No. 16-0298 - Quicken Loans, Inc. v. Walters                               FILED
                                                                        June 15, 2017
LOUGHRY, C.J., dissenting, joined by KETCHUM, J.:                         released at 3:00 p.m.
                                                                        RORY L. PERRY, II CLERK

                                                                      SUPREME COURT OF APPEALS

                                                                           OF WEST VIRGINIA


              The majority’s illogical and legally unsound opinion takes a perfectly

straightforward statute and, despite declaring it to be unambiguous, badly misconstrues it,

making a perfectly lawful banking transaction illegal. West Virginia Code § 31-17-8(m)(8)

prohibits only the predatory practice of making loans which on their face appear to be

adequately collateralized, but actually exceed the securing property’s fair market value when

aggregated with other loans. In no way does the statute prohibit making loans which exceed

100 percent “loan-to-value”; nevertheless, the majority now prohibits this otherwise lawful

practice and compounds this error by awarding respondent Walters (the “respondent”) with

attorney’s fees for prosecuting a claim that garnered her nothing. Because this Court is

neither empowered to sua sponte create regulatory banking legislation nor sits as an arbiter

of “moral” victories, I respectfully dissent.



I.     Inapplicability of West Virginia Code § 31-17-8(m)(8)

              The respondent refinanced her existing mortgage with the petitioner, Quicken

Loans, Inc. (the “petitioner”) in the amount of $136,000.00 for the purpose of lowering her

interest rate and monthly payment. Her property was apparently only worth $67,000.00 at

the time of the loan, despite a licensed appraiser valuing the property at $152,000.00. The

respondent filed a complaint against the petitioner, the appraiser, and the loan servicer. She

                                                1

settled for $98,000.00 with the appraiser and loan servicer and proceeded to trial against the

petitioner on her claims of an “illegal loan” prohibited by West Virginia Code § 31-17­

8(m)(8) and fraud; she sought punitive damages and a determination that the statutory

violation was “willful” for purposes of voiding the loan. A jury rejected all of the

respondent’s claims except for a single violation without malice of West Virginia Code § 31­

17-8(m)(8). Prior to trial, the petitioner moved the circuit court for judgment as a matter of

law on the respondent’s claim for a violation of West Virginia Code § 31-17-8(m)(8), which

the circuit court erroneously denied.



              The majority concludes, as did the circuit court, that this statutory provision

prohibits the making of a singular mortgage loan in an amount that exceeds the fair market

value of the property. In fact, it does no such thing. West Virginia Code § 31-17-8(m)(8)

provides in pertinent part:

              In making any primary or subordinate mortgage loan, no
              licensee may, and no primary or subordinate mortgage lending
              transaction may, contain terms which:

              (8)	   Secure a primary or subordinate mortgage loan in a
                     principal amount that, when added to the aggregate total
                     of the outstanding principal balances of all other
                     primary or subordinate mortgage loans secured by the
                     same property, exceeds the fair market value of the
                     property on the date that the latest mortgage loan is
                     made.




                                              2

(Emphasis added). Without necessity of interpretation or construction of the statute, even

the most casual reader can ascertain that the statute forbids only making a loan (whether

primary or subordinate) which “when added to the aggregate total . . . of all other . . . loans

secured by the same property” exceeds the property’s fair market value. (Emphasis added).

This clear and simplistic language plainly proscribes making a loan that, when aggregated

with other loans, exceeds the property’s fair market value. The sine qua non of this

prohibition is the existence of “other primary or subordinate mortgage loans” which

aggregate, along with the subject loan, to exceed the property’s fair market value. The

necessity of the existence of other loans is further made clear by the operative date for the

fair market valuation of the property–“the date that the latest mortgage loan is made.”

(Emphasis added).



