Schmidt et al v. Wells Fargo Bank, N.A.BRIEF in OppositionD.N.J.June 20, 2017United States District Court District of New Jersey Elizabeth T. Foster, Attorney at Law, LLC NJ Bar 009152006 22 E. Quackenbush Ave. Dumont, NJ 07628 201 290 5761 201 215 9574 (fax) liztlaw@gmail.com Attorneys for Plaintiff --------------------------------------------------------- Debora Schmidt and James Schmidt, Plaintiffs, Civ. No. 2:17cv1708 WJM MF v. Wells Fargo Bank, N.A., Defendant -------------------------------------------------------- _____________________________________________________________________ Plaintiffs’ Brief in Opposition to Motion to Dismiss _____________________________________________________________________ Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 1 of 9 PageID: 115 Preliminary Statement Wells Fargo, perhaps the biggest player in the organized criminal syndicate that the 1 home mortgage business has become, decries plaintiff's complaint, suggesting that plaintiffs have not provided enough facts to put forth a viable complaint. It therefore requests that plaintiffs’ complaint be dismissed with prejudice. Defendant says: "it appears that plaintiffs have offered 2 absolutely no factual content that would allow a reasonable fact finder to conclude that the defendant is liable for the claims alleged in the complaint." D. Br. 7. It is not the plaintiff's burden to convince the factfinder, by means solely of the complaint, that the defendant is liable. The plaintiff does not have that burden at the pleading stage. Fed. R. Civ. P. 8(a) only requires a party asserting a claim to set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). Rule 8(a) does not require intricately detailed factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); [*20], 556 U.S. at 678. Claim under RESPA Plaintiff's RESPA claim is adequately pled and not time barred. Plaintiff wrote letters to Wells Fargo as recently as March 2017 regarding current issues with her loan --the failure to credit a payment that she had made-- and plaintiff included as damages emotional distress. 1 In March, it was announced that Wells Fargo executives might face arrest due to their coverup of the fake bank accounts Wells opened without its customers’ knowledge. https://www.bloomberg.com/news/articles/2017-03-03/wells-fargo-executives-may-face- criminal-charges-reuters-says 2 Defendant Wells does not explain why plaintiffs’ complaint should be dismissed with prejudice and indeed plaintiffs can discern no basis for this request, which does not comport with the federal rules’ requirement that leave to amend be “freely granted” unless there is undue delay, prejudice or futility. Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 2 of 9 PageID: 116 Greene v. Bank of America, NA, No. 1:13-cv-00937-JAP/KBM (D.N.M. Jun. 9, 2014)(holding that RESPA claim was adequately pled because borrower alleged emotional distress by its actions toward the homeowners). In its brief, Defendant says it replied to the answers and if plaintiff did not like the answers, that's just too bad. But plaintiff maintains that defendant never provided an answer, and this violates the RESPA. The law provides that defendant must:Within 30 days (excluding Saturdays, Sundays, and legal holidays), the servicer must: ● correct the account, including crediting any late charges or penalties, as well as transmit a written notification of the correction to the borrower and provide the name and telephone number of a representative of the servicer who can provide further assistance to the borrower ● after investigating the matter, provide the borrower with a written explanation or clarification that includes a statement of the reasons why the servicer believes the account is correct and the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or ● after investigating the matter, provide the borrower with a written explanation or clarification that includes the information requested by the borrower or an explanation of why the information that was requested is unavailable or cannot be obtained and the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower. 12 U.SC. § 2605[e][2]. The 30-day period may be extended by an additional 15 days (excluding Saturdays, Sundays, and legal holidays) if the servicer notifies the borrower of the extension and the reasons for the extension in writing before the end of 30 days. 12 U.SC. § 2605[e][4]. Defendant does not explain how it did any of these things, because it failed to do them and thereby violated the relevant statute. Because defendant's actions were not strictly "in connection with a closing" the defendant committed a continuing violation in connection with the plaintiffs' loan and the claim is therefore timely since a new violation occurs each time the 2 Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 3 of 9 PageID: 117 incorrect payment date and failure to credit the plaintiff properly for their payment occurs. In addition, within the last year, Defendant tendered a check to plaintiffs for $137 and did not explain the basis for the payment. Plaintiffs have no choice but to assume it is in connection with their RESPA complaints and for this reason, the RESPA claim is timely. “Adopting the theory that any "violation" of RESPA can only occur at a closing would defy U.S. Supreme Court precedent. In Freeman v. Quicken Loans, Inc., the U.S. Supreme Court made perfectly clear that a "violation" of RESPA can occur in many different ways at many different times. Id., 132 S. Ct. 2034 (2012). Reading the plain language of the statute, the Court explained that borrowers may sue any time someone "violate[s] the prohibitions" of § 2607. Id. at 2038. Some of the "prohibitions" of § 2607 include the very violations alleged in this case: kickbacks, fees, and referrals. 