CIT Bank v. Coffman

904 S.E.2d 466

CIT BANK, N.A., Plaintiff/Counterclaim Defendant Below, Petitioner,

v.Caroline COFFMAN, as Administratrix of the Estate of Shirley Bowen, Defendant/Counterclaim Plaintiff Below, Respondent.

No. 22-ICA-330

West Virginia Intermediate Court of Appeals.

Submitted: April 2, 2024

Filed: June 11, 2024

Appeal from the Circuit Court of Hampshire County, Honorable C. Carter Williams, Judge, Civil Action No. CC-14-2016-C-97

Marc E. Williams, Esq., Randall L. Saunders, Esq., Shaina D. Massie, Esq., Jonah D. Samples, Esq., Nelson Mullins Riley & Scar- borough LLP, Huntington, West Virginia, Counsel for Petitioner

Jonathan G. Brill, Esq., Jonathan G. Brill, PLLC, Romney, West Virginia, F. Samuel Byrer, Esq., Law Office of F. Samuel Byrer, PLLC, Charles Town, West Virginia, Counsel for Respondent

LORENSEN, JUDGE:

Petitioner, CIT Bank, N.A. ("CIT"), appeals, in part, the May 6, 2022, order of the Circuit Court of Hampshire County denying CIT’s motion for a new trial and motion for judgment as a matter of law. CIT also appeals a November 18, 2022, order granting punitive damages and a November 22, 2022, order awarding attorney fees. Respondent Estate of Shirley Bowen ("Ms. Bowen") asserts a cross-assignment of error regarding the circuit court’s reduction of punitive damages in the November 18, 2022, order. A jury found CIT liable for (1) wrongful foreclosure; (2) slander of title; (3) breach of contract; (4) violations of the West Virginia Consumer Credit Protection Act ("WVCCPA"); (5) abuse of process; (6) tort of outrage; and (7) fraudulent court record. Ms. Bowen was awarded $760,000.00 in compensatory damages for her various claims and was additionally awarded $1,500,000.00 in punitive damages. Following the post-trial motions presently on appeal, the circuit court reduced Ms. Bowen’s total damages to $1,750,000.00 and separately awarded Ms. Bowen $613,858.35 in attorney fees and costs.

For the reasons below, we affirm the circuit court’s ruling on Ms. Bowen’s breach of contract and tort of outrage claims. However, we reverse the circuit court’s holdings on the claims for wrongful foreclosure, slander of title, abuse of process, and fraudulent court record. We further reverse the circuit court’s order regarding punitive damages and vacate the order awarding attorney fees. This matter is remanded to the circuit court for a reconsideration of attorney fees.

I. FACTUAL AND PROCEDURAL BACKGROUND

Shirley Bowen purchased her home in Delray, West Virginia, in 1988. Faced with financial insecurity, she entered into a reverse mortgage arrangement with Financial Freedom Senior Funding Corporation, now CIT, in 2006. Almost ten years after entering into the reverse mortgage, Ms. Bowen learned that CIT had foreclosed and sold her home. She alleged that she received no notice of the foreclosure and was not aware of why CIT would foreclose.¹ Shortly thereafter, CIT filed a Petition to Rescind Foreclosure Sale in the Circuit Court of Hampshire County, which began the action on appeal.

A reverse mortgage provides regular and reliable income to a homeowner in exchange for his or her forfeiture of equity in the property. The purpose of a reverse mortgage is to enable older homeowners to access equity in their homes. See W. Va. Code § 47-24-2 (1996). The terms of Ms. Bowen’s reverse mortgage required her to "occupy, establish, and use the Property as Borrower’s principal residence after execution of this Security Instrument." Though she certified her occupancy for the first four years of the reverse mortgage, Ms. Bowen stopped submitting her written occupancy certifications in December of 2012.

On July 2, 2012, Ms. Bowen personally called CIT and requested that her mailing address be changed from her former Post Office Box ("P.O. Box") to the property’s physical address at 1207 Delray Road due to increased P.O. Box fees. On January 7, 2013, Ms. Bowen completed an occupancy certification form, which listed her daughter, Caroline Coffman, as her alternative contact. Also on that form was a section that stated, "[i]f this information is no longer correct, please provide a current alternative contact below." In this section, Ms. Bowen left the "Name" space blank but listed the 1207 Delray Road address in the "Address" space.

