, no matter how slight a part it may be.’ ”
Id. at 314, 71 S.E.2d at 350 (emphasis in original).
[13]
Having distinguished a
mere middleman from a true broker, this Court articulated a rule in Syllabus
Point 2 of Moore, supra, imposing a duty of disclosure on brokers:
A
broker must act with the utmost good faith towards his principal and is under a
legal obligation to disclose to his principal all facts within his knowledge
which are or may be material to the transaction in which he is employed or
which might influence the action of his principal in relation to such
transaction.
Since
a middleman is not bound by the rules governing brokers, it follows that this
duty of disclosure applies only where a true broker, and not just a middleman,
is involved. Applying these principles to the facts of the instant case, we
find that where a loan broker acts as a true broker, and not a mere middleman,
the broker is under a legal obligation (i.e., a duty) to disclose to the
prospective borrowers all facts within his knowledge which are or may be
material to the transaction for which he is employed or which might influence
their action in relation to such transaction.
[14]
[15]
[16]
The final issue
confronting this Court, as part of certified question three, is whether a loan
broker acts as an agent of prospective borrowers. Like the duty of disclosure,
the answer to this question is fact dependent; one must examine the facts of a
particular case to determine whether an agency relationship exists. But “
‘[p]roof of an express contract of agency is not essential to the establishment
of the relation. It may be inferred from facts and circumstances, including
conduct.’ ” General Elec. Credit Corp. v. Fields, 148 W.Va. 176, 181, 133 S.E.2d 780, 783 (1963). In Syllabus Point 2 **865
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of Thomson v. McGinnis, 195 W.Va. 465, 465 S.E.2d 922 (1995), this Court stated:
“One
of the essential elements of an agency relationship is the existence of some
degree of control by the principal over the conduct and activities of the agent.”
Syl. Pt. 3, Teter v. Old Colony Co., 190 W.Va. 711, 441
S.E.2d 728 (1994).
See Peters v. Riley, 73 W.Va. 785, 791, 81 S.E. 530, 532 (1914) (no agency found where “[a]ll the essential elements of the contract remained
in the sole and exclusive control of the defendant”); see also Wright & Souza,
Inc. v. DM Properties, 1
Neb.App. 822, 510 N.W.2d 413 (1993) (prospective borrower failed to
establish that loan broker acted as borrower's agent where borrower had no
control over broker). This Court further stated in Thomson that a principal denying agency must show that the principal neither
controlled, nor had the right to control, the work, and “where factual conflict
exists regarding the degree of control exercised and the nature of the
relationship thereby created, jury resolution is warranted.” 195 W.Va. at 470, 465
S.E.2d at 927. Thus, in answer to the last part of certified
question three, we emphasize that the existence of an agency relationship
between a loan broker and prospective borrowers is fact dependent, and absent
proof that the borrowers had the right to, or did, exert some degree of control
over the conduct of the broker, no agency can be found to exist.
Certified Questions
Answered.
Chief Justice DAVIS and
Justices WORKMAN, STARCHER, and MAYNARD joined
in the Opinion of the Court.
Justice McGRAW did not
participate in the decision of this case.
Herrod v.
Supreme Court of Appeals of
Rita K. HERROD and Jennifer A.
Herrod, Plaintiffs Below, Appellants,
v.
FIRST REPUBLIC MORTGAGE CORPORATION, INC., dba First Security Mortgage
Corporation, A Corporation; Washtenaw Mortgage Company, A Corporation; Chase
Manhattan Mortgage Corporation, A Corporation; Earl Young; Craddocks Last
Stand, Inc., A Corporation; Darleen Westfall; West Virginia Real Estate Appraiser
Licensing and Certification Board; and Federal National Mortgage Association,
Defendants Below, Appellees.
Submitted Sept. 14, 2005.
Decided Dec. 1, 2005.
Concurring and Dissenting Opinion Justice Davis Dec. 7, 2005.
Concurring Opinion of Justice Starcher Dec. 16, 2005.
Background: Home mortgagors brought claims against assignee of original
mortgagee for violations of Consumer Credit and Protection Act, fraud, unfair
or deceptive practices, unconscionability, and liability based on joint venture,
agency, or conspiracy, relating to original mortgagee's allegedly illegal and
predatory lending practices. The Circuit Court,
Holdings: The Supreme Court of Appeals, Albright, C.J.,
held that:
(1) genuine issues of material fact
precluded summary judgment on claim of unconscionability;
(2) assignee of mortgage was not
required to ensure original mortgagee's compliance with credit services
organizations provisions of Consumer Credit and Protection Act;
(3) assignee was not liable for
original mortgagee's allegedly fraudulent representations;
(4) credit services organizations
provisions of Consumer Credit and Protection Act do not extend to or prohibit a
licensed lender's use of yield spread premiums;
(5) genuine issue of material fact
precluded summary judgment as to assignee's liability under theories of joint
venture, agency, or conspiracy.
