Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_13-cv-00441/USCOURTS-almd-2_13-cv-00441-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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1 

IN THE UNITED STATES DISTRICT COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

NORTHERN DIVISION 

CASEY and STEPHANIE OTT, ) 

) 

Plaintiffs, ) 

) 

v. ) CASE NO. 2:13-cv-441-WHA 

) 

QUICKEN LOANS, INC., ) (WO) 

) 

Defendant. ) 

MEMORANDUM OPINION AND ORDER 

I. INTRODUCTION

 This case is before the court on a Motion for Summary Judgment (Doc. # 24) and 

accompanying Memorandum (Doc. # 25) filed by Defendant Quicken Loans, Inc. on November 

21, 2014. Also before the court are Plaintiffs Casey and Stephanie Ott’s Response in Opposition 

(Doc. # 33) and Defendant’s Reply thereto (Doc. # 34). 

 The Plaintiffs’ original Complaint was filed in the Circuit Court of Autauga County, 

Alabama in September of 2012. The Complaint alleges state law claims for breach of contract; 

fraudulent misrepresentation; promissory fraud; fraudulent suppression, negligent and wanton 

conduct; negligent and wanton hiring, supervision, and training; intentional infliction of 

emotional distress; and slander of credit. All of the claims stem from Plaintiffs’ dealings with 

Defendant after they applied for a loan to refinance their home mortgage and began the process 

of closing on the loan. 

 The Defendant removed the case to this court based on diversity jurisdiction in June of 

2013, and the Plaintiffs did not file a motion to remand. The court finds that diversity 

jurisdiction exists in this case. 

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 For the reasons to be discussed, the Motion for Summary Judgment is due to be 

GRANTED. 

II. SUMMARY JUDGMENT STANDARD

 Summary judgment is proper “if there is no genuine issue as to any material fact and . . . 

the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 

317, 322 (1986). 

The party asking for summary judgment “always bears the initial responsibility of 

informing the district court of the basis for its motion,” relying on submissions “which it believes 

demonstrate the absence of a genuine issue of material fact.” Id. at 323. Once the moving party 

has met its burden, the nonmoving party must “go beyond the pleadings” and show that there is a 

genuine issue for trial. Id. at 324. 

Both the party “asserting that a fact cannot be,” and a party asserting that a fact is 

genuinely disputed, must support their assertions by “citing to particular parts of materials in the 

record,” or by “showing that the materials cited do not establish the absence or presence of a 

genuine dispute, or that an adverse party cannot produce admissible evidence to support the 

fact.” Fed. R. Civ. P. 56 (c)(1)(A)–(B). Acceptable materials under Rule 56(c)(1)(A) include 

“depositions, documents, electronically stored information, affidavits or declarations, stipulations 

(including those made for purposes of the motion only), admissions, interrogatory answers, or 

other materials.” 

 To avoid summary judgment, the nonmoving party “must do more than show that there is 

some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio 

Corp., 475 U.S. 574, 586 (1986). On the other hand, the evidence of the nonmovant must be 

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believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby, 

477 U.S. 242, 255 (1986). 

 After the nonmoving party has responded to the motion for summary judgment, the court 

shall grant summary judgment if the movant shows that there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). 

III. FACTS 

The submissions of the parties establish the following facts, construed in a light most 

favorable to the non-movant: 

The Plaintiffs first contacted the Defendant to inquire about refinancing the mortgage on 

their home in Prattville, Alabama in April of 2012. Stephanie Ott went online to apply for a 

refinancing loan under the government Home Affordable Refinance Program (“HARP”). If 

approved, the Plaintiffs would have entered into an adjustable rate mortgage (ARM) loan for 

seven years with a locked rate of 2.99%, which could then increase to a rate no higher than 

7.99%. The Plaintiffs were interested in lowering both their interest rate and their monthly 

payments. 