              The rationale behind the mortgage loan prohibition, as stated in the statute,

rather than the one created by the majority, is not difficult to discern. Loans which on their

face alone do not exceed the property’s fair market value, but do so when added to other

encumbrances, may deceptively lure a consumer into believing the property adequately

collateralizes the individual loan. In reality, however, such a loan creates potential personal

exposure for the consumer because the property has insufficient value to cover the aggregate

combined total of the loans, which aggregated total may be unknown to or not easily

ascertained by the consumer. It is this type of deceptive and predatory practice that the


                                              3

statute seeks to preclude. On the other hand, a singular primary mortgage loan, the value of

which exceeds the property’s fair market value, would be hard for even the most

unsuspecting consumer to overlook. More importantly, such a loan may quite purposefully

exceed the property’s value in order to provide additional funds for other purposes, such as

paying off other unsecured debt. See McFarland v. Wells Fargo Bank, N. A., 810 F.3d 273,

281 (4th Cir. 2016) (noting that excess proceeds of under-collateralized loan provided

McFarland “with money he needed to pay off approximately $40,000 of student and

automobile debt, as he had hoped.”).



              The majority, despite declaring West Virginia Code § 31-17-8(m)(8)

unambiguous, launches into a lengthy discussion of the rule of statutory construction

regarding avoidance of absurd results and the Legislative intent behind the statutory scheme

to reach its erroneous conclusion that a single, stand-alone loan that exceeds the property’s

fair market value is prohibited by this statute.1 Focusing exclusively on the use of the terms


       1
         As stated within the precedent cited by the majority, ascertaining and giving effect
to the intention of the Legislature is the primary rule of “statutory construction.” Syl. Pt. 1,
Sheena H. For Russell H. v. Amfire, LLC, 235 W.Va. 132, 772 S.E.2d 317 (2015) (emphasis
added). Further, avoidance of absurdity in favor of reasonableness are methods of
“construction of a statute[.]” Syl. Pt. 3, Id. (emphasis added). The majority apparently
overlooks the threshold, fundamental principle that “[j]udicial interpretation of a statute is
warranted only if the statute is ambiguous[.]” Syl. Pt. 1, in part, Ohio Cnty Com’n v.
Manchin, 171 W.Va. 552, 301 S.E.2d 183 (1983). Having declared the statute unambiguous,
it is unclear why the majority relies upon these canons of statutory construction–there is quite
simply nothing to construe. See Syl. Pt. 6, Leggett v. EQT Production Co., __ W.Va. __, __
S.E.2d __, 2017 WL 2333083 (2017) (“‘When a statute is clear and unambiguous and the

                                               4

“primary or subordinate” mortgage, the majority, like the respondent, grossly oversimplifies

the statute, rendering meaningless more than half of the remaining language in the statute.

The majority apparently believes this reverse engineering is necessary to reach the immaterial

conclusion that the statute “applies” to “primary” or “first” mortgages. Certainly, it does.

Depending upon whether the subject loan is a primary or subordinate loan, the statute is

potentially applicable.



               However, it is the majority’s lack of familiarity with lending practices which

reveals the fallacy in its logic when it states that “by definition only subordinate mortgage

loans are ‘subject to the lien of one or more prior recorded mortgages or deeds of trust.’” In

short, the majority apparently believes that the only time a “primary mortgage loan” could

be effectuated is when no other loans already exist. Quite the contrary, loans which assume

the first-lien priority status, i.e., “primary” loans, are commonly entered into when other,

“subordinate” loans exist.2 Through use of a garden-variety subordination agreement, the

refinance of a “primary mortgage” preserves the first lien status of the mortgage despite the



legislative intent is plain, the statute should not be interpreted by the courts, and in such case
it is the duty of the courts not to construe but to apply the statute.’ Syl. Pt. 5, State v. General
Daniel Morgan Post No. 548, V.F.W., 144 W.Va. 137, 107 S.E.2d 353 (1959).”).
       2
        The statutory definitions provide that the only difference in a primary and subordinate
mortgage loan is that the “subordinate mortgage loan” is “subject to the lien of one or more
prior recorded mortgages or deeds of trust.” W.Va. Code § 31-17-1(m) and (o). “Primary
mortgage loan” is not defined as a singular loan which exists to the exclusion of all other
loans. Rather, it is simply a mortgage loan which occupies first-lien position.

