Fisher v. American General Finance Co. , 52 F. App'x 601 ( 2002 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PAUL E. FISHER; CAROL S. FISHER, 
Plaintiffs-Appellees,
v.
AMERICAN GENERAL FINANCE  No. 01-2511
COMPANY, a corporation; AMERICAN
GENERAL HOME EQUITY,
INCORPORATED, a corporation,
Defendants-Appellants.

PAUL E. FISHER; CAROL S. FISHER, 
Plaintiffs-Appellees,
v.
AMERICAN GENERAL FINANCE  No. 02-1250
COMPANY, a corporation; AMERICAN
GENERAL HOME EQUITY,
INCORPORATED, a corporation,
Defendants-Appellants.

Appeals from the United States District Court
for the Southern District of West Virginia, at Charleston.
Elizabeth V. Hallanan, Senior District Judge.
(CA-00-350-2)
Argued: October 31, 2002
Decided: December 11, 2002
Before WILKINS, Circuit Judge, Frank J. MAGILL,
Senior Circuit Judge of the United States Court of Appeals
for the Eighth Circuit, sitting by designation, and
Henry E. HUDSON, United States District Judge
for the Eastern District of Virginia,
sitting by designation.
2 FISHER v. AMERICAN GENERAL FINANCE CO.
Reversed in part and vacated and remanded in part by unpublished
per curiam opinion.
COUNSEL
ARGUED: Robert Reynold Merhige, Jr., HUNTON & WILLIAMS,
Richmond, Virginia, for Appellants. Bren Joseph Pomponio, MOUN-
TAIN STATE JUSTICE, INC., Charleston, West Virginia, for Appel-
lees. ON BRIEF: John Charles Thomas, HUNTON & WILLIAMS,
Richmond, Virginia; Stephen M. Nickelsburg, HUNTON & WIL-
LIAMS, Washington, D.C.; T. Thomas Cottingham, III, HUNTON &
WILLIAMS, Charlotte, North Carolina, for Appellants. Daniel F.
Hedges, MOUNTAIN STATE JUSTICE, INC., Charleston, West
Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
American General Finance Company and American General Home
Equity, Inc. (collectively, "American General") raise several chal-
lenges to a judgment arising out of a loan transaction. We reverse in
part, vacate in part, and remand.
I.
In March 1997, Paul E. and Carol S. Fisher refinanced their home
mortgage with a $28,990.36 loan from American General ("the Amer-
ican General loan"). In conjunction with the loan, the Fishers intended
to divide the property on which their house was situated into three
parcels, with their home in the center parcel ("the Middle Tract"). The
parties agreed that the Middle Tract, which appraised at $68,000,
FISHER v. AMERICAN GENERAL FINANCE CO. 3
would secure the loan. A local attorney was then hired to prepare
deeds vesting ownership of the other two parcels in the Fishers and
one of their sons in joint tenancy.
When this work was completed, Pam Elliott,1 an American General
branch manager, memorialized American General’s security interest
by preparing a deed of trust. The Fishers later realized that Elliott had
copied the description of the entire original property from the Fishers’
title report to the loan documents, instead of copying the description
of the Middle Tract from one of the new deeds.
In March 2000, the Fishers refinanced the American General loan
with Wesbanco Bank, Inc. ("the first Wesbanco loan"). At that time,
the Fishers learned that since American General had not informed
them that they had three days in which to rescind the American Gen-
eral loan, by law the rescission period had extended to three years.
See 15 U.S.C.A. § 1635(a), (f) (West 1998). The Fishers rescinded
that loan on March 27, 2000—just within the three-year period—by
faxing notice to American General. In that notice, the Fishers
requested that American General calculate their payoff amount in four
days. American General did not respond during that period; by law,
it had 20 days to respond, see 15 U.S.C.A. § 1635(b) (West 1998).
Nevertheless, the Fishers closed on the first Wesbanco loan on March
31, 2000. The amount of the loan was $36,000, with $26,889.16 held
by Wesbanco in escrow to repay American General.
Even after the loan closed, however, American General refused to
take steps to reflect the release of its lien and failed to provide the
Fishers with an exact payoff amount. Finally, on May 2, 2000, 35
days after receiving notice of the Fishers’ rescission, American Gen-
eral sent the Fishers a letter offering to rescind the loan if the Fishers
paid $16,771.68, which was the original principal amount of the loan
less the total of the payments the Fishers had already made.
