Zamora v. Wells Fargo Home Mortg.
| Decision Date | 19 September 2012 |
| Docket Number | No. CV 12-0048 RB/LFG,CV 12-0048 RB/LFG |
| Parties | REBECCA A. ZAMORA, Plaintiff, v. WELLS FARGO HOME MORTGAGE, A Division of Wells Fargo Bank, N.A., and FEDERAL HOME LOAN MORTGAGE CORPORATION, Defendants. |
| Court | U.S. District Court — District of New Mexico |
This matter is before the Court on the Joint Motion to Dismiss filed by Defendants Wells Fargo Home Mortgage ("Wells Fargo") and Federal Home Loan Mortgage Corporation ("Freddie Mac"), (Doc. 18, filed February 24, 2012). Jurisdiction arises under 28 U.S.C. § 1332. The motion has been fully briefed and is now ready for decision. Having considered the submissions and arguments of the parties, the relevant law, and being otherwise fully advised, the Court GRANTS IN PART and DENIES IN PART Defendants' motion.
Federal Rule of Civil Procedure 12(b)(6) authorizes a court to dismiss a complaint in whole or in part for failing to state a claim upon which relief is available. To survive a Rule 12(b)(6) motion to dismiss, a complaint must state a claim for relief that plausibly, not merely possibly, entitles the plaintiff to relief under the relevant law. Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citation omitted). In considering a motion to dismiss, the court must look within the four corners of the complaint and accept all well-pleaded factual allegations astrue. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188, 1191 (10th Cir. 2009) (citations omitted); Issa v. Comp USA, 354 F.3d 1174, 1177 (10th Cir. 2003) (citation omitted). However, the court need not accept legal conclusions contained in the complaint as true. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).
Generally, courts considering Rule 12(b)(6) motions must confine their review to the complaint and other pleadings; if the parties present matters outside the pleadings for the court's consideration, the motion may be converted to one for summary judgment. FED. R. CIV. P. 12(d). However, there are some exceptions. A court may consider documents attached to a plaintiff's complaint on a motion to dismiss without converting it. See FED. R. CIV. P. 10(c). Moreover, even if a plaintiff does not attach a document to the complaint, the court may consider documents that are referenced in the complaint if they are central to the plaintiff's claims and the parties do not dispute their authenticity. Cnty. of Santa Fe v. Pub. Serv. Co. of N.M., 311 F.3d 1031, 1035 (10th Cir. 2002) (citation omitted); GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997) (citations omitted).
Plaintiff Rebecca A. Zamora borrowed $200,000 from Wells Fargo Bank in 2008. (First Am. Supplemental Compl. and Pet. for Injunctive Relief, Doc. 5, at ¶ 9; Doc. 18 at 3; Note, Doc. 18-1, at 1). She executed a Mortgage in which she pledged property as security for her promise to repay the borrowed money. (Doc. 5 at ¶¶ 9-13; Mortgage, Doc. 18-2). The Note and Mortgage are owned by Freddie Mac and serviced by Wells Fargo. (Doc. 5 at ¶¶ 9-10, 79). Beginning in 2009, Ms. Zamora experienced financial difficulties that rendered her unable to make her loanpayments, and she sought the assistance of Wells Fargo, including requesting a loan modification under the Home Affordable Modification Program ("HAMP"). (Id. at ¶¶ 12-15, 21-23, 32).
HAMP is a program established by the U.S. Department of Treasury as a component of the Emergency Economic Stabilization Act ("EESA"), which Congress enacted in response to rapidly deteriorating financial market conditions in mid-2008. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556 (7th Cir. 2012); Thomas M. Schehr & Matthew Mitchell, The Home Affordable Modification Program and a New Wave of Consumer Finance Litigation, 91 MICH. B.J. 38, 38 (June 2012). Through HAMP, the federal government has incentivized lenders and loan servicers to help struggling homeowners avoid foreclosure by modifying the monthly payments on eligible loans to affordable and sustainable levels. See 12 U.S.C. § 5219(a); Schehr & Mitchell, supra, at 38.
To determine a homeowner's eligibility for a loan modification, the Treasury set out a three-step process. First, the borrower must meet certain threshold requirements, including that the loan originated on or before January 1, 2009, the loan was secured by the homeowner's primary residence, and payments exceeded thirty-one percent of the homeowner's monthly income. Wigod, 673 F.3d at 556. Next, the servicer calculates a modification seeking to reduce the monthly payment to close to thirty-one percent of the homeowner's income. Id. at 556-57. Then, the servicer applies a Net Present Value ("NPV") test to assess whether it would be more profitable to modify the loan or allow it to go into foreclosure; modification is only required if the value of the modified mortgage exceeds the expected return after foreclosure. Id. at 557 (citation omitted).
