Walter H. Hackett, III et al v. Wells Fargo Bank, N.A. at al
Filing
31
MINUTES OF Motion Hearing held before Judge Christina A. Snyder: RE DEFENDANTS MOTION TO DISMISS 26 . The Court DENIES Wells Fargos motion to dismiss as to plaintiffs first claim for violation of the ECOA. The Court DISMISSES with prejudice plaintiffs fourth claim for negligence. The Court DENIES Wells Fargos motion to dismiss plaintiffs fifth claim for violation of the UCL. Court Reporter: Laura Elias. (lc) .Modified on 6/26/2018. (lc).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
Present: The Honorable
CHRISTINA A. SNYDER
Catherine Jeang
Deputy Clerk
Laura Elias
Court Reporter / Recorder
N/A
Tape No.
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
Eric Mercer (By Telephone)
David Newman
Proceedings:
I.
DEFENDANT’S MOTION TO DISMISS (Dkt. 26, filed April 18,
2018)
INTRODUCTION
On October 6, 2017, plaintiffs Walter H. Hackett, III and Lorinda D. Hackett filed
the instant action against defendants Wells Fargo Bank, N.A. (“defendant”), and Does 1
through 10 inclusive, alleging that Wells Fargo failed to properly review plaintiffs’
requests for loan modifications. Dkt. 1.
On January 22, 2018, Wells Fargo filed a motion to dismiss, dkt. 11. On March 5,
2018, the Court granted in part and denied in part Wells Fargo’s motion, and provided
plaintiffs leave to amend. Dkt. 24.
On April 4, 2018, plaintiffs filed a first amended complaint (“FAC”). Dkt. 25.
Plaintiffs assert claims for (1) violations of the Equal Credit Opportunity Act (“ECOA”),
15 U.S.C. § 1691(d)(1); (2) violations of the Real Estate Settlement Procedures Act, 12
U.S.C. § 2605(f), 12 C.F.R. §§ 1024.41, 1024.35, 1024.36; (3) negligence in violation of
Cal. Civ. Code § 1714; and (4) unfair business practices in violation of Cal. Bus. & Prof.
Code § 17200. See FAC.
On April 18, 2018, Wells Fargo filed a motion to dismiss plaintiffs’ ECOA,
negligence, and UCL claims. Dkt. 26 (“Motion”). On the same day, Wells Fargo filed a
request for judicial notice. Dkt. 27 (“Def. RJN”). Plaintiffs filed an opposition on June
4, 2018, dkt. 28 (“Opp’n”), and the same day filed a request for judicial notice, dkt. 29
(“Plf. RJN”). On June 11, 2018, Wells Fargo filed a reply. Dkt. 30 (“Reply”).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
On June 25, 2018, the Court held a hearing. Having carefully considered the
parties’ arguments, the Court finds and concludes as follows.
II.
BACKGROUND
Plaintiffs allege the following facts.
Plaintiffs maintain their principal and family residence at the real property located
at 3316 East Hiltonia Drive, West Covina, California 91792 (the “Subject Property”).
FAC ¶¶ 6–7. Wells Fargo is the current servicer of plaintiffs’ mortgage with respect to
the Subject Property. Id. ¶ 8.
In June 2006, plaintiffs refinanced their original loan with respect to the Subject
Property, and the refinance is the “Subject Loan” of this action.1 Id. ¶¶ 23–24.
Beginning in the summer of 2006, plaintiffs allege that W. Hackett was “summarily
terminated” by his employer and thereafter sought various types of work as a banking
consultant and as an attorney. Id. ¶ 27. Due to a significant reduction in income,
plaintiffs sought bankruptcy protection and filed a Chapter 13 petition in July 2010 after
missing two mortgage payments. Id. ¶ 28–31. In August 2010, plaintiffs allege that they
began making their regular monthly payments “directly to Wells Fargo,” and that the
bankruptcy action included “only the two months[’] arrears.” Id. ¶ 32.
