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Flynn v. Wells Fargo Bank, N.A.

United States District Court, E.D. California

August 29, 2019

WELLS FARGO BANK, N.A.; and DOES 1-47 inclusive, Defendants.



         Plaintiff Patricia E. Flynn asserts state statutory and common law claims against defendant Wells Fargo Bank. Plaintiff's claims arise out of Wells Fargo's alleged mishandling of her loan modification application and alleged wrongful foreclosure on her home. Presently before the court is defendant's Motion to Dismiss Plaintiff's Second Amended Complaint (“SAC”). (Docket No. 24.)


         In January 2006, plaintiff entered into a consumer loan transaction with defendant Wells Fargo to refinance her home, a single-family residency located at 2540 6th Avenue in Sacramento, California (“the subject property”). (SAC ¶¶ 1, 10.) Shortly thereafter, Wells Fargo took a security interest in the subject property; it also recorded a deed of trust with the Sacramento County's Recorder's Office. (Id. ¶ 10.)

         In May 2016, plaintiff submitted a request for a loan modification to Wells Fargo. (Id. ¶ 14.) She had experienced a “material change in financial circumstance” and wanted to secure a lower interest rate. (Id.) Plaintiff then received three letters from defendant, all dated July 19, 2016. (Id. ¶ 16.) One letter denied plaintiff's modification application on the grounds that Wells Fargo did not have the contractual authority to modify plaintiff's loan. (Id.) The second letter stated that Wells Fargo was unable to create an affordable mortgage payment for plaintiff based on her gross monthly income and stated that “[y]ou or a co-borrower have reached the allowable number of modifications.” (Id.) The third letter acknowledged receipt of plaintiff's application and advised her that she may need to submit additional documents. (Id.)

         Plaintiff alleges that in the months that followed, she received multiple solicitations from Wells Fargo for home loan modifications. (Id. ¶ 17.) Under California's Homeowner Bill of Rights, Wells Fargo was required to provide plaintiff a “single point of contact” who could assist her in the loan modification process. Plaintiff alleges that throughout the period at issue in the complaint, she was subjected to a “revolving door” of single points of contact (id. ¶ 20) and Wells Fargo changed her single point of contact as many as four times in a single month. (Id. ¶ 81.) She alleges that the frequency with which Wells Fargo changed her designated single point of contact hindered her ability to navigate the loan modification process. (Id. ¶ 87.)

         Plaintiff alleges that on March 30, 2017, defendant Wells Fargo recorded a Notice of Default against the subject property, though at that time, Wells Fargo had her complete loan modification application which it had not reviewed. (Id. ¶ 35.)

         On April 25, 2017, plaintiff attended Wells Fargo's annual shareholder meeting as the guest of Sister Nora Nash, the director of the Interfaith Center on Corporate Responsibility (“Interfaith Center” or “ICCR”). (Id. ¶ 37.) The Interfaith Center represents a coalition of more than 300 global institutional investors who collectively hold more than $400 billion in managed assets. (Id.) At the meeting, plaintiff publicly shared her negative experiences with the loan modification process. (Id.) Defendant Timothy Sloan, Wells Fargo's CEO, then promised plaintiff he would “personally investigate” her case. (Id. ¶ 38.) Plaintiff alleges that Sloan made this representation because he wanted to placate Sister Nora Nash and other interested shareholders at the meeting. (Id.) Sloan then directed plaintiff to go into the foyer and speak to Anthony Bennum, a Wells Fargo representative. (Id.) She did so, and Anthony Bennum told her that he would be her new single point of contact and would “help” her. (Id. ¶ 40.) Plaintiff alleges that Bennum “specifically reiterated the promise of Timothy Sloan that they would investigate her home loan modification application and that if mistakes were found in the process, Plaintiff's home certainly would not be foreclosed without a new application being appropriately evaluated and processed by Wells Fargo.” (Id.)

