United States District Court, W.D. Wisconsin
TRACY L. GIFFORD, Plaintiff,
PHH MORTGAGE CORPORATION, d/b/a COLDWELL BANKER MORTGAGE, Defendant.
OPINION AND ORDER
Stephen L. Crocker, Magistrate Judge.
Tracy Gifford has filed suit against defendant PHH Mortgage
Corporation for claiming monetary relief against PHH for
misrepresentation (intentional, negligent and strict
liability) under Wisconsin law and violations of the Truth in
Lending Act (TILA), 15 U.S.C. § 1601 et seq.,
and the Wisconsin Deceptive Trade Practices Act (DTPA),
Wis.Stat. § 100.18. PHH filed a motion to dismiss (dkt.
12) that I denied on November 19, 2019 (dkt. 23). PHH now has
filed a motion for summary judgment (dkt. 31), which I am
alleges that PHH failed to provide a good faith estimate of
the property taxes on the home she purchased and escrowed
approximately $2, 000 less than it should have to pay her
first property tax bill. Gifford contends that because she
was under the assumption that the escrow account would cover
the entire amount that she owed for taxes, she did not make
any further payment and was placed in delinquent status. To
account for the tax shortfall, PHH increased her monthly
mortgage payment by about $400 for two months and $168.38
thereafter, which subjected Gifford to financial hardship.
motion for summary judgment, PHH renews the arguments that it
made in its motion to dismiss. Specifically, PHH contends
that: (1) Gifford's TILA claim is barred by the
applicable statute of limitations; (2) Gifford's state
law misrepresentation claims fail because PHH's escrow
estimate was not a representation of fact; (3) Gifford's
misrepresentation claims are barred by the economic loss
doctrine; and (4) Gifford is not entitled to relief under
Wis.Stat. § 100.18 because she was not was not a member
of “the public” during the transaction at issue.
As explained below, I conclude that PHH is entitled to
summary judgment because Gifford's TILA claim is barred
by the one-year statute of limitations and she has failed to
show that PHH misrepresented a fact, as she is required to do
to succeed on her state law claims.
the parties proposed findings of fact, I find the following
facts to be material and undisputed:
The Parties and Some Background
Tracy Gifford resides at 237 Peeso Creek Lane in Mondovi,
Wisconsin. Defendant PHH Mortgage Corporation, which does
business as Coldwell Banker Mortgage, is incorporated in New
Jersey and has its principal place of business there.
March 25, 2015, Gifford purchased her residence from Western
Dairyland Economic Opportunity Council, Inc. To help finance
her purchase, Gifford obtained a mortgage loan issued by PHH
in the amount of $102, 564.00. The mortgage was recorded on
April 20, 2015, in the Register of Deeds for Buffalo County,
Wisconsin as Document Number 257681.
December 30, 2014, two Uniform Residential Loan Applications
were completed in Gifford's name for an FHA mortgage in
the amount of $102, 584. (The parties do not say why two
applications were completed but one application lists an
interest rate of 4% while the other lists a rate of 3.875%.
Dkt. 34, exhs. 12 and 13.) The only signature on the
applications is that of PHH employee Jamie Pond, who was
Gifford's loan originator. (Pond also described herself
as Gifford's “mortgage advisor” and
“consultant.”) Both loan applications state that
the “proposed” monthly payment for real estate
taxes is $166.67.
January 15, 2015, Gifford made an offer to Western Dairyland
to purchase the property for $120, 000. The offer contained a
“Financing Contingency” clause with a maximum
initial monthly payment of $794.00, including principal,
interest, real estate taxes (equal to 1/12th of the estimated
net annual taxes), hazard insurance, and a mortgage insurance
premium. Gifford's offer also was contingent on Western
Dairyland providing Gifford with a grant in the amount of $4,
200 and a loan in the amount of $15, 000.
grant and loan appear to be part of special programs for
which Gifford was eligible as a first time home buyer who met
certain education and income requirements. The mortgage
agreement contains certain restrictions required by the HUD
HOME Program. See dkt. 34-8.
