Malcom v. Wells Fargo Bank NA

Filing 50

ORDER plaintiff's motion for partial summary judgment 44 is denied; defendant's motion for summary judgment 40 is granted as to all of plaintiff's claims other than the Fair Debt Collection Practices Act claim; defendant's motion for default judgment against Erick Sanderson 41 is granted; judgment as to these claims will be entered when the action is concluded as to all claims and parties. Signed by Honorable Joe Heaton on 11/05/2014. (lam)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
AMBER MALCOM,
an individual,

)
)
)
Plaintiff,
)
vs.
)
)
WELLS FARGO BANK, N.A.,
)
a foreign corporation,
)
)
Defendant/Cross-Claim Plaintiff,)
)
vs.
)
)
ERIK SANDERSON,
)
)
Cross-Claim Defendant.
)

NO. CIV-13-0754-HE

ORDER
Plaintiff Amber Malcom filed this action against Wells Fargo Bank, N.A. (“Wells
Fargo”), asserting both federal and state law claims. The claims arise out of defendant’s
alleged mishandling of the note and mortgage plaintiff and her former spouse, Erik
Sanderson, executed when they purchased a home in Oklahoma City, Oklahoma. Plaintiff
has filed a motion for partial summary judgment and defendant has filed a motion for
summary judgment against plaintiff and a motion for default judgment on its crossclaim
against defendant Sanderson.
Summary judgment is appropriate only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A party asserting that a material fact is disputed or undisputed must

support the assertion by:
(A)

citing to particular parts of materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those made for
purposes of the motion only), admissions, interrogatory answers,
or other materials; or

(B)

showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.

Fed.R.Civ.P. 56(c).
Plaintiff does not even attempt in her motion to support her various factual assertions
by reference to the materials described in Rule 56(c), and she appears to labor under the
misapprehension that, as in answering a complaint, all that need be done is to assert or deny
an alleged fact. The rule is otherwise. Plaintiff’s motion for partial summary judgment will
be denied.1
Defendant’s motion will be granted in substantial part, as discussed below, but denied
as to plaintiff’s claim under the Fair Debt Collection Practices Act.
Background
The background facts appear to be substantially undisputed,2 but are complicated due
to the largely contemporaneous nature of three different legal proceedings—the foreclosure
1

Plaintiff’s motion is directed to her second and third claims, involving claims under the Real
Estate Settlement Procedures Act and for wrongful negotiation of insurance checks. As discussed
below in connection with defendant’s motion, those claims fail even apart from the formal
deficiencies in plaintiff’s motion.
2

Plaintiff explicitly admits most of the facts upon which defendant relies in its motion. As
to those purportedly disputed, plaintiff’s response largely fails to reference any evidence to support
her position as to whether the fact is disputed.
2

case, the divorce case between plaintiff and Sanderson, and plaintiff’s lawsuit again the law
firm representing Wells Fargo in the foreclosure.
On May 30, 2003, plaintiff and Sanderson executed a note and mortgage in
conjunction with their purchase of the home (the “property”), located at 14509 S. Robinson
Avenue in Oklahoma City, Cleveland County, Oklahoma.3 Wells Fargo eventually acquired
the note and mortgage. On March 30, 2010, the law firm of Baer, Timberlake, Coulson &
Cater, P.C. (“Baer Timberlake”) filed a foreclosure proceeding on defendant’s behalf in
Cleveland County. Plaintiff filed an answer and counterclaim. She acknowledges her filing
“delayed and deterred” the property’s foreclosure and that defendant could not proceed to
a sheriff’s sale until the counterclaims she asserted were resolved.
In the meantime, plaintiff had filed for divorce from Sanderson. Her 2008 filing in
Cleveland County district court eventually resulted in a final divorce decree being entered
on March 21, 2011. The divorce decree awarded Sanderson the real property underlying this
litigation, but awarded plaintiff a judgment lien on the property in the amount of $23,000.
On April 3, 2012, while the foreclosure was pending, Allstate Insurance Company
sent a notice of non-renewal to Erick Sanderson at the S. Robinson Avenue address,
informing him that the homeowner’s insurance policy currently in effect would not be
renewed and would be terminated as of May 30, 2012. Notice that the insurance was going

