No. 11-1423 LORI WIGOD Plaintiff-Appellant, v. WELLS FARGO BANK, N.A. d/b/a WELLS FARGO HOME MORTGAGE f/k/a WACHOVIA MORTGAGE, FSB, Defendant-Appellee. On Appeal from the United States District Court For the Northern District of Illinois, Case No. 1:10-cv-2348 The Honorable Blanche M. Manning, United States District Judge. BRIEF FOR DEFENDANT-APPELLEE WELLS FARGO BANK, N.A. Michael J. Hayes Jessica A. Baer K&L GATES LLP 70 W. Madison St., 3100 Chicago, IL 60602 Tel: (312) 372-1121 Fax: (312) 312-8000 Irene C. Freidel (counsel of record) David D. Christensen K&L GATES LLP State Street Financial Center One Lincoln Street Boston, MA 02111 Tel: (617) 261-3100 Fax: (617) 261-3175 Counsel for Defendant-Appellee Wells Fargo Bank, N.A. UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT Case: 11-1423 Document: 21 Filed: 09/14/2011 Pages: 63 Case: 11-1423 Document: 22 Filed: 09/14/2011 Pages: 63
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
No. 11-1423
LORI WIGOD
Plaintiff-Appellant,
v.
WELLS FARGO BANK, N.A. d/b/aWELLS FARGO HOME MORTGAGE f/k/a
WACHOVIA MORTGAGE, FSB,
Defendant-Appellee.
On Appeal from the United States District Court For the Northern District of Illinois,
Case No. 1:10-cv-2348The Honorable Blanche M. Manning, United States District Judge.
BRIEF FOR DEFENDANT-APPELLEE WELLS FARGO BANK, N.A.
Michael J. HayesJessica A. Baer
K&L GATES LLP70 W. Madison St., 3100
Chicago, IL 60602Tel: (312) 372-1121 Fax: (312) 312-8000
Irene C. Freidel (counsel of record)David D. Christensen
K&L GATES LLPState Street Financial Center
One Lincoln StreetBoston, MA 02111Tel: (617) 261-3100 Fax: (617) 261-3175
Counsel for Defendant-Appellee Wells Fargo Bank, N.A.
UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT
To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party oramicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing thefollowing information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.
The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement mustbe filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occursfirst. Attorneys are required to file an amended statement to reflect any material changes in the required information. The textof the statement must also be included in front of the table of contents of the party's main brief. Counsel is required tocomplete the entire statement and to use N/A for any information that is not applicable if this form is used.
[ ] PLEASE CHECK HERE IF ANY INFORMATION ON THIS FORM IS NEW OR REVISED AND INDICATE WHICH INFORMATION IS NEW OR REVISED.
(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide thecorporate disclosure information required by Fed. R. App. P 26.1 by completing item #3):
(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedingsin the district court or before an administrative agency) or are expected to appear for the party in this court:
(3) If the party or amicus is a corporation:
i) Identify all its parent corporations, if any; and
ii) list any publicly held company that owns 10% or more of the party’s or amicus’ stock:
Attorney's Signature: Date:
Attorney's Printed Name:
Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes No
B. The Wigod Loan .................................................................................................10
V. SUMMARY OF ARGUMENT.......................................................................................11
VI. STANDARD OF REVIEW .............................................................................................13
VII. ARGUMENT ...................................................................................................................14
A. The District Court Correctly Held That Wigod’s State Law Claims Are An Impermissible End-Run Around The Lack Of A Private Right Of Action In EESA And HAMP.............................................................................14
B. Wigod’s State Law Claims As Applied Are Preempted ...............................21
1. Wigod’s claims are barred under principles of conflict preemption ..............................................................................................21
2. Wigod’s state law claims are subject to field preemption by virtue of the Home Owners’ Loan Act (“HOLA”).............................25
C. Wigod Failed To Allege A Breach Of Contract With Respect To Her TPP. .......................................................................................................................29
1. The TPP is not an enforceable “offer.” ................................................30
2. Wigod has not alleged facts reflecting “consideration.”...................32
3. The TPP does not contain “definite and certain terms.”...................34
D. The District Court Properly Dismissed Wigod’s Promissory Estoppel Claim. ...................................................................................................................36
E. The District Court Correctly Held That Wigod Failed To Allege A Valid ICFA Claim. ..............................................................................................37
1. Wigod offers no well-pleaded factual allegations that Wells Fargo intended Wigod to rely on its alleged deception....................37
2. Wigod failed to allege that she suffered actual damages. ................38
3. The District Court properly held that Wigod’s claim that Wells Fargo engaged in unfair conduct did not state a claim under ICFA..........................................................................................................40
F. The District Court Properly Dismissed Wigod’s Misrepresentation Claims Because She Failed To Plead That She Justifiably Relied Upon Statements In The TPP. ......................................................................................41
G. The Moorman Or Economic Loss Doctrine Bars Wigod’s Negligence-Based Claims; Wigod Failed To Sufficiently Allege The Elements Of
Each Such Claim. ............................................................................................................44
1. Dismissal of Wigod’s negligence-based claims should be affirmed based on the “economic loss doctrine.” ..............................44
2. Dismissal of Wigod’s negligent hiring claim should be affirmed....................................................................................................46
3. The District Court’s dismissal of Wigod’s negligent or fraudulent misrepresentation/concealment should be affirmed. ...47
(a) Wigod failed to allege with specificity facts showing that Wells Fargo had a scheme to defraud Wigod. ......................47
(b) Wigod failed to allege that she was damaged by Wells Fargo’s conduct. ..........................................................................47
(c) Wigod failed to allege that Wells Fargo owed her a duty. ...48
VIII. CONCLUSION................................................................................................................49
CERTIFICATE OF COMPLIANCE WITH FED. R. APP. PROC. 32(a)(7) ..........................50
A/S Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chemical Group, Inc.,873 F.2d 155 (7th Cir. 1989)............................................................................................30
Adams v. U.S. Bank,2010 WL 2670702 (E.D. Mich. July 1, 2010) .................................................................48
American United Logistics, Inc. v. Catellus Development Corp.,319 F.3d 921 (7th Cir. 2003)............................................................................................45
Ashcroft v. Iqbal,129 S. Ct. 1937 (2009) ..........................................................................................13, 40, 44
Association Benefit Services, Inc. v. Caremark RX, Inc.,493 F.3d 841 (7th Cir. 2007)......................................................................................29, 34
Aux Sable Liquid Products v. Murphy,526 F.3d 1028 (7th Cir. 2008)..........................................................................................22
Ayers v. General Motors Corp.,234 F.3d 514 (11th Cir. 2000)........................................................................16, 17, 19, 21