The same day that the letter was sent, the Fishers filed suit against
American General. Two of their claims ("the TILA claims") asserted
that American General violated the Truth in Lending Act ("TILA") by
1
Prior to trial, Elliott changed her surname to Perry.
4 FISHER v. AMERICAN GENERAL FINANCE CO.
failing to notify them of their three-day right of rescission and by fail-
ing to release the lien within 20 days of receiving the Fishers’ rescis-
sion notice. See id. § 1635(a), (b). A third claim ("the bad faith
claim") alleged that American General breached its contractual duty
of good faith and fair dealing by intentionally misidentifying the
property securing the loan in the deed of trust. A fourth claim ("the
fraud claim") alleged that American General fraudulently induced the
Fishers into entering the loan transaction.
Despite American General’s offer to release its lien if the Fishers
tendered $16,771.68, American General failed to comply with its
legal duty to take the steps needed to demonstrate release of its secur-
ity interest even after the Fishers filed suit. See id. § 1635(b) (requir-
ing creditor to take steps to demonstrate release of security interest
within 20 days of debtor’s request for rescission). Accordingly, on
May 25, 2000, in order to avoid continuing to pay interest on the
money the Fishers had borrowed to pay off American General, the
Fishers paid off the $36,000 first Wesbanco loan and obtained a sec-
ond mortgage from Wesbanco of approximately $9,000 ("the second
Wesbanco loan").2
The Fishers also received six monthly default statements at their
home after filing suit against American General. The Fishers asserted
in an amended complaint that these statements were sent in violation
of W. Va. Code Ann. § 46A-2-128(e) (Michie 1999), which prohibits
a debt collector from communicating directly with a consumer when
it appears that the consumer is represented by counsel ("the WVC-
CPA claim").
Following discovery, both parties moved for summary judgment.
The district court concluded as a matter of law that American General
had violated TILA both by failing to notify the Fishers of their three-
day right of rescission and by failing to demonstrate release of its lien
within 20 days of receiving the Fishers’ rescission notice. The court
also ruled, however, that as a matter of equity, the Fishers’ right of
rescission was conditioned upon their tendering of $15,837.48, which
represented the principal remaining on the loan less the interest and
2
This loan was a second mortgage because American General had not
yet taken steps to reflect the release of its security interest.
FISHER v. AMERICAN GENERAL FINANCE CO. 5
closing costs the Fishers had paid. The court further ordered Ameri-
can General to pay a $2,000 statutory penalty under TILA. Finally,
the court granted summary judgment to American General on the
fraud claim and ruled that the Fishers could not recover punitive dam-
ages on their remaining causes of action. The court therefore ordered
a trial as to actual damages on the TILA claims and both liability and
damages on the bad faith and WVCCPA claims.
Prior to trial, American General moved in limine to exclude the tes-
timony of Troy Mynes. Mynes was a former American General
employee who had been deposed for discovery in another suit shortly
after the present lawsuit was filed. The Fishers sought to elicit testi-
mony from Mynes that Elliott and other American General employees
had fabricated personal property on some loan applications in order
to have those applications approved. American General maintained,
inter alia, that Mynes’ testimony was irrelevant character evidence.
The district court disagreed and held the testimony admissible to
show that Elliott’s inclusion of all of the Fishers’ property in the deed
of trust was done in bad faith and that American General had a pattern
and practice of such actions.
During trial, Mynes failed to appear in response to a subpoena.
Counsel for the Fishers represented to the court that Mynes had
recently suffered a herniated disk. Counsel suggested that excerpts
from Mynes’ discovery deposition taken in the unrelated suit be read
into the record. American General objected, arguing that it had not
had an adequate opportunity to cross-examine Mynes in the prior
case. The court overruled this objection, however, and the excerpts
were read into the record. They included Mynes’ testimony (1) that
in order to qualify Mynes for a loan for which he had applied, Pam
Elliott falsified his loan application to make it appear that he owned
personal property that he did not really own; (2) that Elliott subse-
quently told him that she would not be punished for the fabrication
because no one would ever find out; (3) that fabricating property on
loan applications in order to qualify the applicants happened on "nu-
merous" occasions at American General, J.A. 239; and (4) that
although Mynes did not know whether it was American General’s
"policy" to qualify people for loans by falsifying their applications, he
"kn[e]w that’s what they did," id. at 241.
