UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-1567
PATRICIA OSTOLAZA-DIAZ; JOSE LUIS DIAZ-GOYES, a/k/a Jose L.
Ostolaza,
Plaintiffs - Appellants,
v.
COUNTRYWIDE BANK, N.A.; COUNTRYWIDE HOME LOANS; ALLIED HOME
MORTGAGE CAPITAL CORPORATION; ANTHONY FALCONE; SAMUEL I.
WHITE, P.C., Trustee,
Defendants – Appellees,
and
COLONIAL TITLE COMPANY; KIM TAESONG,
Defendants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (1:08-cv-00078-CMH-JFA)
Argued: October 29, 2009 Decided: January 12, 2010
Before NIEMEYER and DUNCAN, Circuit Judges, and Benson E. LEGG,
United States District Judge for the District of Maryland,
sitting by designation.
Affirmed by unpublished opinion. Judge Legg wrote the opinion,
in which Judge Niemeyer and Judge Duncan joined.
ARGUED: Martin Carroll Conway, PESNER KAWAMOTO CONWAY, PLC,
McLean, Virginia, for Appellants. William Paul Childress, III,
HUNTON & WILLIAMS, LLP, Richmond, Virginia; Cameron Scott
Matheson, LECLAIR RYAN, PC, Richmond, Virginia, for Appellees.
ON BRIEF: Harry M. Johnson, III, HUNTON & WILLIAMS, LLP,
Richmond, Virginia, for Appellees Countrywide Bank, N.A., and
Countrywide Home Loans; Paul D. Anders, Tara L. Elgie, LECLAIR
RYAN, PC, Richmond, Virginia, for Appellees Allied Home Mortgage
Capital Corporation and Anthony Falcone.
Unpublished opinions are not binding precedent in this circuit.
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LEGG, District Judge:
Patricia Ostolaza-Diaz and Jose Luis Diaz-Goyes appeal the
district court’s dismissal of certain claims arising out of the
refinancing of their home. Specifically, they challenge the
dismissal of their state-law claims for fraud and intentional
infliction of emotional distress. Because we find that Ms.
Ostolaza-Diaz and Mr. Diaz-Goyes did not reasonably rely upon
Defendants’ allegedly false representations, we conclude that
they cannot establish a prima facie case for fraud. We likewise
find no merit in their claim for intentional infliction of
emotional distress. Thus, we affirm the district court’s
dismissal of the case.
I.
We view the facts in the light most favorable to
plaintiffs, the non-prevailing party below. Patricia Ostolaza-
Diaz and Jose Luis Diaz-Goyes (“Appellants”) are home owners in
Fairfax County, Virginia. Prior to the events giving rise to
this case, their home was secured by two mortgage loans and a
home equity line of credit provided by Bank of America. In
March of 2006, Defendant Anthony Falcone — an employee of Allied
Home Mortgage Capital Corporation — placed an unsolicited
telephone call to Appellants and represented himself as a Bank
of America loan officer. During that call, Falcone informed
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Appellants that he could refinance their mortgages with Bank of
America using a new loan product that would allow them to reduce
their monthly payments, saving them thousands of dollars over
the life of the loan.
In reliance on Falcone's representations, Appellants
completed and submitted a loan application. They thought that
Falcone was a representative of Bank of America. In reality,
Falcone was representing Countrywide Home Loans, Inc.
Appellants also thought that the refinancing would reduce their
monthly mortgage payment. In reality, as Falcone knew, the
refinancing would leave them with greatly increased monthly
payments that they could not afford. 1
At closing, Appellants were presented with all relevant
documents, including the Truth in Lending Act disclosure
statement. These documents stated the actual amounts Appellants
would be obligated to pay under their new loan. Nonetheless,
Appellants executed the loan documents. Because Appellants were
unable to afford their mortgage payments, Countrywide eventually
initiated a foreclosure action against them.
Appellants originally brought suit in the Circuit Court for
Fairfax County, Virginia stating claims for: (i) common law
1
Under the terms of the Countrywide loan product,
Appellants first monthly mortgage payment was $2,699.17. The
subsequent payments were $4,028.67 per month. Appellants’
previous mortgage payments had been $2320.00 per month.