Baltazar v. Premium Capital Funding,2011 WL 3841450 (D. Utah Aug. 26, 2011) ..................................................................20
Barinaga v. JP Morgan Chase & Co.,749 F. Supp. 2d 1164 (D. Or. 2010)................................................................................34
Bell Atlantic v. Twombly,550 U.S. 544 (2007) ..........................................................................................................13
Bosque v. Wells Fargo Bank, N.A.,762 F. Supp. 2d 342 (D. Mass. 2011) ............................................................24, 25, 31-32
Bower v. Jones,978 F.2d 1004 (7th Cir. 1992)..........................................................................................47
Boyd v. U.S. Bank, N.A., ex rel. Sasco Aames Mortgage Loan Trust,--- F. Supp. 2d ----, 2011 WL 1374986 (N.D. Ill. Apr. 12, 2011)............................21, 41
Broder v. Cablevision Systems Corp.,418 F.3d 187 (2d Cir. 2005).......................................................................................15, 16
Brown v. First Tennessee National Association,753 F. Supp. 2d 1249 (N.D. Ga. 2009) ...............................................................16, 17, 24
Buckman Co. v. Plaintiffs’ Legal Committee,531 U.S. 341 (2001) ..............................................................................................23, 24, 25
Business Systems Engineering, Inc. v. International Business Machines Corp.,547 F.3d 882 (7th Cir. 2008)............................................................................................34
Casey v. FDIC,583 F.3d 586 (8th Cir. 2009)............................................................................................27
Catalan v. GMAC Mortgage Corp.,629 F.3d 676 (7th Cir. 2011)............................................................................................45
Cobb-Alvarez v. Union Pacific Corp.,962 F. Supp. 1049 (N.D. Ill. 1997)..................................................................................30
Conboy v. AT &T Corp.,241 F.3d 242 (2d Cir. 2001).................................................................................15, 16, 18
Contempo Design, Inc. v. Chicago & Northeast Illinois District Council of Carpenters,226 F.3d 535 (7th Cir. 2000)............................................................................................33
Copeland-Turner v. Wells Fargo Bank, N.A,--- F. Supp. 2d ----, 2011 WL 2650853 ((D. Or. July 6, 2011) ................................26, 28
Costigan v. CitiMortgage, Inc.,2011 WL 3370397 (S.D.N.Y. Aug. 2, 2011) ...................................................................36
Cox v. Mortgage Electronic Registration Systems, Inc., 2011 WL 2600700 (D. Minn. June 30, 2011) .................................................8, 14, 17, 20
Cozzi Iron & Metal, Inc. v. U.S. Office Equipment, Inc.,250 F.3d 570 (7th Cir. 2001)............................................................................................44
Crawford Supply Group, Inc. v. Bank of Am., N.A.,2011 WL 3793913 (N.D. Ill. Aug. 25, 2011) ..................................................................15
Dersch Energies, Inc. v. Shell Oil Co.,314 F.3d 846 (7th Cir. 2002)............................................................................................15
Duffy v. Ticketreserve, Inc., 722 F. Supp. 2d 977 (N.D. Ill. 2010) ..............................................................................41
Edwards v. Aurora Loan Services, LLC,--- F. Supp. 2d ----, 2011 WL 2340939 (D.D.C. June 14, 2011)..................................7, 8
First Place Bank v. Skyline Funding, Inc.,2011 WL 3273071 (N.D. Ill. July 27, 2011)....................................................................45
Fletcher v. OneWest Bank, FSB,--- F. Supp. 2d ----, 2011 WL 2648606 (N.D. Ill. June 30, 2011)......................14, 20, 25
Freedom Mortgage Corp. v. Burnham Mortgage Corp., 750 F. Supp. 2d 978 (N.D. Ill. 2010). .............................................................................45
Frye v. L’Oreal USA, Inc.,583 F. Supp. 2d 954 (N.D. Ill. 2008) ..............................................................................38
Gade v. National Solid Wastes Management Association,505 U.S. 88 (1992) ............................................................................................................22
Geier v. American Honda Motor Co.,529 U.S. 861 (2000) ..........................................................................................................23
Geva v. Leo Burnett Co., 931 F.2d 1220 (7th Cir. 1991)..........................................................................................36
Graham v. Midland Mortgage Co.,406 F. Supp. 2d 948 (N.D. Ill. 2005) ..............................................................................49
Grill v. BAC Home Loans Servicing LP,2011 WL 127891 (E.D. Cal. Jan. 14, 2011)...............................................................31, 34
Grochowski v. Phoenix Construction,318 F.3d 80 (2d Cir. 2003).........................................................................................15, 16
Haehl v. Wash. Mutual Bank, F.A.,277 F. Supp. 2d 933 (S.D. Ind. 2003) .............................................................................27
Hicklin Engineering, L.C. v. Bartell,439 F.3d 346 (7th Cir. 2006)..............................................................................................1
Hollymatic Corp. v. Holly Systems, Inc.,620 F. Supp. 1366 (N.D. Ill. 1985)..................................................................................47
Hukic v. Aurora Loan Services,588 F.3d 420 (7th Cir. 2009)............................................................................................13
Ibrahim v. Mid-Atlantic Air of DC, LLC,F. Supp. 2d, 2011 WL 3489110 (D.D.C. Aug, 10, 2011) ..............................................16
In re Ocwen Loan Servicing, LLC Mortgage Servicing Litigation,491 F.3d 638 (7th Cir. 2007)................................................................................25, 26, 27
In re Orthopedic Bone Screw Products Liability Litigation,193 F.3d 781 (3d Cir. 1999).............................................................................................16
In re Salvador,--- B.R. ----, 2011 WL 1833188 (Bankr. M.D. Ga. May 12, 2011) ..........................34, 36
Kim v. Carter’s Inc.,598 F.3d 362 (7th Cir. 2010)............................................................................................38
Lonberg v. Freddie Mac,2011 WL 838943 (D. Or. Mar. 4, 2011)..........................................................................31
Lucia/Corvello v. Wells Fargo Bank, N.A.,--- F.Supp.2d ----, 2011 WL 3134422 (N.D. Cal. Apr 22, 2011) ................20, 31, 36, 42
Lund v. CitiMortgage Inc., 2011 WL 1873690 (D. Utah May 17, 2011) .............................................................31, 42
Marcus & Millichap Inv. Services of Chicago, Inc. v. Sekulovski,639 F.3d 301 (7th Cir. 2011)......................................................................................13, 44
Marks v. Bank of America, N.A.,2010 WL 2572988 (D. Ariz. June 22, 2010) ...................................................................17
McInroy v. BAC Home Loan Servicing, LP,2011 WL 1770947 (D. Minn. May 9, 2011) .............................................................17, 19
Medtronic, Inc. v. Lohr,518 U.S. 470 (1996) ..........................................................................................................24
Mehta v. Wells Fargo Bank, N.A.,737 F. Supp. 2d 1185 (S.D. Cal. Aug. 26, 2010)......................................................33, 34
Mizrahi v. Wells Fargo Home Mortgage,2010 WL 2521742 (D. Nev. June 16, 2010) ...................................................................34
Morales v. Chase Home Finance LLC,2011 WL 1670045 (N.D. Cal. Apr. 11, 2011).................................................................20
Nadan v. Homesales, Inc., 2011 WL 3584213 (E.D. Cal. Aug. 12, 2011).......................................................8, 20, 34
