Welte v. Wells Fargo Bank Nat'l Ass'n

• Decision Date: 27 May 2016
• Docket Number: Case No. EDCV 13-463 JGB (SPx)
• Citation: 189 F.Supp.3d 965
• Court: U.S. District Court — Central District of California
• Parties: Clarisa A. Welte v. Wells Fargo Bank National Association et al.

189 F.Supp.3d 965

Clarisa A. Welte

v.Wells Fargo Bank National Association et al.

Case No. EDCV 13-463 JGB (SPx)

United States District Court, C.D. California.

Filed May 27, 2016

Michael R. Weinstein, Scott H. Toothacre, William A. Lee Biddle, Ferris & Britton APC, San Diego, CA, for Clarisa A. Welte.

Laura J. Petrie, Law Offices of Petrie & Associates, Laguna Niguel, CA, Cathy A. Knecht, Jeffrey Burns Gardner, Barry, Gardner & Kincannon, APC, Carlsbad, CA, for Wells Fargo Bank National Association et al.

Proceedings: Judgment and Order GRANTING Defendants' Motion for Summary Judgment (Dkt. No. 75)

Present: The Honorable JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Wells Fargo Bank, N.A.'s Motion for Summary Judgment. (Dkt. No. 75.) After consideration of the papers filed in support of and in opposition to the motion, and the argument presented at the May 23, 2016 hearing, the Court GRANTS the motion.

I. BACKGROUND

On March 12, 2013, Plaintiff Clarisa A. Welte ("Plaintiff" or "Clarisa") filed a complaint against Defendants Wells Fargo Bank, N.A ("Wells Fargo"), Federal National Mortgage Association ("Fannie Mae"), and Shaun Donovan, the Secretary of the U.S. Department of Housing and Urban Development ("HUD"). (Complaint, Dkt. No. 1.) Plaintiff's claims relate to a reverse mortgage that her now-deceased husband, Kenneth Welte, purchased from Wells Fargo in 2005.

On April 18, 2013, Defendants filed a motion to dismiss the Complaint, (Dkt. No. 8), which the Court granted in part and denied in part on May 29, 2013, (May 29, 2013 Order, Dkt. No. 16). After Plaintiff filed a First Amended Complaint, (Dkt. No. 17), Defendants filed another motion to dismiss, (Dkt. No. 19), which the Court granted in part and denied in part, (Dec. 18, 2014 Order, Dkt. No. 24). On December 30, 2014, Plaintiff filed a Second Amended Complaint. ("SAC," Dkt. No. 25.)

On February 28, 2014, Plaintiff voluntarily dismissed Shaun Donovan from the SAC, (Dkt. No. 34), and on May 29, 2015, she voluntarily dismissed Fannie Mae. (Dkt. No. 47.) Then on June 3, 2015, Plaintiff dismissed several of her claims against Wells Fargo. (Dkt. No. 49.) Wells Fargo brought a third motion to dismiss the remaining claims, (Dkt. No. 50), which the Court denied on July 14, 2015, (Dkt. No. 54). Thus, Plaintiff maintains the following claims against Wells Fargo: negligence, deceit by concealment or nondisclosure, constructive fraud, and financial elder abuse. (SAC ¶¶ 47-73.)

On April 11, 2016, Wells Fargo filed a motion for summary judgment as to all four remaining claims. ("Mot.," Dkt. No. 75.) In support of its motion, Wells Fargo filed the following documents:

• Statement of Uncontroverted Facts and Conclusions of Law, ("DSUF," Dkt. No. 75–2);

• Request for Judicial Notice,¹ ("RJN," Dkt. No. 75–3);

• Declaration of Jeffrey Taylor, ("Taylor Decl.," Dkt. No. 75–4);

• Declaration of Cathy K. Robinson, ("Robinson Decl. I," Dkt. No. 75–5);

• Excerpts of the Deposition of Cynthia Savala, ("Savala Dep.," Dkt. No. 75–6);

• Excerpts of the Deposition of Carole Sparrow, ("Sparrow Dep.," Dkt. No. 75–7); and

• Excerpts of the Deposition of Clarisa A. Welte, ("Welte Dept.," Dkt. No. 75–8);

Plaintiff opposed Wells Fargo's motion on April 18, 2016. ("Opp.," Dkt. No. 78.) In support of her opposition, Plaintiff submitted the following documents:

• Declaration of Michael R. Weinstein, ("Weinstein Decl.," Dkt. No. 78–3 at 41), attached to which are 31 exhibits, (Dkt. Nos. 78–2 to 78–3);

• Statement of Genuine Disputes of Material Facts ("SGD") and Statement of Additional Material Facts ("PSUF"), (Dkt. No. 78–4); and

• Evidentiary Objections, (Dkt. No. 78–5).