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fraud, (ii) intentional infliction of emotional distress, (iii)
violation of the Truth in Lending Act, and (iv) violation of the
Real Estate Settlement Procedures Act. Defendants removed the
case to the Eastern District of Virginia, where the district
court dismissed each of the claims. Appellants now appeal the
dismissal of their state-law fraud and intentional infliction of
emotional distress claims.
II.
Appellants’ complaint includes claims for both actual and
constructive fraud. 2 To establish fraud under Virginia law, a
plaintiff must demonstrate: (i) a false representation, (ii) of
a material fact, (iii) made intentionally and knowingly, (iv)
with an intent to mislead, and (v) reliance by the misled party,
(vi) which results in damage to the misled party. See Van
Deusen v. Snead, 247 Va. 324 (1994). Failure to plead
reasonable reliance is fatal to a common law fraud claim. See
Metrocall of Del. v. Cont’l Cellular Corp., 246 Va. 365, 374
(1993).
2
“Constructive fraud differs from actual fraud in that the
misrepresentation of material fact is not made with the intent
to mislead, but is made innocently or negligently although
resulting in damage to the one relying on it.” ITT Hartford
Group v. Va. Fin. Assocs,. Inc., 258 Va. 193, 204 (1999).
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In this case, Appellants are, as a matter of law, unable to
show that they reasonably relied upon Falcone’s – or any other
Defendant’s – representations. At closing, they were presented
with documents that unambiguously spelled out the terms of the
loan and contradicted Falcone’s oral statements. In Virginia, an
individual “may not reasonably rely upon an oral statement when
he has in his possession a contrary statement in writing.”
Foremost Guaranty Corp. v. Meritor Savings Bank, 910 F.2d 118,
126 (4th Cir. 1990); see also, Calhoun v. Exxon Corp., 1995 WL
473981, at * 3 (4th Cir. Aug. 11, 1995) (same). Stated another
way, “Plaintiffs cannot be heard to complain when they failed to
read the relevant documents.” Johnson v. Washington, 559 F.3d
238, 245 (4th Cir. 2009).
Because Appellants were presented with multiple documents,
including a Truth in Lending Act disclosure statement, that laid
out the true terms of their loan, they cannot now contend that
they reasonably relied upon any false oral representation.
Accordingly, the District Court did not err when dismissing
Appellants’ fraud claims.
III.
In addition to contesting the dismissal of their fraud
claims, Appellants argue that the district court erred in
dismissing their claim for intentional infliction of emotional
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distress. In Virginia, a plaintiff bringing a claim for
intentional infliction of emotional distress must allege facts
showing that: (i) the wrongdoer’s conduct was intentional or
reckless, (ii) the conduct was outrageous and intolerable, (iii)
the alleged wrongful conduct and emotional distress are causally
connected, and (iv) the distress is severe. See Ogunde v.
Prison Health Servs., 274 Va. 55, 65 (2007). In order to
satisfy the second element, the alleged improper conduct must be
“so outrageous in character, and so extreme in degree, as to be
regarded as atrocious, and utterly intolerable in a civilized
community.” Russo v. White, 241 Va. 23, 26 (1991).
Here, while Falcone’s actions were clearly improper, they
fail to satisfy the “outrageousness” requirement. Assuming that
Appellants are correct in their allegation that Falcone made
“intentional and material false representations” and that
Countrywide “gave [them] a loan they could not afford,” the
actions still do not rise to the level of actionable conduct.
See, e.g., Harris v. Kreutzer, 271 Va. 188, 204 (2006) (holding
that allegations that a defendant “verbally abused [plaintiff],
raised his voice to her, stated she was ‘putting on a show,’ and
accused her of being a faker and malingerer” did not equate to
the type of outrageous behavior necessary to sustain a claim of
intentional infliction of emotional distress). As a result, the
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District Court did not err when dismissing Appellants’ claim for
intentional infliction of emotional distress.
IV.
In sum, we conclude that the district court erred neither
in dismissing Appellants’ fraud claims nor in dismissing their
claim for intentional infliction of emotional distress. We
therefore affirm the judgment of the district court.
AFFIRMED
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