12 U.S.C. § 2607(a), (b). The Court also offered hypothetical "violations" of the statute that have nothing to do with a real estate closing. Freeman, 132 S. Ct. at 2043 ("[A] settlement-service provider who agrees to exchange valuable tickets to a sporting [*22] event in return for a referral of business would violate § 2607(a)"); id. ("[A] settlement-service provider who gives a portion of a charge to another person who has not rendered any services in return would violate § 2607(b)"). Accordingly, I cannot agree that a RESPA violation only occurs at the closing because to do so would be to go directly against the U.S. Supreme Court's interpretation of RESPA.’" Blake v. JPMorgan Chase Bank, N.A., No. 13-6433, 2017 U.S. Dist. LEXIS 64392 (E.D. Pa. Apr. 26, 2017). Yet another federal court has held that under circumstances similar to the plaintiffs' claims here, the bank was liable for a pattern and practice of RESPA violations. A servicer may also be liable for statutory damages "in an amount not to exceed $2,000" if the court finds that there was "a pattern or practice of 3 Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 4 of 9 PageID: 118 noncompliance" with RESPA. 12 U.S.C. § 2605(f)(1)(B). See Wirtz v. JPMorgan Chase Bank, N.A., 185 F. Supp. 3d 1140 (D. Minn. 2016) (homeowner complained for three years about bank's incorrect insistence that he was late on his payments, and finally had to hire a lawyer to correct the issue with the bank; he was awarded summary judgment on this issue). Apparently, since Wells was ordered to pay the federal government a 70 million dollar penalty last year for similar failures, this problem of miscalculating loan items is not uncommon. The OCC also found that, between March 2013 and October 2014, Wells Fargo made escrow calculation errors that in some cases led to incorrect loan modification denials and constituted unsafe or unsound banking practices. http://stopforeclosurefraud.com/2016/05/27/occ-terminates-mortgage-servicing-related-consent- order-against-wells-fargo-bank-issues-70-million-civil-money-penalty/comment-page-1/ Paying for these gaffes must be getting tiresome for Wells, accounting for its desire to shut down such complaints at the pleading level. Fraud Claims. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) held that plaintiff could state a fraud claim in connection with the failure to provide a proper loan modification. In Rojecki v. Bank of Am., N.A., Civil Action No. 15-8160 (ES), 2016 U.S. Dist. LEXIS 83434 (D.N.J. June 28, 2016), Judge Salas specifically held that RESPA applies to the process of obtaining a HAMP modification. Here, the plaintiff Debbie Schmidt has alleged that she only recently found out from Wells Fargo that her loan was owned by Wells itself. Previously Wells had advised her that the loan was owned by investors and therefore she was not HAMP eligible. Thus, plaintiff alleges that she was lied to and put in an inferior position vis a vis the loan 4 Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 5 of 9 PageID: 119 modification process due to her loan being HAMP ineligible. Whether this is pled as common law fraud, consumer fraud or a RESPA violation, it is clear that it is an important and valid claim. Further, it is timely under the discovery rule because the plaintiff only recently learned about the ownership issue, as a Wells employee having informed her about it within the last year. As for pleading with specificity, the plaintiffs have met this requirement. Hutchinson v. Delaware Sav. Bank FSB, 410 F. Supp. 2d 374, 381 ( D. New Jersey 2006) (pleading was held specific enough even though plaintiffs could not pinpoint the exact day a representation was made to them or the speaker, but could attribute the remarks to a representative of the defendant). Breach of Contract Defendant argues that plaintiff cannot make out a breach of contract claim based on defendant’s repeated, willful failure to credit the plaintiffs with all of the payments that they made. Plaintiffs respectfully disagree. Defendant cites no case law in support of its quixotic position. The failure to credit payments certainly breaches the contract and may even be conversion, a tort. Breach of the Covenant of Good Faith and Fair Dealing Defendant does not dispute that the duty of good faith and fair dealing inheres in every contract. It simply says that defendant did nothing to deprive the plaintiffs of the benefit of their contract and therefore the claim is invalid. This conclusory charge is inapt; as plaintiffs explain in their complaint, the defendant refused to provide an amortization schedule and improperly accounted for the plaintiff's payments, These actions functioned to deprive the plaintiffs from 5 Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 6 of 9 PageID: 120 the benefit of their contract. See Susilo