On April 25, 2016, Wells Fargo filed a reply memorandum in support of its motion. ("Reply," Dkt. No. 79.) Wells Fargo also replied to Plaintiff's statement of additional facts, ("PSUF Reply," Dkt. No. 79–3), and Plaintiff's evidentiary objections, (Dkt. No. 79–1); submitted its own evidentiary objections to Plaintiff's evidence, (Dkt. Nos. 79–2, 79–4); and filed two additional declarations: the declaration of Linda Bridges, ("Bridges Decl.," Dkt. No. 79–5), and a second declaration from Cathy Robinson, ("Robinson Decl. II," Dkt. No. 79–6). The Court held a hearing on the motion on May 23, 2016.

II. LEGAL STANDARD

A motion for summary judgment shall be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party must show that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

Generally, the burden is on the moving party to demonstrate its entitlement to summary judgment. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir.1998) ; Retail Clerks Union Local 648 v. Hub Pharmacy, Inc., 707 F.2d 1030, 1033 (9th Cir.1983). The moving party bears the initial burden of identifying the elements of the claim or defense and presenting evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When the non-moving party has the burden at trial, however, the moving party need not produce evidence negating or disproving every essential element of the non-moving party's case. Id. at 325, 106 S.Ct. 2548. Instead, the moving party's burden is met by pointing out an absence of evidence supporting the non-moving party's case. Id. The burden then shifts to the non-moving party to show that there is a genuine issue of material fact that must be resolved at trial. Fed. R. Civ. P. 56(e) ; Celotex, 477 U.S. at 324, 106 S.Ct. 2548 ; Anderson, 477 U.S. at 256, 106 S.Ct. 2505. The non-moving party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 322, 106 S.Ct. 2548 ; Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ; see also William W. Schwarzer, A. Wallace Tashima & James M. Wagstaffe, Federal Civil Procedure Before Trial, 14:144. "This burden is not a light one. The non-moving party must show more than the mere existence of a scintilla of evidence." In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir.2010) (citing Anderson, 477 U.S. at 252, 106 S.Ct. 2505 ). "The non-moving party must do more than show there is some ‘metaphysical doubt’ as to the material facts at issue." Id. at 387 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. In ruling on a motion for summary judgment, the Court construes the evidence in the light most favorable to the non-moving party. Barlow v. Ground, 943 F.2d 1132, 1135 (9th Cir.1991) ; T.W. Elec. Serv. Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630–31 (9th Cir.1987).

III. FACTS

Except as noted, the following material facts are sufficiently supported by admissible evidence and are uncontroverted. They are "admitted to exist without controversy" for purposes of the Motion for Summary Judgment. SeeFed. R. Civ. P. 56(e)(2) ; L.R. 56-3.

A. Reverse Mortgages

The federal government, through the U.S. Department of Housing and Urban Development ("HUD"), administers a program called the Home Equity Conversion Mortgage ("HECM") program. (DSUF ¶¶ 1, 3.) The HECM program was created by Congress in 1987 to enable elderly homeowners to convert the equity in their homes to monthly streams of income and/or lines of credit or lump sum payments. (Id.¶ 4.) Loan proceeds in an HECM—or a "reverse mortgage"—are paid out according to a payment plan selected by the borrower. (Id.¶ 5.) In a reverse mortgage, there are no monthly payments. (PSUF ¶ 303.) Instead, the reverse mortgage is repaid in one payment, after the death of the borrower(s), upon sale of the home, or when the borrower no longer occupies the property as a principal residence. (DSUF ¶ 6.)

To qualify for a reverse mortgage, applicants must be at least 62 years of age. (Id.¶ 8.) Loan amounts are based on the value of the home, the interest rate, and the age of the youngest borrower. (Id.¶ 9.) Older borrowers qualify for higher loan amounts than younger borrowers under the HECM program. (Id.¶ 10.)

HUD mandates that all potential borrowers complete a counseling program prior to applying for a reverse mortgage. (Id.¶ 11.) The HUD counselors are independent from lending institutions: they receive separate training and testing by HUD and are employed by separate, third-party agencies. (Id.¶ 12.) The HUD counselors cannot have any affiliations with lenders or loan originators. (Id.¶ 13.) Representatives from lending institutions are not present during HUD counseling. (Id.¶ 18.)

The purpose of the mandatory HUD counseling is to inform potential borrowers of the implications of and alternatives to a reverse mortgage. (Id.¶ 14.) Counselors educate potential borrowers about the loan, assess financial needs of the applicants, discuss alternatives, and answer any questions that might arise. (Id.) At the completion of the HUD counseling, if the counselor determines that the potential borrower(s) understood the major components of the loan program, the counselor will issue a HUD certificate. (Id.¶ 16.) Loan processing for a reverse mortgage under the HECM program cannot continue without a signed HUD counseling certificate. (Id.¶ 17.)

In addition to the mandatory counseling, HUD also issues guidelines and requirements for reverse mortgage lenders. (Id.¶ 20.) In 2014, HUD issued "Mortgagee letter 2014-07 (April 25, 2014)" and later, "Mortgagee letter 2015-15 (June 12, 2015)." (Id.¶ 23.) These letters require lenders to identify and issue certain disclosures to...