6 FISHER v. AMERICAN GENERAL FINANCE CO.
On the issue of damages, the Fishers sought compensation for dam-
age to their credit and for expenses they incurred with regard to both
Wesbanco loans. They also sought to recover for emotional distress.
The Fishers testified that American General’s actions caused them
"stress," "agony," and "worry" because they were concerned Ameri-
can General would foreclose on their home. Id. at 115, 182. Mrs.
Fisher further testified that she developed shingles, and that the cause
"had to be" the stress caused by American General’s actions. Id. at
115.
Following the parties’ presentation of their cases, American Gen-
eral moved for judgment as a matter of law on several issues. As is
relevant here, American General maintained that the Fishers had
failed to present sufficient evidence that American General breached
its duty of good faith and that its actions caused the Fishers emotional
distress. American General also challenged the sufficiency of the
Fishers’ evidence relating to several injuries for which they sought
damages on their TILA claims. The district court denied the motion.
Attempting to capitalize on the admission of Mynes’ testimony,
counsel for the Fishers argued to the jury that American General had
built its business "with shady practices and questionable conduct,"
and by "taking advantage" of relatively uneducated people. Id. at 316.
Counsel asked the jury to return a verdict that "tells American Gen-
eral that this is not how you treat people." Id. at 325. And on reply,
counsel stated, "You heard Troy Mynes, they’ve done this thing
before; they will continue to do it again, unless they know that they
have to compensate people for the harm that they caused." Id. at 342.
The jury found in favor of the Fishers on all counts, awarding
$7,500 in actual damages on the TILA claims, $200,000 on the bad
faith claim, and $35,000 on the WVCCPA claim. The district court
then imposed $15,000 in civil penalties under the WVCCPA. Ameri-
can General subsequently renewed its motion for judgment as a mat-
ter of law and alternatively moved for a new trial or at least a
remittitur.
During the pendency of these motions, the district court awarded
the Fishers $57,188 in attorneys’ fees and costs. The court then
denied American General’s motion for judgment as a matter of law
FISHER v. AMERICAN GENERAL FINANCE CO. 7
but reduced the bad faith verdict from $200,000 to $26,534 on remit-
titur.
II.
American General argues that the district court abused its discre-
tion in admitting the excerpts from Mynes’ deposition because the
testimony was irrelevant and unduly prejudicial. See United States v.
Van Metre, 150 F.3d 339, 349 (4th Cir. 1998) (stating standard of
review). We agree.
The Federal Rules of Evidence provide that evidence of prior bad
acts "is not admissible to prove the character of a person in order to
show action in conformity therewith." Fed. R. Evid. 404(b). However,
it may "be admissible for other purposes, such as proof of . . . intent
. . . or absence of mistake or accident." Id. In order for evidence of
prior bad acts to be admissible under Rule 404(b) to show a pattern
tending to refute a claim of mistake, the prior acts "must be similar
in nature to" the act at issue at trial. United States v. Queen, 132 F.3d
991, 996 (4th Cir. 1997). The similarity of the acts is what distin-
guishes evidence "introduced to show a particular intent" from evi-
dence "introduced only to show a much more generalized intent,"
such as the intent to commit illegal or dishonest acts. Id. The former
may be admissible, while the latter is not. See id.Here, the dissimilarity between Elliott’s and American General’s
alleged prior acts and Elliott’s incorrect description of the property
securing the loan demonstrates that the evidence of the prior acts was
inadmissible. Mynes’ testimony at most tended to show that Elliott
and American General regularly fabricated personal property on loan
applications in order to qualify applicants for loans. Here, however,
the Fishers had already qualified for their loan. Thus, any dishonesty
by Elliott here would have served an entirely different goal.3 In light
3
Although the misstatement in the Fishers’ deed of trust and the fabri-
cations described in the Mynes deposition all involved security for loans,
these statements are not similar in nature. The statement in the deed of
trust operated to the Fishers’ detriment. By contrast, the false statements
described by Mynes apparently assisted applicants in obtaining loans for
which they may not have been eligible.