On March 29, 2013, Ms. Bowen again submitted a Change of Mailing Address form, requesting that CIT change Ms. Bowen's mailing address from her former P.O. Box to 1207 Delray Road. The form contained a section titled "Reason for Change (Required)" which Ms. Bowen left blank. CIT received the Change of Mailing Address form and marked it invalid for its failure to include a reason for the change. Thereafter, CIT sent Ms. Bowen a letter to the 1207 Delray Road address that stated that CIT had recently sent mail correspondence to Ms. Bowen that was returned by the postal service with a forwarding address for Ms. Bowen. The letter stated that CIT could only send notices to Ms. Bowen at the property address or any other address that Ms. Bowen designates and, therefore, CIT cannot forward notices to Ms. Bowen to an address which she has not authorized.² The letter contained another Change of Mailing Address form that listed the 1207 Delray Road address as the forwarding address provided by the United States Postal Service. CIT never entered a change of address into its internal system for Ms. Bowen and as a result, sent all correspondence to Ms. Bowen’s discontinued P.O. Box, as well as to a physical address for Ms. Bowen’s home listed on the deed of trust.³

On July 29, 2015, CIT sent a "Home Equity Conversion Mortgage Repayment Notice" to Ms. Bowen’s former P.O. Box. The notice asserted that Ms. Bowen’s loan had become due and payable because of her alleged failure to occupy the property. On November 2, 2015, CIT sent Ms. Bowen by regular mail a "Notice of Intent to Foreclose" to her former P.O. Box. The notice stated that Ms. Bowen’s loan was in default due to her failure to occupy her home.

On February 18, 2016, CIT foreclosed on Ms. Bowen’s home. CIT then purchased the property at the sale for $116,000.00 and conveyed title to the property to Federal National Mortgage Association. Ms. Bowen first became aware of the foreclosure and conveyance a little less than a month later when she discovered a written notice on her front door stating that her home had been sold. On March 10, 2016, Ms. Bowen’s daughter, Ms. Coffman, called CIT on her mother’s behalf. She informed CIT that her mother still lived at the property and that she changed her address due to a new 911 physical address policy, as well as Ms. Bowen’s inability to afford her long-discontinued P.O. Box. On March 15, 2016, Ms. Bowen sent CIT a letter that stated that she was 79 years old, still resided in her home, had not left for any reason, and wished to stay there for the remainder of her life. Along with the letter, Ms. Bowen sent CIT a copy of her driver’s license and an electric bill, both of which reflected the 1207 Delray Road address.

It was revealed during discovery that Ms. Bowen did, in fact, certify her occupancy on multiple occasions. The loan notes revealed as follows:

1) On March 22, 2014, Ms. Bowen called Financial Freedom and confirmed she continued to reside in her home.

2) On March 26, 2014, Ms. Bowen provided Financial Freedom with written confirmation that she continued to reside in her home.

3) On March 28, 2014, and in response to Ms. Bowen’s prior phone call and written correspondence, Financial Freedom notes its confirmation that Ms. Bowen continued to reside in her home.

4) On April 2, 2015, Financial Freedom received an occupancy inspection noting that Ms. Bowen continued to reside in her home, which was verified by Ms. Bowen’s neighbor.

5) On May 14, 2015, Financial Freedom confirmed that Ms. Bowen’s home was occupied.

6) On May 22, 2015, Ms. Bowen sent Financial Freedom a handwritten letter providing, "To whom it may concern, I Shirley M. Bowen still live in my home."

7) On August 28, 2015, Financial Freedom received an appraisal from Scott See noting that the home was occupied by Ms. Bowen.

8) On September 22, 2015, Financial Freedom ordered an occupancy inspection and received notification from the inspector that provided, "Property occupied per contact with the mortgagor."

9) On January 7, 2016, Financial Freedom received another appraisal from Scott See noting that Ms. Bowen was residing in her home.

CIT also claimed early in this litigation, in addition to occupancy, Ms. Bowen had failed to provide a reason for changing her mailing address. However, the loan notes proved that assertion to be false. The reverse mortgage loan documents provide that notice "shall be given to the Property address or any other address all Borrowers jointly designate." None of the loan documents required Ms. Bowen to provide a reason for a change in address.⁴

On March 25, 2016, CIT submitted a request to the United States Department of Housing and Urban Development ("HUD") to rescind the foreclosure sale. HUD’s approval was required by the structure of the reverse mortgage, which involved two deeds of trust, one held by HUD and one by CIT.

On March 31, 2016, Ms. Bowen sent a handwritten letter to CIT simply requesting a change of mailing address to reflect the 1207 Delray Road address. On April 12, 2016, CIT denied the request and sent Ms. Bowen a letter that stated that her change of address had not been accepted because the address provided was missing information. The letter requested Ms. Bowen resubmit a preprinted change of address form that provided a reason for the change. CIT mailed this letter to Ms. Bowen’s former P.O. Box. On June 13, 2016, CIT mailed Ms. Bowen another letter to her former P.O. Box explaining, among other things, that it could not process the requested change of address without a stated reason for the change. On June 24, 2016, Ms. Bowen’s March 31, 2016, handwritten request for an address change was approved after Ms....