Casto v. Wells Fargo, N.A.

Filing 55

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 9/23/2015. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
WILLIS CASTO,

:

Plaintiff,

:

v.

:

WELLS FARGO BANK, N.A.,

:

Defendant.

Civil Case No. GLR-13-1142

:
MEMORANDUM OPINION

THIS MATTER is before the Court on Plaintiff Willis Casto’s
(“Casto”) Motion for Partial Summary Judgment (ECF No. 47) and
Defendant’s, Wells Fargo Bank, N.A. (“Wells Fargo”), Motion for
Summary

Judgment

disposition.

(ECF

No.

50).

The

Motions

are

ripe

for

The Court, having reviewed the Motions and supporting

documents, finds no hearing necessary pursuant to Local Rule 105.6
(D.Md. 2014).

For reasons stated below, Casto’s Motion will be

denied and Wells Fargo’s Motion will be granted.
I.

BACKGROUND 1

Casto is a former customer of Wells Fargo.

On October 31,

2003, Casto refinanced his First Mortgage with Wells Fargo and, in
2005, he also obtained a Home Equity Line of Credit (“HELOC”) in
the amount of $200,000.

The HELOC agreement stated that the annual

percentage rate (the “interest rate”) shall change daily based upon
the range of the unpaid balance of the account and would never be

1

Unless otherwise noted, the following facts are taken from
the parties’ briefings on the instant motions, and are viewed in
the light most favorable to the nonmoving party.

less than 4.24%.
19,000.00;

The ranges of unpaid balances included: $0.00 to

$20,000.00

to

$49,999.99;

and

$50,000.00

and

above.

Because the agreement required that Casto only pay the interest
charged per month, his unpaid balance remained in the $50,000.00
and above range throughout his relationship with Wells Fargo.
On April 27, 2009, Casto filed for Chapter 13 bankruptcy in
the United States Bankruptcy Court for the District of Maryland
(“Bankruptcy Court”).

After filing for bankruptcy, Wells Fargo no

longer sent Casto monthly account statements for his First Mortgage
and repeatedly informed Casto that his HELOC was past due. Wells
Fargo

began

Casto

mailed

to

misapply

three

Casto’s

checks

for

HELOC

payment

payments.
into

his

Specifically,
HELOC,

checks were mistakenly applied to his First Mortgage. 2

but

the

Immediately

upon discovering the misapplied payments, Casto would contact Wells
Fargo to inform it of the errors, refusing to repay any amount
supposedly

past

due.

On

May

27,

2010

and

December

14,

2010,

however, Wells Fargo corrected the errors and applied the checks to
the HELOC.
On May 18, 2010, Wells Fargo filed a Motion seeking Relief
from Stay in the Bankruptcy Court, stating Casto was in arrears for
$3,057.09.
Motion.

On June 4, 2010, Casto filed an opposition to the

On July 23, 2010, Wells Fargo withdrew its Motion.

2

Also, Wells Fargo misapplied payments towards the
principal balance of his accounts instead of the accrued
interest. Wells Fargo, however, corrected the errors.
2

On April 5, 2011, Casto filed a Motion to Approve Refinancing
of Debtor’s Real Estate in the Bankruptcy Court so that he could
lower his monthly expenses and payoff the amount owed under the
confirmed plan early.
letter

stating

$48,203.48.

the

On April 11, 2011, Wells Fargo sent Casto a
payoff

amount

for

the

First

Mortgage

was

On April 13, 2011, Wells Fargo sent Casto another

letter stating the payoff amount was $201,477.36.
On

April

authorizing

20,

the

2011,

loan

the

Bankruptcy

modification.

On

Court
May

entered
12,

an

order

2011,

Casto

refinanced his home to a reverse mortgage where he consolidated the
Wells Fargo First Mortgage and HELOC with 1st Maryland Mortgage
Corp.

On May 17, 2011, the new company disbursed to Wells Fargo

$48,527.88 for the First Mortgage and $201,593.44 for the HELOC.
Casto incurred settlement charges of $26,176.26.

Casto claims that

he never intended to refinance his home, but, due to Wells Fargo’s
deceptive and predatory practices, he had to refinance and suffer
settlement costs.
Mortgage

Corp.