                                                 5

existence of “prior recorded mortgages or deeds of trust.”3 In this event, the statute could be

violated if this “primary” loan was entered into where there are additional “subordinate”

loans which, aggregated with the subject primary loan, exceed the property’s fair market

value as of the date of the “latest” mortgage loan. The reason the statute prohibits such

practice–regardless of whether the subject loan is a primary or subordinate loan–is to account

for this very scenario, i.e., the refinance of a primary loan, which will continue to occupy

first-lien status.4 The prohibition against this practice as to primary loans does not mean that

a singular, stand-alone primary mortgage that exceeds 100 percent loan-to-value violates the

statute.



              This is the same conclusion reached by Judge Goodwin in the Southern District

of West Virginia–the only jurist to have previously addressed this precise issue. In Skibbe

v. Accredited Home Lenders, Inc., No. 2:08-cv-01393, 2014 WL 2117088 *6 (May 21, 2014,

S.D. W.Va.), Judge Goodwin similarly reasoned that “the plain language of the statute




       3
         “A mortgage subordination agreement is a document frequently used when there are
two mortgages on a home, and the homeowner is looking to refinance the first mortgage. The
mortgage subordination agreement specifies which mortgage takes precedence over the
other.” http://www.mortgage101.com/article/what-is-mortgage-subordination-agreement
(last visited June 12, 2017).
       4
        Were the statute not to make such a provision for primary loans, a predatory lender
could simply refinance the first-lien mortgage and obtain subordination of any other loans,
thereby duping the debtor into encumbering his or her property for a greater aggregate
amount than the property is worth–the precise practice prohibited by the statute.

                                               6

requires the existence of other mortgage loans before it will apply.” I can scarcely improve

upon Judge Goodwin’s straightforward reading of the plain language of the statute:

              By its terms, the statute does not apply when a borrower takes
              out her first mortgage loan and the principal balance of that loan
              exceeds the fair market value of the property at the time the loan
              is made. This section applies when a borrower takes out an
              additional mortgage loan, and the principal balance of that loan,
              when added to the outstanding balance of other existing loans,
              “exceeds the fair market value of the property on the date that
              the latest mortgage loan is made.”

Id. (Emphasis in original). This conclusion is entirely unaffected by the respondent’s string

cite of cases, which purportedly conclude that “the statutory prohibition applies to both

primary and subordinate mortgage loans.” These cases either did involve multiple loans (to

which the statute plainly applies) or failed altogether to address the issue presented herein:

the applicability of the statute to a singular loan that exceeds the property’s fair market

value.5 To state that the statute “applies” to primary or subordinate mortgage loans is to miss

the entire issue presented herein.



       5
       Fabian v. Home Loan Center, Inc., No. 5:14-cv-42, 2014 WL 1648289 (N.D. W.Va.
Apr. 24, 2014), and Robinson v. Quicken Loans, Inc., 988 F. Supp.2d 615 (S.D. W.Va. Dec.
24, 2013), both involved a primary mortgage and a secondary home equity line of credit.
O’Brien v. Quicken Loans, Inc., No. 2:12-cv-5138, 2013 WL 2319248 (S.D. W.Va. May 28,
2013), Hixson v. HSBC Mortgage Services, Inc., No. 09-ap-42, 2011 WL 4625374 (Bankr.
N.D. W.Va. Sept. 30, 2011), Bishop v. Quicken Loans, Inc., No. 2:09-cv-1076, 2011 WL
1321360 (S.D. W.Va. Apr. 4, 2011), Crove v. GreenPoint Mortg. Funding, Inc., 740 F.
Supp.2d 788 (S.D. W.Va. Aug. 11, 2000), and Quicken Loans, Inc., v. Brown, 230 W.Va.
306, 737 S.E.2d 640 (2012), were all disposed of on pleading or evidentiary issues or did not
otherwise address the issue presented in any fashion. All of these cases, except for Hixson,
involved the respondent’s counsel.

