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Diane Depould, An Individual v. Wells Fargo Bank


September 27, 2011


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge



[Motion filed on 4/18/11]

Presently before the court is Defendant Wells Fargo Bank, N.A. ("Wells Fargo")'s Motion to Dismiss First Amended Complaint. Having considered the submissions of the parties and heard oral argument, the court grants the motion and adopts the following order.

I. Background

In 2007, Plaintiff obtained a mortgage loan, secured by her principal residence. (First Amended Complaint ("FAC") ¶ 10). Wells Fargo later obtained the First Trust Deed on Plaintiff's property. (Id.)

Plaintiff could not afford the loan, and her account became delinquent. (FAC ¶¶ 11,15). On or about June 2010, Plaintiff contacted Wells Fargo and requested a loan modification. (FAC ¶ 16). On June 6, 2010, Wells Fargo requested additional information from Plaintiff so that Wells Fargo could evaluate Plaintiff under the Making Homes Affordable Program ("HAMP"). (FAC ¶ 17).

Between June 11, 2010 and October 23, 2010, Plaintiff spoke with Wells Fargo representatives over a dozen times. (FAC ¶¶ 18-35). Wells Fargo repeatedly informed Plaintiff that Wells Fargo required additional documentation, including IRS Form 4506-T. (FAC ¶¶ 19, 22, 30). Plaintiff first provided Form 4506-T on August 24, 2010. (FAC ¶ 24). Plaintiff again provided Form 4506-T, at Wells Fargo's request, on or about September 10, 2010. (FAC ¶ 24).

Wells Fargo requested an updated Form 4506-T on September 16, 2010. (FAC ¶ 25). Plaintiff faxed the document to Wells Fargo on September 27, 2010. (FAC ¶ 31). On October 21, 2010, Wells Fargo informed Plaintiff that no additional documents were required at that time. (FAC ¶ 34).

Between November 1, 2010 and March 29, 2011, Wells Fargo repeatedly informed Plaintiff that her modification request had not been resolved because of problems with her Form 4506-T. (FAC ¶ 37). On March 29, 2011, Plaintiff filed a First Amended Complaint for negligence and unfair business practices, alleging that she has been harmed by Wells Fargo's failure to act on her modification request. (FAC ¶ 44). Wells Fargo now moves to dismiss the First Amended Complaint.

II. Legal Standard

A complaint will survive a motion to dismiss when it "contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When considering a Rule 12(b)(6) motion, a court must "accept as true all allegations of material fact and must construe those facts in the light most favorable to the plaintiff." Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include "detailed factual allegations," it must offer "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 129 S. Ct. at 1949. Conclusory allegations or allegations that are no more than a statement of a legal conclusion "are not entitled to the assumption of truth." Id. at 1950. In other words, a pleading that merely offers "labels and conclusions," a "formulaic recitation of the elements," or "naked assertions" will not be sufficient to state a claim upon which relief can be granted. Id. at 1949 (citations and internal quotation marks omitted).

"When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief." Id. at 1950. Plaintiffs must allege "plausible grounds to infer" that their claims rise "above the speculative level." Twombly, 550 U.S. at 555-56. "Determining whether a complaint states a plausible claim for relief" is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S. Ct. at 1950.

III. Discussion

Wells Fargo argues that Plaintiff's claims are preempted by the Home Owners Loan Act ("HOLA"). (Mot. at 6). In accordance with its authority under HOLA, the Office of Thrift Supervision promulgated a preemption regulation, 12 C.F.R. § 560.2. Section 560.2 explicitly "occupies the entire field of lending regulation for federal savings associations." 12 C.F.R. § 560.2(a). Federal regulations do not, however, preempt "basic state laws" such as uniform commercial codes, contract, or tort laws that "only incidentally" affect lending operations. Harris v. Wachovia Mortgage, FSB, 185 Cal.App.4th 1018, 1025-1026 (2010). As the Ninth Circuit has explained, "[w]hen analyzing the status of state laws under § 560.2, the first step will be to determine whether the type of law in question is listed in paragraph (b). If so, the analysis will end there; the law is preempted." Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 1005 (9th Cir. 2008).

Here, Plaintiffs claims are based on Wells Fargo's failure to properly process her application for a loan modification. These claims fall squarely within paragraph (b) of Section 560.2. Section 560.2(b)(4) applies to requirements regarding "[t]he terms of credit, including amortization of loans and the deferral and capitalization of interest and adjustments to the interest rate, balance, payments due, or term to maturity of the loan . . . ." 12 C.F.R. § 560.2(b)(4). Plaintiff seeks a determination regarding the very adjustments listed in paragraph (b)(4). Furthermore, Section 560.2(b)(10) references regulation of the "processing, origination, or servicing" of mortgages. 12 C.F.R. § 560.2(b)(10). Plaintiff's claims regarding Wells Fargo's improper processing of her application for a modification of loan terms have more than an "incidental effect" on lending operations, and are preempted by 12 C.F.R. § 560.2.*fn1 See also Zarif v. Wells Fargo Bank, NA, 2011 WL 1085660 (S.D. Cal. 2011)(dismissing claims based on loan modification as preempted); c.f. Ahmed v. Wells Fargo Bank & Co., 2011 WL 1751415 (N.D. Cal. 2011) (distinguishing claims based on fraudulent misrepresentation that a loan modification would be approved from "processing, origination, and servicing" claims).

IV. Conclusion

For the reasons stated above, Wells Fargo's Motion to Dismiss is GRANTED.


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