Plaintiffs’ July 2010 petition was dismissed. Id. ¶ 34. Plaintiffs filed a second
Chapter 13 petition in October 2010—which was also dismissed—and plaintiffs filed a
third and final Chapter 13 petition in May 2012.2 Id. ¶¶ 35–37.
Plaintiffs assert that they contacted Wells Fargo in January 2013 and requested
review for a loan modification. Id. ¶ 40. Wells Fargo offered plaintiffs a temporary
modification, but plaintiffs informed them telephonically and in writing that they would
need the loan to be permanently modified in order to keep the loan current. Id.
In January 2013, plaintiffs allegedly sought a permanent modification of the
subject loan with assistance from their bankruptcy attorney, and they allege that they
1
Plaintiffs do not identify the original loan and when it originated.
The FAC alleges that the first two bankruptcy petitions were dismissed due to
“errors made by counsel unknown to [p]laintiffs” and after their counsel “suffered an
emotional breakdown.” FAC ¶ 34, 36.
2
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
were current on their mortgage obligations at the time of this application. Id. ¶ 41. Wells
Fargo allegedly failed to respond in writing within 30 days after receipt of the
application. Id. Plaintiffs allege that in a letter dated October 3, 2013, Wells Fargo
advised plaintiffs that its investor would not permit permanent modification of loans. Id.
¶ 42. Plaintiffs believe that this representation is false, and that there is no investor
restriction on loan modification under the Home Affordable Modification Program
(“HAMP”). Id.
In a separate October 3, 2013 letter, Wells Fargo allegedly offered a “Forbearance
Agreement,” which called for three payments of $1,543.77 beginning November 14,
2013. Id. ¶ 44. Plaintiffs executed this agreement and allege that they made all payments
in accordance with the Forbearance Agreement for four additional months. Id. In April
2014, Wells Fargo allegedly offered a six-month temporary loan modification, and
plaintiffs made timely payments under this modification. Id. ¶ 46. As a result, plaintiffs
allege that by May 2014, they “became current”3 under their mortgage obligations. Id. ¶
47. Nonetheless, plaintiffs allege that they “continued making the bankruptcy plan
payments that included two months of arrears because there was no change in the
bankruptcy plan,” and that as a result, they “made overpayments on the mortgage in
approximately $6,000.” Id. ¶ 48.
In February 2015, plaintiffs received an early discharge from the bankruptcy
because they satisfied all of their debts when they applied retirement savings to the debt.
Id. ¶ 49. Plaintiffs allege that they continued making their regular monthly mortgage
payments—as they had every month from August 2010 to the present—directly to Wells
Fargo. Id. ¶ 50.
In June 2015, plaintiffs again requested a permanent loan modification because W.
Hackett allegedly suffered brain damage and was unable to work as an attorney or as a
banker. Id. ¶ 51. In July 2015, plaintiffs submitted all information requested by Wells
Fargo to determine whether they qualified for a loan modification—yet plaintiffs allege
that Wells Fargo failed to respond within thirty days or at any other time. Id. ¶ 52.
Plaintiffs allege they were current on their mortgage obligations at the time of this
3
Given plaintiffs’ allegations that they were current on their mortgage obligations at
the time of the January 2013 application for loan modification, FAC ¶41, and that
plaintiffs “made all regular monthly payments” until October 2013, id. ¶ 43, it is unclear
whether plaintiffs were in default between October 2013 and May 2014.
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CIVIL MINUTES - GENERAL
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
application. Id. Furthermore, plaintiffs allege that Wells Fargo failed to evaluate and
make a determination of plaintiffs’ loan modification applications—or, “applications for
credit” as defined by 15 U.S.C. section 1691a(d)—within 30 calendar days. Id. ¶¶ 65–75.
Plaintiffs allege that they sent requests for information (“RFI”) to Wells Fargo on
January 29, 2016 and in late February 2016, and that Wells Fargo failed to properly
respond to these requests. Id. ¶¶ 53–60.
