Gorra v. Wells Fargo Bank, N.A.

Filing 45

MEMORANDUM OPINION AND ORDER granting in part and denying in part defendant's 28 Motion for Summary Judgment. Motion is denied as to Plaintiff's negligence claim (Count I). Motion is granted as t o Plaintiff's negligent misrepresentation claim (Count II). Plaintiff's negligent misrepresentation claim is dismissed with prejudice. Motion as to Plaintiff's ECOA claim (Count III) is denied with respect to Plaintiff's claim for actual damages and granted with respect to Plaintiff's claim for punitive damages. (Written Opinion). Signed by Judge John R. Tunheim on July 12, 2013. (DML)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
JOHN J. GORRA,

Civil No. 12-410 (JRT/FLN)
Plaintiff,

v.
WELLS FARGO BANK, N.A.,

MEMORANDUM OPINION AND
ORDER ON DEFENDANT’S
MOTION FOR SUMMARY
JUDGMENT

Defendant.

Matthew A. Drewes and James H. Gempeler, THOMSEN & NYBECK,
P.A., 3600 American Boulevard West, Suite 400, Bloomington, MN
55431, for plaintiff.
Charles F. Webber and Elizabeth Ann Walker, FAEGRE BAKER
DANIELS LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN
55402, for defendant.
This case arises out of defendant Wells Fargo Bank, N.A.’s (“Wells Fargo”) denial
of plaintiff John Gorra’s application for a loan intended to finance renovation of Gorra’s
rental property. Gorra brings claims for negligence, negligent misrepresentation, and
violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691 et seq., due
to Wells Fargo’s delay in notifying Gorra that he would not receive the requested loan.
The case is now before the Court on Wells Fargo’s motion for summary judgment.
Because a material issue of fact remains regarding the proximate cause of Gorra’s
damages, the Court will deny Wells Fargo’s motion with respect to the negligence and
ECOA claims. The Court will grant Wells Fargo’s motion for summary judgment on the

27

negligent

misrepresentation

claim

because

Gorra’s

reliance

on

the

alleged

misrepresentations was unjustifiable as a matter of law.

BACKGROUND
I.

THE LOAN APPLICATION
Gorra owned a rental duplex (the “Property”) in Minneapolis, Minnesota. (Ex.

(“Wells Fargo App.”) at 2-45 (Dep. of John Gorra (“Gorra Dep. A”) 12:8-15), Apr. 1,
2013, Docket No. 30; Aff. of John J. Gorra ¶ 4, Apr. 22, 2013, Docket No. 37.) 1 In
September 2009, Gorra applied for a loan from Wells Fargo to finance improvements on
the Property. (Wells Fargo App. at 49; Gorra Aff. ¶ 13.) Gorra intended to remodel the
Property into two single family homes attached by a common wall and then sell the
Property as separate units. (Gorra Aff. ¶ 8; Second Aff. of Matthew A. Drewes, Ex. A
(“Gorra Dep. B”) 46:15-47:1, Ex. 2, Apr. 22, 2013, Docket No. 36.) At the time Gorra
sought a loan, Wells Fargo already held a first mortgage on the Property in the amount of
approximately $200,000. (Gorra Dep. B 48:24-25, Ex. 2.) Gorra also had a checking

1

Instead of filing affidavits and attaching relevant documents as exhibits, Wells Fargo
filed a single exhibit, entitled Wells Fargo Appendix containing all of the documents in support
of its motion in consecutively paginated form. The Order refers to this document as “Wells
Fargo App.” In its responsive memorandum, Gorra argued that because Wells Fargo failed to
attest to the authenticity of the exhibits produced, the Court should not consider these documents
in deciding Wells Fargo’s motion for summary judgment. When Wells Fargo filed its reply brief
it included declarations and affidavits providing foundation for the documents submitted as part
of the appendix. (See Decl. of Elizabeth A. Walker, May 6, 2013, Docket No. 39; Decl. of
Charles F. Webber, May 6, 2013, Docket No. 40; Aff. of Dale Streiff, May 6, 2013, Docket
No. 41.) Gorra indicated at oral argument that this production satisfied its request for foundation
and indicated that he no longer objects to the Court’s consideration of the documents produced in
the Wells Fargo Appendix.

