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Fiorilli v. Wells Fargo Bank, N.A.

United States District Court, N.D. California

August 7, 2014

WELLS FARGO BANK, N.A., Defendant.


DONNA M. RYU, Magistrate Judge.

Defendant Wells Fargo Bank, N.A. ("Defendant") moves the court to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). [Docket No. 13.] The court held a hearing on the motion on July 31, 2014. For the reasons stated below and at the hearing, Defendant's motion to dismiss is granted.


A. The Class Action

In In re Wachovia Corp."Pick-A-Payment" Mortgage Marketing And Sales Practices Litigation, No. 5:09-md-02015 (the "Class Action"), the plaintiffs attacked the defendants' "Pick-A-Payment" mortgage loans, which allowed borrowers to choose a minimum payment for their loan and to make those payments for a limited amount of time and subject to specific terms. The plaintiffs alleged that through the Pick-A-Payment scheme the defendants (1) violated the Truth in Lending Act, 15 U.S.C. § 1601, (2) violated the California Business and Professions Code § 17200, (3) committed breach of an implied covenant of good faith and fair dealing, and (4) committed fraud. Compl. [Docket No. 1] ¶ 12. Ultimately, the parties to the Class Action entered into a written class action settlement agreement ("MDL-SA"). The MDL-SA contains a jurisdictional clause to govern future disputes between the parties:

[The MDL-SA] [p]reserve[s] the Court's continuing and exclusive jurisdiction over the Parties to this Agreement, including the Defendants and all Settlement Class Members, to administer, supervise, construe and enforce this Agreement in accordance with its terms for the mutual benefit of the Parties, but without affecting the finality of the Judgment....

Compl. Ex. A (MDL-SA), Section XV(D)(6). The MDL-SA defined "the Court" as the "United States District Court for the Northern District of California, the Honorable Jeremy F. Fogel... or any other court that obtains competent jurisdiction of the Lawsuit." MDL-SA § I(1.15). At the time of the settlement, the judge presiding over the case was Judge Fogel; subsequently, the case was reassigned to Judge Seeborg.

The MDL-SA created three classes of members: (1) borrowers who did not possess Pick-A-Payment loans anymore, (2) borrowers who continued to hold their loan and were not in default with their loan, and (3) borrowers who still held their loans but were in default. In re Wachovia Corp. "Pick-A-Payment, " No. 5:09-md-02015-JF, 2011 WL 1877630 at *1 (N.D. Cal. May 17, 2011). The MDL-SA also listed requirements for the defendants to follow in considering the plaintiffs' loan modification applications. MDL-SA § VI. For example, the defendants had to evaluate the applications under one or both of the two types of loan modification programs available, the Home Affordable Modification Program or the Mortgage Assistance Program 2, which applied different evaluation standards. MDL-SA § VI(E)(1). Moreover, in evaluating applications under the Mortgage Assistance Program 2, the defendants were to use lower evaluation standards (a so-called "waterfall" analysis) in order to benefit the plaintiffs in the application process. MDL-SA § VI(E)(5). The defendants were also required to provide an adequately staffed help line, a primary point of contact for each Class, notification to applicants of missing documents within ten days, a written explanation of an application denial within thirty days, and a "second-look and escalation" protocol or review process for modification applications. MDL-SA § VI(E)(8)(a)-(e).

B. The Instant Case

On May 31, 2007, Plaintiff Carol Fiorilli refinanced her New Jersey home and executed a Pick-A-Payment loan through World Savings Bank, FSB ("World Savings"). Compl. ¶ 9. A year later, Defendant acquired World Savings as a subsidiary and changed its name to Wachovia Mortgage, FSB which then became Wells Fargo. Request for Judicial Notice ("RJN") [Docket No. 14][1], Ex. 4 (Official Certification of the Comptroller of the Currency "stating that Wachovia Mortgage, FSB converted to Wells Fargo Bank Southwest, N.A., which then merged into Wells Fargo Bank, N.A.") and Ex. 5 (Federal Deposit Insurance Corp. printout of Wachovia Mortgage, FSB's history).

In 2011, Plaintiff stopped paying her mortgage loan. Compl. ¶¶ 27-28. She also applied for a loan modification from Defendant multiple times. Compl. ¶¶ 27-28. Plaintiff alleges that she is a class member of the Class Action, such that she and Defendant are subject to the MDL-SA. Compl. ¶ 13, 15. Plaintiff claims that Defendant failed to follow the MDL-SA in (1) not staffing the help line adequately, (2) inconsistently assigning primary points of contact, (3) not issuing written notifications, and (4) denying her application without evidence that Defendant applied a "financial waterfall" analysis. Compl. ¶¶ 29-35. In addition, Defendant made false, deceptive, and/or misleading statements in phone conversations with Plaintiff, such as requiring a $20, 000 payment from Plaintiff for the loan modification. Compl. ¶¶ 33-34.

On February 6, 2014, Plaintiff filed the instant lawsuit against Defendant, bringing two claims: (1) breach of the MDL-SA and (2) violation of the Fair Debt Collection Practices Act ("FDCPA") 15 U.S.C. § 1692e in the assessment of her loan modification application. Compl. ¶ 25.

C. Judge Seeborg's Case Relation Order

On May 1, 2014, the parties stipulated to relate this case to the Class Action. [Docket No. 24.] Judge Seeborg denied the stipulation, finding that there could be a "nexus" between Plaintiff Fiorilli's claims and those of the Class Action but "it [wa]s not clear at th[at] juncture whether Fiorilli's claims [we]re limited to enforcement of the settlement or whether she [wa]s asserting independent grounds for relief." Order [Docket No. 25]. Judge Seeborg noted that the presiding judge should determine whether "any or all of the ...

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