On May 18, 2011, Casto stated to 1st Maryland

that

the

payoff

amounts

were

intended to file suit against Wells Fargo.

incorrect

and

he

On September 6, 2011,

Casto was discharged by the Bankruptcy Court.

On January 3, 2012,

the Bankruptcy Court closed Casto’s case.
On October 19, 2012, Casto filed a Complaint against Wells
Fargo

in

alleging:

the

Circuit

intentional

Court

for

Anne

Arundel

misrepresentation

County,

(Count

I);

Maryland,
negligent

misrepresentation (Count II); deceit (Count III); concealment or
3

non-disclosure (Count IV); constructive fraud (Count V); breach of
contract-First Mortgage (Count VI); and breach of contract-HELOC
(Count VII).

(ECF No. 2).

In Counts I-V, Casto seeks to recover

compensatory damages in the amount of $610,000, and $2,400,000 in
punitive

damages.

Casto

also

seeks

to

recover

$48,527.88

in

compensatory damages in Count VI and $201,593.44 in compensatory
damages in Count VII.

On April 18, 2013, Wells Fargo removed the

action

based

to

this

Court

U.S.C. § 1332 (2012).

on

diversity

(ECF No. 1).

filed a First Amended Complaint.

jurisdiction

under

28

On December 11, 2013, Casto

(ECF No. 32).

On January 13, 2015, Casto filed a Motion for Partial Summary
Judgment as to Count I.

(ECF No.47).

On February 13, 2015, Wells

Fargo filed a cross-Motion for Summary Judgment and Opposition to
Casto’s Motion.

(ECF No. 50).

On April 8, 2015, Casto filed a

Reply to Wells Fargo’s Opposition and Opposition to Wells Fargo’s
Motion.

(ECF No. 53).

to Casto’s Opposition.

On May 11, 2015, Wells Fargo filed a Reply
(ECF No. 54).
II.

DISCUSSION

A. Standard of Review
Under Federal Rule of Civil Procedure 56, the Court must grant
summary

judgment

if

the

moving

party

demonstrates

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).

In reviewing a motion for summary judgment, the Court views
the

facts

in

a

light

most

favorable
4

to

the

non-moving

party.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing
Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970)).

Once a

motion for summary judgment is properly made and supported, the
opposing party has the burden of showing that a genuine dispute
exists.

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 586-87 (1986).

“[T]he mere existence of some alleged

factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment; the requirement is
that there be no genuine issue of material fact.”

Anderson, 477

U.S. at 247-48.
A “material fact” is one that might affect the outcome of a
party’s case.

Id. at 248; see also JKC Holding Co. v. Wash. Sports

Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001) (citing HoovenLewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001)).
fact

is

considered

to

be

“material”

is

Whether a

determined

by

the

substantive law, and “[o]nly disputes over facts that might affect
the

outcome

of the

suit

under the

governing

preclude the entry of summary judgment.”

law

will

properly

Anderson, 477 U.S. at

248; accord Hooven-Lewis, 249 F.3d at 265.
A “genuine” issue concerning a “material” fact arises when the
evidence

is

sufficient

to

allow

a

reasonable

verdict in the nonmoving party’s favor.

jury

to

return

a

Anderson, 477 U.S. at 248.

Rule 56(c) requires the nonmoving party to go beyond the pleadings
and

by

its

own

affidavits,

or

by

the

depositions,

answers

to

interrogatories, and admissions on file, designate specific facts
5

showing that there is a genuine issue for trial.
Catrett, 477 U.S. 317, 324 (1986).

Celotex Corp. v.

The nonmoving party “cannot

create a genuine issue of material fact through mere speculation or
the building of one inference upon another.”