-2-

account, a credit card, and an unsecured line of credit through Wells Fargo, and owed
between $10,000 and $15,000 on both the credit card and line of credit. (Id. 47:10-48:1.)
To initiate the loan application process, Gorra sent a letter to his personal banker,
Jean Willier, expressing his desire to obtain financing for improvements on the Property.
(Id. 49:19-23.) Gorra sought a home equity loan of approximately $60,000, secured by
the Property, and provided Willier with his proposed business development plan detailing
the costs and projected returns of the improvements to the Property. (Wells Fargo App.
at 48; Gorra Dep. B, Ex. 2.) Gorra’s business plan indicated that he currently received
$1,100 in rent each month for each unit in the duplex, and that the market value of the
Property in its current state was between $260,000 and $295,000. (Gorra Dep. B, Ex. 2.)
Gorra projected that after improvements, each unit on the Property would be worth
between $190,000 and $225,000. (Id.)
After receiving Gorra’s business development plan, Willier referred him to Dale
Streiff, a Wells Fargo home renovation loan specialist. (Gorra Dep. B 53:21-54:3.) On
September 24, 2009, Gorra submitted an application for a home renovation loan (the
“Loan Application”). (Wells Fargo App. at 49; Gorra Aff. ¶ 13.) The next day Streiff emailed Gorra to confirm receipt of the Loan Application. (Wells Fargo App. at 49.)

II.

INITIAL LOAN PROCESSING
On October 4, 2009, Streiff told Gorra that he could not be approved for the loan

because his credit score was below 680. (Gorra Aff. ¶ 18.) To ensure that his credit
score did not hamper his ability to qualify for the loan, Gorra began making efforts to

-3-

clear any accounts reflecting negatively upon his score. (Id. ¶ 20.) In particular, Gorra
contacted Macy’s with regard to a credit card delinquency that appeared on his credit
report. (Id., Ex. B.) In response, Macy’s removed the derogatory information from
Gorra’s credit history and reported his account as current. (Id.; Gorra Dep. B 60:1061:13.) Gorra also had a tax lien related to overdue property taxes on the Property
removed from his report. (Gorra Dep. B at 61:24-62:15.) Streiff and Gorra spoke again
about his credit score sometime in October, and Gorra sent Streiff another e-mail on
October 23, 2009, showing Gorra’s credit score from three major credit bureaus as 712 or
724. (Gorra Dep. B, Ex. 4.)
On November 3, 2009, Streiff e-mailed Gorra and indicated that Gorra’s credit
report now reflected a score of 683. (Gorra Dep. B 80:19-81:3; Wells Fargo App. at 53.)
Streiff’s e-mail then stated: “So far so good.” (Wells Fargo App. at 53.) The e-mail also
requested that Gorra provide a list of properties associated with the loans on his credit
report, indicate whether taxes and insurance were part of the payments on those loans,
indicate the value of those properties, and send Streiff copies of Gorra’s 2008 tax returns.
(Id.) Gorra responded to Streiff by e-mail that same day, indicating that he would ask
Willier to forward Gorra’s tax documents to Streiff. (Id.) Gorra also provided the other
information requested in Streiff’s e-mail. (Gorra Dep. B 89:8-11.)
On November 9, 2009, Gorra sent Streiff an e-mail which stated “what is our
status?” (Wells Fargo App. at 55.) The next day, Streiff responded and restated his
requests for the information identified in the November 3 e-mail. (Id. at 56.) Gorra
contends that on November 10 he had already provided Streiff with the requested
-4-

information, but provided it to Streiff again. (Gorra Dep. B 89:8-17, 93:1-14.) Streiff’s
e-mail also asked Gorra whether he had any bids from contractors for the planned
renovation work. (Wells Fargo App. at 56.) Gorra testified that he could not recall
whether he answered this inquiry. (Gorra Dep. B 90:17-91:6.) Gorra testified both that
he provided that information in his original Loan Application, and also that information
about bids was not a requirement of the Loan Application. (Id. 89:18-90:2, 91:15-17.)