3

Page references for briefs and exhibits are to the CM/ECF document and page number. For
example, the last page of the Journal Entry of Judgment filed on August 13, 2012, which is Exhibit
11 to defendant’s brief in support of its summary judgment motion is referred to as Exhibit 40-11,
p. 6.
3

to lapse was also sent to Wells Fargo.4
On June 6, 2012, defendant sent a notice to plaintiff and Sanderson at the address of
record provided by the borrowers, advising them that their hazard insurance had expired.5
On July 11, 2012, defendant sent a letter to plaintiff and Sanderson at the same address
stating it had previously notified them that it did not have evidence that they had a
homeowner’s policy protecting their property as required by the terms of their mortgage and
that lender-placed insurance would be purchased. The next month, on August 25, 2012,
defendant sent another notice to the same address, which explained that lender-placed
insurance had been purchased, along with a copy of the policy, which named Wells Fargo
as the Named Insured and plaintiff and Sanderson as Additional Insureds.
A Journal Entry of Judgment, to which plaintiff agreed, was entered in the foreclosure
action on August 13, 2012. Plaintiff agreed to dismiss her counterclaims in exchange for the
entry of only an in rem judgment against her.6 The next month, on September 19, 2012,
plaintiff sued the Baer Timberlake law firm in Stephens County District Court, alleging that

4

Plaintiff states that she cannot admit or deny this and defendant’s fact no. 20. However,
as noted above, that is not enough to dispute a fact and therefore both are considered undisputed
for purposes of the motion. Fed.R.Civ.P. 56(e)(2).
5

Plaintiff does not dispute that the notice was sent to the address of record, but asserts that
defendant also failed to send it to her in Marlow. Plaintiff responds to defendant’s fact nos. 11, 12,
and 14, stating that her “address of record was in Marlow, Oklahoma” and “Defendant was
apprised that the Plaintiff lived in Marlow, Oklahoma.” Doc. #46, p. 3. However, she fails to offer
any evidence substantiating these assertions.
6

Plaintiff states she was “forced/coerced into agreeing to said judgment.” Doc. #46, p. 4,
¶4. Yet she offers no evidence to support that assertion or to otherwise controvert the judgment
defendant has submitted, which plaintiff executed and which states above her signature and that of
opposing counsel: “Agreed as to Form and Content.” Doc. #40-11, p. 6 (emphasis added).
4

certain acts taken during the foreclosure action violated the Fair Debt Collection Practices
Act, constituted malicious prosecution, intentionally inflicted emotional distress, and
amounted to financial abuse and waste.
The property, which was unoccupied at the time, was destroyed by a tornado on May
20, 2013. That resulted in an insurance claim being submitted to American Security
Insurance Company, the insurer which issued the lender-placed insurance. On June 17, 2013,
the insurer issued two checks to plaintiff, Sanderson, and defendant, totaling $184,416.71.
Defendant deposited the checks in a restricted escrow account. They were kept separate from
defendant’s own funds and remained in the restricted escrow account until they were
withdrawn later to pay off the loan. Amounts in excess of the loan payoff were eventually
refunded to plaintiff and Sanderson.
On June 27, 2013, Wells Fargo sent to plaintiff for signature a form which would
authorize the application of the insurance proceeds to pay off the loan. Plaintiff did not sign
the form at that time but, on July 22, 2013, filed this case. On July 27, 2013, Wells Fargo
responded to an inquiry from plaintiff’s attorney and informed plaintiff that the checks had
been deposited in the restricted escrow account.
On August 15, 2013, a special execution was issued in the foreclosure case setting a
sheriff’s sale for October 2, 2013. It is undisputed that Baer Timberlake, the foreclosure
counsel, made the decision to issue the special execution without instruction from defendant.
On August 16, 2013, plaintiff and Sanderson executed the written request for the insurance
proceeds to be used to pay off the loan. Defendant issued a check to itself on August 21,