Nance v. Maxwell Federal Credit Union (MAX),186 F.3d 1338 (11th Cir. 1999)..................................................................................16, 20
Nash v. GMAC Mortgage, LLC,2011 WL 2470645 (D.R.I. May 18, 2011).......................................................................20
National Railroad Passenger Corp. v. National Association of Railroad Passengers,414 U.S. 453 (1974) ..........................................................................................................15
Norman v. Niagara Mohawk Power Corp.,873 F.2d 634 (2d Cir. 1989).............................................................................................16
Olson v. Jenkens & Gilchrist,461 F. Supp. 2d 710 (N.D. Ill. 2006) ..............................................................................49
Parmer v. Wachovia,2011 WL 1807218 (N.D. Cal. Apr. 22, 2011).................................................................28
Poco v. Wachovia Mortgage Corp.,2011 WL 2633298 (N.D. Cal. July 5, 2011) ...................................................................28
Pommier v. People Bank Marycrest,967 F.2d 1115 (7th Cir. 1992)..........................................................................................35
Prince-Servance v. BankUnited, FSB,2007 WL 3254432 (N.D. Ill. Nov. 1, 2007) ....................................................................27
Rackley v. JPMorgan Chase Bank, National Ass’n,2011 WL 2971357 (W.D. Tex. Jul 21, 2011).............................................................20, 33
Remo v. Wachovia Mortgage, 2011 WL 3448234 (N.D. Cal. Aug. 5, 2011)............................................................26, 28
Runnemede Owners, Inc. v. Crest Mortgage Corp.,861 F.2d 1053 (7th Cir. 1988)..........................................................................................43
Salgado v. America’s Servicing Co.,2011 WL 3903072 (D. Ariz. Sept. 6, 2011) ....................................................................33
Sato v. Wachovia Mortgage, FSB,2011 WL 2784567 (N.D. Cal. July 13, 2011) .................................................................26
Schultz v. Prudential Insurance Co. of America,678 F. Supp. 2d 771 (N.D. Ill. 2010) ..............................................................................41
Schilke v. Wachovia Mortgage, FSB,758 F. Supp. 2d 549 (N.D. Ill. 2010) ..............................................................................27
Shurtliff v. Wells Fargo Bank, N.A.,2010 WL 4609307 (D. Utah Nov. 5, 2010) ....................................................................31
Siegel v. Shell Oil Co.,612 F.3d 932 (7th Cir. 2010)............................................................................................37
Silvas v. E*Trade Mortgage Corp.,514 F.3d 1001 (9th Cir. 2008)..........................................................................................27
Snyder v. Wachovia Mortgage,2010 WL 2736945 (E.D. Cal. July 12, 2010) ..................................................................29
Steffens v. American Home Mortgage Servicing, Inc.,2011 WL 901812 (D.S.C. Jan. 5, 2011) .............................................................................8
Stolba v. Wells Fargo & Co.,2011 WL 3444078 (D.N.J. Aug 08, 2011)................................................20, 31, 42-43, 49
Teamsters Local 282 Pension Trust Fund v. Angelos,839 F.2d 366 (7th Cir. 1988)............................................................................................44
Touche Ross & Co. v. Redington,442 U.S. 560 (1979) ..........................................................................................................15
Vida v. OneWest Bank, F.S.B., 2010 WL 5148473 (D. Or. Dec. 13, 2010) ......................................................................31
Wachovia Bank, N.A. v. Schmidt,546 U.S. 303 (2006) ............................................................................................................1
Warren v. Bank of America,2011 WL 2116407 (S.D. Ga. May 24, 2011)...................................................................17
Williams v. Geithner,2009 WL 3757380 (D. Minn. Nov. 9, 2009).........................................................8, 17, 19
Zarif v. Wells Fargo Bank, N.A., 2011 WL 108560 (S.D. Cal. Mar. 23, 2011)..............................................................28, 29
Zoher v. Chase Home Financing,2010 WL 4064798 (S.D. Fla. Oct. 15, 2010) ...................................................................24
State Cases
Adler v. William Blair & Co.,648 N.E.2d 226 (Ill. App. Ct. 1995)..........................................................................43, 44
Anand v. Marple,522 N.E.2d 281 (Ill. App. Ct. 1988)................................................................................35
Chatham Surgicore, Ltd. v. Health Care Service Corp.,826 N.E.2d 970 (Ill. App. Ct. 2005)................................................................................47
Connick v. Suzuki Motor Co.,675 N.E.2d 584 (Ill. 1996)....................................................................................48, 49, 51
Cooney v. Chicago Public Schools,943 N.E.2d 23 (Ill. App. Ct. 2010).................................................................................39
DiLorenzo v. Valve & Primer Corp.,807 N.E.2d 673 (Ill. App. Ct. 2004)................................................................................33
Duran v. Leslie Oldsmobile, Inc.,594 N.E.2d 1355 (Ill. App. Ct. 1992)..............................................................................37
Fox Associates, Inc. v. Robert Half International, Inc.,777 N.E.2d 603 (Ill. App. Ct. 2002)................................................................................45
Luciani v. Bestor,436 N.E.2d 251 (Ill. App. Ct. 1982)................................................................................43
Magna Bank of Madison County v. Jameson,604 N.E.2d 541 (Ill. App. Ct. 1992)..........................................................................48, 49
McErlean v. Union National Bank of Chicago,414 N.E.2d 128 (Ill. App. Ct. 1980)..........................................................................34, 35
Mitchell v. Norman James Construction Co.,684 N.E.2d 872 (Ill. App. Ct. 1997)................................................................................46
Moorman Manufacturing Co. v. National Tank Co.,435 N.E.2d 443 (Ill. 1982)..........................................................................................44, 45
Oliveira v. Amoco Oil Co.,776 N.E.2d 151 (Ill. 2002)................................................................................................40
Petty v. Chrysler Corp.,799 N.E.2d 432 (Ill. App. Ct. 2003)................................................................................39
Price v. Philip Morris, Inc.,848 N.E.2d 1 (Ill. 2005)........................................................................................38, 39, 40
Ross v. May Co.,880 N.E.2d 210 (Ill. App. Ct. 2007)................................................................................32
Schmidt v. Landfield,169 N.E2d 229 (Ill. 1988).................................................................................................43
Suburban 1, Inc. v. GHS Mortgage, LLC,833 N.E.2d 18 (Ill. App. Ct. 2005)..................................................................................37
Teachers Insurance & Annuity Association of America v. LaSalle National Bank,691 N.E.2d 881 (Ill. App. Ct. 1998)................................................................................49
Van Horne v. Muller,705 N.E.2d 898 (Ill. 1998)................................................................................................46
State Statutes
815 ILL. COMP. STAT. 505/10a ..........................................................................................4, 37, 38
Plaintiff-appellant Lori Wigod (“Wigod”) filed this action against Wells Fargo Bank,
N.A. (“Wells Fargo”) on April 15, 2010. (Dckt. 1.) Wigod’s jurisdictional statement is not
complete or entirely correct. The District Court had original jurisdiction over Wigod’s
suit pursuant to both 28 U.S.C. §§ 1332(a) and 1332(d).