III.

FEDERALLY REQUIRED DISCLOSURES
On November 13, 2009, Streiff sent Gorra federally required disclosures related to

the Loan Application. (Wells Fargo App. at 58-71.) The documents included the Truthin-Lending Disclosure, Good Faith Estimate of Settlement Costs, and a Truth-in-Lending
Addendum. (Id.) The packet containing these disclosures thanked Gorra for allowing
Streiff to assist Gorra “in the initial steps of your Wells Fargo Bank, N.A. loan
application,” and stated that “[a]s you continue through the loan process, I’ll do
everything I can to ensure that the program you select is the best fit for your financial
needs and goals.” (Id. at 58.) Gorra’s loan profile listed an “[a]nticipated closing date”
of December 15, 2009. (Id. at 59.) The Truth-in-Lending Act Addendum indicated that
the total loan amount would be $290,053. (Id. at 64.) Gorra testified that he never asked
for a loan in this amount, but that Wells Fargo had suggested this larger amount, with
which Gorra would pay off his existing mortgage and also obtain financing for the
renovations. (Gorra Dep. B 185:4-21.)

-5-

On November 15, 2009, Gorra failed to make a payment due on his existing loan
from Wells Fargo secured by a mortgage on the Property. (Id. 111-13, 170:11-18; Gorra
Aff. ¶ 16.) Gorra was unable to make the payments because his tenants had not paid rent
and because Gorra had already begun to incur expenses for renovation. (Gorra Dep. B
124:1-5; Gorra Aff. ¶ 16.) Gorra believed that the renovation loan would be used to
satisfy his existing loan, and eliminate that mortgage. (Gorra Dep. B 108:1-13, 113:1019.)

Because he believed the closing on the renovation loan would happen on

December 15, 2009, Gorra did not make his November payment to bring his account
current, and assumed that Wells Fargo would have no opportunity to report his existing
line of credit as thirty days late. (Id. 108:1-23; Gorra Aff. ¶¶ 23, 25.)

IV.

DENIAL OF LOAN APPLICATION
On December 14, Gorra sent Streiff an e-mail asking where and when the

December 15 closing would occur. (Wells Fargo App. 74.)
On December 15, Wells Fargo called Gorra, inquiring as to the status of Gorra’s
overdue November 15 payment on the existing Wells Fargo loan. (Gorra Aff. ¶ 26.)
During this phone call, Gorra discussed with the Wells Fargo representative the plan to
retire the existing loan during the closing of the renovation loan scheduled for that day.
(Id. ¶ 27; Gorra Dep. B 142:6-21.) Streiff was conferenced in on the call, and explained
to Gorra for the first time that the renovation loan would not close that day. (Gorra Aff.
¶ 28.) Streiff explained that Gorra’s loan had not been approved because his credit report
still reflected the tax lien. (Wells Fargo App. at 75-76.) Streiff also sent Gorra an e-mail

-6-

indicating that the renovation loan had not been approved by Wells Fargo’s system.
(Gorra Aff., Ex. C.)
Wells Fargo continued to work on addressing issues in the Loan Application, and
resubmitted a revised application. (Gorra Dep. B at 119:23-121:15, 122:1-7.) However,
during this period of time Gorra’s credit score fell to 514 – reflecting two thirty-day late
notices on Wells Fargo accounts from September and December, an overdue Macy’s
account, and an overdue Bank of America account. (Wells Fargo App. at 79-80.)
In a letter dated January 27, 2010, Wells Fargo notified Gorra that it was denying
his Loan Application. (Wells Fargo App. at 81-83.) Wells Fargo cited its reasons for
denial as “[i]ncome insufficient for amount of requested credit,” “[e]xcessive obligations
in relation to income,” and “[d]elinquent past or present obligations with others.” (Id. at
83.) Gorra testified that the letter was postmarked on February 7, 2010. (Gorra Dep. B
170:5-7.)
In February 2010, when the Loan Application was denied, Gorra had been in
default for several months on his payments on the existing Wells Fargo loan secured by a
mortgage on the Property. (Gorra Aff. ¶ 33.) Due to this default, Wells Fargo initiated
foreclosure proceedings in September 2011, and it acquired the Property for just over
$100,000. (Id. ¶ 35.) During the six-month redemption period provided by Minn. Stat.
§ 580.23, Gorra sold the Property for $184,000. (Id. ¶ 36; Gorra Dep. B 115:10-16.)

