UWM seeks dismissal of Atlantic Trust's "All-In" countersuit

United Wholesale Mortgage is asking a Michigan federal court to toss out a countersuit filed by brokerage Atlantic Trust Mortgage Corp. The move comes shortly after the court declined the Florida-based brokerage's ask to dismiss UWM's original litigation, which accuses Atlantic Trust of breaching its All-In mandate. 

The wholesale lender called Atlantic Trust's fraud allegations "vague and unviable" in a court filing submitted April 30.

In its motion to dismiss the case, UWM argued that Atlantic Trust's fraud claims are based on "a future promise reserved for a contract claim," lack any allegations of bad faith, and rely on an "unreasonable" interpretation that contradicts the parties' written agreement. UWM also said Atlantic Trust failed to show it suffered any damages as a result of the alleged fraud.

Atlantic Trust's countercomplaint claims that in late 2022, as the brokerage was preparing to end its partnership with UWM, the lender offered a 60-day trial period during which the firm would not be bound by the terms of the All-In Addendum. Atlantic Trust accepted the offer but was later sued by UWM for violating the mandate.

UWM argues, however, that the ultimatum, which Atlantic Trust was aware of, supersedes any alleged promises made.

The wholesale lender in its filing, also included in the fact that America's Moneyline filed a similar countersuit against it and those allegations were tossed.

"The court held the promises cannot serve as the basis for a separate and independent tort claim. . . . And [America's Moneyline] has not identified any duties that UWM violated that are separate. The court accordingly dismissed the fraud claim," UWM wrote in its filing, stating that the same should be done to Atlantic Trust's countersuit.

Atlantic Trust did not immediately respond to a request for comment Friday.

Thus far, UWM has fared well in litigating against brokerages that allegedly violated its mandate. The controversial rule prevented brokers working with UWM from doing business with Rocket Mortgage or Fairway Independent Mortgage. In February 2024, Fairway exited the wholesale channel.

Earlier this year, two federal judges in Michigan declined to dismiss UWM's All-In lawsuits against Atlantic Trust and District Lending. Both brokerages, sued by UWM for violating its ultimatum, had their motions to dismiss denied in the U.S. District Court for the Eastern District of Michigan, Southern Division, less than a week apart.

The judges overseeing the two lawsuits ruled that Atlantic Trust and District Lending were bound by the wholesale broker agreement with UWM, despite not signing the ultimatum, because they continued doing business with the Pontiac, Michigan-based company.

Other brokerages — including the previously mentioned America's Moneyline and The Okavage Group, which were also sued for violating UWM's All-In ultimatum and later countersued — face an uphill legal battle against the mortgage giant.

A Michigan federal judge tossed AML's countersuit for fraud in March 2024, citing another court's decision where a judge earlier that year was unconvinced by The Okavage Group's similar arguments. The Okavage Group is currently appealing the court's decision.

Another mortgage broker, Mid Valley Funding, agreed to settle and pay UWM $40,000 in June 2023.