First, there is diversity of citizenship. Wigod is a citizen of Illinois. (Amended
Complaint (Dckt. 1) (“AC”) ¶11.)1 Wells Fargo is a national banking association with its
main office in South Dakota. (AC ¶12.) For jurisdiction purposes, national banking
associations are deemed “citizens of the States in which they are respectively located.”
28 U.S.C. § 1348. This statutory language means that a national banking association is a
citizen of the state in which its main office, as set forth in its articles of association, is
located, Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 318 (2006), and its principal place
of business is not relevant to the jurisdictional analysis. See Hicklin Eng’g, L.C. v. Bartell,
439 F.3d 346, 347-48 (7th Cir. 2006).
The amount in controversy exceeds $75,000. Wigod seeks specific performance of a
purported contract to modify her $728,500 mortgage loan serviced by Wells Fargo.
(Mortgage, Dckt. 30-1 ¶E; AC ¶¶69-70, 83 & Prayer for Relief ¶¶C, H.) Wigod also seeks
compensatory and punitive damages, as well as attorneys’ fees. (AC, Prayer for Relief
¶¶A-J.) Pursuant to 28 U.S.C. § 1332(a), complete diversity exists.
1 Citations to the record are indicated by the relevant district court docket number (“Dckt.”) and page range. Citations to the Joint Appendix are indicated by “App.” and page range.
provides monetary incentive payments to borrowers, lenders, and servicers. April
Report at 25; see also (Supplemental Directive (“SD”) 09-01, App. 22-25); SD 10-05 at 6-7,
available at https://www.hmpadmin.com/portal/programs/guidance.jsp; MHA
Handbook Version 3.3, at 106-108.2
2. The Servicer Participation Agreement
On April 13, 2009, Wells Fargo and Fannie Mae, as financial agent for the United
States, executed a Commitment to Purchase Financial Instrument and Servicer
Participation Agreement for HAMP (“SPA”). (App. 98-116.) Wells Fargo and Fannie
Mae executed an Amended SPA on March 16, 2010. (Dckt. 30-4.) The SPA sets forth the
“terms and conditions relating to the respective roles and responsibilities of Program
participants and other financial agents of the government.” (App. 98.) Further, the SPA
provides that Freddie Mac, also as financial agent of the United States, will “fulfill a
compliance role in connection with the Program ,” (id.) and that Wells Fargo’s
“performance of the Services and implementation of the Program shall be subject to
review by Freddie Mac and its agents and designees,” (id., 99, ¶2.D).
By executing the SPA, Wells Fargo agreed to perform the loan modification and
other services described therein and set forth in the “Program guidelines and
2 Prior to August 19, 2010, Treasury published its guidelines in the form of Supplemental Directives, FAQs, among other documents. Since August 2010, Treasury has published a consolidated handbook of programmatic guidance for non-GSE loans, available at https://www.hmpadmin.com/portal/programs/servicer.jsp. This brief generally cites to the original guidance documents applicable to Wigod’s loan, available at https://www.hmpadmin.com/portal/programs/guidance.jsp.
releases/Pages/200934145912322.aspx. Treasury has since issued supplemental
guidance on numerous occasions to adjust and enhance different components of the
program and to answer questions raised by program participants, primarily loan
servicers. See supra, footnote 2.
The program guidelines set forth a defined loan modification process based on
government and investor criteria. Using the guidelines, the loan servicer evaluates
whether an individual loan may be modified in such a way as to achieve a sustainable
monthly payment amount. Not all loans serviced by Wells Fargo are eligible for
consideration for HAMP. (See SD 09-01, App. 2-3.) For example, some investors do not
participate in HAMP, a result contemplated by HAMP guidelines. (Id., 1, 4
(participating servicers must make an effort to remove investor prohibitions on
modifications; loans with a negative NPV result cannot be modified without express
investor approval).) Further, contrary to Wigod’s repeated statements, the participating
servicer is not required to modify every HAMP-eligible loan. 3
Using the borrower’s verified income information, HAMP guidelines require a
servicer to apply steps known as the “waterfall.” The waterfall is designed to achieve a
monthly mortgage payment that is not more than 31% of a borrower’s total pre-tax
3 EESA does not mandate loan modifications. Williams v. Geithner, 2009 WL 3757380, at *6 (D. Minn. Nov. 9, 2009); see also Nadan v. HomeSales, Inc., 2011 WL 3584213, at *8 (E.D. Cal. Aug. 12, 2011) (“Defendants are correct that lenders ‘retain the right to reject or structure modifications as appropriate to the individual circumstances of the borrower.’”); Cox v. Mortgage Elec. Registration Sys., Inc., 2011 WL 2600700, at *2 (D. Minn. June 30, 2011); Edwards, 2011 WL 2340939, at *6; Steffens v. Am. Home Mortgage Servicing, Inc., 2011 WL 901812, at *4 (D.S.C. Jan. 5, 2011).
A. The District Court Correctly Held That Wigod’s State Law Claims Are An Impermissible End-Run Around The Lack Of A Private Right Of Action In EESA And HAMP.
HAMP provides the determinative law that governs the outcome of Wigod’s claims;
those claims, to be resolved, would require litigation of contested issues of federal law,
for example, regarding the requirements that Wells Fargo was obligated to follow under
HAMP, and whether Wells Fargo satisfied those requirements. Because the outcome of
Wigod’s claims depends almost, if not, entirely upon application of federal law
standards, her claims cannot be resolved under state law. For that reason, Wigod’s
claims are HAMP claims in disguise, and the District Court correctly concluded that
they are an end-run around the lack of a private right of action in EESA and HAMP. If
Congress had intended courts to be adjudicating whether a borrower qualified for a
loan modification under EESA or HAMP, it would have provided a private right of
action – but it chose not to do so.5 The District Court’s decision that Wigod “fail[ed] to
state a cause of action independent of HAMP, for which there is no private right of
action” should be affirmed.
While Wigod asserts that there is no rule of law that supports the District Court’s
holding (Pl. Br. 18, and citing Fletcher v. OneWest Bank, FSB, --- F. Supp. 2d ----, 2011 WL
2648606, at *4 (N.D. Ill. June 30, 2011)), she is incorrect. “It is a principle of statutory
construction that ‘when legislation expressly provides a particular remedy or remedies,
5 It is beyond dispute (as Wigod recognizes) that neither EESA nor HAMP provides borrowers with the right to privately enforce its terms to obtain a permanent HAMP modification. See, e.g., Cox, 2011 WL 2600700, at *3; (Pl. Br. 12-13, 15-16.)
administrative remedies and lender participation was encouraged). The same principle
applies here.
Congress placed responsibility on Treasury for implementing HAMP and for issuing
guidance that sets forth the HAMP standards to be applied by servicers. See 12 U.S.C.