Plaintiffs allege that they have been attempting to obtain a fair review for loan
modification from defendants for almost four years, yet Wells Fargo has reacted with
“disdain, inaction, obfuscation, and apathy.” Id. ¶ 62.
III.
LEGAL STANDARDS
A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence
of sufficient facts alleged under a cognizable legal theory.’ ” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). This policy is applied with “extreme liberality.”
Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990); Moss v.
Secret Serv., 572 F.3d 962, 972 (9th Cir. 2009). However, leave to amend may be denied
when “the court determines that the allegation of other facts consistent with the
challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v.
Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203
F.3d 1122, 1127 (9th Cir. 2000).
IV.
DISCUSSION
A.
Requests for Judicial Notice
Federal Rule of Evidence 201 empowers a court to take judicial notice of facts that
are either “(1) generally known within the territorial jurisdiction of the trial court; or (2)
capable of accurate and ready determination by resort to sources whose accuracy cannot
reasonably be questioned.” Fed. R. Evid. 201(b); Mullis v. U. S. Bankr. Court for Dist.
of Nevada, 828 F.2d 1385, 1388 n.9 (9th Cir. 1987).
1.
Wells Fargo’s Request
Wells Fargo requests that the Court judicially notice a true and correct copy of the
Deed of Trust concerning the Subject Property, which was recorded in the official records
of the Los Angeles County Recorder’s Office on June 13, 2006. Def. RJN & Ex. A.
Wells Fargo also requests that the Court judicially notice the “Chapter 13 Standing
Trustee’s Final Report and Account,” which is alleged to be a true and correct copy of an
official record of the United States Bankruptcy Court. See Def. RJN & Ex. B. Plaintiffs
do not oppose the requests.
A court may judicially notice matters of public record. Lee v. City of Los
Angeles, 250 F.3d 668, 689 (9th Cir. 2001). Given that the Deed of Trust was recorded
in the Los Angeles County Recorder’s Office, and that the Trustee’s report is a true and
correct copy of an official record of the United States Bankruptcy Court, the Court
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
judicially notices these documents as public records whose accuracy may be readily
determined. See Fed. R. Evid. 201(b)(2); Myles v. JPMorgan Chase Bank, N.A., No. 13cv-09036-BRO-AGRx, 2013 WL 12084732, at *2 (C.D. Cal. Dec. 20, 2013) (judicially
noticing true and correct copies of deeds of trust); Ng v. US Bank, N.A., No. 15-CV04998-KAW, 2016 WL 6995884, at *3 (N.D. Cal. Nov. 30, 2016), aff’d sub nom. Ng v.
U.S. Bank, N.A., 712 F. App’x 665 (9th Cir. 2018) (judicially noticing filings made in
bankruptcy proceedings). Accordingly, Wells Fargo’s request for judicial notice is
granted.
2.
Plaintiffs’ Request
Plaintiffs request that the Court judicially notice portions of Supplemental
Directives 09–01, 09–08, and 10-01 of HAMP Guidance, an opinion letter regarding
application of ECOA to applications for loan modification, and the National Housing
Law Project and the Housing and Economic Reform Advocate’s request to the California
Supreme Court to depublish Asipiras v. Wells Fargo Bank, N.A., No. S214297, 2014 Cal.
LEXIS 399 (Jan. 15, 2014). Plf. RJN & Exs. 1–5. Wells Fargo does not oppose these
requests.
The Court may judicially notice the HAMP Guidance and opinion letter as publicly
available information whose accuracy cannot be reasonably questioned. See Cooksey v.
Select Portfolio Servicing, Inc., No. 14-cv-1237-KJM-KJN, 2014 WL 4662015, at *3
(E.D. Cal. Sept. 18, 2014) (judicially noticing portions of Supplemental Directives of
HAMP Guidance). Moreover, courts may judicially notice undisputed matters of public
record—such as the request to depublish—on file in state courts. See Bennett v.
