Downey v. Wells Fargo Bank, N.A.

COLLEEN DOWNEYand PATRICIA DOWNEY, Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.

Civil Action No. 12-11340-DJC

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

July 11, 2014

MEMORANDUM AND ORDER

CASPER, J.

I. Introduction

Colleen Downey and Patricia Downey ("Plaintiffs") have filed this lawsuit against Defendant Wells Fargo Bank, N.A. ("Wells Fargo") alleging violations of the Massachusetts Consumer Credit Cost Disclosure Act ("MCCCDA"), Mass. Gen. L. c. 140D; Mass. Gen. L. c. 93 § 49; Mass Gen. L. c. 93A; fraudulent misrepresentation; and intentional and/or negligent infliction of emotional distress. D. 1-1. Wells Fargo has now moved for summary judgment. D. 16. For the reasons stated below, the Court ALLOWS Defendants' motion.

II. Factual Allegations

Unless otherwise noted, the following facts are as described in Wells Fargo's Statement of Facts, D. 18 ("SOF"), which Plaintiffs have admitted by their failure to controvert these facts. Stonkus v. City of Brockton Sch. Dep't, 322 F.3d 97, 102 (1st Cir. 2003) (quoting D. Mass. L.R. 56.1) (providing that "[m]aterial facts of record set forth in the statement required to be servedby the moving party will be deemed for purposes of the motion to be admitted by the opposing parties unless controverted by the statement required to be served by opposing parties").¹

In 2009, Plaintiffs engaged Wells Fargo to refinance the mortgage on their property. SOF ¶¶ 1-2. Wells Fargo is a federally chartered national bank. Id. ¶ 45. Plaintiffs allege that a Wells Fargo representative told Colleen Downey ("C. Downey") that Plaintiffs' loan payment would be $1,800 including escrow and taxes but cannot recall the name of the representative who told her that. Id. ¶¶ 3-4. On September 17, 2009, Wells Fargo sent C. Downey initial disclosures for her loan, which included a "Truth-in-Lending disclosure." Id. ¶¶ 5, 7. The Truth-in-Lending disclosure stated that Plaintiffs' initial payments would be between $1,784.12 and $1,769.11 with an annual percentage rate of 3.3636%. Id. ¶¶ 8-9. The disclosure also stated that Plaintiffs' finance charge would be $182,227.29 and their total amount financed would be $333,553.22. Id. ¶ 9.

Wells Fargo also sent Plaintiffs a "Good Faith Estimate of Settlement Cost" on September 17, 2009, which clarified the loan terms, costs and payments providing for monthly principal and interest payments of $1,631.08, a property insurance premium of $89.50, annual property taxes of $395.47, a mortgage insurance premium of $153.04 and therefore a total monthly payment of $2,269.09. Id. ¶ 10. These amounts reflected a total mortgaged amount of $341,649.00 with a 4.0% initial interest rate. Id.

On September 28, 2009, Plaintiffs completed and signed a mortgage loan application in the amount of $341,649.00 with a 4.0% initial interest rate. Id. ¶ 13. Wells Fargo approved Plaintiffs for a loan of $348,957.00. Id. ¶ 14. The parties closed the loan on November 10, 2009and the Plaintiffs signed the Uniform Residential Home Loan Application on that date, id. ¶¶ 15, 16, although Plaintiffs separately assert that these signatures were forged. D. 21 ¶ 4. Although the amount of the loan changed, the initial interest rate and all other terms were the same as the September 28, 2009 application. SOF ¶ 17.

At the closing, Colleen Downey signed the loan documents under the closing attorney's supervision. Id. ¶ 18. She was asked to sign documents before her mother arrived. D. 21 ¶ 8. Although no one prevented her from reading the documents, she did not read or ask any questions about the documents before signing them. D. 18 ¶¶ 19-21. Ultimately, Plaintiffs signed a promissory note in the amount of $348,957.00 secured by a mortgage on their property. Id. ¶¶ 27-28. At the closing, Plaintiffs received a "TILA" or "truth-in-lending" disclosure which they signed, a "HUD-1 Settlement Statement" and a "Loan Profile." Id. ¶¶ 29-30. The TILA Disclosure stated that their initial payment would vary from $1,822.28 to $1,806.95 with a total finance charge of $188,240.56 and total amount financed of $340,822.52. Id. ¶¶ 31-32. The HUD-1 Settlement Statement noted that Plaintiffs would also have to pay flood insurance, property taxes and property insurance on a monthly basis. SOF ¶ 34. Plaintiffs also received and signed two copies of the notice of their right to cancel the loan. Id. ¶ 35.