                                              7

               The majority’s reading of West Virginia Code § 31-17-8(m)(8) requires one

to completely disregard the primary operative language of the statute, i.e., the aggregation

language. In order to give significance to this language, the respondent flimsily suggests

that when there is no other such loan(s) with which to aggregate, the “outstanding principal

balance” added to the subject loan is simply zero. However, if the Legislature had intended

to wholly proscribe loans which, alone or in the aggregate, exceed a property’s fair market

value, it certainly could have done so by simply writing the statute to prohibit a mortgage

loan that either singly or “when added to the aggregate total of the outstanding principal

balances of all other primary or subordinate mortgage loans, if any, secured by the same

property, exceeds the fair market value . . . .” The Legislature simply did not so intend.6 Nor

did the Legislature see fit to expand the statute to include single, primary mortgage loans

when the statute was amended in 2001, 2002, 2010, 2012, and 2016.



               The foregoing leads to the core fallacy underlying the majority’s conclusion:

there is simply nothing illegal or unlawful about making a loan in excess of a property’s fair



       6
        In fact, before inclusion of these and other provisions into this Article, it was entitled
“Secondary Mortgage Loans.” See W.Va. Code Chapter 31, Article 17 (1996). In 2000,
subsection (m)(8) was added to West Virginia Code § 31-17-8 and the statute was amended
to govern mortgages, generally, removing references to “secondary” mortgage loans and
altering the title to simply “Mortgage Loans.” However, the particular portion of West
Virginia Code § 31-17-8(m)(8) at issue herein has remained unaltered since its inclusion in
2000, and has always forbidden primary or subordinate mortgages insofar as such mortgages
aggregated with other outstanding loans exceeds fair market value.

                                                8

market value should a lender choose to accept such risk.7 There is no federal prohibition on

such a practice identified by the respondent and such loans create greater risk to the lender

than the consumer. In McFarland, 810 F.3d at 278, faced with precisely the same scenario,

the Fourth Circuit explained:

              Whatever the pitfalls, receiving too much money from a bank is
              not what is generally meant by “overly harsh” treatment . . . . [I]t
              is not the borrower but the bank that typically is disadvantaged
              by an under-collateralized loan. That is why borrowers may pay
              a premium for under- or non-collateralized loans, why it is
              common practice for banks, as many borrowers can attest, to
              ensure that their real estate loans are for significantly less than
              property value, and why a generous mortgage loan is usually
              cause for celebration and not a lawsuit.

Id. at 280 (citations omitted). Further, as Judge Goodwin aptly reasoned in the underlying

District Court opinion concerning this scenario:

              The notion that [a consumer is] harmed by [a mortgage loan that
              exceeds the secured property’s fair market value] is ridiculous.
              Consumers using credit cards to incur more charges than they
              can repay are not disadvantaged by their high credit limits.
              Students financing their education are not disadvantaged by
              their ability to obtain such financing. The plaintiff obviously
              owes a larger debt than he otherwise would if he accepted a
              smaller loan. But that is exactly how loans work, and there is
              nothing unfair about it.

McFarland v. Wells Fargo Bank, N.A., 19 F. Supp. 3d 663, 670 (S.D. W.Va. 2014), aff’d in

part, vacated in part, 810 F.3d 273 (4th Cir. 2016). In fact, the Fourth Circuit fully embraced


       7
        This would be subject, of course, to any and all applicable state and federal lending
guidelines in the making and consummation of the loan. See 15 U.S.C.A. § 1601 et seq.
(governing “Consumer Credit Cost Disclosures”).

