Hampton v. Wells Fargo Bank
| Docket Number | 4:21-cv-00386 |
| Decision Date | 15 March 2022 |
| Parties | EUGENE HAMPTON PLAINTIFF v. WELLS FARGO BANK, N.A. & DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR VENDEE MORTGAGE TRUST 1994-3 DEFENDANTS |
| Court | U.S. District Court — Eastern District of Arkansas |
This lawsuit concerns the alleged misconduct of two banks related to Plaintiff's mortgage and the demolition of Plaintiff's home.[1] Specifically, Mr. Eugene Hampton brings five state-law claims against Defendants Wells Fargo and Deutsche Bank: (1) unjust enrichment, (2) negligence, (3) breach of fiduciary duty, (4) trespass, and (5) violations of the Arkansas Deceptive Trade Practices Act (“ADTPA”).[2]
This is the second time Mr. Hampton has prosecuted a lawsuit in this District against these Defendants covering essentially the same factual ground.[3] In the first lawsuit (let's call it Hampton I), Judge Billy Roy Wilson entered two orders that in combination, dismissed Mr. Hampton's case.[4] Based on Judge Wilson's dismissal of the last case, Defendants say the Court should dismiss the case at bar. Defendants principally argue that Judge Wilson's rulings in Hampton I preclude Mr. Hampton from taking a second bite at the apple.[5] Alternatively, Defendants argue that some of Mr. Hampton's claims are untimely and each of Mr. Hampton's claims fails to state a viable cause of action.[6] Mr. Hampton disputes all of Defendants' arguments.[7] For the reasons that follow, Defendants' Motion to Dismiss is GRANTED. Mr. Hampton's breach-of-fiduciary-duty and negligence claims are barred by the claim preclusion facet of res judicata doctrine. Mr. Hampton's ADTPA, unjust enrichment, and trespass claims are untimely.
Mr. Hampton's Complaint alleges two courses of conduct by Defendants that overlap in time. The Court will first set out the facts involving Mr. Hampton's home loan. The Court will then provide the facts related to the demolition of Mr. Hampton's home. After all this, the Court will recount the somewhat convoluted procedural history of the related prior lawsuit (Hampton I) and the lawsuit presently at bar.
On July 31, 1991, Mr. Hampton purchased property, including a house, in Little Rock, Arkansas.[9] On the same date, Mr. Hampton executed a Deed of Trust Note for the principal sum of $19, 400 in favor of the Department of Veterans Affairs (“VA”).[10] Mr. Hampton, as grantor, also executed a Deed of Trust in favor of the VA.[11] Mr. Hampton agreed to repay the loan principal at an interest rate of 9%.[12] Mr. Hampton agreed to make monthly payments of $156.10 over the course of thirty years with the last payment being due on August 1, 2021.[13] Mr. Hampton made his first payment in September 1991.[14]
In 1994, the VA assigned its interest in the Deed of Trust to Bankers Trust Company.[15] In 1999, Deutsche Bank acquired Bankers Trust Company and thus acquired the interest in the Deed of Trust.[16] Wells Fargo serviced the loan, [17] meaning that Wells Fargo, on Deutsche Bank's behalf, oversaw the day-to-day operations of Mr. Hampton's loan by sending payment invoices and receiving Mr. Hampton's payments.
Things seemed to go along okay until Mr. Hampton's 2002 divorce left him unable to make timely payments on the loan.[18] In July 2004, Mr. Hampton filed for bankruptcy.[19] In August 2004, despite the bankruptcy filing, Wells Fargo (on behalf of Deutsche Bank) had its lawyers commence a nonjudicial foreclosure of Mr. Hampton's property.[20] On November 2, 2004, Deutsche Bank purchased the property at a foreclosure sale for $27, 651.31.[21] This sale price exceeded (by an unknown amount) the balance that Mr. Hampton owed on the loan.[22] But Deutsche Bank did not give Mr. Hampton the excess.[23] Two weeks later, Wells Fargo's lawyers filed a Trustee's Deed conveying the property from Mr. Hampton to Deutsche Bank in the Pulaski County records.[24] Mr. Hampton received no notice that the foreclosure sale occurred.[25] Neither Defendant credited Mr. Hampton's account with the proceeds of the sale.[26]
On November 23, 2004, just a few days after the Trustee's Deed conveyance was filed, Wells Fargo entered an appearance in Mr. Hampton's bankruptcy case.[27] On December 16, 2004, Wells Fargo filed a proof of claim asserting a secured claim totaling $27, 120.79.[28] On the same day, Wells Fargo filed an amended proof of claim asserting “a secured claim for the principal sum of $16, 378.83 plus arrears and other charges and costs totaling $23, 120.78.”[29] For each proof of claim, Wells Fargo cited the 1991 Deed of Trust as the document supporting the secured claim.[30]Wells Fargo did not mention the foreclosure on or the sale of the house.