Plaintiffs defaulted on their mortgage in May 2011. Id. ¶ 42. Plaintiffs did not object to their payment amount until they sent Wells Fargo a demand letter on February 8, 2012. Id. ¶¶ 36-37. The letter demanded damages for Wells Fargo's failure to make certain disclosures at the closing and asked Wells Fargo to reallocate Plaintiffs' loan payments, but did not reference any debt collection activity or payment applications by Wells Fargo. Id. ¶¶ 38-39.

III. Procedural History

Plaintiffs filed a case in Norfolk Superior Court on June 3, 2012. D. 1-1 at 5.² Wells Fargo removed this matter to this Court on July 23, 2012. D. 1. Counts I and II allege violations of Mass. Gen. L. c. 93A and c. 140D, respectively and assert in part that Wells Fargo made inaccurate or insufficient disclosures about nature of the loan at closing (the "disclosure claims"). Compl., D. 1-1 at 9-10. Plaintiffs' also assert through their c. 93A claim that Wells Fargo, in the negotiations preceding the loan closing, intentionally misrepresented that Plaintiffs could refinance their loan in such a way to have a total monthly payment of $1,800 per month, while Count III alleges a fraudulent misrepresentation claim under asserting same (the "fraud claims"). Id. at 9-11. Count IV alleges a violation of Mass. Gen. L. c. 93, § 49. Id. at 12. Count V alleges negligent and/or intentional infliction of emotional distress. Id.

IV. Discussion

A. Standard of Review

The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). "A fact is material if it carries with it the potential to affect the outcome of the suit under applicable law." Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see Celotex v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets its burden, the non-moving party may not rest on the allegations or denials in its pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986), but must come forward with specific admissible facts showing that there is a genuine issue for trial. Borges ex rel. S.M.B.W. v. Serrano-Isern, 605F.3d 1, 5 (1st Cir. 2010). The Court "view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor." Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009).

B. The Disclosure Claims Fail as a Matter of Law

1. Wells Fargo Complied with State and Federal Disclosure Requirements

Although Wells Fargo argues that the MCCCDA does not apply to loans originated by a federal chartered institution, Wells Fargo posits that whether state or federal law applies to Plaintiffs' loan, they disclosed the clear and conspicuous terms of the loan at closing as required by both statutes. D. 17 at 5. To the extent that Plaintiffs argue that these terms did not comply with what they were told prior to the loan closing, she has not shown how such action amounts to the Defendant's failure to disclose, clearly and accurately, the material terms of the mortgage transaction, or, ultimately, how such actions amount to liability under the state and federal truth in lending statutes. Shaw v. BAC Home Loans Serv., LP, No. 10-11021-DJC, 2013 WL 789195, at *7 (D. Mass. Mar. 1, 2013) (dismissing TILA claim where plaintiff alleged that broker told her that her payments would be a certain amount different from those in the TILA disclosures, but she failed to state how such actions violated TILA); see also In re DiVittorio, 670 F.3d 273, 282 (1st Cir. 2012) (noting that MCCCDA was "closely modeled" after the TILA and, in most respects "mirrors its federal counterpart") (citation omitted).

To the extent that Plaintiffs argue that Wells Fargo made inaccurate disclosures regarding the loan at the time of closing, such conduct does fall within the ambit of the MCCCDA and TILA. In re Bettano, 440 B.R. 13, 15 (Bankr. D. Mass. 2010) (noting that if the documents provided "are inaccurate to a degree that exceeds the statutorily-established tolerance for error," then the borrower may rescind the loan rescission period extends until three days after a compliant disclosure form is eventually provided to the borrower," but not more than four years)(citing McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 421 (1st Cir. 2007)) (explaining the extended right to rescind in federal TILA cases, and that the rescission process is the same under the MCCCDA). Here, Plaintiffs signed a promissory note in the amount of $348,957.00, SOF ¶ 27, but the "truth-in-lending" disclosure listed the total amount financed as being $340,822.52. Id. ¶ 32. Meanwhile, the interest rate on the promissory note was 4.000 percent, while the "truth-in-lending" disclosure listed the APR as 3.3936 percent. Id. ¶¶ 8; D. 18-4 at 2. Nevertheless, the "principal amount" on the note does not necessarily equal the "amount financed," and the "interest rate" on the note does not necessarily equal "APR;" rather, these are terms of art. For example, the "amount financed" is a number derived from the "principal amount." As the Fourth Circuit has explained:

The perceived inconsistency arises, however, from the lender's compliance with the truth-in-lending requirements. "APR" and "amount financed" are terms of art, defined by federal regulations, and explained in the disclosure statement itself. "Amount financed" is

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