5

2013, to pay off the loan.
Plaintiff’s name was published in two newspapers on August 22, 2013, and August
24, 2013, in Oklahoma City and Norman in conjunction with the sheriff’s sale. The notice
of sheriff’s sale was recalled on August 28, 2013.
On August 26, 2013, defendant issued a check to plaintiff and Sanderson in the
amount of $22,469.54, representing the excess insurance over the claimed loan balance.
Both plaintiff and Sanderson endorsed the check. Soon after the $22,469.54 check cleared,
Sanderson paid plaintiff her $23,000 share of the equity in the property and plaintiff released
her judgment lien. Plaintiff then moved on September 13, 2013, to amend her petition in the
Stephens County lawsuit against Baer Timberlake to include claims based on the issuance
of the special execution and publication of notice of the sheriff’s sale in the foreclosure
action. On September 25, 2013, the state court judge in the foreclosure action, on motion of
Wells Fargo, vacated both the judgment previously entered and the sheriff’s return of special
execution and order of sale, restored the note and mortgage and ordered them redelivered to
Wells Fargo as the owner and holder thereof. The judge then dismissed the foreclosure
action without prejudice. Doc. #40-22.7 On August 27, 2013, plaintiff quitclaimed all of her
right, title and interest in the property to Sanderson.
On February 11, 2014, plaintiff and Baer Timberlake entered into a settlement

7

Plaintiff objects to this fact statement asserting that “Defendant did dismiss the lawsuit, but
wholly failed to obtain proper signatures and lied to the court. Defendant stated that all parties
were in agreement.” Doc. #46, p. 4, ¶8. Plaintiff did not substantiate her statements with any
evidence and defendant misstated what occurred. The state court judge, not defendant, dismissed
the case on Wells Fargo’s application.
6

agreement that settled “claims which were or might have been asserted against one another
by the parties.” Exhibit 23.8 On March 12, 2014, plaintiff released her judgment lien against
the property arising out of the divorce proceeding. The release provided that plaintiff
released and quitclaimed all right, title and interest in and to the property located at 14509
South Robinson Avenue, Oklahoma City, Oklahoma, that she might have acquired by virtue
of the divorce proceeding. Doc. #40-24.9
Analysis
Plaintiff asserts federal law claims against defendant under the Real Estate Settlement
Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, and the Fair Debt Collection Practices
Act, 15 U.S.C. §§ 1692-1692p. She also asserts state law claims for conversion, negligence
per se, breach of fiduciary duty, constructive fraud, actual fraud, intentional infliction of
emotional distress, wrongful foreclosure, unjust enrichment, and for violation of Oklahoma’s
version of the Uniform Commercial Code.
The court’s task has been greatly complicated by the ragged briefing of the parties.
Plaintiff’s submissions do not come remotely close to meeting the standards for a summary
judgment response. Defendant’s brief includes inaccurate case citations and, as suggested
below, an absence of proofreading.

8

In her response to defendant’s motion, plaintiff explicitly admits defendant’s fact #36 which
describes the Baer Timberlake settlement. However, she apparently disputes whether the settlement
agreement was actually implemented, asserting she dismissed and then refiled the suit.
9

Citing Exhibit 25, defendant asserts that on March 17, 2014, plaintiff dismissed with
prejudice the lawsuit she filed against Baer Timberlake in Stephens County. However, the last
exhibit attached to defendant’s brief is Exhibit 24.
7