Medtronic, Inc., 285 F.3d 801, 803 n.2 (9th Cir. 2002) (noting that a court may judicially
notice filings in state court proceedings). As such, the Court grants plaintiffs’ request for
judicial notice.
B.
Wells Fargo’s Motion to Dismiss
Wells Fargo contends that plaintiffs’ claims asserting ECOA violations,
negligence, and unfair business practices should be dismissed with prejudice. Motion at
1–2.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
1.
Plaintiffs’ Claims for Violation of ECOA, 15 U.S.C § 1691(d)(1)
Plaintiffs allege that they provided Wells Fargo with completed loan modification
applications in January 2013 and July 2015, and that Wells Fargo failed to evaluate
plaintiffs’ applications and failed to respond to plaintiffs in writing within 30 calendar
days in violation of ECOA. FAC ¶¶ 41, 52.
ECOA requires that when a creditor takes adverse action with respect to an
application for credit, “[w]ithin thirty days … after receipt of a completed application for
credit, a creditor shall notify the applicant of its action on the application.” 15 U.S.C. §
1691(d)(1). Moreover, “[e]ach applicant against whom adverse action is taken shall be
entitled to a statement of reasons for such action from the creditor.” 15 U.S.C. §
1691(d)(2). An “adverse action” is a “denial or revocation of credit, a change in the
terms of existing credit arrangement, or a refusal to grant credit in substantially the
amount or on substantially the terms requested.” 15 U.S.C. § 1691(d)(6). In turn,
“[c]redit means the right granted by a creditor to an applicant to defer payment of a debt,
incur debt and defer its payment, or purchase property or services and defer payment
therefor.” 12 C.F.R. § 202.2(j). When a creditor fails to give the required notice of taking
an adverse action on an application for credit, the applicant may sue for a violation of
ECOA. See Schlegel v. Wells Fargo Bank, N.A., 720 F.3d 1204, 1210 (9th Cir. 2013).
Wells Fargo argues that plaintiffs’ claim under ECOA fails because plaintiffs did
not apply for “credit” within the meaning of ECOA, and because they do not specifically
plead that they sought to defer payment beyond what was already provided for in the loan
documents. Motion at 3–5.
In opposition, plaintiffs argue that applications for loan modifications are
applications for “credit” for purposes of ECOA, and they contend that they alleged this in
the amended complaint. Opp’n at 8 (citing FAC ¶ 72). Moreover, plaintiffs argue that
the overwhelming weight of authority has found that applications for loss mitigation are
applications for credit under ECOA. Id. at 9 (citations omitted).
Here, plaintiffs allege in their complaint that their “applications for loan
modification were applications for credit as defined by 15 U.S.C. § 1691a(d) and 12
C.F.R. § 202.2(j).” FAC ¶ 72 (internal quotations omitted). Plaintiffs’ contention that
their loan modification applications constituted applications for credit under ECOA
comports with the conclusions of several Central District courts. See Houman v. Wells
CV-7354 (06/18)
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Page 7 of 11
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
Fargo Bank, N.A., No. 15-cv-08740-AB-PLAx, 2016 WL 7444869, at *8 (C.D. Cal. Feb.
5, 2016) (ECOA’s protection for credit applicants extend to those seeking loan
modifications); Banks v. JP Morgan Chase Bank, N.A., Case No. 14-cv-6429-JAKFFMx, 2014 WL 6476139 (C.D. Cal. November 19, 2014) (same). At this juncture, the
Court is obligated to accept as true all of plaintiffs’ material allegations, as well as all
reasonable inferences drawn from them. In light of plaintiffs’ allegations that they were
not in default on their mortgage at the time of the loan modification applications, and
given that their applications are alleged to be applications for credit as defined by ECOA,
the Court concludes that plaintiffs sufficiently allege a claim for relief for purposes of
ECOA. Accordingly, the Court DENIES Wells Fargo’s motion to dismiss plaintiffs’
ECOA claim.