-7-

V.

GORRA’S DAMAGES
Gorra testified about a variety of damages that he alleges were caused by Wells

Fargo’s failure to notify him that the Loan Application would ultimately be denied. First,
Gorra claims that he incurred various renovation expenses in reliance on receiving the
loan. (Id. 158-59; Wells Fargo App. at 89.) Gorra testified that in October or November
of 2009 he incurred costs to obtain separate titles for the two homes he intended to create.
(Gorra Dep. A 158:12-18.)

Gorra also incurred expenses related to water heaters,

furnaces, appliances, landscaping, and painting between September and December 2009.
(Id. 26-28, 159:3-25; Gorra Dep. B 180:21-25.) Second, Gorra claims damages in the
form of lost rent. (Wells Fargo App. at 89.) Gorra testified that his tenants stopped
paying rent in the fall of 2009 because they believed the Property was being renovated
for sale, which would force the tenants to move. (Gorra Dep. A 24:9-13, 32:1-4.)
Gorra also testified as to damages he suffered with respect to his existing Wells
Fargo loan, due to Wells Fargo’s failure to alert Gorra earlier than December 15, 2009,
that it would not close on his loan. Gorra testified that if Wells Fargo had alerted him
earlier that the loan would not close he would have had time to raise the funds necessary
to make the November payment on his existing Wells Fargo loan, avoided a thirty-day
late notice on his credit report, and avoided the continuing decline of his credit score.
(Gorra Dep. B 154:1-156:12.) Gorra admitted in his deposition that the actions he could
have taken were “kind of conjecture,” but testified that “I . . . could have worked out
some loan modification where [Wells Fargo] extended out payments or I could have sold
something or I could have pressured the tenants harder. There were things that may have
-8-

been able to have been accomplished had I known something prior to the actual
December 15th.” (Decl. of Elizabeth A. Walker, Ex. B (“Gorra Dep. C”) 191:25, May 6,
2013, Docket No. 39.) In particular, Gorra testified that he had assets such as a coin
collection, “two or three extra cars,” guns, and a boat that he could have sold in early
December to raise the necessary funds. (Id. 192:8-15.)
Gorra also alleges that the delay prevented him from seeking other financing
options for the renovation prior to the damage to his credit caused by Gorra’s inability to
satisfy his existing Wells Fargo payments with the proceeds of the renovation loan.
(Gorra Aff. ¶ 31.) Gorra claims that he was damaged because his application for a Chase
credit card was denied after the events involving Wells Fargo. (Gorra Dep. A 163:1-3.)
Gorra testified that he did not know exactly why Chase denied his credit card application.
(Id. 163:18-20.) Gorra further testified that he informally inquired about financing at
U.S. Bank sometime after Wells Fargo denied his Loan Application, and after looking at
his credit U.S. Bank told him he could not obtain a loan. (Gorra Dep. C. 190:24-191:6.)
Finally, Gorra claims that if he had not received a thirty-day-late mark on his credit the
Property would not have become a distressed asset and, even without the renovations, he
would have been able to sell the Property at market value for between $260,000 and
$360,000 – instead of for $184,000 as a distressed asset. (Gorra Aff. ¶¶ 24, 32, 34; Gorra
Dep. B 156:4-8.)
Gorra brought the present action against Wells Fargo in Hennepin County District
Court and Wells Fargo removed the action to this Court. (Notice of Removal, Ex. A
(“Compl.”), Feb. 16, 2012, Docket No. 1.)
-9-

ANALYSIS
I.

