McFarland v. Wells Fargo
Filing
24
MEMORANDUM DECISION AND ORDERgranting 12 Motion to Dismiss. Signed by Magistrate Judge Brooke C. Wells on 4/22/2014. (las)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, NORTHERN DIVISION
TODD B. MCFARLAND,
MEMORANDUM DECISION AND ORDER
GRANTING MOTION TO DISMISS
Plaintiff,
v.
Case No. 1:13-cv-148
WELLS FARGO BANK, N.A.,
Magistrate Judge Brooke Wells
Defendant.
Defendant Wells Fargo Bank, N.A. moves to dismiss Plaintiff Todd McFarland’s
Complaint. 1 After careful consideration of the record, relevant law, and the parties’ memoranda,
the Court has determined that oral argument is unnecessary and decides the motion based upon
the record before it. 2
In response to Defendant’s motion, Plaintiff conceded that his second and ninth causes of
action lacked merit. 3 The Court dismissed those causes of action in an order dated March 14,
2014. 4 Wells Fargo asserts that Mr. McFarland’s remaining claims are barred by res judicata.
Or, in the alternative, each of the causes of action should be dismissed on their merits. Because
Plaintiff’s claims are barred by res judicata Defendant’s motion is GRANTED and Plaintiff’s
Complaint is dismissed with prejudice. 5
1
Docket no. 12.
2
DUCivR 7-1(f).
3
Op. p. 21, docket no. 16.
4
Docket no. 22.
5
On March 18, 2014, the Court struck the hearing set on this motion. Pursuant to Local Rule 7-1(f) the Court
decides this motion on the basis of the written memoranda of the parties.
BACKGROUND 6
On approximately May 6, 2005, Mr. McFarland obtained a mortgage to purchase real
property located in West Haven, Utah. In connection with the loan, Mr. McFarland also
executed a Deed of Trust to Wells Fargo which encumbered the property and secured his
obligations under the loan.
In 2010, Plaintiff lost his employment and contacted Wells Fargo requesting a loan
modification. Because Plaintiff was current on his loan he was advised by Wells Fargo that he
was not eligible for any loan modification program and to qualify he needed to be at least three
months delinquent in payments. Mr. McFarland then discontinued making payments on the loan
for a period of three months after which Plaintiff once again contacted Wells Fargo to start the
application process. Plaintiff was never approved for a loan modification and during the loan
modification review process Defendant provided notice of a trustee’s sale that was set to occur
on November 16, 2010. Defendant informed Plaintiff that this sale would be postponed if he
would send $2,700. Mr. McFarland sent $2,700 to Wells Fargo at that time and the sale was
postponed.
The sale was scheduled again for December 17, 2010 and subsequently postponed until
February 1, 2011. On approximately January 31, 2011, Plaintiff received an oral confirmation
from Defendant that the third sale had been postponed until March 4, 2011. During this time
frame Mr. McFarland was in frequent contact with Defendant regarding the status of his loan
modification request. Defendant repeatedly informed Mr. McFarland that his request was under
review. On March 3, 2011 Wells Fargo informed Mr. McFarland that the sale had been
postponed an additional 30 days because his loan modification application was still under
6
The facts are taken from Plaintiff’s Complaint and are accepted as true for purposes of the instant motion.
2
review. Mr. McFarland contacted Defendant once again on March 21, 2011 and was told that
the property had been sold on March 18, 2011. Defendant was the only bidder at the sale of the
property. Mr. McFarland never received a denial of his loan modification application.
“After the foreclosure sale occurred, [Plaintiff] brought an action in the Second Judicial
District Court in and for the Weber County, State of Utah, to challenge the foreclosure as a
counterclaim in an eviction action.” 7 Wells Fargo was a named party in that action but was
dismissed without prejudice. “Unfortunately, counsel for [Plaintiff] did not handle [that] civil
litigation properly and failed to follow the Rules of Civil Procedure.” 8 Mr. McFarland’s
response to a motion for summary judgment in that case was untimely and that court entered
judgment against him. Mr. McFarland has appealed the decision of the Second Judicial District
Court and that appeal is still in process. According to Plaintiff, “[i]n the meantime, he has
elected to pursue his claims against Wells Fargo separately which are now before this Court.” 9
STANDARD OF REVIEW
When reviewing a motion to dismiss under Rule 12(b)(6), all well-pleaded factual
allegations, as opposed to conclusory allegations, are accepted as true and viewed in the light
most favorable to Plaintiff, which is the nonmoving party. 10 Plaintiff must provide “enough facts
to state a claim to relief that is plausible on its face.” 11 All well-pleaded factual allegations in the
complaint are accepted as true and viewed in the light most favorable to the nonmoving party. 12
The Court, however, “need not accept conclusory allegations without supporting factual
7
Op. p. 7.
8
Id.
9
Id. at 8.
10
Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002).
11
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547(2007) (dismissing a complaint where Plaintiffs “have not
nudged their claims across the line from conceivable to plausible”).
12
GFF Corp. v. Associated Wholesale Grocers, INc., 130 F.3d 1381, 1384 (10th Cir. 1997).
