The case — Linza v. PHH Mortgage Corporation et al — involved Phillip Linza, a Plumas Lakes homeowner who filed suit against PHH Mortgage Corporation alleging mortgage servicing errors on a loan modification that eventually led to a foreclosure action.
Linza contended that PHH breached its contract and committed fraud by providing him with a loan modification and then changing the payment amounts. When Linza defaulted on the loan, PHH initiated foreclosure proceedings. Linza sued for fraud, breach of contract and intentional infliction of emotional distress.
It was later discovered that a deficit in LInza’s escrow account, which triggered PHH’s system to send out erroneous statements, was caused by a computer error.
In July 2014, a Yuba County jury awarded Linza $513,000 in compensatory damages and $15.7 million in punitive damages. PHH appealed the award, and in late October, Yuba County Superior Court Judge Steven Berrier reduced the compensatory damages to $158,000 and dismissed the $15.7 million in punitive damages entirely, saying that the dispute was a breach of contract.
In its motion to dismiss the punitive damages, PHH argued that the award was not supported by facts in the case or by applicable law and that the jury award was “grossly disproportionate” to the alleged damages.
In his opinion granting PHH’s motion to dismiss, Berrier wrote, “There was no evidence that the errors made were intentional or made in reckless disregard of causing emotional distress.”
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