STANDARD OF REVIEW
Summary judgment is appropriate where there are no genuine issues of material

fact and the moving party can demonstrate that it is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a). A fact is material if it might affect the outcome of the suit,
and a dispute is genuine if the evidence is such that it could lead a reasonable jury to
return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A court considering a motion for summary judgment must view the facts in the
light most favorable to the non-moving party and give that party the benefit of all
reasonable inferences to be drawn from those facts. See Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).

II.

NEGLIGENCE
To succeed on a negligence claim under Minnesota law, Gorra must prove (1) that

Wells Fargo had a legal duty of care; (2) that Wells Fargo breached that duty; (3) that the
breach of that duty was the proximate cause of Gorra’s harm; and (4) damage. Brunsting
v. Lutsen Mountains Corp., 601 F.3d 813, 820-21 (8th Cir. 2010); Domagala v. Rolland,
805 N.W.2d 14, 22 (Minn. 2011). Gorra’s negligence claim, as articulated in his
complaint and refined in his brief opposing the instant motion, alleges that Wells Fargo
had a duty to inform him in a timely manner that the Loan Application would be denied.
(Compl. ¶ 35.)

- 10 -

Wells Fargo asks the Court to assume, for purposes of this motion, that Wells
Fargo had a duty to inform Gorra at some point before December 15 that it would not be
closing on his loan that day, and that it breached that duty. Therefore, Wells Fargo
argues only that Gorra has failed to raise a genuine issue of material fact with respect to
causation and damages.
“There is proximate cause between a negligent act and an injury when the act is
one which the party ought, in the exercise of ordinary care, to have anticipated was likely
to result in injury to others.” Lietz v. N. States Power Co., 718 N.W.2d 865, 872 (Minn.
2006) (internal quotation marks omitted). Additionally, the defendant’s conduct is only
the proximate cause of the harm “if the act was a substantial factor in the harm’s
occurrence.” George v. Estate of Baker, 724 N.W.2d 1, 10 (Minn. 2006). “The existence
of proximate cause is usually a question of fact for the jury.” Lietz, 718 N.W.2d at 872.
The Court decides proximate cause as a matter of law only where reasonable minds could
not disagree on the issue. Wartnick v. Moss & Barnett, 490 N.W.2d 108, 115 (Minn.
1992).
As an initial matter, the Court notes that in order for Wells Fargo’s breach to have
been the proximate cause of Gorra’s damages, the damages must have been sustained
after Wells Fargo’s hypothetical breach. Therefore any damages suffered or expenses
incurred by Gorra prior to Wells Fargo’s alleged breach will not be recoverable at trial.
In the absence of argument on the nature and extent of Wells Fargo’s alleged duty the
Court is unable, at this stage, to ascertain which, if any, of Gorra’s damages, were
incurred prior to Wells Fargo’s hypothetical breach.
- 11 -

Assuming as it must, for purposes of this motion, that Wells Fargo breached a duty
to notify Gorra prior to December 15 that his loan would not be approved; the Court finds
that Gorra has presented sufficient evidence of damages proximately caused by such a
breach to survive a motion for summary judgment. If Wells Fargo in fact breached a
duty by failing to inform Gorra that he would not receive the loan prior to Gorra incurring
renovation expenses and losing rents as a result of those renovations, a reasonable jury
could find that Wells Fargo’s breach was a substantial factor in causing Gorra’s damages.
A reasonable jury could also find that had Gorra received advanced notice that his loan
would not close on December 15, he would have made other efforts to obtain the funds
necessary to make the outstanding November 15 payment on his existing Wells Fargo
loan.