Beale v. Hardy, 769

F.2d 213, 214 (4th Cir. 1985) (citing Barwick v. Celotex Corp., 736
F.2d 946, 963 (4th Cir. 1984)).
B. Analysis
1. Intentional Misrepresentation and Deceit
The Court finds that Casto fails to demonstrate a claim for
intentional misrepresentation and deceit. 3
intentional

misrepresentation

under

To prove a claim for

Maryland

law,

the

plaintiff

must show that: (1) the defendant made a false representation to
the plaintiff; (2) the defendant knew the statement was false or
made the statement with reckless indifference for the truth; (3)
the purpose of the misrepresentation was to defraud the plaintiff;
(4) the plaintiff relied on the misrepresentation and had the right
to rely on it; and (5) the plaintiff suffered compensable injury as
a result of the misrepresentation. 4

SpinCycle, Inc. v. Kalendar,

186 F.Supp.2d 585, 590 (D.Md. 2002) (quoting Alleco Inc. v. Harry &
Jeanette Weinberg Found., Inc., 665 A.2d 1038, 1047-48 (Md. 1995)).
3

The elements of deceit are identical to those of
intentional misrepresentation. Ellerin v. Fairfax Sav., F.S.B.,
652 A.2d 1117, 1123 (Md. 1995) (quoting Nails v. S & R, 639 A.2d
660, 668-69 (Md. 1994)).
The Court will, therefore, determine
whether the parties are entitled to summary judgment as to
intentional misrepresentation and deceit in tandem.
4
Misrepresentation damages may include emotional and
psychological distress.
Bradley v. Bradley, 56 A.3d 541, 549
(Md.Ct.Spec.App. 2012).
6

Casto

argues

Wells

Fargo

made

several

misrepresentations:

Wells Fargo misapplied two checks to his First Mortgage instead of
his HELOC because Casto mailed the payments to the wrong address;
Wells Fargo wrote the wrong account number on the checks Casto
mailed for payments to his HELOC; Wells Fargo filed a Motion for
Relief

of

Stay

stating

his

HELOC

was

in

arrears;

Wells

Fargo

incorrectly calculated the amount of interest owed on his HELOC;
Wells Fargo repeatedly stated Casto’s accounts were past due; and
Wells Fargo’s internal notes on the HELOC are inconsistent with the
account statements Casto received.
Wells Fargo argues Casto fails to demonstrate that he relied
on

the

misrepresentations.

Casto

presents

Fargo corrected each misapplied payment.

evidence

that

Wells

Casto concedes that he

opposed Wells Fargo’s Motion to Lift Stay and that Wells Fargo
ultimately withdrew that Motion.

Also, Casto did not rely on any

statements that his HELOC account was past due.

Instead, Casto

requested his account history in order to dispute that his account
was

past

due.

Moreover,

Casto

does

not

demonstrate

that

he

suffered a compensable injury due to Wells Fargo’s statements that
he mailed his checks to the wrong address because the payments were
ultimately applied to his HELOC.

Casto also fails to demonstrate

that he relied on Wells Fargo’s internal notes.
Lastly, Casto fundamentally misunderstands how the interest is
calculated for the HELOC.

Interest is calculated based upon the

unpaid balance of the account.

(ECF No. 54-1).
7

The ranges of

unpaid

balances

included:

$0.00

to

$49,999.99; and $50,000.00 and above.

19,000.00;

$20,000.00

to

Beginning in 2011, if the

unpaid balance was $19,000 or less, the interest rate would be 0%;
and if the unpaid balance was between $20,000.00 and $49,999.99 or
$50,000.00 and above, the interest rate would be 4.24%.
unpaid

balance

remained

above

$50,000.00

Casto’s

throughout

his

relationship with Wells Fargo; therefore, the interest rate charged
throughout

2011 was 4.24%. 5

As

such,

Wells Fargo’s statements

regarding the interest rate charged on the HELOC were not false
representations.

Accordingly, the Court will grant Wells Fargo’s

Motion for Summary Judgment as to Counts I and III and deny Casto’s
Motion for Partial Summary Judgment.
2. Negligent Misrepresentation
The Court finds that Casto has failed to demonstrate a claim
for negligent misrepresentation.

To prove a claim for negligent

misrepresentation, a plaintiff must demonstrate that:
“(1) the defendant, owing a duty of care to
the plaintiff, negligently asserts a false
statement; (2) the defendant intends that his
statement will be acted upon by the plaintiff;
(3) the defendant has knowledge that the
plaintiff will probably rely on the statement,
which, if erroneous, will cause loss or
injury; (4) the plaintiff, justifiably, takes
action in reliance on the statement; and (5)
the
plaintiff
suffers
damage
proximately
caused by the defendant's negligence.”

