Mayotte v. United States Bank Nat'l Ass'n - 985 F.3d 1248 (10th Cir. 2021)

Rule:

Remedies are often broader for tort than for breach of contract, and claimants often seek the broader tort remedies for conduct considered wrongful only because it violates a contractual duty. To enforce the limits on contractual remedies, courts employ a doctrine known as the economic-loss rule. Under this rule, tort remedies are ordinarily unavailable for economic losses resulting from violation of contractual duties in the absence of an independent duty growing out of a special relationship between the parties.

Facts:

Plaintiff Mary Mayotte obtained a mortgage with U.S. Bank, which then used Wells Fargo to service the loan. Plaintiff sought modification of the loan and alleged that Wells Fargo had agreed to modify her loan if she withheld three payments. Based on this alleged understanding, plaintiff withheld three payments. Wells Fargo denied that it agreed to modify the loan, and U.S. Bank eventually foreclosed. Plaintiff sued the banks, asserting statutory claims (violation of the Colorado Consumer Protection Act), tort claims (negligence, negligent supervision, and negligent hiring), and a claim for a declaratory judgment. Invoking the economic-loss rule, the district court granted summary judgment to the banks on the claims for economic and declaratory relief.  Plaintiff appealed, arguing that the economic-loss rule did not apply to her claims for violation of a state statute or for a declaratory judgment.

Issue:

 Did the economic-loss rule prevent the use of tort remedies for a lender’s failure to carry out its promises? 

Answer:

Yes.

Conclusion:

Under the economic-loss rule, tort remedies were ordinarily unavailable for economic losses resulting from violation of contractual duties in the absence of an independent duty growing out of a special relationship between the parties. In this case, the court held that the plaintiff did not show an independent duty and forfeited her new arguments on the claims for a statutory violation and declaratory judgment. The court further noted that although the plaintiff’s expert witness addressed matters bearing on the implied duty of good faith and fair dealing, he did not purport to identify the banks' legal duties, and could not, for the existence of a legal duty was within the sole province of the court. Hence, even if the expert witness had purported to opine on the banks' legal duties, that opinion could not prevent summary judgment. Moreover, the plaintiff did not present any evidence of non-economic harm. The court affirmed the district court’s judgment.