Real Estate Settlement Procedures Act
Plaintiff contends defendant failed to comply with RESPA’s requirement that the
mortgage servicer send the borrower written notices regarding any changes in insurance
coverage for the property. See 12 U.S.C. § 2605(k) and (l). However, as defendant points
out, the lender-placed insurance involved here was purchased in 2012 and the RESPA
requirements upon which plaintiff relies were not effective until January 10, 2014. See
Berneike v. CitiMortgage, Inc., 708 F.3d 1141, 1145 n.3 (10th Cir. 2013) (explaining that in
2013, the Bureau of Consumer Financial Protection issued a final rule implementing the
Dodd-Frank Wall Street Reform and Consumer Protection Act amendments to RESPA and
amending Regulation X, RESPA’s implementing regulation, with an effective date of
January 10, 2014); Ali v. Wells Fargo Bank, N.A., 2014 WL 345243, at *2 (W.D.Okla. Jan.
24, 2014) (order granting partial motion to dismiss); see generally Mortgage Servicing Rules
Under the Real Estate Settlement Procedures Act (Regulation X), 78 Fed.Reg. 10696 (Feb.
14, 2013). Plaintiff ignores this argument in her response brief, focusing instead on
defendant’s failure to send her notices to an address she contends it “clearly knew” was her
“correct address.” Doc. #46, p. 6. That is not enough, though, to make defendant liable
under RESPA for requirements that did not become effective until January 2014.
Even if Sections 2605(k) and (l) had been in effect in 2012, plaintiff’s RESPA claim
would still fail due to plaintiff’s lack of proof. She did not offer any evidence demonstrating
either that defendant “was clearly apprised of [her] address,” Doc. #46, p. 5, or that she
provided Wells Fargo with notice of her change of address by first class mail as required by

8

the mortgage, so that it had the information it needed to comply with any applicable RESPA
notice requirements.10 See Doc. #40-1, p. 5, ¶ 13. Conclusory, unsubstantiated statements
in a brief are insufficient to create a material fact dispute.
Summary judgment will therefore be entered in defendant’s favor on plaintiff’s
RESPA claims.11 As plaintiff’s state law “negligence per se” claim is based on a claimed
violation of RESPA, summary judgment will also be entered as to that claim.
Fair Debt Collection Practices Act
Plaintiff alleges defendant also committed various violations of the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p. Defendant has moved for
summary judgment as to this claim on the sole basis that it is not a “debt collector” within
the meaning of the Act.12 It cites Poehl v. Countrywide Home Loans, Inc., 528 F.3d
1093(8th Cir. 2008) and Perry v. Stewart Title Co., 756 F.2d 1197 (5th Cir. 1985), arguing
it is not a “debt collector” because the term does not include “the consumer’s creditors, a
mortgage servicing company, or an assignee of a debt, as long as the debt was not in default
at the time it was assigned.” Perry, 756 F.2d at 1208. In fact, Poehl does not include the
quotation attributed to it in defendant’s brief and deals with the Fair Credit Reporting Act,

10

Plaintiff is not challenging the substance of the notice that was given, but only that she
personally was not given notice. See generally Doc. Nos. 40-9, 40-10, 40-12.
11

The court finds it unnecessary to consider defendant’s alternative argument – that it
complied with RESPA’s notice requirements.
12

What the defendant actually said in its brief is this: “Because Defendant is not a “debt
collector,” but was Defendant’s creditor and mortgage servicer, the FDCPA does not apply ....”
Doc. #40 at 30. That statement makes zero sense. Presumably, it meant to say that defendant was
the plaintiff’s creditor.
9

not the FDCPA. However, assuming the quoted language states the law, defendant is still
not entitled to summary judgment. None of the facts proffered by defendant address when
the loan was acquired by the bank or whether the loan was in default at that time, and
plaintiff has offered some evidence that the debt was in default long before the foreclosure
proceeding was commenced. Further, while neither party addresses the significance of it,
there is evidence in the record indicating that defendant serviced and attempted the collection
of this loan in the name of Wells Fargo Home Mortgage, rather than in the bank’s own
name.13 E.g., Doc. #40-9. While defendant is, as it asserts, plaintiff’s creditor, “the term
[debt collector] includes any creditor who, in the process of collecting his own debts, uses
any name other than his own which would indicate that a third person is collecting or
attempting to collect such debts.” 15 U.S.C.A. § 1692a. Here, the evidence potentially
triggers that definitional provision. See Doc. # 46-3; see also Doc. Nos. 40-9, p. 3, 40-10,
p. 3, 40-16 (Fair Debt Collection Practices Act Disclosures). Defendant’s motion for
summary judgment on the FDCPA claim will be denied.14
State law claims
Plaintiff’s remaining claims against defendant are based on Oklahoma state law.
Several of them revolve around plaintiff’s objection to defendant’s holding the two insurance
checks in the restricted escrow account without having first obtained the endorsements of
13

Wells Fargo Home Mortgage is apparently a division of defendant. See Doc. #40-10.