§ 5519(a); see also Cox, 2011 WL 2600700, at *2; Williams, 2009 WL 3757380, at *3. Freddie
Mac, the United States’ financial agent, is responsible for enforcing HAMP and ensuring
that servicers comply with HAMP guidance. (App. 25, 98); Warren v. Bank of Am., 2011
WL 2116407, at *3 (S.D. Ga. May 24, 2011); McInroy v. BAC Home Loan Servicing, 2011 WL
1770947, at *3 (D. Minn. May 9, 2011) (“HAMP designates Freddie Mac as the program’s
sole enforcement agent and provides consumers with a procedure for filing complaints
with Freddie Mac.”); Marks v. Bank of Am., N.A., 2010 WL 2572988, at *6 (D. Ariz. June
22, 2010) (“[b]y delegating compliance authority to one entity, Freddie Mac, Congress
intended that a private cause of action was not permitted”).6
It would be inconsistent with HAMP’s structure to provide borrowers with a right to
seek judicial enforcement of HAMP guidelines through state law thus shifting
interpretation of HAMP’s requirements from the Treasury, and its agents, to the courts.
See, e.g., Ayers, 234 F.3d at 524-25; Brown, 753 F. Supp. 2d at 1258. Not only would
6 Wigod seeks to challenge not only Wells Fargo’s determination that she did not qualify for a permanent HAMP modification, but also Wells Fargo’s procedures for complying with HAMP, including the manner in which it hired and supervised employees to meet its HAMP obligations. These obligations flow to Wells Fargo through its SPA. The Treasury is authorized, and uses its authority, to monitor and enforce the manner in which servicers are meeting their obligations under the SPA, and Wigod has no standing to do so.
numerous federal judges begin interpreting HAMP but, under Wigod’s approach, each
state’s laws would be added to the mix, thus offering the prospect of numerous
different interpretations being applied to the same servicer. This would undermine
authority provided exclusively to governmental agencies by Congress.7 Nothing in the
case law or EESA supports this result.
As the Second Circuit noted analogously in Conboy, where a federal agency (there,
the FCC) is responsible for interpreting and implementing a federal statute, a private
right of action would be inconsistent with those powers “because ‘[p]rivate litigation
tends to transfer regulatory interpretation and discretion from the agency to the
courts.’” 241 F.3d at 253 (quoting Conboy v. AT&T Corp., 84 F. Supp. 2d 492, 501
(S.D.N.Y. 2000). The Second Circuit continued:
a private right of action would place the FCC’s “interpretive function squarely in the hands of private parties and some 700 federal district judges, instead of in the hands of the Commission … The result would be to deprive the FCC of necessary flexibility and authority in creating, interpreting, and modifying communications policy.” New England Tel. & Tel. Co. v. Public Utils. Comm’n, 742 F.2d 1, 6 (1st Cir. 1984) [Breyer, J.]. It is highly unlikely, therefore, that Congress intended to create a private right of action for violations of FCC regulations. Such a right would “threaten[] the sound development of a coherent nationwide communications policy – a central objective of the [Communications] Act.” Id. at 5.
7 EESA appoints a Special Inspector General of the Trouble Asset Relief Program (“SIGTARP”), which includes HAMP. The SIGTARP conducts audits and investigations, with subpoena power, with respect to TARP. The SIGTARP is also responsible for issuing quarterly reports to Congress. 12 U.S.C. § 5231. EESA also gives oversight authority to the Financial Stability Oversight Board to make recommendations to Treasury, submit reports to Congress, and report fraud to the Attorney General or the Special Inspector General for TARP. 12 U.S.C. § 5214. The Treasury also issues monthly and quarterly reports regarding servicers’ compliance with HAMP. (See, e.g., Dckt. 30-3.)
241 F.3d at 253; see also Ayers, 234 F.3d at 524-25; Brown, 753 F. Supp. 2d at 1258.
A finding by this Court affirming the District Court’s decision would not mean that
Wigod or any other borrower would be without a remedy. A borrower who wishes to
challenge a HAMP determination, or pursue a HAMP complaint, has several options
including, for example: (1) using the extensive escalation process initiated by calling the
HOPE Hotline (see Williams, 2009 WL 3757380, at *3); (2) submitting a complaint to
Freddie Mac (see McInroy, 2011 WL 1770947, at *3); or (3) submitting a complaint to the
OCC, the agency that oversees national banks, including Wells Fargo.8
More specifically, Fannie Mae contracts with the non-profit Homeownership
Preservation Foundation to operate the HOPE Hotline through which borrowers may
escalate concerns regarding how their HAMP application was handled.9 See
Congressional Oversight Panel, December Oversight Report at 78, (Dec. 14, 2010),
available at http://cybercemetery.unt.edu/archive/cop/20110401223225/
http://cop.senate.gov/reports/. Complaints from borrowers asserting that their
modifications were wrongly denied are escalated to HUD-approved counselors who
will initiate a three-way call with the servicer and borrower to resolve the issue. Id. If
the counselor is unable to resolve the issue, the complaint may then be sent to the
8 See http://www.helpwithmybank.gov/contact-us/contact-the-occ.html.
9 Fannie Mae requires servicers to provide a Borrower Notice, which must include the HOPE Hotline number (and an explanation that the borrower can seek free assistance from HUD-approved housing counselors and can request assistance in understanding the notice by asking for MHA HELP), to all borrowers who have been evaluated for HAMP but were not offered a TPP, were not offered a HAMP modification, or are at risk of losing eligibility for HAMP because they have failed to provide required financial documentation. (See SD 09-08, Dckt. 47-4, 1-4.)
counseling agencies’ management who will consult with higher-level officials at the
servicer. Id. If the complaint remains unresolved at this stage, it is escalated to the
HAMP Solution Center at Fannie Mae. Id. Complaints alleging that the servicer did not
adhere to HAMP guidelines can be further escalated to the MHA Compliance
Committee at Treasury, which is authorized to require the servicer to change a
modification decision. Id. at 79. Accordingly, the lack of a private right of action does
not leave a borrower who seeks to challenge a negative HAMP outcome without a
process to do so.
Numerous courts in federal jurisdictions around the country agree with the District
Court in this case that a plaintiff may not pursue a state law cause of action that seeks to
do nothing more than enforce HAMP. See, e.g., Baltazar v. Premium Capital Funding, 2011
WL 3841450, at *4 (D. Utah Aug. 26, 2011) (dismissing state law claims that “are nothing
more than disguised HAMP claims.”); Nadan, 2011 WL 3584213, at *8; Stolba v. Wells
Fargo & Co., 2011 WL 3444078, at *3 (D.N.J. Aug 08, 2011) (citing Wigod decision); Rackley
v. JPMorgan Chase Bank, Nat’l Ass’n, 2011 WL 2971357, at *3 (W.D. Tex. Jul 21, 2011)
(same); Cox, 2011 WL 2600700, at *3 (dismissing state law claims predicated on HAMP);
Nash v. GMAC Mortgage, LLC, 2011 WL 2470645, at *12 (D.R.I. May 18, 2011);
Lucia/Corvello v. Wells Fargo Bank, N.A., --- F. Supp. 2d ----, 2011 WL 3134422, at *6-7
(N.D. Cal. Apr 22, 2011) (same); Morales v. Chase Home Fin. LLC, 2011 WL 1670045, at *5
(N.D. Cal. Apr. 11, 2011) (same).10
10 The two cases that have expressly rejected Judge Manning’s decision are in the Northern District of Illinois: Fletcher v. OneWest Bank, FSB, --- F. Supp. 2d ----, 2011 WL
HAMP was not intended to benefit every borrower, and, in EESA, Congress
recognized that not every foreclosure is “avoidable.” Indeed, placing borrowers in
modified loans that they cannot afford would perpetuate, rather than alleviate, the
financial circumstances that EESA was intended to address. Wigod’s state law claims
are not contract claims or unfair and deceptive practices claims. At their core, they are
challenges to Wells Fargo’s determination that Wigod did not qualify for a HAMP
modification agreement. Because Wigod does not have a right to seek a private remedy
for a HAMP denial, the District Court properly dismissed her claims as a matter of law.