5

Casto inexplicably believes that, in 2011, the first
$19,000 of his balance was to be charged a 0% interest rate and
the remainder of balance was to be charged a 4.24% interest
rate.
8

White

v.

Kennedy

Krieger

Inst.,

Inc.,

110

A.3d

724,

747

(Md.Ct.Spec.App. 2015) (quoting Lloyd v. Gen. Motors Corp., 916
A.2d 257 (Md. 2007)).
In

Maryland,

negligent

misrepresentation

claims

require

plaintiffs to prove that defendants owed a duty to them. Jacques v.
First Nat’l Bank of Md., 515 A.2d 756, 758 (Md. 1986)).

It is well

established in Maryland that the relationship between the bank and
borrower is contractual, not fiduciary, in nature.

Spaulding v.

Wells Fargo Bank, N.A., 714 F.3d 769, 778 (4th Cir. 2013) (quoting
Kuechler v. Peoples Bank, 602 F.Supp.2d 625, 633 (D.Md. 2009));
Yousef

v.

Trustbank

Sav.,

(Md.Ct.Spec.App. 1990)).

F.S.B.,

568

A.2d

1134,

1138

Moreover, “[t]he mere negligent breach of

a contract, absent a duty or obligation imposed by law independent
of

that

arising

out

of

the

contract

sustain an action sounding in tort.”

itself,

is

not

enough

to

Jacques, 515 A.2d at 759.

In cases involving economic loss, the imposition of a tort
liability requires “an intimate nexus between the parties” that is
satisfied by “contractual privity or its equivalent.”
60.

Absent

special

circumstances, the

court

is

Id. at 759reluctant

to

“transform an ordinary contractual relationship between a bank and
its customer into a fiduciary relationship or to impose any duties
on the bank not found in the loan agreement.”

Parker v. Columbia

Bank, 604 A.2d 521, 532 (Md. 1992) (citations omitted).
The

Maryland

Court

of

Special

Appeals

has

recognized

four

“special circumstances” that can give rise to a tort duty between a
9

bank and its customer: where the lender (1) took on any extra
services on behalf of [the borrowers] other than furnishing the
money;

(2)

received

any

greater

economic

benefit

from

the

transaction other than the normal mortgage; (3) exercised extensive
control; or (4) was asked by the borrowers if there were any lien
actions pending.

Id. at 533; see Polek v. J.P. Morgan Chase Bank,

N.A., 36 A.3d 399, 418 (Md. 2012).

Casto has failed to demonstrate

any such circumstances existed to give rise to a tort duty. 6

The

Court will, therefore, grant Wells Fargo’s Motion as to Count II.
3. Constructive Fraud
The Court finds that Casto has failed to demonstrate a claim
for constructive fraud.

Constructive fraud “is a breach of legal

or equitable duty which, irrespective of the moral guilt of the
fraud feasor, the law declares fraudulent because of its tendency
to deceive others, to violate public or private confidence, or to

6

In his Opposition, Casto argues special circumstances
existed because Wells Fargo failed to provide account statements
and payment information. Casto, however, appears to be arguing
his concealment or non-disclosure claim (Count IV), stating
Wells Fargo breached its duty to provide regular account
statements and information. To prove a claim of concealment, a
plaintiff must prove the following elements: (1) the defendant
owed him a duty to disclose a material fact; (2) the defendant
failed to disclose that fact; (3) the defendant intended to
defraud or deceive him; (4) he took action in justifiable
reliance on the concealment; and (5) he suffered damages as a
result of the defendant’s concealment.
Lloyd v. Gen. Motors
Corp., 916 A.2d 257, 274 (Md. 2007) (quoting Green v. H & R
Block, 735 A.2d 1039, 1059 (1999)). Because the Court has found
that Casto failed to demonstrate that Wells Fargo owed him a
tort duty, the Court will also grant Wells Fargo’s Motion for
Summary Judgement as to Count IV.
10

injure

public

interests.”

SpinCycle,

Inc.

v.

Kalender,

186

F.Supp.2d 585, 590 (D.Md. 2002) (quoting Scheve v. McPherson, 408
A.2d 1071, 1076 (Md.Ct.Spec.App. 1979); accord Canaj, Inc. v. Baker
&

Div.