14

Except as referenced elsewhere in this order, the court expresses no view as to whether the
particular actions relied on by plaintiff do or do not constitute substantive violations of the FDCPA.
Rather, it concludes only that the basis upon which defendant sought summary judgment—that it
is not a “debt collector”—does not warrant that result.
10

plaintiff and Sanderson. As noted above, it is undisputed that, by the time defendant actually
paid itself (i.e. paid off and discharged the note and mortgage from the escrowed funds), both
plaintiff and Sanderson had signed an authorization for defendant to do so. Defendant’s Fact
#27. What plaintiff apparently objects to is defendant holding the checks in the escrow
account prior to that. However, it is undisputed that the funds involved were proceeds from
the lender-placed insurance and that the terms of issuance of that insurance included
authorization for the “Mortgagee” (Wells Fargo) to act for the “Additional Insureds”
(plaintiff and Sanderson) “in all matters pertaining to this insurance ....”

Doc. #40-12.

Similarly, the mortgage itself authorized the property insurer to make payment for any loss
direct to the mortgagee, rather than jointly with the borrowers. Doc. #40-1, ¶4. These
undisputed facts establish defendant’s authority to hold the funds in escrow as it did, thus
rendering summary judgment for defendant proper as to plaintiff’s “U.C.C. claim,”15 and the
claims for conversion, breach of fiduciary duty,16 and actual fraud.17
Plaintiff’s constructive fraud claim is essentially based on defendant’s failure to send
15

Plaintiff’s second claim is described as “Violation of the Uniform Commercial Code.”
However, it appears the claimed “violation” of 12A Okla. Stat. § 3-110 is, in substance, nothing
other than an alternative way of describing a claim for conversion.
16

The breach of fiduciary duty claim would also fail as a matter of law, in light of the
Oklahoma authorities indicating the bank/borrower relationship is ordinarily not fiduciary in
nature, but is one of debtor and creditor. See First Nat’l Bank & Trust Co. of Vinita v. Kissee, 859
P.2d 502 (Okla. 1993) and Rogers v. Tecumseh Bank, 756 P.2d 1226 (Okla. 1988). Plaintiff makes
no effort to distinguish those cases, relying instead on general statements in a case she described
as F.D.I.C. v. Grant. However, as plaintiff did not provide a citation to any such case, either in the
text of her brief or its table of authorities, it is unclear whether the case applies or not.
17

It is unclear how many different theories plaintiff relies upon to support her “fraud” claim.
However, as best the court can determine, the disposition of the insurance proceeds is central to
each of them.
11

her notices of the lender-placed insurance.18 The same lack of proof that undermines
plaintiff’s RESPA claim precludes her constructive fraud claim.19 Plaintiff offered no
evidence creating a material question of fact as to whether defendant was aware of her thencurrent address or whether she provided Wells Fargo with notice of her change of address
by first class mail as required by the mortgage. See Doc. #40-1, p. 5, ¶ 13.
Plaintiff’s intentional infliction of emotion distress claim fails for two reasons. First,
even viewing the evidence in the light most favorable to plaintiff, the alleged behavior of
defendant falls short of the level of conduct required to impose liability for intentional
infliction of emotional distress. See Computer Publ’ns, Inc. v. Welton, 49 P.3d 732, 735 n.2
(Okla.2002) (“‘One who by extreme and outrageous conduct intentionally or recklessly
causes severe emotional distress to another is subject to liability for such emotional distress,
and if bodily harm to the other results from it, for such bodily harm.’”) (quoting Restatement
(Second) of Torts § 46 (1977)). Dealing with a non-responsive or incompetent bureaucracy,
such as is suggested by some of the submissions here, is no doubt frustrating but appears to
be conduct short of what the Oklahoma courts would view as “extreme” or “outrageous.”
Second, plaintiff offers no evidence to create a material fact question as to whether the