                                               9

Judge Goodwin’s cogent analysis that “[i]f anything . . . an undersecured mortgage

disadvantages the lender, not the borrower” when affirming Judge Goodwin’s conclusion that

such a loan is not, on its terms alone, substantively unconscionable.8



               The foregoing is utilized not necessarily as dispositive of the meaning of the

statute at issue, but as an illustration that loans that exceed a property’s fair market value are

neither unheard of nor inherently suspect. In fact, under the federal “Home Affordable

Refinance Program”9 such loans are often written by lenders with no loan-to-value ratio

(“LTV”) requirements.10       See http://harpprogram.org/faq.php (“There is no longer a



       8
        Interestingly, despite being represented by the same counsel as the respondent
herein–Mountain State Justice–and presenting ostensibly identical facts involving only a
singular, under-collateralized loan, McFarland did not bring an action for violation of West
Virginia Code § 31-17-8(m)(8). Rather, he only asserted claims for substantive
unconscionability and unconscionable inducement; the Fourth Circuit allowed only the claim
of unconscionable inducement to proceed. The respondent in the case at bar voluntarily
dismissed her claim of unconscionable inducement.
       9
        See Marks v. Bank of Am., N.A., No. 03:10-CV08039PHXJAT, 2010 WL 2572988,
at *5 (D. Ariz. June 22, 2010) (“On October 8, 2008, President Bush signed into law the
Emergency Economic Stabilization Act of 2008, Pub.L. No. 110-343, 122 Stat. 3765
(codified 12 U.S.C.A.§ 5201 et seq.) (“EESA”). Section 109 required the Secretary of the
Treasury (“the Secretary”) to take certain measures in order to encourage and facilitate loan
modifications. 12 U.S.C.A. § 5219. . . . The EESA authorized the Secretary of the Treasury,
FHFA, Fannie Mae, and Freddie Mac to create the Making Home Affordable Program on
February 18, 2009, which consists of two components: (1) the Home Affordable Refinance
Program [“HARP”], and (2) the HAMP [“Home Affordable Modification Program”].”).
       10
          See http://harp.gov/About (“Introduced in March 2009, HARP enables borrowers
with little or no equity to refinance into more affordable mortgages without new or additional
mortgage insurance. HARP targets borrowers with loan-to-value (LTV) ratios equal to or

                                               10

maximum LTV limit for borrower eligibility. If the borrower refinances under HARP® and

their new loan has a fixed rate mortgage, there is no maximum LTV. If the borrower

refinances under HARP® and their new loan is an adjustable rate mortgage, their LTV may

not be over 105%.”). While such loans are expressly exempted from the reach of West

Virginia Code § 31-17-8(m)(8), their mere existence demonstrates that the practice now

made unlawful by the majority is, if perhaps not commonplace, perfectly legitimate. As

Judge Goodwin astutely noted, “[f]ollowing the plaintiff's logic, all unsecured loans are

substantively unconscionable[.]” McFarland, 19 F. Supp. 3d at 670. Just as unsecured loans

are not per se unconscionable, singular loans that exceed 100% loan-to-value are not

unlawful. As such, there is simply no reason why the Legislature would have chosen to

forbid under-secured loans in a statutory scheme designed to prohibit predatory lending

practices. See Herrod v. First Republic Mortg. Corp., 218 W.Va. 611, 618, 625 S.E.2d 373,

380 (2005) (describing W.Va. Code § 31-17-8(m) as part of West Virginia’s “predatory

lending law”).



              In short, the majority has ham-handedly rendered a perfectly lawful lending

transaction “predatory” in nature and, therefore, “illegal.” For those of us not immersed in

the industry, it is difficult to predict the sweeping implications of the majority’s uninformed




greater than 80 percent and who have limited delinquencies over the 12 months prior to
refinancing.”).

                                              11

decision. What is clear, however, is that it is now incumbent upon the Legislature to rectify

this “judicial legislation” and cure any economic implications created by the unwary

majority, which was apparently bent on salvaging the respondent’s self-proclaimed “victory”

that was only marginally obtained in the first instance.