8 FISHER v. AMERICAN GENERAL FINANCE CO.
of this critical difference, Mynes’ testimony at most tended to prove
Elliott’s or American General’s "generalized intent" to commit dis-
honest acts when it served their interests, rather than the "particular
intent" to take a security interest for American General in more prop-
erty than the Fishers had authorized. Id.; cf. Coast-to-Coast Stores,
Inc. v. Womack-Bowers, Inc., 818 F.2d 1398, 1403-04 (8th Cir. 1987)
(holding that evidence of prior misrepresentations was properly
excluded when acts were "different in kind" from the acts giving rise
to the suit). The court therefore abused its discretion in admitting the
evidence.
Moreover, the erroneous admission of the deposition excerpts was
not harmless. See 28 U.S.C.A. § 2111 (West 1994) (stating that appel-
late court may not reverse judgment based on errors that do not affect
substantial rights). As we will discuss in greater detail, there simply
was no other evidence that could support a verdict for the Fishers on
their bad faith claim. And, the Fishers relied heavily on Mynes’ testi-
mony in closing argument, in which they alleged that American Gen-
eral had a pattern and practice of dishonesty that had to be stopped.
Indeed, the size of the damages verdicts—when viewed in conjunc-
tion with the Fishers’ modest damages evidence—indicates that
American General was prejudiced by the admission of this evidence.
We therefore vacate the judgment against American General.4
III.
American General next contends that the district court erred in
denying its motion for judgment as a matter of law. We review the
denial of a motion for judgment as a matter of law de novo. See
Anderson v. Russell, 247 F.3d 125, 129 (4th Cir.), cert. denied, 122
S. Ct. 342 (2001). We must view the evidence in the light most favor-
able to the Fishers, the non-movants, and draw all reasonable infer-
4
The size of the verdicts also strongly supports American General’s
argument that the verdicts were the result of passion and prejudice, and
therefore that the district court abused its discretion in not granting a new
trial on this basis. We need not decide this issue, however, in light of our
vacatur of the judgment.
Because we vacate the judgment, we also vacate the award of attor-
neys’ fees and costs.
FISHER v. AMERICAN GENERAL FINANCE CO. 9
ences in their favor without weighing the evidence or assessing the
witnesses’ credibility. See Sales v. Grant, 158 F.3d 768, 775 (4th Cir.
1998). Judgment as a matter of law is proper only if "there can be but
one reasonable conclusion as to the verdict." Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250 (1986).
A.
American General first claims that the Fishers presented insuffi-
cient evidence that they were entitled to actual damages on the TILA
claims. To establish actual damages from a TILA violation, a plaintiff
must prove that the violation proximately caused his damages. See
Peters v. Jim Lupient Oldsmobile Co., 220 F.3d 915, 917 (8th Cir.
2000). The Fishers have not claimed any injury from American Gen-
eral’s first violation, its failure to disclose the Fishers’ rescission
rights. Accordingly, we focus on the question of whether there was
sufficient evidence of injury resulting from the second violation,
American General’s failure to take actions to reflect the release of its
lien within 20 days of the Fishers’ cancellation notice. We conclude
that there was.
The Fishers presented testimony that had American General dem-
onstrated release of its lien within the 20-day period, the second Wes-
banco loan would have been a first mortgage rather than a second
mortgage, and their interest rate would have been at least one-and-
one-quarter percent lower. American General asserts that the
increased interest was not recoverable as damages because the Fishers
would have incurred liability for that interest even had it demon-
strated release of the lien, because the Fishers would have needed to
borrow money to repay the American General loan. This argument
misses the mark. Had American General demonstrated release of the
lien within the 20-day period, any money that the Fishers would have
borrowed would have been at the first-mortgage rate, rather than the
higher second-mortgage rate, because Wesbanco would have known
it was the only lender with a lien on the property.