v. Wells Fargo Bank, N.A., 796 F. Supp. 2d 1177, 1189 (D. Utah 2011) (denying Rule 12(b)(6) dismissal of breach of the duty of good faith claim where plaintiff alleged that the mortgage company refused to disclose the reinstatement amount). See also Girgis v. Countrywide Home Loans, Inc., 733 F. Supp. 2d 835 (N.D. Ohio 2010) (borrowers stated claim for breach of implied covenant because borrower alleged, among other things, that the mortgage company refused to timely credit their payments). Here, the plaintiff requested an amortization schedule, but was never provided with one, she asked how the balloon payment figure was calculated, but no one provided an answer. Since Wells Fargo failed to provide this 3 information to the plaintiff, she states a valid claim for a breach of the duty of good faith and fair dealing. Slander of Credit The plaintiffs base their slander of credit claims on the fact that Wells insisted they were late with their payments when they were not, and Wells misapplied a payment and could not explain what happened to it. F.D.I.C. v. Bathgate, 27 F.3d 850, 871 (3d Cir. 1994) confirms that false statements made to credit bureaus are actionable. Since Wells said that plaintiffs were always a month late with their payments when they were not in fact late, the plaintiffs have stated a valid claim. Since Wells' actions were "knowing" it can be inferred that they acted with malice, thus their slander of credit claims are not preempted. The Fair Credit Reporting Act 3 See Abraham v. Ocwen Loan Servicing, LLC, Civ. A. No. 14-4977, 2014 U.S. Dist. LEXIS 157651, 2014 WL 5795600 (E.D. Pa. Nov. 7, 2014)(failure to provide information about how the balloon payment would be calculated supports statutory fraud claim). 6 Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 7 of 9 PageID: 121 (FCRA) preempts state actions in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency. 15 U.S.C.S. § 1681h(e). To avoid FCRA preemption, a plaintiff must demonstrate that the defendant furnished the false information in question with malice or willful intent to injure. To plead malice, a complaint must include facts suggesting that the defendant when he published the words - (1) either knew they were false, or (2) published them in reckless disregard of whether they were true or not." Sheets v. Wells Fargo Bank, N.A., Civil Action No. 3:12-CV-4534-N, 2013 U.S. Dist. LEXIS 160266 (N.D. Tex. Sep. 11, 2013). Here, the plaintiffs have adequately alleged that they were constantly reminding Wells that their loan payments were current, yet Wells refused to fix the problem with its recordkeeping. This reflects a reckless disregard on Wells’ part in disseminating the false information as it did. TCPA Plaintiff Deborah Schmidt’s TCPA claims are based on Wells calling her incessantly to get her to make a payment that she had already made. It is surprising that Wells seeks to dismiss this claim, since Wells has admitted to the conduct with which the plaintiff is charging it in other courts. See Masters v. Wells Fargo Bank S. Cent., N.A., No. A-12-CA-376-SS, 2013 U.S. Dist. LEXIS 101171 (W.D. Tex. July 11, 2013) (Wells made an offer of judgment, implicitly conceding that the claim had merit). In addition, last year, Wells paid millions to settle a class action in Georgia for its TCPA violations.https://www.insidearm.com/news/00041676-wells-fargo-will-pay-163-million-to-end- 7 Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 8 of 9 PageID: 122 t/ This year, in 2017, it paid another 17 million dollars to settle two more Georgia cases. https://www.insidearm.com/news/00042660-wells-fargo-agrees-settle-2-separate-tcpa/ Turning to the merits, plaintiff alleged that she told Wells representatives to stop calling her. They refused. Plaintiff alleged that she was constantly called on her cell phone despite her repeated requests for Wells to stop. Complaint, par. 22. The law in the Third Circuit is that consent can be revoked anytime. Gager v. Dell Financial Services, LLC, 727 F. 3d 265 (3d Cir. 2013). The defendant fails to focus on this issue. On facts similar to plaintiffs’ , Judge Bumb recently denied summary judgment for Wells. Watkins v. Wells Fargo Bank, N.A., No. 15-5712 (RMB/KMW), 2017 U.S. Dist. LEXIS 84503 (D.N.J. June 2, 2017). Conclusion The defendant Wells Fargo was the recipient of government largesse. That largesse was not intended for Wells to keep or dole out unjustly and in an unfair and parsimonious manner. Despite being bailed out, Wells has continued to behave in criminal fashion, even behaving more recklessly than ever, opening bank accounts without the account-holders’ knowledge, and cheating their law abiding customers. The plaintiffs are no match for these sophisticated swindlers, and therefore require the court’s assistance in dealing with them. Yet Wells casts aspersions on the plaintiffs, telling them to be happy with their inadequate loan modification and the unscrupulous way that Wells accounted for their loan. Wells refused to act properly but expects its actions to be tolerated or overlooked. Their cheating and manipulation of honest customers must stop. Their motion to dismiss must be denied. Dated: June 19, 2017 s/Elizabeth T. Foster________ 8 Attorney for Plaintiffs Case 2:17-cv-01708-WJM-MF Document 9 Filed 06/20/17 Page 9 of 9 PageID: 123