Stephanie Ott filled out Defendant’s “Uniform Residential Loan Application” on April 

18, 2012. On the same date she and Casey Ott filled out a Certification and Authorization to 

Release Information, Plaintiffs received an “Interest Rate Disclosure” form from Defendant 

through its employee Sean Barry (“Barry”), and they also received a Truth-in-Lending 

Disclosure Statement, pursuant to the requirements of the Truth in Lending Act (TILA). On 

April 23, 2012, Barry sent the Plaintiffs a letter stating they were “conditionally approved for a 

7/1 Arm Conforming loan in the amount of $283,925.00.” (Doc. # 26-2 at 120.) As part of the 

initial application process, Plaintiffs submitted a $500 good faith deposit to be applied to the cost 

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of appraisal and credit report at closing, along with any other closing costs. The fee was to be 

refunded, except for the cost of the appraisal and credit report, in the event the loan did not 

ultimately close. 

In the period that followed, two factors became problematic in the loan approval process. 

First, copies of Plaintiffs’ most recent tax returns showed a Schedule E loss of $20,522.00. 

Second, upon receipt of an employment verification letter from Stephanie Ott’s employer, 

Defendant learned that she was on short term disability and was receiving paychecks amounting 

to a reduced portion of her full-time salary. The full-time salary was listed on the original loan 

application. Although employees of Defendant tried to work with the Plaintiffs to get the loan 

approved in the following weeks, the loan was denied on June 15, 2012 because of problems 

with the Plaintiffs’ debt-to-income ratio. Representatives of Defendant informed the Plaintiffs 

that $200 more in monthly income was required to bring the ratio within the necessary range to 

get the loan approved. Defendant refunded the good faith deposit less the cost of credit inquiries. 

In the initial exchange of paperwork, the Plaintiffs received a document called “Things 

We Need from You,” detailing further information and documents Defendant would need as part 

of the application process. This document instructed the Plaintiffs to continue paying their 

existing mortgage payments until Defendant was “completely finished with [the] new loan.” 

(Doc. # 26-2 at 118.) In contrast with this written instruction, Barry told the Plaintiffs sometime 

around May 10 that they should not pay their monthly mortgage payment for May because the 

loan would be closing soon. As the month went by and the loan did not close, the Plaintiffs 

became concerned about their mortgage payment because they knew it would be overdue if it 

was not paid by the end of May. They did ultimately make the payment in early June, but before 

they did their mortgage account went into collections. 

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After the failed loan approval process concluded, both Plaintiffs had lower credit scores 

than they had before the process began. The Plaintiffs believed that this was due in substantial 

part to excessive credit inquiries performed by Defendant. 

IV. DISCUSSION 

A. Breach of Contract 

Under the Alabama Statute of Frauds, contracts falling under the statute are “void unless 

such agreement or some note or memorandum thereof expressing the consideration is in writing 

and subscribed by the party to be charged therewith or some other person by him thereunto 

lawfully authorized in writing.” § 8-9-2 Ala. Code 1975. The statute covers “every agreement 

or commitment to lend money, delay or forebear repayment thereof or to modify the provision of 

such an agreement or commitment except for consumer loans with a principal amount financed 

less than $25,000.” Id. at (7). The loan at issue here qualifies under this provision, as it would 

have been a loan for $283,295.00, according to Barry’s conditional approval letter. Any 

commitment by Defendant to enter into the loan would therefore need to satisfy the Statute of 

Frauds to be enforceable. 

Defendant contends, and Plaintiffs nowhere argue otherwise, that there was never a 

signed written loan commitment agreement between the parties sufficient to satisfy the Statute of 

Frauds. Plaintiffs do not argue that the alleged agreements and oral representations by 

Defendant fall outside the statutory language, but rather appear to argue that their claims can get 

around the bar of the Statute of Frauds if they satisfy the elements of promissory estoppel due to 

“detrimental reliance.” (Doc. # 33 at 3–4.) Plaintiffs further argue that Alabama “appears to 

have completed the transition from using promissory estoppel as a substitute for consideration in 

a contract action to treating promissory estoppel as a claim independent of contract.” (Id. at 4.) 

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First, the Plaintiffs’ argument that promissory estoppel is a “claim independent of 

contract,” leads the court to conclude that Plaintiffs no longer assert an independent breach of 

contract claim. Their promissory estoppel arguments are their only response to Defendant’s 

reliance on the Statute of Frauds. To the extent Plaintiffs alleged a breach of contract claim 

independent of their promissory estoppel and other fraud-based claims, the court deems that 

claim abandoned as the theory seems to have shifted entirely to promissory estoppel. 