II.       Erroneous Attorney’s Fee Award

               The respondent’s self-proclaimed “victory” leads me to the majority’s second,

equally inscrutable and erroneous conclusion: that the respondent somehow “prevailed” in

the underlying litigation, making her entitled to a potential award of more than $150,000.00

in attorney’s fees, despite securing not a single penny in judgment from the petitioner for its

alleged statutory violation. As indicated above, the jury awarded the respondent $27,000.00

in damages for the petitioner’s non-willful statutory violation. Having previously settled

with the other co-defendants in the total amount of $98,000.00 ($65,500.00 in compensatory

damages and $32,500.00 for attorney’s fees), after offset, the respondent received nothing

from the petitioner. This perceived “moral victory” is wholly insufficient to substantiate an

award of attorney’s fees. In rejecting the same argument, the United States Supreme Court

stated:

               The only “relief” [plaintiff] received was the moral satisfaction
               of knowing that a [] court concluded that his rights had been
               violated. The same moral satisfaction presumably results from
               any favorable statement of law in an otherwise unfavorable
               opinion. . . . . [A] favorable judicial statement of law in the
               course of litigation . . . does not suffice to render him a

                                              12

               “prevailing party.” Any other result strains both the statutory
               language and common sense.

Hewitt v. Helms, 482 U.S. 755, 762-63 (1987).



       A.      The respondent did not “prevail”

               The United States Supreme Court has further explained that “plaintiffs may be

considered ‘prevailing parties’ for attorney’s fees purposes if they succeed on any significant

issue in litigation which achieves some of the benefit the parties sought in bringing suit.”

Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (citing Nadeau v. Helgemoe, 581 F.2d 275,

278-79 (1st Cir. 1978) (emphasis added)). The respondent can identify absolutely no

“benefit” the trial and jury verdict rendered. Similarly, this Court has held that “[f]or a

plaintiff to have “prevailed” at trial, . . . he must demonstrate that the litigation effected the

material alteration of the legal relationship of the parties in a manner which the legislature

sought to promote in the fee statute.” Schartiger v. Land Use Corp., 187 W.Va. 612, 613,

420 S.E.2d 883, 884 (1991). The respondent’s “victory” of a mere finding of a single, non-

willful statutory violation resulted in absolutely no alteration of the legal relationship of the

parties: the petitioner paid the respondent nothing and the debt remained intact due to the

finding of a non-willful violation. More to the point, this Court has expressly stated:

               A party who needlessly pursues litigation after he has been
               offered a settlement that exceeds what the jury finally awards by
               an amount sufficient to have compensated the plaintiff for all his
               attorneys’ fees and expenses at the time the offer was made is


                                               13

               not entitled to any attorneys’ fees that accrued after the offer
               was made.

Id. at 616, 420 S.E.2d at 887. This is precisely what occurred in this case. As indicated in

the petitioner’s brief, months before trial it extended a settlement offer to the respondent,

which she rejected. The respondent then “needlessly pursue[d] litigation” and gained

nothing. Id.



               The majority appears to be implicitly operating under a misapprehension that

the pre-offset verdict is of some legal consequence in this analysis. Let me be clear: the

offset in this matter was not levied as a “favor” to the petitioner, nor is it a mere technicality

which creates the illusion that the respondent did not prevail. An offset for amounts already

paid by jointly tortious defendants is legally required and serves to fix, by law, the amount

which the respondent is legally entitled to recover from the petitioner. Indeed, “[d]efendants

in a civil action against whom a verdict is rendered are entitled to have the verdict reduced

by the amount of any good faith settlements previously made with the plaintiff by other

jointly liable parties.” Syl. Pt. 7, Bd. of Educ. of McDowell Cty. v. Zando, Martin &

Milstead, Inc., 182 W.Va. 597, 600, 390 S.E.2d 796, 799 (1990). In this case, the respondent

is entitled to recover nothing by operation of law. Until the offset is applied, the judgment

is neither fixed, nor final. See Groves v. Compton, 167 W.Va. 873, 880, 280 S.E.2d 708, 712

(1981) (stating that when jury is not apprised of prior settlement amount “the trial court



                                               14

deducts the settlement figure from the award before entering the judgment”) (emphasis

added). Therefore, focus on the pre-offset verdict of $27,000.00 is pointless.