         Plaintiff alleges that after her conversation with Bennum at the Wells Fargo annual shareholder meeting, Bennum repeatedly made false representations to her. Specifically, she alleges that even though Bennum and Wells Fargo knew that plaintiff was ineligible for loan modification, Bennum told plaintiff that Wells Fargo would work on a loan modification for plaintiff. (Id. ¶ 100.) Plaintiff alleges that during telephone conversations on June 15, 2017, July 25, 2017, and August 10, 2017, Bennum again deceitfully told plaintiff that Wells Fargo was working on the proposed loan modification. (Id.) Plaintiff also alleges that on July 3, 2017, Bennum emailed her and said he was submitting the results of Wells Fargo's review to Keep Your Home California, [1] though plaintiff alleges that at the time of this email, Bennum knew that this was a “futile act.” (Id.) On July 14, 2017, Wells Fargo employee Grace Yang emailed plaintiff's loan modification proposal to Keep Your Home California. On July 20, 2017, however, Grace Yang acknowledged to Keep Your Home California that the wrong debt to income ratio had been used on plaintiff's file. (Id. ¶¶ 47, 49.)

         On August 17, 2017, Wells Fargo informed plaintiff that her loan modification had been denied because the property had already received the maximum number of modifications allowed. (Id. ¶ 53.) On October 6, 2017, plaintiff received a letter from Wells Fargo stating that her loan was in default and that Wells Fargo would pursue foreclosure alternatives. (Id. ¶ 55.) On November 7, 2017, Wells Fargo recorded a Notice of Trustee's Sale against the subject property. (Id. ¶ 56.) The sale took place on December 1, 2017. On December 12, 2017, plaintiff received the trustee's deed upon sale that was recorded against the subject property and was served with a 3-Day Notice to Quit. (Id. ¶¶ 57-58.)

         Plaintiff alleges that “if plaintiff's home loan [was] in fact not one that could be modified, the President's office of Wells Fargo could deliver such news within a month, if not minutes.” (Id. ¶ 41). She alleges that she was subjected to the months long back-and-forth with Bennum about her loan modification application as part of a deliberate subterfuge designed by Wells Fargo to “distract Sister Nora Nash, [the Interfaith Center on Corporate Responsibility] and others from [Wells Fargo's] wrongful business practices.” (Id.) This subterfuge, plaintiff alleges, left plaintiff “as the innocent pawn in a much broader scheme of potentially securing of 400 billion dollars of investment money to Wells Fargo.” (Id.)

         Plaintiff further alleges that, acting in reliance on Bennum's misrepresentations, she declined to pursue available private money loans. (Id. ¶ 110.) Subsequently, by the time her appeal of the modification denial was denied, on September 21, 2017, she did not have sufficient time to refinance her mortgage loan or cure her arrearage. (Id.) This inability was also due in part, the Second Amended Complaint alleges, to the fact the plaintiff's loan balance with Wells Fargo “included misapplied payments to her principal and thousands of dollars of additional fees, including fees from the multiple failed modification processes, totaling approximately $10, 000.”[2] (Id.) “Had [p]laintiff known the true amount she owed at the time of the denial of her appeal . . . she could have obtained the financing to correct her arrearage.” (Id.)

         In November 2018, plaintiff filed this action in the Superior Court, State of California, County of Sacramento. (See Docket No. 1-1.) Defendant Wells Fargo removed the case to this court on January 17, 2019 (Docket No. 1), and on March 18, 2019, plaintiff filed her First Amended Complaint, which added Wells Fargo CEO Timothy Sloan as well as two individual Wells Fargo employees as defendants. (See Docket No. 9.)

         The court granted Wells Fargo's Motion to Dismiss the First Amended Complaint (“FAC”) as to all claims against Sloan and as to all claims except certain alleged violations of California's Homeowners Bill of Rights. (See Order Re: Mot. to Dismiss (Docket No. 19).) Plaintiff then filed her Second Amended Complaint asserting violations of the Homeowner Bill of Rights, fraud, negligent misrepresentation, negligence, wrongful foreclosure, and violations of California's Unfair Competition Law (“UCL”), Cal. Bus & Prof. Code § 17200, et seq. (Docket No. 23.) Defendant now moves to dismiss plaintiff's fraud, negligent misrepresentation, negligence, wrongful foreclosure, and UCL claims, as well as plaintiff's requests for punitive and treble damages. (Docket No. 24.)


         On a motion under Federal Rule of Civil Procedure Rule 12(b)(6), the inquiry before the court is whether, accepting the allegations in the complaint as true and drawing all reasonable inferences in the plaintiff's favor, the plaintiff has stated a claim to relief that is plausible on its face. See Ashcroft v. Iqbal,556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “A claim has facial plausibility when the ...

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