Tanner v. Wells Fargo Bank, N.A.

AMY S. TANNER, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.

CASE NO: 1:20-cv-01104

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION

December 10, 2020

Judge Dan Aaron Polster

OPINION AND ORDERMEMORANDUM

Amy S. Tanner, individually and on behalf of all others similarly situated, ("Plaintiff" or "Tanner"), by and through counsel, seeks to recover alleged damages and civil penalties arising from her mortgage with Wells Fargo Bank, N.A. ("Defendant" or "Wells Fargo"). Pending before the Court is Defendant's Motion to Dismiss Plaintiff's second amended complaint pursuant to Fed. R. Civ. P. 12(b)(6) on the grounds that the complaint fails to state a claim upon which relief is granted ("Defendant's Motion"). For the reasons below, the Court GRANTS in part and DENIES in part Defendant's Motion, Doc. #: 14.

I. PROCEDURAL HISTORY

On May 20, 2020, Plaintiff filed a two-count class action complaint in this Court alleging violations of 12 C.F.R. § 1024.36(d) and § 1024.35(e), and 12 U.S.C. § 2605(e) and § 2605(k), and breach of contract. Doc. #: 1. On July 7, 2020, the parties requested, and the Court granted the parties' proposed stipulation extending Plaintiff's deadline to amend her Complaint until July 17, 2020. Doc. #: 9. Plaintiff filed an amended class action complaint, on July 17, 2020, adding a claim for breach of covenant of good faith and fair dealing, negligent misrepresentation, breach of fiduciary duty, and violations of 12 C.F.R. § 1024.36(d) and § 1024.35(e), and 12 U.S.C. § 2605(e) and § 2605(k). Doc. #: 10. On July 24, 2020, the Court instructed Plaintiff to file a second amended complaint that clearly articulates Plaintiff's revised theory of the case no later than August 6, 2020. Doc. #: 11. On August 6, 2020, Plaintiff filed her second amended class action Complaint ("Second Amended Class Action Complaint" or "Complaint"). Doc. #: 12. Plaintiff brings her Complaint pursuant to Fed. R. Civ. P. 23 on behalf of a class and subclass of similarly situated individuals and entities, and alleges the following: 1) breach of contract, 2) breach of covenant of good faith and fair dealing, 3) negligent misrepresentation, 4) breach of fiduciary duty, and 4) violations of 12 C.F.R. § 1024.36(d) and § 1024.35(e), and 12 U.S.C. § 2605(e) and § 2605(k). Id. On September 8, 2020, Wells Fargo filed its motion to dismiss Plaintiff's Complaint pursuant to Fed. R. Civ. P. 12(b)(6). Doc. #: 14. On October 8, 2020, Plaintiff filed her opposition brief. Doc. #: 17. Wells Fargo filed its reply brief on October 22, 2020. Doc. #: 18.

II. BACKGROUND

The facts are taken from Plaintiff's Complaint, Doc. #: 12, and are accepted as true for the purposes of this motion to dismiss. On January 14, 2014, Plaintiff executed a mortgage ("Plaintiff's Mortgage" or the "Mortgage") to secure payment of a note in the amount of $108,498.00. Doc #: 12, Ex. 1. Every residential loan that is insured by the Federal Housing Administration ("FHA"), including Plaintiff's loan with Wells Fargo, requires lenders to comply with the rules and regulations promulgated by the Secretary of the United States Department of Housing and Urban Development ("HUD"). Plaintiff defaulted on her loan and entered into FHA's Home Affordable Modification Program ("FHA HAMP") around September 2017 with Wells Fargo (the "First Loan Modification"). Doc. #: 12 at ¶50, Ex. 4. At some point between September 2017 and April 2019, Plaintiff defaulted on the terms of her First Loan Modification. Id. ¶51. On or about March 12, 2019, Wells Fargo sent a letter to Plaintiff responding to her request for assistance anddetailing her eligibility for a short sale. Doc. #: 12, Ex. 3. Wells Fargo informed her that she was not eligible for the FHA HAMP Loan Modification due to her having "reached the allowable numbers of modifications" ("Plaintiff's Initial Loss Mitigation Denial"). Id. Wells Fargo further explained that Plaintiff was not eligible for a repayment plan because, based on the documentation she provided, Wells Fargo was "unable to create an affordable mortgage payment that still meets the requirement of the program. [Wells Fargo] reached this decision by reviewing Plaintiff's monthly income, which is calculated as $3,838.50, along with reviewing the other information she provided." Id.