              Accordingly, the final appealable judgment entered in this matter was zero.11

The judgment is precisely the same as if the jury had found no violation or a violation, yet

no damages. Other courts have had little difficulty in reaching the inescapable conclusion

that somehow eludes the majority: that the trial and verdict must have benefitted the

respondent in some manner for her to have “prevailed.” See Goodman v. Lozano, 223 P.3d

77, 78 (Cal. 2010) (finding plaintiff “ordered to take nothing against the nonsettling

defendants due to the settlement offset” was not prevailing party); Imperial Lofts, Ltd. v.

Imperial Woodworks, Inc., 245 S.W.3d 1, 7 (Tex. Ct. App. 2007) (holding that because

“settlement credits and insurance payment exceeded the jury’s damage award . . . [plaintiff]

was not the prevailing party and was not entitled to recover its attorney’s fees.”); Blizzard

v. Nationwide Mut. Fire Ins. Co., 756 S.W.2d 801, 806 (Tex. Ct. App. 1988) (“It is one thing

to allow a party an award of attorney fees on a successful claim notwithstanding an opposing

party’s success on an offsetting claim. It is quite another to allow attorney fees on a claim

which, although successful, was paid in full [through prior settlements] before trial.”); Stout

v. State, 803 P.2d 1352, 1354 (Wash. Ct. App. 1991) (holding “one who obtains a verdict for



       11
         The circuit court granted the petitioner’s motion to correct the verdict to reflect an
offset of $65,500.00, leaving a verdict of zero.

                                              15

an amount equal to or less than what is already in hand has not received an affirmative

judgment and is not the prevailing party” for purposes of attorney’s fee award).



               In absence of damages–a necessary element of any cause of action–what has

the respondent successfully accomplished? The respondent did not seek a mere declaration

that the petitioner violated West Virginia Code § 31-17-8(m)(8). She proceeded to trial

under the belief that her action against the petitioner would garner her a damages award in

excess of those amounts she had already received; she was wrong. Under the respondent’s

argument, the only party who benefitted from that erroneous risk assessment is her attorney.

Quite simply, West Virginia Code § 31-17-8 does not exist to generate fees for lawyers.

Under the majority’s decision, there is no disincentive for attorneys to encourage their clients

to endure the rigors of trial since, at worst, their client recovers nothing, yet they still recover

their fees. This transforms the statute into a mere fee-generating mechanism for attorneys.



       B.      Attorney’s fees under West Virginia Code § 31-17-17 are not compensatory

               I further take extreme issue with the circular position that, since attorney’s fees

were recoverable under the statute, such fees therefore form part of the compensatory

damages to which the respondent was entitled, thereby justifying an award of attorney fees.

Boiled to its essence, the respondent argues that the statutory allowance for attorney’s fees

supports the notion that she “prevailed”; since she prevailed, she is thereby entitled her to


                                                16

attorney’s fees. Aside from being entirely circular, this argument contains a more obvious

fallacy: that she is necessarily “entitled” to attorney’s fees under the statute.



               As set forth in my dissent in Quicken Loans, Inc. v. Brown, 236 W.Va. 12, 777

S.E.2d 581 (2014) (“Quicken II”), attorney’s fees and costs are not per se compensatory

damages, the type to which a claimant is entitled. Although the discussion in Quicken II

regarded recovery of attorney’s fees under the West Virginia Consumer Credit and Protection

Act, the analysis is the same. Like the Consumer Credit and Protection Act, West Virginia

Code § 31-17-17(c) makes fees permissible, not mandatory: “Any residential mortgage loan

transaction in violation of this article shall be subject to an action . . . by the borrower seeking

damages, reasonable attorney’s fees and costs[.]” While a borrower may “seek” attorney’s

fees, there is no language whatsoever in the operative statute making an award of fees

mandatory under any circumstances. As I explained in Quicken II, “[l]ogic suggests that

recovery of [attorney’s fees] would have been structured as mandatory if the Legislature had

intended attorney’s fees and costs to be deemed compensatory in nature[.]” Id. at 46, 777

