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Decided: August 5, 2014

The Fourth Circuit held that the district court did not abuse its discretion on any of the Appellants’ claims.

Wells Fargo and Walker Jackson Mortgage Corporation, a subsidiary of Long & Foster Real Estate (“Long & Foster”), created Prosperity Mortgage Company (“Prosperity”) in 1993. Prosperity operated as a mortgage lender, and funded its loans through a wholesale line of credit provided by Wells Fargo. Appellants used Long & Foster as their realtor and purchased their homes through mortgages from Prosperity. In 2007, Appellants filed a class action lawsuit alleging that Wells Fargo and Long & Foster formed Prosperity as a “front” organization to facilitate illegal referral fees and kickbacks in violation of the Real Estate Settlement Procedures Act (“RESPA”). The jury returned a verdict in favor of Appellees, and Appellants moved for a new trial. The district court denied Appellants’ motion, and Appellants filed a timely appeal.

The Fourth Circuit stated that the district court did not abuse its discretion in denying Appellants’ motion for a new trial because Appellants raised its argument for the first time post-verdict that the statements made by defense counsel in its closing amounted to a judicial admission that Long & Foster referred Appellants to Prosperity to obtain their mortgages. Further, in reviewing the evidence, the Fourth Circuit found that it could not conclude that there was a total absence of evidence to support the jury’s verdict. Appellants also challenged the district court’s decision to allow testimony about the lack of economic harm that Appellants suffered from their use of Prosperity’s settlement services. However, the Fourth Circuit noted that the decision to allow Appellees’ attorneys to get general testimony from Appellants about Prosperity’s competitive loan pricing was relevant to determine whether Prosperity was in fact a “front” business, and whether it independently priced its loans, or was controlled by Wells Fargo and Long & Foster. Finally, the Fourth Circuit found that the district court did not abuse its discretion by refusing to strike the statements made by Appellees’ attorney in its closing statement. The Fourth Circuit stated that although defense counsel’s statements were improper, the statements were an isolated incident over the course of a seventeen-day trial, and had no bearing on the real issues. Thus, the Court found that no reasonable probability existed that these isolated comments diverted the jury from deciding the issues on the evidence and law it received from the trial court.

Full Opinion

Alysja S. Garansi