Prince George's Cnty. v. Wells Fargo & Co.
| Decision Date | 15 December 2021 |
| Docket Number | Civil No. 18-3576 PJM |
| Citation | 575 F.Supp.3d 578 |
| Parties | PRINCE GEORGE'S COUNTY, MARYLAND, et al., Plaintiffs, v. WELLS FARGO & CO. et al., Defendants. |
| Court | U.S. District Court — District of Maryland |
Andrew David Freeman, Jean Mary Zachariasiewicz, Brown Goldstein and Levy LLP, Baltimore, MD, David J. Worley, Pro Hac Vice, James M. Evangelista, Pro Hac Vice, Kristi Stahnke McGregor, Pro Hac Vice, Evangelista Worley LLC, Atlanta, GA, J. Birt Reynolds, Pro Hac Vice, Jennifer Sarah Czeisler, Leigh Smith, Pro Hac Vice, Sanford Paul Dumain, Pro Hac Vice, Milberg Coleman Bryson Philips Grossman, PLLC, Garden City, NY, Justin G. Day, Pro Hac Vice, Mark E. Silvey, Pro Hac Vice, Virginia Ann Whitener, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Knoxville, TN, for Plaintiff Maryland Prince George's County.
Andrew David Freeman, Jean Mary Zachariasiewicz, Brown Goldstein and Levy LLP, Baltimore, MD, David J. Worley, Pro Hac Vice, James M. Evangelista, Pro Hac Vice, Kristi Stahnke McGregor, Pro Hac Vice, Evangelista Worley LLC, Atlanta, GA, J. Birt Reynolds, Pro Hac Vice, Jennifer Sarah Czeisler, Leigh Smith, Pro Hac Vice, Sanford Paul Dumain, Pro Hac Vice, Milberg Coleman Bryson Philips Grossman, PLLC, Garden City, NY, Justin G. Day, Pro Hac Vice, Virginia Ann Whitener, Pro Hac Vice, Milberg Coleman Bryson Phillips Grossman, PLLC, Knoxville, TN, for Plaintiff Maryland Montgomery County.
Stephen Gregory Topetzes, Meghan E. Flinn, Stavroula E. Lambrakopoulos, K & L Gates LLP, Seth P. Waxman, Pro Hac Vice, Wilmer Cutler Pickering Hale And Dorr LLP, Washington, DC, Abram I. Moore, Pro Hac Vice, K and L Gates LLP, Chicago, IL, Olivia Kelman, Pro Hac Vice, Paul F. Hancock, Pro Hac Vice, K&L Gates LLP, Miami, FL, for Defendants Wells Fargo & Co., Wells Fargo Financial, Inc., Wells Fargo Bank, N.A.
Stephen Gregory Topetzes, Stavroula E. Lambrakopoulos, K & L Gates LLP, Seth P. Waxman, Pro Hac Vice, Wilmer Cutler Pickering Hale And Dorr LLP, Washington, DC, Abram I. Moore, Pro Hac Vice, K and L Gates LLP, Chicago, IL, Olivia Kelman, Pro Hac Vice, Paul F. Hancock, Pro Hac Vice, K&L Gates LLP, Miami, FL, for Defendant Wells Fargo "John Doe" Corps 1-375.
Prince George's County and Montgomery County, Maryland ("the Counties") filed this suit against Wells Fargo & Company and related entities1 (collectively "Wells Fargo"), alleging predatory and discriminatory residential mortgage lending, servicing, and foreclosure practices in violation of the Fair Housing Act (FHA), 42 U.S.C. §§ 3601 et seq. In a previous Opinion, the Court denied Wells Fargo's motion to alter or amend its decision not to certify for interlocutory appeal the question of whether, as a matter of law, the Counties have adequately alleged the "direct relation between the injury asserted and the injurious conduct alleged," necessary to meet the proximate-cause requirement under the FHA. See Fourth Mem. Opinion (May 13, 2021), ECF No. 105. The Court held that Wells Fargo did not meet the high bar for certification, explaining, in part, that it was not persuaded that a substantial ground for difference of opinion existed. Id. at 10–11.
Following the Ninth Circuit's unanimous en banc opinion in City of Oakland v. Wells Fargo & Co. , 14 F.4th 1030 (9th Cir. 2021), reversing a panel opinion of that court, Wells Fargo filed a Motion for Reconsideration of this Court's May 13, 2021 Order. Mot. for Reconsideration, ECF No. 125 (the "Motion"). The Counties oppose the request. ECF No. 128. Wells Fargo asserts that there has been a "change in applicable law" that supports reconsideration. Mot. at 2.
Having reviewed the Motion for Reconsideration and, for the reasons that follow, the Court will GRANT the Motion and will CERTIFY for interlocutory appeal the specific question of whether the Counties’ tax-based and municipal-expenditure claims for damages, both of which rely on regression analysis, would satisfy the FHA's proximate-cause requirement.