S.E.2d at 615 (Loughry, J., dissenting). Moreover, a separate delineation of attorney’s fees

and costs, in addition to “damages,” further suggests that such an award does not represent

part of the recovery needed to compensate a plaintiff. Finally, the type of predatory lending

behavior West Virginia Code § 31-17-8 seeks to preclude is clearly “bad behavior”; the

purpose for which attorney’s fees are awarded for such behavior is to “punish[] and


                                                17

discourage.” Boyd v. Goffoli, 216 W.Va. 522, 569, 608 S.E.2d 169, 186 (2004). Thus, it

makes little sense to argue that the availability of attorney’s fees, if appropriate, constitutes

some sort of compensatory element of the respondent’s damages which itself is sufficient to

justify an award of attorney’s fees. I therefore find the majority’s new syllabus point

declaring these permissive fees to be compensatory wholly without support.



       C. The circuit court’s attorney’s fee analysis was error

               Assuming, arguendo, that the respondent’s “moral victory” against the

petitioner made her the “prevailing” party for purposes of an attorney’s fee award, it is clear

that the circuit court erred in summarily awarding fees generated prosecuting the entire cause

of action against all defendants and only allowing an offset of a nominal, non-representative

figure for attorney’s fees received in the prior settlements. It is well-established that “when

a complainant sets forth distinct causes of action so that the facts supporting one are entirely

different from the facts supporting another, and then fails to prevail on one or more such

distinct causes of action . . . attorneys’ fees for the unsuccessful causes of action should not

be awarded.” Bishop Coal Co. v. Salyers, 181 W.Va. 71, 83, 380 S.E.2d 238, 250 (1989).

The figure presented by the respondent to the circuit court reflected fees generated in pursuit

of the entire case against all defendants, as reflected in the circuit court’s order. Further, the

figure requested by the respondent plainly represented efforts expended in pursuing its entire

case against the petitioner, including her fraud claim on which she did not prevail. Any fee


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award should have consisted only of those fees and costs generated in pursuit of the

respondent’s singular “successful” claim against the petitioner: the nominal statutory

violation.



               The circuit court attempted to ameliorate the obvious inequity of the significant

fee award by offsetting those amounts received from the settling co-defendants that were

designated as “attorney’s fees” within those settlements. However, the round figures which

purportedly represented attorney’s fees in the prior settlements–$25,000.00 and

$7,500.00–signify literally nothing. There is no evidence those amounts represented actual

fees incurred and attributable to the claims against those parties. As settlement figures, they

reflected compromised amounts rather than a precise calculation of fees and costs payable

by that particular party in settlement of a claim for attorney’s fees. Moreover, the circuit

court summarily designated certain amounts to pursuit of claims against the settling

defendants and concluded that, since such amounts were less than the actual settlement

amounts, the respondent was getting some added benefit from offsetting the attorney’s fee

settlement sums.       Significantly, however, since the circuit court’s order contains no

itemization of these fees and costs, it evades this Court’s review. Further, the fact that the

circuit court found that time dedicated to pursuing the settling defendants was actually less

than they paid in settlement for those fees fully demonstrates how arbitrary and unmeaningful

the offset truly is.


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              The flaws in the circuit court’s analysis of the attorney’s fee award are patent.

Rather than clumsily retrofitting the settlement amounts to the clearly over-inclusive fee

submission by the respondent, the circuit court, on remand, should dredge out of the fee

statements only those amounts reasonably attributable to prosecution of the singular statutory

violation upon which the respondent received a favorable result. As indicated above, this is

required by our caselaw. The circuit court should then itemize those entries in its order

making appellate review of such award feasible. In absence of this methodology, the

attorney’s fee award is a wholly arbitrary and unreviewable, such that the award that should

not stand.



III.    Conclusion

              The majority’s wholly misguided handling of this marginal verdict, both

substantively and with respect to the fee award, is not only troubling, but has serious and far-

reaching implications that will clearly require legislative correction. Further, the majority’s

decision virtually demands that this Court thoroughly revisit its attorney’s fee award

precedent, particularly that articulated in Quicken Loans I and II, rather than simply tossing

in a new syllabus point on the issue while remanding for a badly mishandled fee award.

Accordingly, I respectfully dissent.




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