Gorra testified that he had unencumbered assets, including a coin collection,

several cars, guns, and a boat, that he could have attempted to sell. Gorra also testified
that he could have attempted to work out a different payment arrangement with Wells
Fargo on his original loan, had he been given time to negotiate such an arrangement.
Finally, Gorra testified that if he had been given even several extra days’ notice, he could
have made additional attempts to collect rent from his tenants. A reasonable jury could
further conclude that Wells Fargo’s breach, if such a breach in fact occurred, proximately
caused Gorra’s inability to make other arrangements to pay his existing outstanding
Wells Fargo loan balance, which caused damage to Gorra’s credit and contributed to
Gorra’s inability to sell the Property, as a distressed asset, at fair market value. Therefore
Wells Fargo’s alleged breach could have substantially contributed to Gorra’s lost profit
damages. Whether or not Gorra’s attempts to raise the funds necessary to make the
- 12 -

payment or obtain other financing would have been successful had Wells Fargo provided
him with notice that his loan would not close are questions for the jury. Although Gorra
did not present expert testimony that he would have been able to sell his assets or acquire
other financing, the Court finds that Gorra’s testimony provides sufficient evidence upon
which a reasonable jury could conclude that some of his efforts may have been
successful.
The extent of Gorra’s damages that were proximately caused by Wells Fargo’s
alleged breach is also a question for the jury. It is certainly possible that based upon the
evidence in the record, a reasonable jury could conclude that Gorra would have been
unable to raise the necessary funds or obtain other financing. A jury could also determine
that Wells Fargo’s hypothetical breach was a substantial factor in bringing about only a
portion of Gorra’s claimed damages.

“The question before the Court, however, is

whether this is a case in which reasonable minds could only reach the conclusion that
[Wells Fargo]’s actions did not proximately cause [Gorra’s] injuries.” ADT Sec. Servs.,
Inc. v. Swenson, 276 F.R.D. 278, 306 (D. Minn. 2011). Here, viewing the evidence in the
light most favorable to Gorra, the Court finds that reasonable minds could differ on the
question of proximate causation. Therefore, the Court will deny Wells Fargo’s motion
for summary judgment on Gorra’s negligence claim.2

2

The Court notes that in addition to proving proximate cause and damages at trial, Gorra
will also be required to establish the elements of duty and breach, which Wells Fargo did not
contest for purposes of this motion.

- 13 -

III.

NEGLIGENT MISREPRESENTATION
To prevail on a claim for negligent misrepresentation under Minnesota law, Gorra

must prove that (1) Wells Fargo owed Gorra a duty of care; (2) Wells Fargo, by its failure
to use reasonable care, made a false representation or failed to discover or communicate
certain information that an ordinary person in its position would have discovered or
communicated; (3) the misrepresentation occurred in the course of Wells Fargo’s
business or in a transaction in which it had a pecuniary interest; (4) Gorra relied on the
information; (5) Gorra was justified in relying on the information; and (6) Gorra was
financially harmed by his reliance. Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d
978, 985 (8th Cir. 2008); Hardin Cnty. Sav. Bank v. Hous. & Redevelopment Auth. of City
of Brainerd, 821 N.W.2d 184, 192 (Minn. 2012); Williams v. Smith, 820 N.W.2d 807,
815 (Minn. 2012); Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn. 1986).
Gorra contends that his negligent misrepresentation claim is based upon Wells
Fargo’s failure to communicate regarding the status of Gorra’s loan between
November 13 (the day Wells Fargo sent Gorra the federally required disclosures) and
December 15. In particular, Gorra argues that he justifiably relied on this silence to mean
that the loan transaction would close on December 15 in light of the fact that (1) he had
promptly responded to Wells Fargo’s inquiries regarding his Loan Application and
provided Wells Fargo with up to date information about his credit report; (2) he received
an e-mail from Streiff indicating “so far so good”; and (3) the federally required
disclosures indicated an anticipated closing date of December 15 and “spelled out how
the transaction was going to look when it was completed.” (Pl.’s Mem. in Opp’n to Mot.
- 14 -

