Martin v. Wells Fargo Bank, N.A.

Background

Rudy Martin, proceeding without a lawyer, sued Wells Fargo Bank, N.A., and Does 1–20. He alleged that he owned property in Pebble Beach, California, and sought to resolve ownership of the property. Wells Fargo had a mortgage recorded against it.

Martin alleged that he entered into a 2006 mortgage agreement and a revised 2007 loan for $993,750. He claimed that Wells Fargo later made unauthorized charges, refused payments that did not match its calculation of the amount due, and promised to investigate the charges, provide an accounting, stop charging late fees, and refrain from foreclosure while the dispute was investigated. The opinion states that no foreclosure had occurred as of May 18, 2020.

Martin’s Second Amended Complaint asserted nine claims: breach of contract; implied-in-fact contract; breach of the implied covenant of good faith and fair dealing; breach of an implied duty to perform with reasonable care; inducing breach of contract; intentional interference with contractual relations; intentional interference with prospective economic relations; negligent interference with prospective economic relations; and reliance damages based on breach of contract.

Court’s Analysis

The court applied Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court also noted that it was required to read a self-represented litigant’s allegations liberally while still requiring facts that plausibly support a claim.

For the breach-of-contract claim, the court found that the alleged promises about accounting, payment acceptance, late fees, and foreclosure did not appear in either the 2006 Agreement or the 2007 Revised Loan. Martin did not identify specific contract provisions supporting the claim, so the claim was conclusory and legally deficient. To the extent the claim relied on oral promises, the court held that those promises modified mortgage agreements subject to California’s statute of frauds, which generally requires such agreements to be in writing and signed.

The court reached a similar conclusion on the implied-covenant claim. Martin did not tie the alleged unfair conduct to a specific express term in either written loan agreement or allege facts showing that Wells Fargo’s conduct conflicted with such a term.

The court also dismissed the newly added claims. The earlier order had authorized amendment only for certain contract and implied-covenant claims based on the written 2007 loan agreement. The new claims were therefore subject to dismissal because they were not authorized. The court nevertheless reviewed their substance and found none legally viable. The alleged implied-in-fact contract relied on oral promises that were unenforceable under the statute of frauds. The reasonable-care claim was not tied to a written contract, and the court stated that Wells Fargo was acting in its conventional role as a lender; the negligence allegations were also conclusory. The inducing-breach and intentional-interference claims improperly repeated previously dismissed fraud allegations and otherwise failed for the reasons already discussed. The prospective-economic-relations claims lacked facts showing the required economic relationship, interference, disruption, and damages; the court also stated that foreclosure notices could be privileged if they were the reports Martin referenced. The reliance-damages claim repeated allegations that did not support a legally viable claim, and the court rejected Martin’s assertion that Wells Fargo Bank, N.A., could not participate in the case.

Disposition

Judge Edward J. Davila granted Wells Fargo’s motion to dismiss the Second Amended Complaint. The court stated that the dismissal was without leave to amend because Martin had had three opportunities to allege legally viable claims and further amendment was likely to be futile.