Armstrong-Harris v. Wells Fargo Bank, N.A.

Background

Cedric Armstrong-Harris, proceeding without a lawyer, sued Wells Fargo and Specialized Loan Servicing. He alleged that he owned a residential property in Oakland, California; that a loan was issued for the property in March 2007 by World Savings Bank, which was later acquired by Wells Fargo; that he could not make the required monthly mortgage payment in 2021; and that defendants demanded the remaining loan balance and later began foreclosure proceedings. He also alleged that he tried to negotiate a loan modification but that no modification agreement was ever entered into.

The lawsuit asserted 14 claims, including claims under the Truth in Lending Act, California’s Unfair Competition Law, California foreclosure-related laws, contract and good-faith duties, slander of title, alter ego liability, unjust enrichment, defamation, false light, cancellation, and intentional misrepresentation. Wells Fargo moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint states enough facts to make a claim legally plausible.

The court also ordered the clerk to terminate Wells Fargo Home Mortgage as a defendant and add Wells Fargo Bank, N.A. Wells Fargo had argued that no entity named Wells Fargo Home Mortgage existed, and Wells Fargo Bank, N.A. had appeared in the case.

Claims Dismissed With Leave to Amend

The court dismissed the following claims but allowed Armstrong-Harris to amend them:

- Claim 1, unlawful business practices under the Unfair Competition Law: The claim relied on alleged violations of the Truth in Lending Act and the Home Owners’ Loan Act. The Truth in Lending Act theory was untimely, and the complaint did not identify how or which provision of the Home Owners’ Loan Act was violated. - Claim 3, slander of title: The complaint did not identify a specific publication, explain why it lacked privilege or justification, or explain why it was false. - Claim 4, alter ego liability: The complaint did not allege facts showing that treating the entities as separate would cause fraud or injustice. - Claim 6, unjust enrichment: The complaint did not allege what benefit Wells Fargo received or why retaining that benefit was unjust and at Armstrong-Harris’s expense. - Claim 8, predatory lending and Truth in Lending Act violations: The claim concerned a 2007 loan but was filed in 2021. The court held that the claim was untimely on its face, while allowing amendment to allege facts that could support equitable tolling, which can suspend a filing deadline in appropriate circumstances. - Claim 10, defamation: The complaint did not identify a specific statement to credit-reporting agencies or explain how the statement was false, defamatory, unprivileged, or damaging. - Claim 11, false light: The complaint did not identify the publicity, explain why it was false or misleading or offensive, or allege how Wells Fargo acted with actual malice. - Claim 12, cancellation of the deed of trust: The complaint did not allege grounds showing that the deed of trust was void or could be invalidated. - Claim 13, cancellation of a voidable contract: The complaint did not adequately allege the facts required by the cited California statutes, including that Wells Fargo was suspended when the loan was entered into in 2007. - Claim 14, intentional misrepresentation: The complaint did not identify the alleged misrepresentation with the required specificity or allege knowledge of falsity, intent to induce reliance, actual reliance, or resulting damage.

Claims Dismissed Without Leave to Amend

The court dismissed claims 2 and 5, for breach of contract and breach of the implied covenant of good faith and fair dealing, without leave to amend. The complaint itself alleged that no loan modification agreement was ever entered into, so the court concluded that amendment would be futile based on the facts already pleaded.

The court also dismissed claim 9, which sought a declaration under California Civil Code section 2923.5, without leave to amend. The claim sought to remedy alleged past violations rather than obtain prospective relief, so it was not appropriate for a declaratory-relief claim.

Claim Allowed to Proceed

The court denied Wells Fargo’s motion as to claim 7, the claim under the fraudulent-practices prong of California’s Unfair Competition Law. The court found that Armstrong-Harris plausibly alleged that Wells Fargo promised a loan modification without intending to provide one and intentionally misled him about whether a foreclosure had occurred or had been entered in error. The court found these allegations sufficiently identified the required details of the alleged fraud.

Order

Judge Haywood S. Gilliam, Jr. granted Wells Fargo’s motion to dismiss in part and denied it in part. The order permitted Armstrong-Harris to file an amended complaint within 28 days, solely to correct the deficiencies identified in the order. He could not add new claims or parties without Wells Fargo’s consent or the court’s permission. The order stated that failure to comply would result in dismissal with prejudice under Rule 41(b), meaning the dismissed claims could not be pursued further.