American General also argues that the Fishers cannot recover costs
associated with the second Wesbanco loan because that loan was not
obtained for the purpose of paying off American General. However,
it is not the purpose of the second Wesbanco loan that serves as the
10 FISHER v. AMERICAN GENERAL FINANCE CO.
causal link between the increased interest and the TILA violation. The
reason that the extra interest may be recoverable is that American
General’s failure to timely demonstrate release of the lien caused the
Fishers to pay second-mortgage rates for any money they borrowed
using their house as collateral—regardless of the purpose for which
the loan was obtained. We therefore conclude that the district court
correctly denied American General’s motion for judgment as a matter
of law on the TILA damages claim.5 Accordingly, we remand for fur-
ther proceedings regarding this claim.
B.
American General also maintains that the district court erred in
denying its motion for judgment as a matter of law on the Fishers’
contractual bad faith claim. In light of our conclusion that the Mynes
deposition excerpts were inadmissible, we agree. See Weisgram v.
Marley Co., 528 U.S. 440, 457 (2000) (holding that courts of appeals
are authorized to direct district courts to enter judgment as a matter
of law when there is insufficient evidence to support the jury verdict
once erroneously admitted evidence is excised from the record).
Nothing in the record showed that Elliott had any motive to claim
a security interest greater than what was authorized by the Fishers,
because the amount loaned was less than half the appraised value of
the Middle Tract alone. Indeed, American General presented unrebut-
ted testimony from one of its former managers that American General
had no motive to obtain additional security, for this very reason.6
Without any evidence that Elliott had a motive to misidentify the
secured property in the deed of trust, a conclusion that her overbroad
5
Because we conclude that the evidence was sufficient to support a
damages verdict for the TILA cause of action, we do not address the
Fishers’ other arguments that American General was not entitled to judg-
ment as a matter of law on this claim.
6
At oral argument, the Fishers suggested that the record contained tes-
timony that a foreclosure sale might bring less than the appraised value
of the property. Although the former American General manager did
agree on cross-examination that sometimes properties are sold at foreclo-
sure for far less than their appraised value, he would not agree that they
sell for "as little as 50 or 60 percent of [their] market value." J.A. 278.
FISHER v. AMERICAN GENERAL FINANCE CO. 11
description of the secured property was the result of intentional
deception, rather than simple carelessness, could only be based on spec-
ulation.7 Cf. Gibson v. Old Town Trolley Tours of Washington, D.C.,
Inc., 160 F.3d 177, 181-82 (4th Cir. 1998) (holding that conclusion
that failure of former employer to complete and return reference form
sent by former employee was due to retaliatory animus rather than
"slopp[iness]" would be speculative absent other evidence of retalia-
tory animus). Accordingly, American General is entitled to judgment
as a matter of law on the bad faith claim.
C.
American General also argues that the Fishers’ damages evidence
on the WVCCPA claim was insufficient. A plaintiff may recover
damages under West Virginia law for injuries proximately caused by
the defendant’s negligent violation of a statute. See Flanagan v. Mott,
114 S.E.2d 331, 335 (W. Va. 1960). However, the only injury the
Fishers claimed as the result of American General’s sending the
default notices directly to them was emotional distress, and American
General argues that the Fishers’ emotional distress evidence was
insufficient to justify a damages award. We agree.
Although the Fishers testified that American General’s refusal to
release the lien and its default notices caused them concern that
American General would foreclose on their house, no evidence
showed that their anxiety was any greater as the result of American
General’s sending the default notices directly to them rather than
communicating through their counsel, as the statute required. Accord-
ingly, the Fishers’ evidence was insufficient to support a damages
award on this claim, and American General was entitled to judgment
as a matter of law.
7
Mrs. Fisher testified that Elliott had the Fishers sign the deed of trust
before Elliott filled in the description of the property securing the loan.
The Fishers argue that a fair inference from this procedure was that
Elliott did not want the Fishers to see her falsification. However, absent
evidence that Elliott had a motive to describe the loan security incor-
rectly, it cannot be reasonably inferred that the misdescription was inten-
tional merely because it was facilitated by the procedures Elliott
followed during this transaction.
12 FISHER v. AMERICAN GENERAL FINANCE CO.
IV.
For the aforementioned reasons, we reverse the denial of judgment
as a matter of law on the bad faith claim and the WVCCPA damages
claim, vacate the balance of the judgment in favor of the Fishers, and
remand for further proceedings.
REVERSED IN PART; VACATED AND REMANDED IN PART