January 16, 2015, Pond sent Gifford a letter, acknowledging
the recent loan application and asking for more information.
On January 29, 2015, Pond sent Gifford “compliance
disclosures, including the Good Faith Estimate (GFE).”
In a cover letter accompanying the disclosures, Pond informed
Gifford that “[c]ertain fees on the GFE such as title
charges, appraisal fees, and taxes are based on estimates and
final charges may vary from scenario to scenario.” On
February 10, 2015, PHH informed Gifford that she had been
preapproved for a loan in the amount of $102, 564 with a
February 17, 2015, Valuation Specialists appraised the
property as having a fair market value of $136, 000. The
appraisal described the property as “C1, ” which
the appraisal defines as “improvements have been very
recently constructed and have not previously been
occupied.” Dkt. 34-17 at 3 and 10.
February 17, 2015, PHH entered a conditional commitment and
endorsement of the loan, “estimating” the
property's value at $136, 000 and monthly taxes in the
amount of $95.06. Western Dairyland informed Pond on March
10, 2015, that it would grant Gifford $4, 550 toward a down
payment and issue Gifford a second mortgage in the amount of
$15, 000 to assist with the purchase of the property. Based
on the above, PHH told Gifford that her monthly payment would
be $709.38, which included $95.06 per month for escrow for
real estate taxes.
March 24, 2015, PHH provided Gifford with a “Final
Commitment” with the following approved loan terms: a
purchase price of $120, 000, a total loan amount of $102,
564, a “total monthly payment” of $709.38, and an
“initial monthly tax escrow payment” of $95.06. A
footnote on the line item “initial monthly tax escrow
payment” states that “[a]mount indicated is based
on information received from outside parties. Although it is
believed to be accurate as of the date of this Final
Commitment, it is subject to change.”
mortgage loan closed on March 25, 2015. The closing documents
included a “Final Truth-In-Lending Disclosure”
that listed “Estimated Taxes Insurance
(Escrows)” as $219.72 a month and the “Total
Estimated Monthly Payment” as $709.38. The
“Initial Escrow Account Disclosure Statement”
“estimated” Gifford's city tax escrow to be
$1, 140.72 a year. The “HUD-1 Settlement
Statement” states that 2015 taxes are exempt and that
$95.06 per month would be held in reserve for property taxes
for six months for a total of $570.36. The form contains two
columns comparing the GFE to the HUD-1 charges and
specifically identifies the initial deposit for the escrow
account-which includes the $95.06 for taxes-as a charge that
parties dispute whether Pond or anyone else explained to
Gifford at the closing how the tax estimate was calculated,
why the tax estimate had changed by the time of the closing,
or that the actual tax amount may increase significantly
because the estimate was based only on the value of a vacant
elected to have PHH pay her property taxes annually on or
before December 31 every year thereafter. Although Gifford
agreed to provide her annual tax statement for the property
to PHH on or before December 20 every year, she never did so.
Calculation of Property Tax Estimate
to Ronald Casperite, who works as a “Complex
Liason” for PHH and testified as PHH's corporate
representative, in underwriting a mortgage loan, PHH verifies
the borrower's income and debt, the existence of a valid
sales agreement, the value of the home to be purchased, and
the amount of mortgage and homeowner insurance and real
estate taxes to be escrowed. See dkt. 36 at 4,
PHH would look at an existing tax bill to estimate real
estate taxes. In 2015, PHH also may have used a nationwide
computerized program called LoanSpan in conjunction with
Desktop Underwriter to estimate property taxes-that program
is not specific to Wisconsin. However, Gifford's property
was unique because it had been owned by a nonprofit entity
and involved a new construction. Prior to her purchase of the
property in 2015, $0 in taxes had been levied on the property
in 2013, 2014, and 2015.
is not sure whether LoanSpan was used to calculate the
$166.67 monthly estimate for Gifford's property taxes. He
also does not know why that amount later changed to $95.06.
The tax statements from the county listed a mill rate, and
Casperite agrees that it could have been used as one of
several means to calculate taxes.
Increase in Gifford's Property Taxes and ...