In February 2005, Mr. Hampton filed an Objection to Wells Fargo's secured claims.[31]Recall that, at this point, Mr. Hampton has no idea about the foreclosure or sale, and he is still living in the home. In the Objection, Mr. Hampton confirmed that “Wells Fargo [has] a secured claim against [Mr. Hampton's] homestead property, ” but he insisted that the amount owed was less than that claimed by Wells Fargo.[32] In November 2005, the bankruptcy court entered an agreed-upon order establishing that the total amount of the “mortgage debt, including the amount of the principal, all pre-petition arrears, attorney fees, and costs was $20, 601.53.”[33]
Mr. Hampton's bankruptcy lasted forty-seven months.[34] During that time, Mr. Hampton paid $15, 716.99 on the secured claim.[35] That amount “included the payment of taxes and insurance for the sole benefit of Deutsche Bank.”[36] On June 18, 2008, the bankruptcy court entered an order reflecting the total amount Mr. Hampton paid and releasing Wells Fargo's claim “with future payments to be made directly by [Mr. Hampton] beginning [on August 1, 2008] . . . .”[37] At this point, Mr. Hampton owed $4, 884.64 on the secured claim.[38] Mr. Hampton began making direct payments to Wells Fargo in August 2008.[39]
In September 2008, Mr. Hampton moved out of the house and allowed his adult children to remain there.[40] Mr. Hampton left all his personal possessions in the house, including his “keepsake[s] and family memories . . . .”[41] Mr. Hampton continued to make payments on the loan secured by the Deed of Trust.[42] In February 2010, “the Deed of Trust Note was satisfied, and Mr. Hampton was no longer obligated on this debt.”[43] Nevertheless, Wells Fargo continued to demand monthly payments from Mr. Hampton, “allegedly for the payment of the mortgage debt secured by the Real Property and payment of taxes and insurance through an escrow that could only be for the benefit of Deutsche Bank.”[44] Wells Fargo continued to make the monthly payment demands because Wells Fargo had not properly credited Mr. Hampton's account with the payments Mr. Hampton made during bankruptcy.[45]
Mr. Hampton, still not knowing that Deutsche Bank foreclosed on and apparently now owned the house, complied with Wells Fargo's demands.[46] He continued to make payments to Wells Fargo until October 2017.[47] At that time, “Mr. Hampton questioned whether he was paying more than what he was supposed to pay.”[48] Mr. Hampton thus requested an accounting of his loan balance.[49]
On October 6, 2017, Mr. Hampton received a partial accounting from Wells Fargo.[50] He could not determine from this accounting “if or when his payments were applied and whether they were applied correctly.”[51] The accounting did not show how the payments Mr. Hampton made during bankruptcy were applied to his loan.[52] On January 25, 2018, Mr. Hampton's counsel sent a letter to Wells Fargo that requested a complete accounting from August 2008 to the present.[53]Wells Fargo responded on June 8, 2018.[54] “Wells Fargo's counsel stated in an email that Mr. Hampton [was] entitled to a refund amount of $14, 289.13.”[55] The email attached a detailed spreadsheet showing Mr. Hampton paid Wells Fargo a total of “30, 166.29 in post-discharge payments.”[56] Despite offering Mr. Hampton a refund, Wells Fargo continued to send Mr. Hampton payment demands.[57] Wells Fargo also sent “Mr. Hampton dunning correspondence with threats of a foreclosure on the Real Property.”[58] It seems that even at this late date, Mr. Hampton did not know that the foreclosure had occurred and that Deutsche Bank was the record owner of the property.
In 2015, the City of Little Rock, Department of Housing and Neighborhood Programs “began notifying Deutsche Bank of municipal code violations on” the property at issue in this case.[59] On April 17, the City sent notice to Deutsche Bank that the property “was inspected and . contained defects that made the home unsafe.”[60] The notice said that the house “has been declared by the City to be a nuisance and detrimental to the public welfare of the citizens of the City of Little Rock.”[61] The notice also said that Deutsche Bank had fifteen days “in which to begin substantial repairs or to demolish the structure.”[62] Failure to do so, the City said, would result in legal proceedings against Deutsche Bank and the property to abate the nuisance.[63] The City left a copy of this notice at the house.[64] Mr. Hampton's children found the notice and told Mr. Hampton about it.[65] Here's the notice in relevant part:
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