By Thomas G. Wolfe, J.D.
Quicken Loans recently petitioned the U.S. Supreme Court to review a $2.17 million punitive damages award upheld by the Supreme Court of Appeals of West Virginia in subprime loan litigation brought by a borrower. In its petition, Quicken Loans contends that the West Virginia Supreme Court “flatly refused to consider [the lender’s] federal constitutional challenge to a $2.17 million punitive damages award that dwarfed, by a 124 to 1 ratio, the less than $17,500 in restitution liability in the case.” Quicken Loans asserts that the borrower’s attorney’s fees and costs, totaling $596,200 in the litigation, should not have been included in the punitive-to-compensatory damages ratio that the state court deemed to be in accord with West Virginia law and not excessive. The dispute arose from a $144,800 mortgage loan obtained by the borrower from Quicken Loans.
According to Quicken Loans, the inclusion of attorney’s fees and costs as part of the compensatory damages calculation for the ratio violated the lender’s substantive due-process rights protected by the Fourteenth Amendment. In addition, Quicken Loans argues that it had not waived its federal constitutional claims in the state court system and that the West Virginia Supreme Court “evaded” its obligation to properly address them (Quicken Loans Inc. v. Brown, March, 25, 2015, Docket No. 14-1191).
It is uncertain whether the U.S. Supreme Court will agree to hear the appeal. Presently, the borrower, who successfully leveled claims of unconscionability under the West Virginia Consumer Credit and Protection Act against Quicken Loans and obtained the $2.17 million punitive damages award, is slated to respond to the lender’s petition by April 29, 2015.
An interesting point raised by the lender in support of its Supreme Court petition centers on the dissenting opinion to the West Virginia Supreme Court’s decision permitting the inclusion of the attorney’s fees in the “punitive-to-compensatory damages ratio” calculation. According to the petition, the dissent recognized that the majority’s opinion “brazenly” ignored federal constitutional due-process issues raised by Quicken Loans in the state court system.
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