Phase

III,

LLC,

893

A.2d

1067,

1095

(Md.

2006).

The

elements of constructive fraud and intentional misrepresentation
are similar, see ADCS Inc. v. Kimbrough, Jr., 30 F.App’x 225, 229
(4th Cir. 2002), except an intent to deceive is not an essential
element of constructive fraud, see Brass Metal Prods., Inc. v. E-J
Enters., Inc., 984 A.2d 361, 390 (Md.Ct.Spec.App. 2009).

Because

the Court finds that Casto failed to demonstrate any reliance on
any misrepresentation purportedly made by Wells Fargo, the Court
will grant Wells Fargo’s Motion as to Count V. 7
4. Breach of Contract
The Court finds that Casto has failed to demonstrate claims
for breach of contract regarding both the First Mortgage and the
HELOC.

In order for a cause of action for breach of contract to

exist, a party must show a contractual obligation and
that obligation.
(Md. 2001).

breach of

Taylor v. NationsBank, N.A., 776 A.2d 645, 651

In the First Amended Complaint, Casto alleges Wells

Fargo breached the contracts for both the First Mortgage and HELOC
by

demanding

unauthorized

fees

7

and

interest

payments

and

A portion of Casto’s constructive fraud claim is based on
Wells Fargo’s failure to provide regular account statements and
payment information when requested.
(Am. Compl. ¶¶ 253-62).
Such allegations, however, amount to a concealment claim, which
the Court has dismissed. See supra note 6.
11

misapplying payments.

Casto seeks damages for the amount disbursed

to Wells Fargo when he refinanced his home.
As Wells Fargo notes, the misapplied payments were corrected,
the

late

fees

were

charged

due

to

Casto’s

late

payments,

and

transaction fees were charged because Casto made several payments
over the phone and through electronic transfers.

Casto does not

demonstrate that the fees were not authorized by his First Mortgage
and HELOC agreements with Wells Fargo.

Instead, Casto argues in

his Opposition that Wells Fargo charged the transaction and late
fees without proper notice to the Bankruptcy Court, purportedly in
violation

of

the

Federal

Rules

of

Bankruptcy

Procedure.

Such

actions, however, do not give rise to a breach of contract claim
and Casto failed to allege a claim regarding any violation of the
Bankruptcy Rules in the First Amended Complaint.
Further, Casto asserts that Wells Fargo provided inaccurate
payoff

amounts

when

he

refinanced

his

home.

Casto

alleges

he

became aware of the inaccuracies after 1st Maryland Mortgage Corp.
disbursed funds to Wells Fargo.
Mortgage

payoff

amount

is

Specifically, he states the First
inaccurate

because

it

includes

transaction and late fees; however, Castro fails to show that the
fees were not permitted by the First Mortgage agreement.
Additionally,

Casto

states

the

HELOC

payoff

amount

is

inaccurate because the interest rate was calculated improperly.

As

previously stated, Casto misunderstands how the interest rate was
calculated on the HELOC.

The interest rate is calculated based
12

upon the unpaid balance of the account.

Because Casto’s unpaid

balance remained above $50,000.00 throughout his relationship with
Wells Fargo and the interest rate in 2011 for that unpaid balance
was 4.24%, his HELOC was charged an interest rate of 4.24% at the
time

Wells

Fargo

generated

the

payoff

letter.

The

Court,

therefore, finds that Casto has failed to demonstrate that the
payoff amounts were inaccurate.

Accordingly, the Court will grant

Wells Fargo’s Motion as to Counts VI and VII. 8
III.

CONCLUSION

For the foregoing reasons, Wells Fargo’s Motion for Summary
Judgment (ECF No. 50) is GRANTED and Casto’s Motion for Partial
Summary

Judgment

(ECF

Complaint is dismissed.

No.

47)

is

DENIED.

The

First

Amended

A separate Order follows.

Entered this 23rd day of September, 2015
/s/
_____________________________
George L. Russell, III
United States District Judge

8

Because the Court has found that Casto fails to
demonstrate any of the claims alleged in the First Amended
Complaint, the Court will not address Wells Fargo’s judicial
estoppel, res judicata, and voluntary payment arguments.

13