Stoff v. Wells Fargo Bank

CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)
Decision Date22 November 2021
Docket Number3:21-cv-00793-BEN-KSC
PartiesMICHAEL STOFF, an individual, on behalf of himself and all others similarly situated, Plaintiff, v. WELLS FARGO BANK, N.A., a Delaware corporation; and DOES 1 through 10, Defendant.

MICHAEL STOFF, an individual, on behalf of himself and all others similarly situated, Plaintiff,
WELLS FARGO BANK, N.A., a Delaware corporation; and DOES 1 through 10, Defendant.

No. 3:21-cv-00793-BEN-KSC

United States District Court, S.D. California

November 22, 2021





Plaintiff Michael Stoff, an individual, and on behalf of himself and all others similarly situated (“Plaintiff”), brings this action against Defendant Wells Fargo Bank, N.A., a Delaware corporation (“Defendant”) alleging violations of California's Consumer Credit Reporting Agencies Act, Cal. Civ. Code § 1785.1 et seq. (the “CCRAA”). ECF No. 1-2.

Before the Court are the following motions: (1) Defendant's Motion to Dismiss the Second Amended Complaint (the “SAC”), ECF No. 3; (2) Defendant's Motion to Strike the SAC, ECF No. 4; (3) Defendant's Request for Judicial Notice, ECF No. 5; and (4) Plaintiff's Motion to Remand to State Court, ECF No. 12. The Motions were submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF Nos. 21, 22.

After considering the papers submitted, supporting documentation, and applicable law, the Court (1) GRANTS Plaintiff's Motion to Remand, ECF No. 12; (2) DENIES without prejudice Defendant's Motion to Dismiss the SAC, ECF No. 3; (3) DENIES without prejudice Defendant's Motion to Strike the SAC, ECF No. 4; (4) DENIES both parties' requests for judicial notice, ECF Nos. 5, 12.


A. Statement of Facts

Plaintiff alleges that “[h]e is an investor and entrepreneur and . . . relies on his credit, borrowing ability and cash flow for the deals in which he is involved, including real estate endeavors.” SAC, ECF No. 1-2 at 142:3-4. He alleges that he “is a ‘consumer' as defined by Cal. Civ. Code § 1785.3(b).” Id. at 142:8. He further pleads on that in 2015, he obtained a mortgage from Defendant for the purchase of a single-family home in the city and county of San Diego, California (the “Mortgage”). Id. at 142:9-10, 148:22-24. “Since that time, Wells Fargo has continued to service Plaintiff's mortgage, ” which “is federally backed by Freddie Mac and now owned by that entity.” Id. at 142:10-11. As the mortgage servicing agent, Defendant has routinely reported the loan status of Plaintiff's mortgage to the major


credit reporting agencies including Experian, Equifax, and TransUnion since the beginning of the mortgage. Id. at 142:11-14.

In March 2020, Plaintiff and his wife were looking to buy a new home and seeking a mortgage to finance the purchase. SAC, ECF No. 1-2 at 148:15-17. Plaintiff pleads that he and his wife's credit score, as well as the contents of any consumer report provided by a credit reporting agency (“CRA”) to a potential lender “were necessarily an important aspect of the home-buying process.” Id. at 148:17-19. He alleges that “[t]he higher the credit score, and the more favorable the consumer report, the more likely a consumer is to qualify for a mortgage and to obtain a more favorable interest rate on that mortgage.” Id. at 148:19-21.

In early April 2020, following the COVID-19 pandemic, he requested and received a three (3) month forbearance of his mortgage obligations under the Coronavirus Aid, Relief, and Economic Security Act, 15 U.S.C. § 9001, et seq. (the “CARES Act”).[1] SAC, ECF No. 1-2 at 140:23-25, 142:9-14. At the time of this request, Plaintiff alleges he was current on his Mortgage, meaning that even if Defendant granted the request, and Plaintiff suspended his Mortgage payments, Defendant would be required to continue reporting Plaintiff's mortgage as current. Id. at 149:7-9. Despite his forbearance request, Plaintiff alleges that “rather than report the Mortgage as ‘current[, ]' [Defendant] added a ‘comment code' that the industry recognizes to signify that the loan is ‘in forbearance.'” Id. at 149:10-19.

Plaintiff alleges that “[i]n early May 2020, [he] received an email from the credit monitoring service, Credit Karma, notifying him that his credit score had fallen nearly 40 points.” Initial Complaint, ECF No. 1-2 at 7, ¶ 37; SAC, ECF No. 1-2 at 149:15-16.


“Fearful of how that would affect his ability to obtain a new mortgage and other consumer loans in the future, and the higher interest rates and fees he would be required to pay for such loans (such as a credit card, refinance, or other consumer credit instruments), [Plaintiff] pulled a copy of his Equifax credit report.” Id. at 149:16-19. “He then discovered that Wells Fargo violated the CARES Act's reporting requirements by reporting that his Mortgage was ‘in forbearance' rather than ‘current, ” which he alleges “negatively and materially impacted his credit score with CreditKarma.” Id. at 149:20-22.