2.
Plaintiffs’ Claim for Negligence
Plaintiffs allege that Wells Fargo had a duty to exercise reasonable care in
considering plaintiffs’ application for a loan modification, and that Wells Fargo created a
“special relationship” with plaintiffs when it promised to perform a review for loan
modification under HAMP and assured plaintiffs that they would receive a determination
on their applications. FAC ¶¶ 110–115.
Wells Fargo argues that plaintiffs’ claim for negligence fails because Wells Fargo
did not owe plaintiffs a duty of care in connection with loan servicing, modification, and
foreclosure, and it asserts that plaintiffs make conclusory allegations that their
relationship with Wells Fargo involved a “special relationship.” Motion at 5–10. In
opposition, plaintiffs contend that California Court of Appeal authority provides that
servicers owe a duty of care when a servicer voluntarily agrees to review a borrower for a
loan modification, and they argue that the California Supreme Court would affirm this
holding. Opp’n at 12–27.
The Court observes that plaintiffs’ briefing appears to be in the nature of a motion
for reconsideration of the Court’s previous determination that, absent special
circumstances, Wells Fargo did not owe plaintiffs a duty of care in reviewing its loan
modification applications. In this district, motions for reconsideration are governed by
Local Rule 7–18, which provides that
A motion for reconsideration of the decision on any motion may be made only on
the grounds of (a) a material difference in fact or law from that presented to the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
Court before such decision that in the exercise of reasonable diligence could not
have been known to the party moving for reconsideration at the time of such
decision, or (b) the emergence of new material facts or a change of law occurring
after the time of such decision, or (c) a manifest showing of a failure to consider
material facts presented to the Court before such decision. No motion for
reconsideration shall in any manner repeat any oral or written argument made in
support of or in opposition to the original motion.
C.D. Cal. L.R. 7–18. Plaintiffs have not demonstrated any entitlement to a request for
reconsideration of the Court’s prior order insofar as they fail to cite (1) a material
difference in fact or law that could not have been known to plaintiffs at the time of the
Court’s prior decision; (2) the emergence of new facts or new law since the Court’s
decision; or (3) a manifest showing of a failure to consider material facts presented to the
Court. Moreover, plaintiffs’ allegation that Wells Fargo created a special relationship
with plaintiffs when it promised to undertake a review for loan modification does not
implicate the range of circumstances identified by the Court in its prior order as special
circumstances giving rise to a duty of care. See Dkt. 24 at 14–15.
For the same reasons articulated in the Court’s previous order, and absent special
circumstances or other facts giving rise to a duty of care, the Court finds that plaintiffs
fail to state a claim for negligence. Accordingly, the Court GRANTS Wells Fargo’s
motion to dismiss and DISMISSES with prejudice plaintiffs’ fourth claim for
negligence.
3.
Plaintiffs’ Claims for Unfair Business Practices
Plaintiffs allege that Wells Fargo’s conduct was unlawful under the UCL insofar as
it violates ECOA and RESPA. FAC ¶ 119. Plaintiffs further allege that Wells Fargo’s
conduct was unfair insofar as Wells Fargo promised—but failed—to complete review of
plaintiffs’ applications for loan modifications, and that it “routinely made false
statements” and failed to provide meaningful information, all in violation of the UCL. Id.
¶ 120. Plaintiffs assert that as a direct result of Wells Fargo’s conduct, plaintiffs have
been injured insofar as they have lost money through excess interest, late fees, and other
fees for services, such as responding to telephone inquiries, processing telephone
payments, and providing statements that plaintiffs would not have incurred but for Wells
Fargo’s delay. Id. ¶ 121.