18

Plaintiff also asserts that “a special relationship of trust and confidence” was created
between defendant and plaintiff upon defendant’s purchase of the mortgage. However, as the court
noted previously, the bank/borrower relationship is ordinarily one of debtor and creditor. See supra
note 16.
19

In her brief plaintiff also asserts as grounds for her constructive fraud claim that defendant
charged her “ridiculous fees,” including various attorney’s fees. However, she offers no evidence
to substantiate her assertions.
12

emotional distress she claims to have suffered was severe.20 The court has nothing to review
other than the unsupported statements in plaintiff’s brief – no deposition testimony or
affidavits or physician’s statement. That is not enough to create a justiciable question as to
the severity of any distress plaintiff suffered. Defendant’s motion will be granted as to the
claim for intentional infliction of emotional distress.
Plaintiff agrees that her wrongful foreclosure claim is akin to a malicious prosecution
action. To prevail on a malicious prosecution claim under Oklahoma law, a plaintiff must
“demonstrate: (i) the bringing of the action by the defendant, (ii) its successful termination
in favor of the plaintiff, (iii) want of probable cause to bring the action, (iv) malice, and (v)
damages.” Pierce v. Gilchrist, 359 F.3d 1279, 1286 (10th Cir. 2004).
There are at least two problems with plaintiff’s claim. First, it is not based on the
actual foreclosure proceeding, but on the sheriff’s sale which never occurred. Second, the
foreclosure proceeding was not terminated in plaintiff’s favor, but was dismissed without
prejudice. Doc. #40-22. Summary judgment will be granted in defendant’s favor on
plaintiff’s wrongful foreclosure claim.
Plaintiff’s final claim, her unjust enrichment claim, is based on defendant’s alleged
failure to cooperate with plaintiff in the sale of the property “[d]uring the three years that the
home sat in a foreclosure case.” Doc. #12, p. 21. Plaintiff also contends that defendant was

20

In its motion, while defendant focuses on the second element of the tort – the requirement
that the conduct must have been extreme and outrageous – which the court agrees plaintiff has not
shown, defendant also argues that plaintiff “cannot overcome her burden of proving any of the
above four elements” of her claim. Doc. #40, p. 28.
13

“unjustly enriched by depositing the two Assurant insurance checks and holding the funds
for more than sixty days.” Id. This claim fails for several reasons. Plaintiff admits that her
conduct prolonged the foreclosure proceedings and delayed the property sale and, by the time
the insurance proceeds were deposited by defendant, plaintiff’s interest in the property was
limited to her $23,000 judgment lien. In addition, plaintiff did not offer evidence creating
a fact question as to the benefit defendant actually gained at her expense. To the extent
plaintiff asserts other grounds for the claim in her brief, in addition to those alleged in the
amended complaint, they also are unsubstantiated. Summary judgment will be entered in
defendant’s favor on plaintiff’s unjust enrichment claim.
Wells Fargo Banks’s motion for default judgment
Wells Fargo filed a crossclaim against Erick Sanderson asking that he be directed to
appear and assert any claims he might have based on the bank’s handling of the foreclosure
of the property or the other conduct alleged in plaintiff’s amended complaint. Essentially,
it seeks a declaratory judgment that it did not violate Mr. Sanderson’s rights on any grounds
paralleling the claims of plaintiff. It now seeks default judgment against Mr. Sanderson. The
clerk previously entered default against Mr. Sanderson. Defendant’s motion, to which Mr.
Sanderson did not respond and thereby confessed, LcvR.7.1(g), is granted, thus barring any
claim he might have against Wells Fargo arising out of these circumstances.
Conclusion
For the reasons indicated, plaintiff’s motion for partial summary judgment [Doc. #44]
is DENIED. Defendant’s motion for summary judgment [Doc. #40] is GRANTED as to all

14

of plaintiff’s claims other than the Fair Debt Collection Practices Act claim. Defendant’s
motion for default judgment against Erick Sanderson [Doc. #41] is GRANTED. Judgment
as to these claims will be entered when the action is concluded as to all claims and parties.
Fed.R.Civ.P. 54(b).
IT IS SO ORDERED.
Dated this 5th day of November, 2014.

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