The background and procedural history of this case have been set forth in detail in the Court's prior opinions. See ECF Nos. 53, 60, 91, 105. To summarize: The Counties allege that Wells Fargo engaged in predatory lending practices relative to racial minority communities in their respective jurisdictions, which they say contributed to the recent financial crisis characterized by mortgage loan delinquencies, defaults, foreclosures, and home vacancies in the Counties, particularly in communities with high concentrations of FHA-protected minority residents. Am. Compl. ¶¶ 3–4, ECF No. 62.
The suit proceeds in three counts: Count I, disparate impact resulting from Wells Fargo's alleged equity-stripping scheme, beginning with loan origination and continuing through servicing and mortgage foreclosure, Am. Compl. ¶¶ 443–67; Count II, disparate impact based solely on Wells Fargo's mortgage servicing and foreclosure practices, id. ¶¶ 468–82; and Count III, intentional disparate treatment throughout the entire equity-stripping scheme, id. ¶¶ 483–93. Asserting both disparate-impact and disparate-treatment theories, the Counties allege five general categories of injuries: foreclosure processing costs, increased cost of municipal services (i.e., municipal expenditures), economic injuries to the Counties’ tax base, lost municipal income, and various noneconomic injuries. See First Mem. Op. at 2–3, ECF No. 53.
In support of its allegations that the Wells Fargo's discriminatory lending practices caused these injuries, the Counties engaged an expert, Dr. Charles Cowan, who conducted a series of regression analyses. See Am Compl. On February 17, 2021, the Court issued a third opinion and order,2 granting the motion to dismiss as to the claim for lost municipal income but allowing the claims for economic injuries to the Counties’ property tax bases and increased municipal expenditures to go forward. Third Mem. Op., ECF No. 91; Order, ECF No. 92. In relevant part, based on Dr. Cowan's regression analysis, the Court held that the Counties had adequately alleged that their property tax-related and increased municipal-expenditure injuries were proximately caused by Wells Fargo's purported violation of the FHA because the Counties had demonstrated "some direct relation" between those injuries and Wells Fargo's alleged conduct. See Third Mem. Op. at 7, 9–15 (quoting Bank of Am. Corp. v. City of Miami (Miami I ), ––– U.S. ––––, 137 S. Ct. 1296, 1305–06, 197 L.Ed.2d 678 (2017) ). In particular, the Court determined that the Counties had sufficiently demonstrated how, engaging the professional expertise of Dr. Cowan, they proposed to use regression analysis techniques to isolate the damages to the Counties’ property tax bases and the municipal expenditures that could be directly traced to Wells Fargo's alleged discriminatory lending. See id. at 11–15.
On March 15, 2021, Wells Fargo filed a motion to amend the Court's judgment to include a certification for interlocutory appeal. ECF No. 98. Specifically, Wells Fargo sought to immediately appeal to the Fourth Circuit the proposed question of whether, as a matter of law, the Counties have adequately alleged, based on their tax-base and municipal-expenditure theories, the "direct relation between the injury asserted and the injurious conduct alleged" necessary to meet the proximate-cause requirement under the FHA." See id. As indicated, however, on May 13, 2021, the Court issued a fourth opinion and order, denying the motion to amend because it was not persuaded that Wells Fargo had met the statutory criteria for certification. See Fourth Mem. Op., ECF No. 105. In relevant part, the Court determined that Wells Fargo's proposed question did not control the outcome of the case nor that the question was purely legal in nature and that there was not a substantial ground for difference of opinion. Id.
On June 14, 2021, Wells Fargo filed a motion to phase initial discovery and dispositive motions to the two-year-limitations period, ECF No. 114, which the Counties opposed, ECF No. 119. On October 1, 2021, Wells Fargo filed the present Motion for Reconsideration, ECF No. 125. Following the filing of the present motion, the Court decided to postpone the hearing on the motion to phase discovery. ECF No. 124. On October 21, the Counties responded in opposition to the Motion for Reconsideration, ECF No. 127, and on November 1, 2021, the Wells Fargo replied, ECF No. 128. The Court now considers the Motion for Reconsideration.
Section 1292(b) permits the appeal of an interlocutory order if the district court certifies that "such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). "The decision to certify an interlocutory appeal is firmly in the district court's discretion." Butler v. DirectSAT USA, LLC , 307 F.R.D. 445, 452 (D. Md. 2015). Wells Fargo submits that the recent unanimous en banc decision from the Ninth Circuit supports reconsideration of the Court's previous opinion denying Wells Fargo's request for a certification for interlocutory appeal. Carlson v. Bos. Sci. Corp. , 856 F.3d 320, 325 (4th Cir. 2017). According to Wells Fargo, this recent Ninth Circuit decision highlights the substantial ground for a difference of opinion regarding the proximate cause requirement of the FHA.
Throughout the pendency of this litigation, one of the most contested issues has been whether the Counties have plausibly alleged that Wells Fargo's equity-stripping scheme proximately caused injuries to the Counties’ tax bases and increased their municipal expenditures. In its previous opinions, this Court explained that it found reasoning in comparable federal court cases helpful in analyzing the direct proximate cause requirement set forth by the Supreme Court in Miami I ,...
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