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Page 9 of 11
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
As noted in the Court’s prior order, the UCL requires that plaintiffs suffer an injury
“as a result of” unfair competition. Cal. Bus. & Prof. Code § 17204. “A plaintiff suffers
an injury in fact for purposes of standing under the UCL when he or she has: (1)
expended money due to the defendant’s acts of unfair competition; (2) lost money or
property; or (3) been denied money to which he or she has a cognizable claim.” Marilao
v. McDonald’s Corp., 632 F. Supp. 2d 1008, 1012 (S.D. Cal. 2009) (citing Hall v. Time
Inc., 158 Cal. App. 4th 847, 855 (2008)). “This statutory limitation requires that a
plaintiff show he has suffered losses capable of restitution,” as restitution and an
injunction are the only remedies available for violation of the UCL. Small v. Mortgage
Electronic Registration Systems, Inc., Nos. 09-cv-0458, 2:10-cv-0342, 2010 WL
3719314, *12 (E.D. Cal. Sept. 16, 2010).
Wells Fargo argues that plaintiffs lack standing to allege a UCL claim, and
contends that plaintiffs fail to demonstrate that they lost money or property as a result of
an alleged UCL violation. Motion at 11. Wells Fargo further contends that plaintiffs’
vague allegation that it “charged excess interest, late fees, and other fees [that] [p]laintiffs
would not have incurred but for defendant’s excessive delay” was the same allegation
that the Court deemed insufficient in its prior order. Reply at 6–7.
In opposition, plaintiffs contend that the facts in the amended complaint
demonstrate that plaintiffs were “deprived of late fees and other default fees,” and that
accordingly, plaintiffs have suffered an injury-in-fact sufficient to allege standing under
the UCL. Id. at 28–29 (citing FAC ¶ 121).
Though at first blush plaintiffs’ allegation concerning excess interest and late fees
seems unchanged from the initial complaint, key to the Court’s prior conclusion that
plaintiffs had not alleged damages for purposes of the UCL was that plaintiffs’ assertions
of “excess interest, late fees, and other fees” appeared to be premised on plaintiffs’ own
default.4 This time around, however, plaintiffs explain that they were not in default. As
such, plaintiffs clarify that Wells Fargo’s “charged excess interest, late fees, and other
fees” is a direct result of Wells Fargo’s alleged ECOA and Real Estate Settlement
4
See prior order, dkt. 24, “[a]bsent allegations in the complaint that plaintiffs
suffered out-of-pocket expenses as a result of Wells Fargo’s alleged loan servicing
failures under RESPA, the Court cannot conclude that plaintiffs’ interest and late fees—
which appear to result from their default—are sufficient to constitute injury.” (Citations
omitted).
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Page 10 of 11
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Case No.
Title
CIVIL MINUTES – GENERAL
‘O’
2:17-cv-7354-CAS(ASx)
Date June 25, 2018
WALTER H. HACKETT, III ET AL. v. WELLS FARGO BANK, N.A.
Procedures Act (“RESPA”) violations. FAC ¶ 121. Because plaintiffs’ allegations, to
demonstrate standing, must demonstrate harms caused by Wells Fargo’s alleged RESPA
and ECOA violations, the Court concludes that plaintiffs’ allegations are sufficient in this
regard. Smith v. Specialized Loan Servicing, LLC, No. 16-CV-2519-GPC-BLM, 2017
WL 1711283, at *5 (S.D. Cal. May 3, 2017) (concluding that plaintiff sufficiently alleged
UCL standing for marked up charges, excessive fees, and incurred administrative costs
due to defendant’s failure to properly comply with the loss mitigation regulations under
RESPA.).
Accordingly, the Court DENIES Wells Fargo’s motion to dismiss plaintiffs’ UCL
claim for lack of standing.
V.
CONCLUSION
In light of the foregoing, the Court DENIES Wells Fargo’s motion to dismiss as to
plaintiffs’ first claim for violation of the ECOA.
The Court DISMISSES with prejudice plaintiffs’ fourth claim for negligence.
The Court DENIES Wells Fargo’s motion to dismiss plaintiffs’ fifth claim for
violation of the UCL.
IT IS SO ORDERED.
00
Initials of Preparer
:
CMJ
03
CV-7354 (06/18)
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