Brouillard v. DLJ Mortgage Capital, Inc.
63 V.I. 788
Supreme Court of The Virgin Is...2015Background
- Claude and Mei-wa Brouillard borrowed under a promissory note and 30-year mortgage from FirstBank in December 2006 (note principal ~$352,500); they made payments through Sept. 2010 then defaulted.
- Brouillards alleged FirstBank misrepresented loan terms and promised additional financing (total $500,000) or an interest-rate reduction when a second tranche was funded in 2007.
- FirstBank denied the $500,000 request and offered $352,500 in writing; Brouillards never submitted a new application in 2007 when told one would be required.
- FirstBank filed foreclosure/debt suit in April 2011 and moved for summary judgment in March 2012; Brouillards asserted counterclaims (negligent & intentional misrepresentation; breach of contract; breach of implied covenant).
- Superior Court granted summary judgment for FirstBank on foreclosure and on all counterclaims (statute of limitations for torts; Statute of Frauds for contract claims); this Court affirms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to foreclose / validity of mortgage | Brouillards: contract was void/voidable due to bank fraudulently inducing execution; foreclosure should be barred | FirstBank: Brouillards executed note, defaulted, and ratified the agreement by accepting benefits and paying for years; bank produced signed note and affidavit of amount due | Court: Elements for foreclosure met; any fraud made contract voidable not void, and Brouillards ratified it; summary judgment proper |
| Timeliness of tort claims (negligent & intentional misrepresentation) | Brouillards: misrepresentations about additional funding were ongoing and induced them to enter loan; claims not time-barred | FirstBank: essential facts occurred by 2007; two-year limitations expired well before counterclaims filed; no continuing-violation shown | Court: Claims accrued by end of 2007; two-year statute bars claims filed in 2012 absent continuing violation; summary judgment for FirstBank |
| Existence/enforceability of alleged $500,000 oral loan agreement | Brouillards: prior oral communications with loan officer created obligation to fund second tranche | FirstBank: unequivocal written denial and counteroffer for $352,500; any oral promise is barred by Statute of Frauds (agreements >1 year/real property require writing) | Court: Oral agreement, if any, concerns a 30-year mortgage/interest in land and is barred by Statute of Frauds; breach claims fail |
| Breach of implied covenant of good faith and fair dealing | Brouillards: bank breached covenant by refusing promised additional financing/modification | FirstBank: no enforceable promise; conduct does not overcome writing and Statute of Frauds; claims untimely | Court: Dismissed as barred (tort statute of limitations and/or Statute of Frauds depending on theory); summary judgment affirmed |
Key Cases Cited
- Anthony v. FirstBank Virgin Islands, 58 V.I. 224 (explains elements required to prevail in foreclosure)
- Burd v. Antilles Yachting Servs., Inc., 57 V.I. 354 (voidable contracts may be ratified by the injured party)
- Ockey v. Lehmer, 189 P.3d 51 (Utah 2008) (distinguishes void vs. voidable contracts arising from fraud/misrepresentation)
- Kincaid v. Black Angus Motel, Inc., 983 P.2d 1016 (Okla. 1999) (contract voidness standard when contrary to public policy)
- Nature's 10 Jewelers v. Gunderson, 648 N.W.2d 804 (S.D. 2002) (no meeting of the minds means no contract formed)