for Summ. J. at 23-24, Apr. 22, 2013, Docket No. 35.) In reliance on his belief that the
loan would close, Gorra incurred renovation costs and failed to make payments on his
existing Wells Fargo mortgage.
Gorra concedes that his negligent misrepresentation claim cannot be based upon
any affirmative representation made by Wells Fargo, because at most Wells Fargo’s
various communications merely predicted the future status of Gorra’s loan and
predictions about future events are not actionable in Minnesota as negligent
misrepresentations. See Trooien v. Mansour, 608 F.3d 1020, 1028-29 (8th Cir. 2010).
Instead, Gorra argues that Wells Fargo’s silence, after making the representations
described above, led him to reasonably believe that he would close on his loan on
December 15. The Court finds, as a matter of law, that Gorra’s reliance on Wells Fargo’s
silence to assume that the Loan Application would be approved and would close on
December 15 was not justified.
Gorra has identified no representation by Wells Fargo that the Loan Application
had been approved or that it necessarily would be if he promptly responded to Wells
Fargo’s inquiries. Gorra had an ongoing relationship with Wells Fargo and had received
loans in the past. The Court finds that he should have known that neither his prompt
responses to Wells Fargo, the preliminary disclosures, nor Streiff’s e-mail indicated that
his loan had been or would be approved. Wells Fargo’s communications, while perhaps
indicating that it was likely that the loan transaction would close on December 15, were
clearly not guarantees. “So far so good” unequivocally suggests that more steps remain
in the process.

And the disclosures referred to the “anticipated” closing date.
- 15 -

A

reasonable jury, therefore, could not find that Gorra was justified in assuming that several
weeks of silence from Wells Fargo indicated that his loan had been, or necessarily would
be, approved.3

See Davis v. U.S. Bancorp, 383 F.3d 761, 768-69 (8th Cir. 2004)

(affirming summary judgment finding that plaintiff was not justified in relying solely
upon her own perception that she was approved for a loan after receiving preliminary
loan documents, when the bank had never indicated that she was approved); see also
Griffith v. Bank of Am., N.A., No. CV 11-5867, 2011 WL 6849048, at *3 (C.D. Cal.
Dec. 13, 2011) (explaining that federally required loan disclosures based upon a loan
application could not form the basis of a negligent misrepresentation claim). Because the
Court finds that no reasonable jury could conclude that Gorra’s reliance on Wells Fargo’s
silence as an indication that his loan would close was justified, it will grant Wells Fargo’s
motion for summary judgment with respect to this claim.

IV.

ECOA CLAIM
A.

Actual Damages

The ECOA “establishes procedural requirements for extending credit and
communicating with applicants.” Davis, 383 F.3d at 766. Of relevance to the present
case, the ECOA requires a creditor to notify a credit applicant of its actions on the
application “[w]ithin thirty days . . . after receipt of a completed application for credit.”
3

Gorra attempts to distinguish reliance on the fact that his loan would close on
December 15 with reliance on the belief that Wells Fargo would approve the loan. The Court
finds that is a distinction without a difference. Gorra’s actions taken in reliance on Wells
Fargo’s alleged misrepresentation – including incurring renovation costs and failing to pay his
existing loan – all stemmed from his mistaken certainty in the fact that his application would be
approved and he would receive the loan.

- 16 -

15 U.S.C. § 1691(d)(1). The ECOA provides that, “[a]ny creditor who fails to comply
with any requirement imposed under this subchapter shall be liable to the aggrieved
applicant for any actual damages sustained by such applicant.” 15 U.S.C. § 1691e(a).
“[A]ctual damages may include out-of-pocket monetary losses, injury to credit reputation
and mental anguish, humiliation or embarrassment.” Fischl v. Gen. Motors Acceptance
Corp., 708 F.2d 143, 148 (5th Cir. 1983). To prevail on a claim for actual damages under
the ECOA, Gorra must prove that the losses he suffered were caused by Wells Fargo’s
violation of the statute. See Coulibaly v. J.P. Morgan Chase Bank, N.A., Civ. No. 103517, 2012 WL 3985285, at *7 (D. Md. Sept. 7, 2012) (granting summary judgment
where “Plaintiffs have failed to meet their burden to prove specifically out-of-pocket
losses caused by Chase’s failure to respond to the March 2009 Application within 30
days”).
Wells Fargo asks the Court to assume, for purposes of this motion, that it violated
the ECOA when it failed to timely inform Gorra of Wells Fargo’s action on his Loan
Application. Relying upon its arguments made with respect to the negligence claim,
Wells Fargo contends only that Gorra has not established actual damages resulting from
Wells Fargo’s purported statutory violation, and therefore cannot recover on his ECOA
claim. Because the duty Wells Fargo allegedly breached in connection with Gorra’s
negligence claim is the same conduct that forms the basis of the hypothetical ECOA
violation, the Court finds that, as explained above, a material issue of fact remains with
respect to whether Gorra’s damages were caused by Wells Fargo’s delay in alerting him

