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Geary v. WesBanco Bank, Inc.

Supreme Court of Appeals of West Virginia

January 13, 2020

Nancy Geary, Plaintiff Below, Petitioner
v.
WesBanco Bank, Inc., and U.S. Bank National Association, Defendants Below, Respondents

          Marshall County 16-C-159

          MEMORANDUM DECISION

         Petitioner Nancy Geary, by counsel David L. Delk, appeals the Circuit Court of Marshall County's September 4, 2018, two separate orders granting respondents summary judgment on petitioner's breach of contract and negligence claims, which she asserted following a determination that her property was in a flood zone and resultant requirement that she purchase flood insurance. Respondent WesBanco Bank, Inc. ("WesBanco"), by counsel James C. Gardill and Richard N. Beaver, filed a response. Respondent U.S. Bank National Association ("U.S. Bank"), by counsel Jared M. Tully and Alex J. Zurbuch, also filed a response.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

         On June 20, 2015, petitioner and David E. McLaughlin entered into a "Real Estate Contract of Sale" (the "Contract") for petitioner's purchase of real property owned by Mr. McLaughlin in Benwood, West Virginia (the "subject property"). The Contract provided that the home on the subject property was being "sold as is," that petitioner and Mr. McLaughlin understood the Contract "to be a legally binding contract requiring performance," and that it "contains all of the terms and conditions agreed upon between the parties and there are no outside conditions, representations, warranties or agreements." Notably, there was no contingency related to a determination as to whether the subject property was located in a flood zone.

         According to petitioner, Mr. McLaughlin represented to her that the subject property was not located within a flood zone. On April 29, 2014, however-more than one year prior to petitioner's closing on the subject property-the Federal Emergency Management Agency ("FEMA") determined that the subject property was "located in the [Special Flood Hazard Area ("SFHA")]" and that "flood insurance is required for" the subject property.

         Petitioner proceeded to closing on the subject property on August 24, 2015, with respondent WesBanco. The Deed of Trust petitioner executed contained the following provisions relevant to the instant appeal:

TRANSFER OF RIGHTS IN THE PROPERTY The beneficiary of this Security Instrument is MERS [Mortgage Electronic Registration Systems, Inc.] (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS. This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower hereby irrevocably grants and conveys to Trustee, in trust, with power of sale, the [subject property].
. . . .
Property Insurance. Borrower shall keep the Improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage," and any other hazards including, but not limited to, earthquakes and floods, for which Lender requires Insurance. . . . What Lender requires pursuant to the preceding sentences can change during the term of the Loan. . . . Lender may require Borrower to pay, in connection with this Loan, either: (a) a one-time charge for flood zone determination, certification and tracking services; or (b) a one-time charge for flood zone determination and certification services and subsequent charges each time remappings or similar changes occur which reasonably might affect such determination or certification. Borrower shall also be responsible for the payment of any fees imposed by the Federal Emergency Management Agency in connection with the review of any flood zone determination resulting from an objection by Borrower.
. . . .
Sale of Note; Change of Loan Servicer; Notice of Grievance. The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower. A sale might result in a change in the entity (known as the "Loan Servicer") that collects Periodic Payments due under the Note and this Security Instrument and performs other mortgage loan servicing obligations under the Note, this Security Instrument, and Applicable Law. There also might be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Borrower will be given written notice of the change which will state the name and address of the new Loan Servicer, the address to which payments should be made and any other information RESPA requires in connection with a notice of transfer of servicing. If the Note is sold and thereafter the Loan is serviced by a Loan Servicer other than the purchaser of the Note, the mortgage loan servicing obligations to Borrower will remain with the Loan Servicer or be transferred to a successor Loan Servicer and are not assumed by the Note purchaser unless otherwise provided by the Note purchaser.

         Petitioner also signed a "Notice of Special Flood Hazards and Availability of Federal Disaster Relief Assistance" ("Notice"), which stated that the subject property was "NOT IN Special Flood Hazard Area (SFHA)" and, therefore, flood insurance was not required. This determination was made on June 25, 2015, by a WesBanco vendor, ServiceLink, which is licensed and federally-approved to make such determinations. The Notice further provided, however, that "[i]f, during the term of this loan, the subject property is identified as being in an SFHA, as designated by FEMA, you may be required to purchase and maintain flood insurance at your expense."

         On September 11, 2015, respondent U.S. Bank informed petitioner that it would begin servicing her loan on October 1, 2015. On October 29, 2015, U.S. Bank notified petitioner that, as the new loan servicer, it had performed a flood determination review of the subject property and determined it to be in a SFHA. Based on this determination, U.S. Bank instructed that the subject property "is now subject to the mandatory purchase of flood insurance as a ...


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