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averments.” 13 Conclusory allegations are allegations that “do not allege the factual basis” for the
claim. 14 Thus, the “court's function on a Rule 12(b)(6) motion is not to weigh potential evidence
that the parties might present at trial, but to assess whether the plaintiff's complaint alone is
legally sufficient to state a claim for which relief may be granted.” 15 Stating an adequate claim
under Rule 8 of the Federal Rules of Civil Procedure “demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation. A pleading that offers ‘labels and conclusions' or
‘a formulaic recitation of the elements of a cause of action will not do.’” 16
DISCUSSION
The Court finds this case turns on the doctrine of res judicata. Wells Fargo argues that
Mr. McFarland’s causes of action fail because they are barred by res judicata. In contrast, Mr.
McFarland argues that this case should not be dismissed under that doctrine because “there has
been no meaningful determination on the merits of [Plaintiff’s] claims in the state court
action.” 17 Thus, although there was a dispositive order by the state court, the “state court did not
render a final judgment on the merits and therefore res judicata does not apply.” 18 Plaintiff fails
to cite any authority in support of this argument and in any event, the Court finds Plaintiffs
position unpersuasive.
“In Utah, res judicata may apply as the result of either claim preclusion or issue
preclusion. Claim preclusion ‘”is premised on the principle that a controversy should be
13
Southern Disposal, Inc., v. Texas Waste, 161 F.3d 1259, 1262 (10ht Cir. 1998); see also Hall v. Bellmon, 935 F.2d
1106, 1110 (10th Cir. 1991).
14
Brown v. Zavaras, 63 F.3d 967, 972 (10th Cir. 1995).
15
Miller v. Glanz, 948 F.2d 1562, 1564 (10th Cir. 1991).
16
Ashcroft v. Iqbal, 556 U.S. 662, 173 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007))
(internal citations omitted).
17
Op. p. 9.
18
Id.at 10.
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adjudicated only once.”’” 19 Utah applies a three-part test to determine whether a claim is
precluded from relitigation:
First, both [suits] must involve the same parties or their privies. Second, the
claim that is alleged to be barred must have been presented in the first suit or be
one that could and should have been raised in the first action [because it arose
from the same transaction or operative facts]. Third, the first suit must have
resulted in a final judgment on the merits. 20
Each of these elements are present here. First, Plaintiff does not dispute that Defendant is
in privity with Federal Home Loan Mortgage Corporation (FHLMC), which was the named party
in the state Unlawful Detainer Action. Wells Fargo and FHLMC have a successive relationship
to rights in the property and the fact that Wells Fargo was eventually dismissed without prejudice
in the state action is of no consequence since FHLMC remained a party in that action. Thus the
Court finds the first element is met.
Second, a review of Mr. McFarland’s causes of action in this case and the underlying
state action indicate that each of Plaintiff’s causes of action could have or should have been
brought in the state case. All of the causes of action are premised upon the same allegations that
Wells Fargo orally agreed to not foreclose on Mr. McFarland’s property while considering his
loan modification request. Thus, the subsequent foreclosure was wrongful. Accordingly, the
second element is met.
Third, the Court finds that the state action resulted in a final judgment in favor of
FHLMC on the merits. Mr. McFarland argues that there was no decision on the merits because
his claims were dismissed on a procedural default. The Court disagrees and finds that the record
19
Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Horne, 698 F.3d 1295, 1301 (10th Cir. 2012)
(quoting Mack v. Utah State Dep’t of Commerce, Div. of Sec., 221 P.3d 194, 203 (Utah 2009) (quoting Nebeker v.
State Tax Comm’n, 34 P.3d 180, 186 (Utah 2001)).
20
Horne, 698 F.3d at 1301 (quoting Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Horne, 289 P.3d
502, 506 (Utah Oct. 2, 2012) (quoting Mack, 221 P.3d at 203).
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as well as case authority undermines this argument. For example, Mr. McFarland has appealed
the Second Judicial District Court’s decision. Such an appeal is an indication of a final
judgment. 21 Further, the United States Supreme Court in a decision from 1947 stated that “A
judgment of a court having jurisdiction of the parties and of the subject matter operates as res
judicata, in the absence of fraud or collusion, even if obtained upon a default.’” 22 There is no
indication of fraud or collusion, so the Court finds there is no reason to abandon the long held
principle that a default is considered a final judgment. Accordingly, element three is met.
CONCLUSION AND ORDER
Based upon the foregoing, the Court finds that the doctrine of res judicata applies to this
matter. Defendant’s Motion to Dismiss is therefore GRANTED.
DATED this 22 April 2014.
Brooke C. Wells
United States Magistrate Judge
21
See e.g., Utah R. App. P. 4a (“Appeal from final judgment and order.); Utah R. App. P. 9(c)(1) (noting that the
docketing statement must contain “A concise statement of the nature of the proceeding, e.g., "This appeal is from a
final judgment or decree of the First District Court").
22
Morris v. Jones, 329 U.S. 545, 550-51 (1947) (quoting Riehle v. Margolies, 279 U.S. 218, 225 (1929)).
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