- 17 -

that his Loan Application would be denied. The Court will therefore deny Wells Fargo’s
motion for summary judgment with respect to Gorra’s ECOA claim for actual damages.

B.

Punitive Damages

The ECOA also provides that “[a]ny creditor . . . who fails to comply with any
requirement imposed under this subchapter shall be liable to the aggrieved applicant for
punitive damages in an amount not greater than $10,000, in addition to any actual
damages.” 15 U.S.C. § 1691e(b). In determining whether punitive damages may be
awarded the ECOA directs courts to consider “the amount of any actual damages
awarded, the frequency and persistence of failure of compliance by the creditor, the
resources of the creditor, the number of persons adversely affected, and the extent to
which the creditor’s failure of compliance was intentional.” Id. Courts may award
punitive damages if “the creditor wantonly, maliciously or oppressively discriminates
against an applicant,” or acts “in reckless disregard of the requirements of the law, even
though there was no specific intention to discriminate on unlawful grounds.” Anderson v.
United Fin. Co., 666 F.2d 1274, 1278 (9th Cir. 1982) (internal quotation marks omitted);
see also Fischl, 708 F.2d at 148.
The Court finds that Gorra has presented no evidence supporting an award of
punitive damages. In particular, Gorra has identified only a single instance of an alleged
ECOA violation. Further, there is no evidence that would allow a factfinder to conclude
that Wells Fargo’s conduct was wanton, malicious, or in reckless disregard of the
ECOA’s requirements.

The statutory provision relied upon by Gorra punishes a

- 18 -

creditor’s inaction. Although the record reflects a period during which Wells Fargo
failed to communicate with Gorra, the record also reflects that Wells Fargo made several
inquiries regarding Gorra’s Loan Application, worked with Gorra to establish an optimal
loan structure, monitored Gorra’s fluctuating credit score, and continued to take steps to
provide Gorra with a loan even after his initial Loan Application was denied. These
actions do not support a finding that Wells Fargo failed to notify Gorra of its actions on
his Loan Application in reckless disregard of the ECOA. Accordingly, the Court will
grant Wells Fargo’s motion for summary judgment with respect to Gorra’s request for
punitive damages.

C.

Attorney Fees

Finally, Gorra requests attorney fees under the ECOA. The Court finds that any
determination of entitlement to attorney fees is premature, as the statute requires a
plaintiff to be successful in an ECOA action before fees are recoverable. See 15 U.S.C.
§ 1691e(d).
This case will be placed on the Court’s next available trial calendar.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendant’s Motion for Summary Judgment [Docket No.
28] is GRANTED in part and DENIED in part as follows:
1.

The motion is DENIED as to Plaintiff’s negligence claim (Count I).

- 19 -

2.

The motion is GRANTED as to Plaintiff’s negligent misrepresentation

claim (Count II). Plaintiff’s negligent misrepresentation claim is DISMISSED with
prejudice.
3.

The motion as to Plaintiff’s ECOA claim (Count III) is DENIED with

respect to Plaintiff’s claim for actual damages and GRANTED with respect to Plaintiff’s
claim for punitive damages.
DATED: July 12, 2013
at Minneapolis, Minnesota.

____s/
____
JOHN R. TUNHEIM
United States District Judge

- 20 -