Second, to the extent the Plaintiffs have argued that promissory estoppel is an exception 

to the Statute of Frauds, the court finds they are mistaken. As the Alabama Supreme Court has 

reasoned: 

[T]he Statute of Frauds identifies defined categories of oral promises that are 

especially subject to fabrication and especially unworthy of reliance or 

enforcement. Therefore, for the courts, on a theory of promissory fraud, to 

countenance a plaintiff’s claim that he has relied on such a promise and to redress 

that plaintiff’s claim that he has suffered from the breach of such a promise, 

defies the policy and frustrates the efficacy of the Statute of Frauds. 

Bruce v. Cole, 854 So. 2d 47, 58 (Ala. 2003) (emphasis added); see also DeFriece v. 

McCorquodale, 998 So. 2d 465, 470 (Ala. 2008) (rejecting promissory fraud claim based on 

alleged statements covered by the Statute of Frauds, relying on Bruce). In this case, without 

denying that the representations at issue fall within the Statute of Frauds, Plaintiffs ask the court 

to enforce an oral promise of the type discussed in Bruce. In light of the Alabama Supreme 

Court’s pronouncement that the enforcement of such promises “defies the policy and frustrates 

the efficacy of the Statute of Frauds,” the court will decline to let this claim proceed. The court 

will further discuss Plaintiffs’ fraud-based claims in the next section, but for multiple reasons it 

finds that summary judgment is due to be GRANTED on Plaintiffs’ breach of contract claim. 

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B. Fraud-Based Claims and Reasonable Reliance 

Under Alabama law, legal fraud is defined as “[m]isrepresentations of a material fact 

made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, 

or if made by mistake and innocently and acted on by the opposite party.” Plaintiffs’ claims 

falling into this category, based upon the Complaint, include promissory fraud, fraudulent 

misrepresentation, and fraudulent suppression. Plaintiffs allege that “Defendant made 

representations to the Plaintiffs that their re-fi was approved and the closing would be 

happening.” (Doc. # 33 at 8.) 

1. Misrepresentation and Promissory Fraud 

Under Alabama law, a fraud claim consists of the following elements: “(1) a false 

representation (2) of a material existing fact (3) reasonably relied upon by the plaintiff (4) who 

suffered damage as a proximate consequence of the misrepresentation.” Southland Bank v. A & 

A Drywall Supply Co., 21 So. 3d 1196, 1210 (Ala. 2008) (internal quotations and citations 

omitted). Additionally, to prevail on a promissory fraud claim, a plaintiff must establish two 

other elements: “(5) proof that at the time of the misrepresentation, the defendant had the 

intention not to perform the act promised, and (6) proof that the defendant had an intent to 

deceive.” Id. (internal citations and quotations omitted). 

The Defendant is entitled to summary judgment on these claims because the record 

shows that any reliance by the Plaintiffs on oral promises made by representatives of the 

Defendant1

 was not reasonable as a matter of law. In Alabama, a plaintiff claiming fraud is 

                                                            

1

 The Defendant does not unconditionally concede that such oral promises were made, but assumes they were made 

for the purposes of its Motion for Summary Judgment. (Doc. # 34 at 2 n.1). The court does the same, as it must 

construe the record in the light most favorable to the Plaintiffs. 

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required to establish “reasonable reliance.”2 Foremost Ins. Co. v. Parham, 693 So. 2d 409, 421 

(Ala. 2003). Under this standard, the factfinder considers “all of the circumstances surrounding 

a transaction, including the mental capacity, educational background, relative sophistication, and 

bargaining power of the parties.” Id. Furthermore, the reasonable reliance standard allows a 

court to “enter a judgment as a matter of law in a fraud case where the undisputed evidence 

indicates that the party or parties claiming fraud in a particular transaction were fully capable of 

reading and understanding their documents, but nonetheless made a deliberate decision to ignore 

written contract terms.” Id. Thus, where written information or disclosures, capable of 

comprehension by the Plaintiffs, are supplied, reliance on contrary oral assurances is 

unreasonable as a matter of law. See, e.g., AmerUs Life Ins. Co. v. Smith, 5 So.3d 1200, 1208 

(Ala. 2008) (“[A] plaintiff who is capable of reading documents, but who does not read them or 

investigate facts that should provoke inquiry, has not reasonably relied upon a defendant’s oral 

representations that contradict the written terms in the documents.”); Wright Therapy v. Blue 

Cross, 991 So.2d 701, 706 (Ala. 2008) (“Under the [‘reasonable-reliance’] standard, a person 

cannot blindly rely on an agent’s oral representations to the exclusion of written disclosures in a 

contract.”) (quoting Harold Allen’s Mobile Home Factory Outlet, Inc. v. Early, 776 So.2d 777, 

783–84 (Ala. 2000)). 

