Law Firm Dodges Suit Over Marketing Mistake
CHICAGO (CN) - A mortgage lender cannot pursue defamation claims against a California law firm over an unflattering mailing sent to prospective clients, a federal judge ruled, noting that the lender did not show that the mailing caused at least $75,000 in damages.
Guaranteed Rate says it has a "sterling reputation in within the mortgage business," dealing with residential real estate.
In December 2011, some of Guaranteed Rate's clients received a notice in the mail from NHT Law Group marked "personal and confidential."
The Costa Mesa, Calif.-based law firm's notice stated: "Court records indicate that a recent lawsuit has been filed against Guaranteed Rate Inc., with claims of foreclosure fraud, mortgage misrepresentation, and unfair business practices. Due to the serious nature of this matter we ask that you respond promptly."
NHT encouraged readers to call if they had experienced "sub prime or predatory financing," or had been "ignored by Guaranteed Rate Inc."
When Guaranteed Rate contacted NHT about the notice, NHT said that its marketing company sent the notices without its approval and that it had fired the employee responsible for the hiring the company. NHT's principal, Paul Nguyen, also said the firm would set the record straight if any recipients of the letter contacted the firm.
But Nguyen also said he could not provide Guaranteed Rate with the distribution list for the notice because it was in the marketing company's possession.
In a federal complaint, Guaranteed Rate claimed that the notice was "nothing more than a craven effort on behalf of NHT to solicit business by alarming [Guaranteed Rate's] valued customers with patently false and outrageous statements." It said the notice had caused Guaranteed Rate "substantial financial harm."
U.S. District Judge John Grady dismissed Guaranteed Rate's complaint for lack of jurisdiction last week, finding that lender could not prove that it suffered at least $75,000 in damages, the threshold for federal jurisdiction.
"Plaintiff relies upon only speculation that it can meet the jurisdictional threshold; it has failed to support its arguments with any 'competent proof' whatsoever," Grady wrote. "'Competent proof' means 'admissible evidence' that supports the plaintiff's estimate of recoverable damages."
"There is no evidence regarding the size of the audience to whom the allegedly defamatory statements were made or the purported lost business opportunities," he added. "There is no evidence that plaintiff has suffered any concrete injury. And as for punitive damages, plaintiff offers no evidence of NHT's alleged 'malice and willfulness' in making the statements, nor does it even cite any cases addressing whether Illinois authorizes punitive damages awards as high as the jurisdictional minimum in the absence of concrete injury."