## Facts

- A borrower refinanced a West Virginia home owned by another plaintiff, with the home pledged as collateral.
- At trial, the home’s fair market value was found to be about $46,000, but the lender relied on an appraisal valuing it at over $181,000.
- The lender offered and closed a loan based on the higher valuation; the final loan amount was about $144,800.
- The closing occurred at the borrower’s home through a notary; no lender employee was present to explain the documents.
- The borrower signed a large set of documents marked for signature and later asserted the loan contained material terms (including a balloon-payment feature and adjustable-rate features) that differed from prior representations and were not adequately disclosed.
- The borrower made two payments, defaulted, and the lender initiated foreclosure.
- The borrower sued in West Virginia circuit court alleging common-law fraud and violations of the West Virginia Consumer Credit and Protection Act (WVCCPA), including unconscionable conduct.
- After a bench trial, the circuit court found for the borrower on most claims, awarded compensatory damages and statutory penalties, awarded substantial attorney’s fees and costs, imposed over $2 million in punitive damages, and cancelled the borrower’s obligation to repay the loan principal.
- The borrower had entered a pretrial settlement with other alleged participants (including appraisal/closing-related entities).

## Issues

1. Whether the evidence supported findings of common-law fraud and WVCCPA violations arising from the appraisal, disclosures, and loan-closing practices.
2. Whether the trial court could cancel the borrower’s obligation to repay the loan principal as a remedy for fraud and WVCCPA violations.
3. Whether the punitive-damages award was permissible absent the required state-law findings and federal due-process review.
4. Whether the trial court was required to offset damages (and related awards) by amounts received in the borrower’s pretrial settlements with non-trial defendants.

## Decision

- The Supreme Court of Appeals of West Virginia affirmed liability findings for common-law fraud and WVCCPA violations based on the lender’s conduct in making and closing the loan.
- The court reversed the remedy cancelling the obligation to repay the loan principal and remanded for reinstatement of a legally permissible repayment obligation, subject to any proper adjustments.
- The court vacated or reversed the punitive-damages determination as inadequately supported and remanded for a punitive-damages analysis consistent with state-law factors and federal due-process limits.
- The court held the trial court was required to apply an appropriate setoff for the borrower’s pretrial settlements to prevent double recovery and remanded for recalculation consistent with that requirement.

## Legal Principles

- Fraud and consumer-credit statutory claims may be supported where a lender relies on a materially inflated appraisal and misrepresents or conceals material loan terms in a consumer mortgage transaction.
- Remedies for WVCCPA violations must be authorized by statute and supported by the record; a court may not eliminate repayment of the entire loan principal absent a legally grounded basis.
- Punitive damages require specific findings under West Virginia’s governing punitive-damages framework and must satisfy federal due-process constraints, including proportionality between punitive and compensatory components.
- Under West Virginia setoff rules, a plaintiff’s recovery must be reduced by amounts obtained through settlements with other responsible parties to avoid duplicative compensation.

## Conclusion

The court sustained the borrower’s fraud and WVCCPA victories but required the trial court to correct the remedy by restoring a lawful principal repayment obligation, applying settlement offsets, and reassessing punitive damages under mandatory state-law findings and federal due-process limits.


Quicken Loans, Inc. v. Brown, 230 W. Va. 306, 737 S.E.2d 640 (W. Va. 2012)