Wells Fargo Bank, N.A. v. Terrace Mortgage Company

Filing 68

ORDER denying 53 Motion to Transfer/Change Venue (Written Opinion). Signed by Judge Patrick J. Schiltz on 11/25/14. (ECW)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
WELLS FARGO BANK, N.A.,

Case No. 13-CV-1556 (PJS/JSM)

Plaintiff,
v.

ORDER

TERRACE MORTGAGE COMPANY,
Defendant.
Charles F. Webber, Hanna L. Terhaar, and Lance W. Lange, FAEGRE BAKER
DANIELS LLP, for plaintiff.
John D. Sear and Charles Schoenwetter, BOWMAN AND BROOKE LLP; Thomas M.
Barton and Aaron P.M. Tady, COLES BARTON LLP, for defendant.
Plaintiff Wells Fargo Bank, N.A., (“Wells Fargo”) purchased residential mortgage loans
from defendant Terrace Mortgage Company (“Terrace”) pursuant to a Loan Purchase Agreement
that was signed in January 1997. The Loan Purchase Agreement provided that it incorporated by
reference the “Seller Guide” that Wells Fargo provided to Terrace. The Loan Purchase
Agreement further provided that the Seller Guide could be amended “upon written notice.” ECF
No. 8-2 at 2.
Wells Fargo sued Terrace for breach of contract, alleging that about 120 of the loans that
Terrace sold to Wells Fargo failed to meet the underwriting standards contained in the Loan
Purchase Agreement and Seller Guide. Terrace moved to transfer venue to the Northern District
of Georgia, where the majority of the relevant borrowers reside. Wells Fargo opposed the
motion, asserting that the Seller Guide contained a forum-selection clause requiring this case to
be heard in Minnesota. Because the factual record was underdeveloped, the Court denied

Terrace’s motion without prejudice and directed the parties to engage in limited discovery on the
venue issue. ECF Nos. 41, 45.
This matter is before the Court on Terrace’s renewed motion to transfer. ECF No. 53.
Wells Fargo has been unable to locate a copy of the Seller Guide that was in effect in January
1997, when the Loan Purchase Agreement was signed. Wells Fargo has, however, submitted
excerpts from the Seller Guide that took effect in October 1997. It is undisputed that the October
1997 version of the Seller Guide included a Minnesota forum-selection clause. ECF No. 65
App. 52. It appears to be undisputed that Terrace received a copy of the October 1997 version
of the Seller Guide. ECF No. 56-2 (under seal) (“[W]ithin the next few days, you will receive
our new . . . Seller Guide!”). Finally, it appears to be undisputed that all subsequent versions of
the Seller Guide contained the same Minnesota forum-selection clause. ECF No. 65 App. 6.
What is disputed is whether and to what extent Wells Fargo gave Terrace “written
notice” of the revisions that were made to the Seller Guide in October 1997. The parties assume,
for purposes of this motion, that the Seller Guide did not include a forum-selection clause prior
to October 1997. ECF No. 64 at 3 n.3; ECF No. 66 at 2-3. One of Wells Fargo’s vice presidents
(Sean Lacy) avers that the bank’s practice at the time was to mail notifications of new versions
of the Guide to lenders, such as Terrace. ECF No. 65 App. 5-6. Wells Fargo has produced a
copy of a September 1997 notification announcing the new Guide. ECF No. 56-2 (under seal).
Wells Fargo’s evidence, however, establishes only that lenders (such as Terrace) were
provided with a copy of the October 1997 Seller Guide and general notice that revisions had
been made to the Guide. Terrace says this is not enough. According to Terrace, the Loan
Purchase Agreement required not only that it receive a copy of the revised Seller Guide, and not

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only that it receive written notice that changes had been made to the Guide, but also a specific
written description of each of the changes. Terrace argues that because Wells Fargo can provide
no evidence that it provided specific written notice that a forum-selection clause had been added
to the Guide, Wells Fargo cannot now enforce that forum-selection clause.
The Court disagrees. The Loan Purchase Agreement provides that Wells Fargo “may
amend the [Seller Guide] from time to time upon written notice.” ECF No. 8-2 at 2. This
requires Wells Fargo to provide written notice to Terrace that the Seller Guide had been
amended; it cannot fairly be read to require Wells Fargo to provide a detailed written description
of each and every amendment. Moreover, even if the Loan Purchase Agreement could be
construed to require more, Terrace received not merely written notice that the Seller Guide had
been amended, but a written copy of the amendments (including the Minnesota forum-selection
clause). Nothing more was required.
The United States Supreme Court has held that “a valid forum-selection clause should be
given controlling weight in all but the most exceptional cases.” Atl. Marine Constr. Co. v. U.S.
Dist. Court for the W. Dist. of Tex., 134 S. Ct. 568, 581 (2013) (alterations and quotation marks
omitted). As the Court explained at the May 15, 2014 hearing on Terrace’s original motion to
transfer, the Court does not view this case as being among “the most exceptional cases,” and thus
Terrace’s renewed motion to transfer is denied.

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ORDER
Based on the foregoing, and on all of the files, records, and proceedings herein, IT IS
HEREBY ORDERED THAT Terrace’s renewed motion to transfer venue [ECF No. 53] is
DENIED.

Dated: November 25 , 2014

s/ Patrick J. Schiltz
Patrick J. Schiltz
United States District Judge

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