See Ayers, 234 F.3d at 525.11
B. Wigod’s State Law Claims As Applied Are Preempted.
1. Wigod’s claims are barred under principles of conflict preemption.
The Court should reject Wigod’s argument on appeal that her claims are not
preempted by federal law.12 As applied and if successful, Wigod’s state law claims
would mandate a result directly at odds with HAMP, that is, the provision of HAMP
2648606 (N.D. Ill. June 30, 2011) and Boyd v. U.S. Bank, N.A., ex rel. Sasco Aames Mortgage Loan Trust, Series 2003-1, --- F. Supp. 2d ----, 2011 WL 1374986 (N.D. Ill. Apr. 12, 2011). For all of the reasons set forth above, including the supporting authority cited herein, Wells Fargo respectfully believes that Boyd and Fletcher were incorrectly decided.
11 Neither EESA’s savings clause (Pl. Br. 19) nor HAMP’s caution to servicers that they must be in compliance with “all federal, state, and local laws” changes the analysis; neither of these provisions provides a private right of action. Indeed, HAMP guidelines state that servicers must be in compliance with Section 5 of the FTC Act (App. 12), under which private individuals have no right of action.
12 Wigod did not offer any arguments to the District Court regarding preemption. However, because she does so here, Wells Fargo responds.
loan modifications to borrowers who do not meet the Treasury’s guidelines for
qualification. Under those circumstances, “state law ‘[would] stand[] as an obstacle to
the accomplishment and execution of the full purposes and objectives of Congress.’”
Gade v. Nat’l Solid Wastes Mgmt. Assoc., 505 U.S. 88, 98 (1992) (internal quotations
omitted).
As this Court stated in Aux Sable Liquid Products v. Murphy, 526 F.3d 1028, 1034 (7th
Cir. 2008):
To determine whether state and federal law are in conflict, it is necessary to examine the federal statute as a whole and identify its purpose and intended effects. … This analysis requires that we consider the relationship between state and federal laws as they are interpreted and applied, not merely as they are written. … the crucial inquiry is whether state law differs from federal law in such a way that achievement of the congressional objective ... is frustrated. (internal quotations and citations omitted).
Here, Wigod’s state law claims, if successful, would frustrate Congressional objectives
in enacting EESA, which was, in part, to stabilize the economy and provide a program
to mitigate “avoidable” foreclosures.13 Wigod seeks an order that her TPP was a
contract that obligated Wells Fargo to provide her with a permanent modification once
she made her trial payments and provided requested documentation. If Wigod were to
obtain the relief she seeks, Wells Fargo could be ordered to either modify her loan,
leading to the perverse result of placing Wells Fargo in default of its SPA with the
government, (App. 102, ¶6.A.1), pay Wigod damages, or both.
13 EESA does not contain an express preemption provision.
participating servicers of legal duties at odds with the requirements of EESA and
HAMP would render compliance with the varying standards impossible.
As in Buckman, servicers – as HAMP participants – could be discouraged from
engaging in HAMP altogether to avoid being exposed to unpredictable civil liability in
connection with the public modification program. See Zoher v. Chase Home Financing,
2010 WL 4064798, at *4 (S.D. Fla. Oct. 15, 2010) (“[f]inding an implied private right of
action for mortgagors would discourage servicers from participating in the program
because they would be exposed to significant litigation expenses”); see also Brown, 753 F.
Supp. 2d at 1255. While Wigod argues that subjecting servicers to state enforcement
actions would encourage better performance under HAMP (Pl. Br. 22), she neglects to
consider that HAMP is a largely voluntary, not mandatory, program designed to benefit
the public at large by bringing greater stability to the housing market. Exposing
servicers to varying state standards and class action penalties under this remedial
program – not to mention putting borrowers in modified loans they still cannot afford –
would serve to frustrate, not further EESA’s purpose.
Significantly, and contrary to Wigod’s argument, that some or all of Wigod’s state
law claims are preempted does not mean that all state law claims against a servicer
“that supposedly touch upon the HAMP” (Pl. Br. 11) would be barred. For example,
tort causes of action based on fraudulent conduct could parallel federal HAMP
requirements. See Medtronic, Inc. v. Lohr, 518 U.S. 470, 481-82 (1996).14 But, these are not
14 In Bosque v. Wells Fargo Bank, N.A., the court rejected the perceived argument that no HAMP related claims could proceed under state law. But that is not the argument
the types of claims present here. Wigod is not suing for damages under state law based
on an established violation of federal law; by this lawsuit, she is seeking to use state law
as a vehicle to establish that a violation of federal standards occurred in the first
instance. Under the precedent of the Supreme Court and this Court, conflict preemption
alone supports affirmation of the District Court’s decision. See, e.g.,Buckman, 531 U.S. at
353.
2. Wigod’s state law claims are subject to field preemption by virtue of the Home Owners’ Loan Act (“HOLA”).
In her brief, relying in large part on Fletcher, Wigod argues that her claims are not
subject to field preemption under HAMP. (Pl. Br. 20-21.) She also expressly states that
the claims are not preempted by the National Bank Act. (Id. 22 n.13.) But this argument
is misplaced. First, there is no dispute that HAMP does not occupy the field of
mortgage servicing or loan modifications and thus field preemption under HAMP is
not relevant to the analysis of whether Wigod’s claims should be preempted by federal
law. Second, Fletcher misapplied this Court’s decision in In re Ocwen Loan Servicing, LLC
Mortgage Servicing Litig., 491 F.3d 638 (7th Cir. 2007). Ocwen stands, in part, for the
proposition that, under the facts presented there, the Home Owners’ Loan Act, 12
U.S.C. §§ 1461, et seq. (“HOLA”) did not preempt a basic breach of contract claim. Id. at
presented here (and, in fact, it was not the argument presented in Bosque). 762 F. Supp. 2d 342, 351 (D. Mass. 2011). Wells Fargo does not urge the Court to find that any state law claim that has any connection to HAMP is barred, but instead only those claims that seek relief based on conduct directly regulated by HAMP.
643-44. Wigod’s claims are not analogous because they implicate federal legislative
purposes not at issue in Ocwen.
However, as a matter of law, Wigod’s breach of implied contract, concealment,
negligent hiring/supervision, and ICFA claims are preempted by HOLA, and
implementing regulations promulgated by the Office of Thrift Supervision (“OTS”), 12
C.F.R. §§ 560.1, et seq., because the claims would substantially interfere with Wells
Fargo’s ability to service residential mortgage loans.15 HOLA empowered the OTS to
regulate federal savings banks, including the preemption of conflicting state laws.
