Bartold v. Wells Fargo Bank, N.A., 14-cv-00865 (VAB)
| Decision Date | 24 November 2015 |
| Docket Number | No. 14-cv-00865 (VAB),14-cv-00865 (VAB) |
| Court | U.S. District Court — District of Connecticut |
| Parties | VINCENT BARTOLD, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant. |
Plaintiff, Vincent Bartold, brings this action against Defendant, Wells Fargo Bank, N.A., ("Wells Fargo") alleging violations of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110a et seq. (Count I), breach of contract (Count II), and negligent misrepresentation (Count III). Defendant has moved to dismiss the entire complaint. For the following reasons, Defendant's motion to dismiss [Doc. No. 14] is DENIED.
All factual allegations in the complaint [Doc. No. 1-2] are assumed to be true for purposes of evaluating a motion to dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). According to the complaint, Mr. Bartold is the owner and occupant of 260 Rockwell Avenue, Stratford, Connecticut, which was deeded to him by his mother in 2005 and was unencumbered by any mortgage liens. Mr. Bartold is in his seventies, has disabilities, and relies on a fixed income consisting of monthly Supplemental Security Income benefits paid by the Social Security Administration. In 2009, Mr. Bartold saw a television commercial advertising a "reverse mortgage" home loan.
A reverse mortgage, or Home Equity Conversion Mortgage ("HECM"), Wolfert ex rel. Estate of Wolfert v. Transamerica Home First, Inc., 439 F.3d 165, 166-67 (2d Cir. 2006). These loans are federally insured by the United States Department of Housing and Urban Development ("HUD") and are subject to HUD regulations. Federal regulations provide for five payment plans through which a borrower can elect to receive their cash payments: (1) tenure; (2) term; (3) line of credit; (4) modified tenure; and (5) modified term.
Generally, "[u]nder the tenure payment option, equal monthly payments are made by the mortgagee to the mortgagor as long as the property is the principal residence of the mortgagor," 24 C.F.R. § 206.19(b), while "[u]nder the term payment option, equal monthly payments are made by the mortgagee to the mortgagor for a fixed term of months chosen by the mortgagor," 24 C.F.R. § 206.19(a). "Under the line of credit payment option, payments are made by the mortgagee to the mortgagor at times and in amounts determined by the mortgagor as long as the amounts do not exceed the payment amounts permitted by" federal regulation. 24 C.F.R. § 206.19(c). The modified tenure plan combines the features of the tenure and line of credit plans, while a modified term plan combines the features of the term and line of credit options. See 24 C.F.R. §§ 206.17(a), 206.25(d).
Mr. Bartold believed that a reverse mortgage loan could enable him to convert the equity in his home to monthly cash payments without having to move out or make monthly loan payments, and that he could receive these payments as long as he was alive and remained living in the home. Desiring to live independently as long as possible, but facing the cost-prohibitive prospect of continuing to live in his home on his fixed income, Mr. Bartold applied for a reversemortgage loan from Webster Bank in early summer 2009. It was very important to him that he be paid on a tenure plan rather than a term plan, so that he would continue receiving payments throughout his life while he lived in his home.
Webster Bank allegedly approved Mr. Bartold for a tenure plan reverse mortgage based on an appraisal of $185,000, and a closing was scheduled for late July 2009. Shortly before closing, a real estate agent allegedly advised Mr. Bartold to contact other banks to see if they could offer more favorable loan terms. Mr. Bartold contacted Wells Fargo, and, in late July 2009, James McMinn, a mortgage broker employed by Wells Fargo, met with Mr. Bartold and told him that Wells Fargo could offer him a reverse mortgage with a 0.5% lower interest rate and larger monthly payments, that it could use Webster Bank's home appraisal of $185,000, and that closing could occur within one month, in late August 2009. Based on these representations, Mr. Bartold agreed to obtain a reverse mortgage from Wells Fargo instead of following through on his scheduled closing with Webster Bank.
Wells Fargo allegedly did not schedule a closing until October 26, 2009, and this delay required Mr. Bartold to obtain a second home appraisal, based upon which Wells Fargo valued the house at $175,000. At the closing, Mr. Bartold and Wells Fargo entered into a Home Equity Conversion Loan Agreement (the "Loan Agreement"), and Mr. Bartold executed a Home Equity Conversion Mortgage Payment Plan in which he allegedly elected a modified tenure plan that would pay him $600 per month. Mr. Bartold began receiving $600 monthly payments from Wells Fargo in November 2009.
