Quicken Loans taking fight to W.Va. high court

Jessica M. Karmasek Sep. 19, 2011, 9:30am


CHARLESTON, W.Va. (Legal Newsline) -- The CEO of Quicken Loans Inc., the nation's largest online home lender, says a West Virginia circuit court judge's decision to award one of its former customers $2 million in punitive damages "made absolutely no sense."

Bill Emerson, who was promoted to CEO of the company in 2002, says Quicken plans to fight the verdict, which stems from a lawsuit filed in Wheeling in 2009.

The plaintiff, Lourie Brown, had applied for a mortgage with the company, hoping to refinance her home.

Based on an assessment of her home -- completed by a licensed West Virginia appraiser -- Quicken loaned Brown $144,800. The loan reduced her monthly mortgage payments by about $300 a month, reduced her interest rate and provided her with cash to buy a new car.

"The client was happy and rated us very high," Emerson said.

Then, two to three months after the transaction closed, Brown stopped making payments.

That's when Quicken received notice of a lawsuit by Brown. In it, she accused the company of lending her too much money and that it took advantage of her.

"We, of course, disagreed with that," Emerson said. "And we fought the lawsuit."

However, Quicken eventually was found liable for $18,000, and the entire note and mortgage was canceled.

On top of that, Circuit Judge Arthur Recht awarded punitive damages in the amount of $2 million, plus $600,000 in attorney fees.

In the end, the total awards ended up being more than 25 times higher than the entire loan amount.

"We received the verdict and we completely disagreed," Emerson said.

"I sort of scratched my head and said, 'really?' It absolutely made no sense to me."

Now, Quicken is taking its fight to the West Virginia Supreme Court of Appeals. It filed a 47-page appeal brief with the state's high court on Sept. 6.

Andrew Lusk, counsel for Quicken, said Wednesday he wasn't sure whether the Court would issue a quick decision or require a hearing.

Either way, the company says it doesn't expect the Court to take any action until early 2012, at least.

Going in, the company realizes West Virginia is a more plaintiff-friendly state.

"Knowing that, a lot of businesses probably wouldn't fight (the verdict). They'd just settle," Emerson said. "But that's not us. That's not what we believe in."

Still, the CEO, who started out as a loan officer with the company, says he is holding out hope.

"Facts are facts and right is right," he said. "And we believe, based on the facts, we are right."

In this case, the company points to the actual appraisal.

"It was inaccurate, not a good estimate," Lusk said. "And it caused us to lend her too much money."

While Quicken believes some of the fault lies with the appraiser, it says some of the responsibility also falls on the plaintiff, herself.

"The homeowner should have been alarmed when the appraisal came back, questioned it and should have known it was too much," Lusk said.

Lusk said Quicken also took issue with Recht finding that the loan was "unconscionable."

To lawyers and non-lawyers, alike, the word means "outrageous," Lusk said.

"When we went back and took a look at the loan and the details of it, it was completely legitimate," he said. "There was nothing outrageous about it."

The company also argues that Recht failed to perform the proper analysis required in awarding the punitive damages.

"There was basically no explanation given," Lusk said.

He said he is hopeful that the Supreme Court will do such an analysis and end up reversing the damages.

While Emerson admits that the company -- now 4,000 strong -- isn't perfect, he contends that it usually gets "phenomenal" feedback from customers.

In fact, the company last year was rated the highest in overall customer satisfaction among U.S. mortgage originators by J.D. Power and Associates, the popular independent consumer researcher.

"I guess that's the frustrating part here," he said, pointing to Brown's initial glowing reviews.

Lusk agreed.

"It's basically, oh, blame someone else," he said. "And we think that's wrong."

No matter the outcome, Emerson said the company is committed to doing business in West Virginia.

"We may not be physically located in West Virginia, but we are committed to the community," he said. "We want to help people here."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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