If the borrower is eligible for a HAMP modification, the modification process consists of two steps. First, the servicer and homeowner implement a Trial Period Plan ("TPP") using thecalculated modified payment. Id. If the homeowner complies with the TPP, the servicer is required to offer a permanent modification. Id. (citation omitted). Significantly, under the original HAMP guidelines, which were in effect until 2010, a servicer could initiate a TPP based on a homeowner's undocumented representations about her finances, confirming her representations and determining final eligibility after the TPP was in effect. Id. (citing Supplemental Directive 09-01).
In late 2009, Wells Fargo, a participating HAMP servicer, sent Ms. Zamora a TPP entitled "Home Affordable Modification Program Loan Trial Period (Step One of Two-Step Documentation Process)." (Doc. 5 at ¶¶ 23, 32). The TPP required Ms. Zamora to make three payments, one each month for consecutive months, of $1,024.88. (TPP, Doc. 18-3, at 2). She signed the TPP on October 27, 2009, returned the signed TPP to Wells Fargo, and made three timely TPP payments, and her representations in the TPP continued to be true in all material respects. (Id. at 3; Doc. 5 at ¶¶ 33-35). She continued making timely TPP payments after the trial period ended, and she had made over twenty TPP payments as of the filing of her complaint. (Doc. 5 at ¶ 37). She did not receive any returned copy of the TPP from Wells Fargo, nor did she receive any information from Wells Fargo regarding the status of her loan modification until June 25, 2010, after she had made eight on-time payments. (Id. at ¶ 38). On that date, a Wells Fargo representative informed Ms. Zamora's attorney that she had been denied a permanent modification based on "insufficient income." (Id.). Ms. Zamora claims that the denial was based on an incorrect income and an improper NPV evaluation. (Id. at ¶¶ 111, 125).
Ms. Zamora submitted an appeal of the denial and requested the NPV scores used by Wells Fargo on June 28, 2010; she never received a response. (Id. at ¶¶ 39-40). Around October of 2010, Ms. Zamora brought her case to HAMP Escalations, a program operated by FreddieMac. (Id. at ¶ 48). Freddie Mac asked Wells Fargo to re-review Ms. Zamora's options. (Id. at ¶¶ 86-93).
Ms. Zamora alleges that she took actions in reliance on the TPP, including taking on additional jobs, working longer hours, decreasing her expenses, foregoing applying for bankruptcy, and undergoing credit counseling as required by the TPP. (Id. at ¶¶ 69-71). Ms. Zamora also alleges that she suffered damages related to Wells Fargo's denial of her loan modification, including damage to her credit and denials of credit. (Id. at ¶ 74).
This case was originally filed in state court in June of 2011. Zamora v. Wells Fargo Home Mortgage, No. CV 11-0870 JB/LFG, Doc. 10 at 1 (D.N.M. Oct. 4, 2011). The sole Defendant at the time, Wells Fargo, removed the case to federal court. Id., Doc. 1 (Sept. 28, 2011). The presiding judge determined that the court lacked subject matter jurisdiction because the sole asserted jurisdictional bases were federal question jurisdiction and complete preemption, neither of which, it determined, applied to Ms. Zamora's state law claims. Id., Doc. 34 at 1-2 (Dec. 14, 2011).
On remand, Ms. Zamora's complaint became immediately removable on diversity grounds, and Wells Fargo again removed the case to federal court. (Notice of Removal, Doc. 1). Following this second removal, Ms. Zamora amended her complaint, adding Freddie Mac as a Defendant. (Doc. 5). She asserts fifteen causes of action against one or both Defendants: (i) breach of loan trial period contract; (ii) breach of the covenant of good faith and fair dealing; (iii) Unfair Trade Practice Act ("UPA") violation by Wells Fargo; (iv) UPA violation by Freddie Mac; (v) promissory estoppel; (vi)1 injunctive relief under the UPA; (vii) defamation by Wells Fargo; (viii) violation of the Fair Credit Reporting Act by Wells Fargo; (ix) violation of the FairDebt Collection Practices Act by Wells Fargo; (x) negligence as to Wells Fargo; (xi) negligence as to Freddie Mac; (xii) failure to respond to a Qualified Written Request ("QWR") under the Real Estate Settlement Procedures Act ("RESPA") by Wells Fargo; (xiii) violation of RESPA as to the protection of credit ratings by Wells Fargo; (xiv) violation of the Truth in Lending Act; and (xv) breach of contract in regard to the application of payments. For relief, Ms. Zamora seeks compensatory and punitive damages, costs, and an injunction to prevent any foreclosure action by Defendants. (Doc. 5 at 52).
Following the enactment of HAMP, a slew of litigation by homeowners against lenders and loan servicers ensued. Various legal strategies have been attempted by homeowners under theories including direct liability, contract law, and...
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