Ocwen, 491 F.3d at 642. Indeed, HOLA’s implementing regulations state that “[the] OTS
hereby occupies the entire field of lending regulation for federal savings associations. 12 C.F.R.
§ 560.2(a) (emphasis added).16
15 While Wells Fargo is a national bank regulated by the National Bank Act rather than HOLA, Wigod’s loan was originated and initially serviced by Wachovia Bank FSB, a federal savings bank regulated by HOLA. (AC ¶29; App. 119 (TPP signed by Wachovia)). See Remo v. Wachovia Mortgage, 2011 WL 3448234, at *2 n.5 (N.D. Cal. Aug.5, 2011) (applying HOLA preemption to loan originated by Wachovia in 2008). Wells Fargo subsequently acquired Wachovia, which is now a division of Wells Fargo. (AC ¶29.) Because Wachovia originated and initially serviced Wigod’s loan, including executing Wigod’s TPP, the HOLA preemption analysis applies to Wigod’s claims. See, e.g., Sato v. Wachovia Mortg., FSB, 2011 WL 2784567, at *5 (N.D. Cal. July 13, 2011). Regardless, the preemption analysis under either HOLA or the National Bank Act is the same. See Copeland-Turner v. Wells Fargo Bank, N.A., --- F. Supp. 2d ----, 2011 WL 2650853, at *9 n.6 (D. Or. July 6, 2011).
16 The preemptive scope of HOLA was modified with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 13776 (2010). However, the Act does not apply to transactions predating the Act’s July 21, 2010 effective date. See 12 U.S.C. § 1553. Here, Wigod’s loan was originated in 2007 and the TPP was dated in 2009, and thus any changes to HOLA are inapplicable to the instant analysis.
Wigod obtained a permanent modification was not subject to negotiation, but rather
dictated by federal guidelines.
1. The TPP is not an enforceable “offer.”
The test for an offer is whether it induces a reasonable belief in the recipient that she
can, by accepting, bind the sender. See Cobb-Alvarez v. Union Pac. Corp., 962 F. Supp.
1049, 1053-54 (N.D. Ill. 1997). A party’s “suggestion” is not an offer if it contains
“suitable language conditioning the formation of a contract on some further step ... such
as approval by corporate headquarters.” Cobb-Alvarez, 962 F. Supp. at 1054; see also A/S
Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chem. Group, Inc., 873 F.2d 155,
157 (7th Cir. 1989).
Here, Wigod’s TPP cannot be reasonably viewed as an “offer,” the acceptance of
which could bind Wells Fargo to permanently modify Wigod’s loan. A TPP has never
been a guarantee of a loan modification.17 The language of the TPP confirms that
permanent modification of Wigod’s loan was conditioned on the receipt and review by
Wells Fargo of additional documentation and the satisfaction of all necessary conditions
to render Wigod eligible for a permanent modification. When signing the TPP, Wigod
acknowledged that she understood that “the [TPP] is not a modification of the Loan
Documents and that the Loan Documents will not be modified unless and until (i) I
meet all of the conditions required for modification, (ii) I receive a fully executed copy
17 Indeed, SD 10-01 (requiring that all TPPs are based on verified financial data) would not have been issued if Wigod’s theory – that a trial plan guarantees a permanent HAMP modification if three timely payments were made – was correct. (See Dckt. 30-5.)
consideration or the result of a reciprocal agreement. As the Illinois Appellate Court
stated in DiLorenzo v. Valve & Primer Corp., “where a party does what it is already
legally obligated to do, there is not consideration.” 807 N.E.2d 673, 679 (Ill. App. Ct.
2004); see also Contempo Design, Inc. v. Chi. & Ne. Ill. Dist. Council of Carpenters, 226 F.3d
535, 550 (7th Cir. 2000) (en banc); Salgado v. America’s Servicing Co., 2011 WL 3903072, at
*2 (D. Ariz. Sept. 6, 2011) (TPP payments fail to satisfy consideration requirement);
Rackley, 2011 WL 2971357, at *3 (TPP payments and provision of financial information
do not constitute consideration for permanent HAMP modification). Accordingly,
where – as here – a party has a pre-existing duty to perform under the terms of an
original contract, a modification of that contract with no additional consideration does
not result in the formation of a new, enforceable contract.18
Whatever actions Wigod undertook or promises she made in connection with the
TPP, such as providing income information and documentation, were nothing more
than conditions that Treasury required she satisfy so that she could obtain the benefits
of HAMP. As discussed above, HAMP is a taxpayer-funded program and part of a plan
to stabilize the economy. Wigod stood to obtain a financial incentive if she qualified for
benefits under the program. Any actions undertaken by Wigod in compliance with
HAMP constituted conditions, not bargained-for consideration paid for the benefit of
Wells Fargo. See 3 SAMUEL WILLISTON, A TREATISE ON THE LAW OF CONTRACTS (“Williston
18 Wigod’s promise “to keep her information current and to make the temporary payments on time,” (AC ¶63), cannot serve as valid consideration for a permanent modification. See Mehta v. Wells Fargo Bank, N.A., 737 F. Supp. 2d 1185, 1197 (S.D. Cal. 2010).
and interest payment, estimated monthly escrow payment amount, total monthly
payment, payment start date, number of monthly payments per interest rate period,
and principal balance. (Id. 123.) Yet, Wigod has not alleged – nor could she – that any of
this information is set forth in her TPP, even though many if not all of such terms may
be modified. (Id. 8-10.). This is so because the TPP is not a permanent modification nor
an enforceable promise to provide a permanent modification.
SD 09-01 distinguishes between the TPP and the final form Agreement: “Servicers
must use a two-step process for HAMP modifications. Step one involves providing a
Trial Period Plan outlining the terms of the trial period, and step two involves
providing the borrower with an Agreement that outlines the terms of the final
modification.” (Id. 14.) If the trial modification form contained all of the information
necessary for a legal and binding permanent modification, the “step two” final
Agreement would not be necessary, but it is. (Id. 15 (“[i]n step two, servicers must
calculate the terms of the modification using verified income, taking into consideration
amounts to be capitalized during the trial period”).) Because the TPP is silent with
respect to “what the parties agreed to” as to any permanent modification, it cannot be
enforced in a court of law.19 See McErlean, 414 N.E.2d at 132; Anand v. Marple, 522 N.E.2d
281, 281 (Ill. App. Ct. 1988) (affirming dismissal where “parties made only an agreement
to agree and … there was no meeting of the minds”).
19 Because Wigod has failed to allege the existence of a contract, the dismissal of her implied covenant claim (AC ¶¶71-73) should also be affirmed. Pommier v. People Bank Marycrest, 967 F.2d 1115, 1120-21 (7th Cir. 1992).
20 Contrary to Wigod’s argument, (Pl. Br. 35 n.21), “reliance remains an element of a private cause of action [under the ICFA].” See Duran v. Leslie Oldsmobile, Inc., 594 N.E.2d 1355, 1362 (Ill. App. Ct. 1992).
