Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—1st Cir.: Denial of right to jury trial on borrower’s unfair and deceptive acts claims against lender was harmless error, (May 2, 2014)

By Linda O’Brien, J.D., LL.M.

Although a borrower may have been entitled to a jury trial on his Massachusetts unfair and deceptive acts claims against a lender following foreclosure of his property, the denial of his right to a jury trial was harmless error, the U.S. Court of Appeals in Boston has decided (Frappier v. Countrywide Home Loans, Inc., April 30, 2014, Per Curiam.).

In 1999, Mark Frappier purchased property and obtained a mortgage loan from Countrywide Home Loans, Inc. From 1999 to 2006, Frappier obtained several mortgage loans on the property from Countrywide. He made the scheduled payments on the loans until 2008. After Frappier ceased making the payments, Countrywide foreclosed on the property.

Frappier filed suit against Countrywide, alleging unfair and deceptive acts in violation of Massachusetts General Laws Chapter 93A, among other claims. Frappier alleged that Countrywide used improper tactics to influence him to enter into loan agreements that the mortgagor knew he would be unable to satisfy. The district court granted Countrywide’s motion for summary judgment with respect to Frappier’s breach of good faith and fair dealing claims and held a bench trial on the remaining claims of unjust enrichment and violations of Chapter 93A. The district court entered judgment in favor of Countrywide on both counts, and Frappier appealed.

The court determined that, although Frappier may have been entitled to a jury trial on his Chapter 93A claim, the denial of a jury trial was harmless error. An error is harmless if the evidence meets the standard for a directed verdict—the evidence does not permit a reasonable jury to find in favor of the plaintiff.

There were numerous deficiencies in Frappier’s Chapter 93A claim, including his failure to prove causation, according to the court. It was undisputed that Frappier made timely payments on the loans until he experienced serious financial difficulties. The district court found that, since he was able to pay the loans until he experienced a series of unfortunate events, it was Frappier’s unexpected financial difficulties that caused him to default on the loans and not Countrywide. There could be no recovery in the absence of a causal relationship between the alleged unfair acts and the claimed loss. Thus, a directed verdict would have been appropriate on Frappier’s chapter 93A claims, the court concluded.

The case is No. 13-1774.

Attorneys: Valeriano Diviacchi (Diviacchi Law Office) for Mark Frappier. Chad W. Higgins and Brian M. LaMacchia (Goodwin Proctor LLP) for Countrywide Home Loans, Inc.

Companies: Countrywide Home Loans, Inc.

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