Plaintiff alleges that “[a]s a direct and proximate result of Wells Fargo's misconduct, Plaintiff lost the ability to obtain a penalty-free forbearance on his Mortgage and paid his Mortgage for at least 3 months and potentially as many as 12 months when he should have been entitled to avoid those mortgage payments without penalty.” Id. at 150:3-6. He further pleads that “Defendant's misconduct negatively affected his ability to obtain credit, including requiring him to agree to and pay higher rates and fees required by lenders in order for Mr. Stoff to obtain credit going forward.” ECF No. 1-2 at 142:5-7. Additionally, he incurred more than $300.00 in legal expenses. Id. at 149:23-25.

The Fair Credit Reporting Act prohibits a person from “furnish[ing] any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A). The CARES Act Amendment defines an “accommodation” as “an agreement to defer 1 or more payments, make a partial payment, forbear any delinquent amounts, modify a loan or contract, or any other assistance or relief granted to a consumer who is affected by the coronavirus disease 2019 (COVID-19) pandemic” from January 31, 2020 through the later of 120 days after March 27, 2020 or “the date on which the national emergency concerning . . . COVID-19 . . . terminates.” 15 U.S.C. § 1681s-2(a)(1)(F)(i)(I)-(II). It further provides that “if a furnisher makes an accommodation with respect to 1 or more payments on a credit obligation or account of a consumer, and the consumer makes the payments or is not required to make 1 or more payments pursuant to the accommodation, the furnisher shall . . . . report the credit obligation or account as current.”


15 U.S.C. § 1681s-2(a)(1)(F)(ii)(I).

B. Procedural History

On June 18, 2020, Plaintiff filed his original complaint against Defendant, commencing Michael Stoff v. Wells Fargo Bank, N.A. and DOES 1-10, San Diego Superior Court Case No. 37-2020-00020808-CU-BTCTL (the “State Court Action”). ECF No. 1-2 at 2-13 (the “Initial Complaint”). On June 24, 2020, Plaintiff served Defendant with the Summons and Initial Complaint. ECF No. 12-1 at 9:17-18.

On August 24, 2020, Defendant filed a demurrer to the complaint, which the San Diego Superior Court sustained on January 8, 2021, while granting leave to amend. ECF No. 1-2 at 24, 165; ECF No. 12-1 at 9:17-19; ECF No. 18 at 9:12-13. Accordingly, on January 19, 2021, Plaintiff filed a First Amended Complaint (the “FAC”). ECF No. 1-2 at 97; ECF No. 18 at 9:13-14. On February 22, 2021, Defendant filed a Demurrer to the FAC as well. ECF No. 1-2 at 110; ECF No. 18 at 9:21. Instead of opposing the demurrer, on March 23, 2021, Plaintiff filed the operative Second Amended Class Action Complaint (the “SAC”) for Damages.[2] ECF No. 1-2 at 139; ECF No. 18 at 9:21-22.

On April 22, 2021, before responding to the SAC, Defendant removed the case to federal court under the Class Action Fairness Act, pursuant to 28 U.S.C. §§ 1441(a), 1446, and 1453(b). ECF No. 1 at 3, ¶ 7. Shortly thereafter, on April 29, 2021, Defendant filed a Motion to Dismiss Plaintiff's SAC, ECF No. 3, and Strike the Nationwide Class Allegations in Paragraph 62 of the SAC, ECF No. 4, both of which are scheduled to be heard on June 14, 2021 at 10:30 a.m. ECF No. 13 at 2, ¶ 5. That same day, Defendant also filed a Request for Judicial Notice. ECF No. 5. On May 31, 2021, Plaintiff filed an Opposition to the Motion to Dismiss, ECF No. 15; Motion to Strike, ECF No. 16; and


Request for Judicial Notice, ECF No. 17. On June 7, 2021, Defendant replied. See ECF Nos. 19, 20.

On May 21, 2021, Plaintiff filed a Motion to Remand pursuant to 28 U.S.C. §1447(c). Motion, ECF No. 12-1 (“Mot.”). On June 7, 2021, Defendant opposed. Opposition, ECF No. 18 (“Oppo.”). On June 14, 2021, Plaintiff replied. Reply, ECF No. 22 (“Reply”).

On October 20, 2021, Plaintiff also filed a Notice of Recent Decision. ECF No.24. However, on October 21, 2021, Defendant filed an Objection to Plaintiff's Notice of Recent Decision. ECF No. 25.


Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Consequently, district courts are presumed to lack jurisdiction unless the Constitution or a statute expressly provides otherwise. Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). . Generally, federal subject matter jurisdiction exists due to the presence of a federal question, see 28 U.S.C. § 1331, or complete diversity between the parties, see 28 U.S.C. § 1332. As...

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