The court finds that this case fits squarely into the category of cases in which there is no 

reasonable reliance as a matter of law. Although the written documents in Plaintiffs’ possession 

expressly stated that there was no guarantee of approval and they should keep paying their 

mortgage until the loan was finalized, Plaintiffs maintain they reasonably relied upon oral 

assurances made by representatives of the Defendant. Specifically they argue that they “may be 

                                                            

2

 The Foremost decision overruled past case law in which the relevant standard was “justifiable reliance,” which 

“eliminated the general duty on the part of a person to read the documents received in connection with a particular 

transaction.” Foremost, 693 So. 2d at 421. 

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able to prove that it was both reasonable and foreseeable they would rely on the Defendant’s 

assurances the re-fi would occur.” (Id. at 5.) The court disagrees with this assessment, as the 

written documents Plaintiffs received from Defendant contained multiple disclaimers and 

disclosures contrary to the oral representations. The “Interest Rate Disclosure” form dated April 

18, 2012 and signed by Stephanie Ott stated in bold: “Neither this agreement nor the locking of 

an interest rate is a commitment to lend by lender or an underwriting approval of your loan.” 

(Doc. # 26-2 at 109.) The Truth-in-Lending Disclosure Statement from the same date stated: 

“There is no guarantee that you will be able to refinance to lower your rate and payments.” (Id.

at 111.) Finally, Item 13 of the “Things We Need from You” document instructed the Plaintiffs 

to continue to make their mortgage payments until Defendant was “completely finished with 

[the] new loan.” (Id. at 115.) There is no dispute that the Plaintiffs received and read these 

documents. (Doc. # 33-3 at 185:5–186:23 (Plaintiffs received and read “Things We Need from 

You”); Doc. # 26-2 at 63:4–9 (Mr. Ott understood from the written documents that there was no 

guarantee the loan would be approved)). 

There is no genuine issue of material fact as to whether the Plaintiffs reasonably relied on 

representations by Defendant that they should not pay their existing mortgage payment and that 

the refinancing loan would close. Because the Plaintiffs received and read written documents 

with explicit disclosures to the contrary, they could not have reasonably relied on the oral 

representations as a matter of law. Therefore, summary judgment is due to be GRANTED on 

Plaintiffs’ claims of fraudulent misrepresentation and promissory fraud. 

2. Fraudulent Suppression 

The Plaintiffs’ Response to the Motion for Summary Judgment does not discuss their 

fraudulent suppression claim in any detail. It does not list the elements of fraudulent suppression 

or discuss how they have been satisfied in this case. Therefore, the court deems the fraudulent 

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suppression claim abandoned3 and finds summary judgment is due to be GRANTED on the 

claim. 

C. Negligent and Wanton Conduct 

In support of their claims of negligent and/or wanton conduct, Plaintiffs argue that “the 

Defendant owed Plaintiffs a duty—formed and created by their own actions. The Defendant 

created this duty by representing to the Plaintiffs that not only was their loan approved, but that it 

would be closing in a matter of days.” (Doc. # 33 at 9.) Alabama law recognizes no such form 

of action in this context. Specifically, there is an “emerging consensus that ‘Alabama law does 

not recognize a cause of action for negligent or wanton mortgage servicing.’” Deutsche Bank 

Trust Co. Americans v. Garst, 989 F. Supp. 2d 1194, 1205 (N.D. Ala. 2013) (quoting Prickett v. 

BAC Home Loans, 2:12–CV–0826–LSC, 2013 WL 2248135, at *5 (N.D. Ala. May 21, 2013)). 

As a recent Northern District of Alabama decision explained: 

Courts have found two justifications for this conclusion. First, “a negligent failure 

to perform a contract . . . is but a breach of the contract.” [Citing Prickett, 2013 

WL 2248135, at *5.] Accordingly, claims related to performance under a 

mortgage agreement must be brought under contract law. Second, damages for 

mortgage servicing are typically economic, while tort liability more appropriately 

seeks compensation for personal injury and property damage. Both justifications 

are strengthened by the plethora of alternative avenues for relief in “negligent 

mortgage servicing” cases, including the FDCPA. 