21 Wigod also stopped making her mortgage payments in May 2010, but, upon information and belief, continues to live in her condominium while her taxes are paid by Wells Fargo.
missed opportunities are purely theoretical and allege no ascertainable damages.
Nothing prevented Wigod from filing for bankruptcy or attempting to sell her home.
(SD 09-01, App. 2 (“borrower actively involved in a bankruptcy proceeding is eligible
for the HAMP at the servicer’s discretion”); TPP, App. 117-119). Nor does Wigod
provide any factual basis for the notion that she could have sold her home at all, let
alone on undefined “favorable terms.” Wigod’s allegations cannot support her claim for
relief. See Morris, 911 N.E.2d at 1053; Price, 848 N.E.2d at 5; Iqbal, 129 S. Ct. at 1949-50.22
3. The District Court Properly Held That Wigod’s Claim That Wells Fargo Engaged In Unfair Conduct Did Not State A Claim Under ICFA.
Wigod also contends that the District Court erred by dismissing her unfairness claim
under ICFA. But Wigod alleged no facts specific to her loan to support such a claim.
Wigod offered only a litany of complaints against Wells Fargo that Wigod labeled
“unfair, immoral and unscrupulous practices.” (Pl. Br. 41-42; see also AC ¶126.) The
District Court’s silence on this argument does not indicate a failure to consider the
claim, but more likely a conclusion that the claim fails and does not warrant discussion.
See Crawford Supply Group, Inc. v. Bank of Am., N.A., 2011 WL 3793913, at *2-3 (N.D. Ill.
Aug. 25, 2011) (court not required to address every argument in decision).
The conduct alleged in sub-paragraphs (a) through (i) of paragraph 126 of the
Amended Complaint, including Wells Fargo’s alleged “one call resolution policy,”
22 Wigod also did not allege a basis for a finding of proximate causation. She does not allege that Wells Fargo prevented her from seeking bankruptcy relief, from selling her home, or from pursuing any alternative and more preferable solutions to address her debt obligations. See Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 155 (Ill. 2002) (affirming dismissal because no proximate causation).
consists of a general complaint that provides no connection to Wigod’s loan
modification application. Nothing in paragraph 126 sets forth well-pleaded factual
allegations that – taken as true – would establish conduct that violated ICFA as to
Wigod’s loan. “[N]amed plaintiffs who [seeks to] represent a class must allege and show
that they personally have been injured, not that injury has been suffered by other,
unidentified members of the class to which they belong and which they purport to
represent.” Schultz v. Prudential Ins. Co. of Am., 678 F. Supp. 2d 771, 782 (N.D. Ill. 2010).
None of Wigod’s general allegations explains how Wells Fargo’s conduct vis-à-vis
Wigod violated ICFA or differed from Wigod’s alleged breach of contract claim. See
Duffy v. Ticketreserve, Inc., 722 F. Supp. 2d 977, 992-93 (N.D. Ill. 2010). Accordingly, the
District Court properly dismissed Wigod’s ICFA claim.23
F. The District Court Properly Dismissed Wigod’s Misrepresentation Claims Because She Failed To Plead That She Justifiably Relied Upon Statements In The TPP.
Wigod alleges that Wells Fargo misrepresented that it would permanently modify
her loan if she made her TPP payments and submitted the supporting documentation
required by the TPP. (AC ¶¶ 7, 27, 104, 120.) The District Court, however, properly
held that, as a matter of law, Wigod could not have reasonably relied on a provision of
the TPP that was inherently contradictory to another. (See Order 13-14.) Wigod argues
that the District Court’s analysis was flawed because it assumed that Wigod relied on
23 The district court’s decision in Boyd does not apply here, because, unlike in Boyd, Wigod has not alleged any “unfair” conduct under ICFA that applies to her. In Boyd, the plaintiff alleged that the servicer failed to evaluate his HAMP eligibility and then foreclosed on his property. 2011 WL 1374986, *2. No such allegations are present here.
information regarding HAMP requirements that was publicly available at the time. See
Adler, 648 N.E2d at 232. Absent any alleged inquiry Wigod’s alleged reliance was not
justifiable, as a matter of law.
Wigod’s naked allegations that she “met the financial threshold for permanent
modification prior to entering into the TPP” do not render her alleged reliance on the
TPP justifiable. Wigod’s repeated argument – with no support from well-pled factual
allegations – that Wells Fargo had verified her qualification for a permanent
modification prior to providing her with a TPP is entirely speculative and does not
support a finding of justifiable reliance on the TPP.24 See Iqbal, 129 S. Ct. at 1949-50.
Absent justifiable reliance on any alleged misrepresentation by Wells Fargo, the District
Court properly dismissed Wigod’s misrepresentation claims. See Cozzi Iron & Metal, Inc.
v. U.S. Office Equip., Inc., 250 F.3d 570, 574 (7th Cir. 2001).25
G. The Moorman Or Economic Loss Doctrine Bars Wigod’s Negligence-Based Claims; Wigod Failed To Sufficiently Allege The Elements Of Each Such Claim.
1. Dismissal of Wigod’s negligence-based claims should be affirmed based on the “economic loss doctrine.”
Under Illinois law, the Moorman, or economic loss, doctrine bars a plaintiff from
recovering for purely economic losses under a tort theory of negligence. Moorman Mfg.
Co. v. Nat’l Tank Co., 435 N.E.2d 443, 453 (Ill. 1982). To recover in tort under the
24 Moreover, the Amended Complaint does not allege that Wigod’s loan received a positive NPV result.
25 Alternate grounds for affirming the dismissal of plaintiff’s misrepresentation claims are discussed in detail in Sections VII.G.1, and VII.G.3. See Marcus & Millichap, 639 F.3d at 312 (Court may affirm dismissal “on any basis that appears in the record, even if it was not the district court's ground for dismissing the suit).
Wigod does not assert that Wells Fargo’s negligence caused her any physical injury or
property damage. Thus, Wigod’s claims fall squarely within the Moorman doctrine, and
dismissal of her negligence-based claims should be affirmed. See Catalan v. GMAC
Mortgage Corp., 629 F.3d 676, 693 (7th Cir. 2011); First Place Bank v. Skyline Funding, Inc.,
2011 WL 3273071, at *6 (N.D. Ill. July 27, 2011) (Moorman doctrine barred negligent
misrepresentation claim against mortgage originator); Freedom Mortgage Corp., 720 F.
Supp. 2d at 1001-02 (dismissing negligent supervision and hiring claims); Fox Assoc.,
Inc. v. Robert Half International, Inc., 777 N.E.2d 603, 610 (Ill. App. Ct. 2002).27
26 A number of exceptions apply to the doctrine, but none is applicable to Wigod’s claims. See Catalan v. GMAC Mortgage Corp., 629 F.3d 676, 693 (7th Cir. 2011) (listing exceptions).
27 Wigod’s claims do not fall into a narrow exception to the Moorman doctrine that applies “where the plaintiff’s damages were proximately caused by a negligent misrepresentation by a defendant in the business of supplying information for the guidance of others in their business transactions.” Catalan, 629 F.3d at 693. Wigod fails