On April 19, 2019, Wells Fargo initiated foreclosure proceedings against Plaintiff. Doc. #: 12 at ¶53. On September 16, 2020, Plaintiff submitted a request to Wells Fargo, as an attempt to secure another modification under FHA HAMP, stating that twenty-four (24) months have lapsed since Plaintiff's First Loan Modification ("Plaintiff's Request #1"). Doc. #: 12 at ¶54, Ex. 5. In response to Plaintiff's request, Wells Fargo wrote to Plaintiff, on September 20, 2019, telling her that she was not eligible to be reviewed for assistance. Id. ¶55, Ex. 2. Plaintiff later learned, after this lawsuit was filed, that the basis for Plaintiff's denial was that her request was incomplete, but Wells Fargo never requested any supplemental information from Plaintiff that would be required to complete Plaintiff's request. Id. ¶56. Due to the alleged deficiencies in Wells Fargo's denial notice and statement regarding Plaintiff reaching "the allowable numbers of modifications," Plaintiff interpreted Wells Fargo's denial notice to mean that she would no longer qualify for any loss mitigation option, regardless of what documentation she submitted. Doc. #: 12 at ¶¶57-58.

On October 8, 2019, Plaintiff, through counsel, sent Wells Fargo requests for information, notice of error for failure to provide accurate information to a borrower regarding loss mitigationoptions and foreclosure, and a formal request to escalate case pursuant to 12 C.F.R. § 1024.36(b), 1024.38(b), and 4000.1, Section III (A)(2)(i)(xi) ("Inquiry #1"). See Doc. #: 12 at ¶59, Ex. 6. Plaintiff's Inquiry #1 alleged that Wells Fargo committed an error by sending Plaintiff a refusal notice and wrongfully claiming that Plaintiff's loan was "not eligible to be reviewed for assistance." Doc. #: 12 at ¶60. On October 31, 2019, Wells Fargo sent a written response to Plaintiff stating that Plaintiff's Mortgage "account was handled properly and no corrections are needed as no error has occurred," and summarized the history of Plaintiff's Mortgage account including her loss mitigation request ("Response to Inquiry #1"). Doc. #: 12 at ¶63-66, Ex. 8-9. The letter did not address Wells Fargo's reason for denying Plaintiff's second mitigation request in response to Plaintiff's Inquiry #1. Id. Wells Fargo's Response to Inquiry #1 also did not address Plaintiff's request for documentation on the maximum allowable number of modifications because Wells Fargo "considered [it] to be privileged, confidential and/or proprietary information to Wells Fargo." Id. Further, the Response to Inquiry #1 included correspondence, dated October 18, 2019, that Plaintiff's account again is not eligible for assistance. Id.

On November 14, 2019, Plaintiff, through counsel, sent a second inquiry to Wells Fargo seeking, among other things, information about Wells Fargo's reasoning for denying Plaintiff's request for a loan modification under FHA HAMP ("Inquiry #2"). Doc. #: 12 at ¶¶67-69. On November 25, 2020, Wells Fargo responded to Plaintiff stating that her account was not eligible for assistance. Id. Pursuant to a court order related to Plaintiff's foreclosure, Plaintiff submitted another request to Wells Fargo on or about November 27, 2019 (Plaintiff's Request #2"). Doc. #: 12 at ¶73. On December 17, 2019, in response to Plaintiff's Request #2, Wells Fargo approved Plaintiff for an FHA HAMP Trial Period Plan (the "TPP"). Doc. #: 12 at ¶74, Ex. 13. Plaintiff accepted the TPP and made all payments under the same. Doc. #: 12 at ¶75. On April 25,2020, Wells Fargo sent Plaintiff an offer for a permanent FHA-HAMP loan modification for Plaintiff's Mortgage. See Doc. #: 12 at ¶76, Ex. 14. Plaintiff's offer was fully executed on May 20, 2020, and Plaintiff's loan was modified a second time ("Plaintiff's Second Loan Modification"). See Doc. #: 12 at ¶77, Ex. 15.

While Plaintiff ultimately obtained her Second Loan Modification, Plaintiff alleges that she incurred additional costs and expenses because Wells Fargo failed to request additional documents from Plaintiff or state the precise reason why Plaintiff's Request #1 was denied. Plaintiff contends that she continues to incur costs and expenses associated with her foreclosure. Id. ¶78. Specifically, Plaintiff alleges she incurred the following damages: unpaid interest and default-related fees, which continued to accrue on Plaintiff's loan; damage to her credit standing and a delay in the rehabilitation of the same; legal fees and costs in defense of her foreclosure and subsequent loss mitigation requests; and additional amounts including interest, fees, costs, and corporate advances - which were incurred during the period between Plaintiff's first and second request - that capitalized into the balance owed on her loan when the Second Loan Modification was executed. Id. ¶¶39, 71-72, 78-80.

III. DISCUSSION

A. Rule 12(B)(6) Standard of Review

"On a motion to dismiss, the court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the complaint contains 'enough facts to state a claim to relief that is plausible on its face.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, (2007). To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim for which relief can be granted, a plaintiff must first comply with Rule 8(a)(2), which requires "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Further, a plaintiff's complaint "must contain sufficient...