Garst, 989 F. Supp. 2d at 1205. For these reasons, any separate claims of negligence 

against Defendant stemming from the alleged misrepresentations and breaches of contract 

in this case are not cognizable. There is nothing about this case to distinguish it from the 

typical mortgage servicing case in which damages are usually economic, unlike cases in 

which plaintiffs seek to recover “compensation for personal injury and property damage” 

                                                            

3 See Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599 (11th Cir. 1995) (holding a non-movant’s silence 

on an issue after a movant raises the issue in a summary judgment motion is construed as an abandonment of the 

claim). 

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by bringing tort claims. See id. Summary judgment is due to be GRANTED on 

Plaintiffs’ negligence and/or wantonness claims. 

D. Negligent Hiring, Training, and Supervision 

Plaintiffs’ Complaint alleges a claim for negligent hiring, training, and supervision of 

Defendant’s employees. The Response in Opposition to the Motion for Summary Judgment 

makes no attempt to rebut Defendant’s contention that Plaintiff has not presented any evidence 

relevant to establishing such a claim under Alabama law. The court deems this claim 

abandoned, and summary judgment is due to be GRANTED as to this claim. 

E. Intentional Infliction of Emotional Distress 

Under Alabama law, in order to sustain a claim for intentional infliction of emotional 

distress (IIED) a plaintiff must present “substantial evidence indicating” that the conduct 

complained of “(1) was intentional or reckless; (2) was extreme and outrageous; and (3) caused 

emotional distress so severe that no reasonable person could be expected to endure it.” Horne v. 

TGM Associates, L.P., 56 So. 3d 615, 630 (Ala. 2010) (internal quotations and citations omitted). 

The Alabama Supreme Court has further clarified that: “By extreme we refer to conduct so 

outrageous in character and so extreme in degree as to go beyond all possible bounds of decency, 

and to be regarded as atrocious and utterly intolerable in a civilized society.” Id. (quoting Am. 

Road Serv. Co. v. Inmon, 394 So. 2d 361, 365 (Ala. 1980)). 

The Defendant has argued that successful claims for IIED in Alabama are generally 

restricted to three particular categories: 1) cases involving wrongful conduct in the context of 

family burials; 2) a case in which insurance agents used heavy handed strategies to induce 

settlement of a claim; and 3) a case involving egregious sexual harassment. (Doc. # 25 at 33.) In 

response, the Plaintiffs supply case law showing successful claims outside these narrow 

categories, all of which are related to the employment law context. (Doc. # 33 at 10–11.) 

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However, Plaintiffs fail to discuss or argue the ways in which their own case meets the high 

standard for IIED. They only state that “there are many interpretations of outrage claims under 

Alabama law,” and that “[t]he conduct of Defendant in the present matter also rises to the level 

of outrageous conduct toward the Plaintiffs.” (Id. at 11.) Such a conclusory assertion, with no 

supporting evidence, argument, or discussion, is insufficient to create a genuine issue of material 

fact. The court finds that the submitted evidence and briefing fail to even suggest that 

Defendant’s conduct may have risen to the high threshold of conduct “so outrageous in character 

and so extreme in degree as to go beyond all possible bounds of decency, and to be regarded as 

atrocious and utterly intolerable in a civilized society.” Horne, 56 So. 3d at 630. Summary 

judgment is due to be GRANTED on this claim. 

F. Slander of Credit 

Plaintiffs’ Response in Opposition fails to respond to Defendant’s arguments supporting 

the Motion for Summary Judgment as to the claim that Defendant damaged Plaintiffs’ credit. 

The court deems this claim abandoned, and summary judgment will be GRANTED on the claim. 

V. CONCLUSION 

For the reasons discussed, it is hereby ORDERED that the Motion for Summary 

Judgment (Doc. # 24) is GRANTED. 

A separate Judgment will be entered in accordance with this Memorandum Opinion and 

Order. 

DONE this 20th day of January, 2015. 

 W. HAROLD ALBRITTON 

 SENIOR UNITED STATES DISTRICT JUDGE 

/s/ W. Harold Albritton 

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