Approximately one year later, Mr. Bartold noticed that the monthly statements he was receiving from Wells Fargo indicated his HECM payments were being made based on a modified term plan. He contacted Wells Fargo several times thereafter to inquire whether hismonthly payments were being made on the modified tenure schedule he believed he had elected. During these telephone conversations, Wells Fargo allegedly repeatedly informed Mr. Bartold that the monthly payments were being made on a modified term schedule, and further told him that this schedule meant that Wells Fargo would only make monthly payments of $600 to him for approximately thirteen years from the closing of the loan, after which Wells Fargo would no longer make any payments to Mr. Bartold. Mr. Bartold allegedly repeatedly responded that Wells Fargo had made an error, and that he and Wells Fargo had agreed to a modified tenure schedule that would pay him $600 monthly for life, so long as he lived in the property. He also allegedly told Wells Fargo that he would never have agreed to a reverse mortgage if it meant he would only receive monthly payments for a set limited number of years. However, Wells Fargo allegedly continued to insist that Mr. Bartold was not entitled to payments on a modified tenure schedule.
Instead, Wells Fargo allegedly told Mr. Bartold that his only option to continue receiving monthly payments beyond the term was to reduce his monthly payment amount, and that he could receive $500, instead of $600, monthly payments to extend the payment term to 16 years. Mr. Bartold told Wells Fargo in May 2011 that he would agree to a reduction in his monthly payments to $500 in order to extend the number of years that he could receive payments. In May 2011, Mr. Bartold signed a "Change of Payment Plan" form prepared by Wells Fargo that stated that Mr. Bartold was electing to change his payment plan from modified term to modified term. Wells Fargo charged a "recalculation fee" for this change.
Beginning June 2011 and continuing through the present, Wells Fargo has paid Mr. Bartold $500 per month, though Mr. Bartold allegedly has continued to contact Wells Fargo regularly to explain that he had elected a modified tenure payment schedule and to request thatWells Fargo pay him accordingly. Wells Fargo allegedly continued to fail either to service the loan correctly in accordance with the loan documents or to represent the terms of the loan correctly, while nevertheless charging Mr. Bartold a $30 monthly service fee.
In response to Mr. Bartold's continuing inquiries, Wells Fargo mailed him a copy of his loan documents in December 2013. These documents stated that Mr. Bartold had elected the modified tenure payment schedule. Thereafter, Mr. Bartold once again called Wells Fargo to inform it that his loan documents specified he was supposed to be on a modified tenure schedule. In response, Wells Fargo allegedly initially insisted that the loan documents had Mr. Bartold on a modified term schedule, but after allegedly being pointed to the specific language in the loan documents, Wells Fargo allegedly acknowledged that Mr. Bartold was supposed to have been on a modified tenure schedule. At that point, Mr. Bartold allegedly requested that Wells Fargo make payments to him according to the terms of the loan documents. Wells Fargo allegedly stated that it would get back to him in approximately two weeks and terminated the call.
Wells Fargo allegedly never called back. Instead, Mr. Bartold allegedly once again had to contact Wells Fargo, which this time allegedly informed him that, regardless of what was written on the loan documents, Wells Fargo would only pay Mr. Bartold $430 per month if he changed his payment schedule to modified tenure.
Mr. Bartold filed a complaint dated May 12, 2014, in Connecticut Superior Court, which was served on Wells Fargo on May 14, 2014. On June 13, 2014, Wells Fargo filed a notice of removal [Doc. No. 1] with this Court. Wells Fargo then filed this motion to dismiss.
A motion to dismiss for failure to state a claim under Rule 12(b)(6), Fed. R. Civ. P., isdesigned "merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof." Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 158 (2d Cir. 2003) (citations omitted). When deciding a Rule 12(b)(6) motion to dismiss, a court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiff, and decide whether it is plausible that the plaintiff has a valid claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Twombly, 550 U.S. 544, 555-56 (2007); In re NYSE Specialists Sec. Litig., 503 F.3d...
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