Affirmed in part, reversed in part, and remanded.
Davis, J.,
filed an opinion concurring in part and dissenting in part, in which Maynard, J.,
joined.
Starcher, J.,
filed an opinion concurring in the judgment.
[1] KeyCite Notes
30 Appeal and
Error
30XVI Review
30XVI(F) Trial
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30k892 Trial De
Novo
30k893 Cases
Triable in Appellate Court
30k893(1) k. In
General. Most Cited Cases
A circuit court's entry of summary judgment is reviewed de novo.
[2] KeyCite Notes
228 Judgment
228V On Motion
or Summary Proceeding
228k181 Grounds
for Summary Judgment
228k181(2) k.
Absence of Issue of Fact. Most Cited Cases
A motion for summary judgment should be granted only when it is
clear that there is no genuine issue of fact to be tried and inquiry concerning
the facts is not desirable to clarify the application of the law.
[3] KeyCite Notes
228 Judgment
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228k182 Motion
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228k185 Evidence in General
228k185(6) k.
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Summary judgment is appropriate if, from the totality of the
evidence presented, the record could not lead a rational trier of fact to find
for the nonmoving party, such as where the nonmoving party has failed to make a
sufficient showing on an essential element of the case that it has the burden
to prove.
[4] KeyCite Notes
228 Judgment
228V On Motion
or Summary Proceeding
228k181 Grounds
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228k181(15) Particular Cases
228k181(15.1) k. In General. Most Cited Cases
Where unconscionability is asserted under the Consumer Credit and
Protection Act, the existence of questions of fact regarding whether the
bargaining power was grossly unequal and thereby rendered the transactions
between the plaintiffs and defendants unconscionable precludes the resolution
of such claims through summary judgment; only when there are no factual
disputes in existence can an unconscionability claim under the Act be
determined as a question of law based on the undisputed factual circumstances
and resolved through summary judgment. (Per Albright, C.J., with one Justice
concurring and one Justice concurring in the judgment.) West's Ann.W.Va.Code,
46A-2-121.
[5] KeyCite Notes
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228V On Motion
or Summary Proceeding
228k181 Grounds
for Summary Judgment
228k181(15) Particular Cases
228k181(25) k.
Mortgage Cases. Most Cited Cases
Genuine issues of material fact as to whether fees that home
mortgagors paid to original mortgagee were excessive and whether appraisal of
home, obtained by original mortgagee in connection with origination of the
loan, was inflated, precluded summary judgment for original mortgagee's
assignee, in mortgagors' action alleging unconscionability under Consumer
Credit and Protection Act. (Per Albright, C.J., with one Justice concurring and
one Justice concurring in the judgment.) West's Ann.W.Va.Code,
46A-2-121.
[6] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk3 License
and Regulation in General
92Bk4 k.
Particular Businesses or Transactions. Most Cited Cases
Even if original mortgagee in home mortgage transaction was
required, as licensed lender, to comply with credit services organizations
(CSO) provisions of Consumer Credit and Protection Act, assignee of mortgage
was not required to ensure original mortgagee's compliance with Act's CSO
provisions. West's Ann.W.Va.Code,
31-17-8(k), 46A-6C-1 et
seq.
[7] KeyCite Notes
266 Mortgages
266V Assignment
of Mortgage or Debt
266k262 k.
Liabilities of Assignee. Most Cited Cases
Assignee of home mortgage was not liable for allegedly fraudulent
representations, made by original mortgagee's loan broker, to mortgagors, that
broker would get them the best rate he could, which representation was
allegedly made before loan closing, and that he was cutting original
mortgagee's fees so there would be “enough room to do the loan,” which
representation was allegedly made at loan closing, where assignee did not have
any contact with mortgagors until after the loan closing.
[8] KeyCite Notes
92B Consumer
Credit
92BI In General
92Bk10 Interest
and Charges
92Bk11 k. Rate
and Amount of Interest or Finance Charge. Most Cited Cases
Credit services organizations (CSO) provisions of Consumer Credit
and Protection Act, prohibiting unfair or deceptive acts or practices, do not
extend to or prohibit a licensed lender's use of yield spread premiums, in home
mortgage loan transactions. West's Ann.W.Va.Code,
31-17-8(k), 46A-6C-3.
[9] KeyCite Notes
228 Judgment
228V On Motion
or Summary Proceeding