Moore v. Wells Fargo Bank, N.A.

Background

Victoria Moore alleged that Wells Fargo acted unlawfully when handling her requests for loan assistance after she defaulted on a loan secured by property she inherited from the trust of her late husband. Moore alleged that she lost her source of income after closing her salon spa for more than a year during the COVID-19 pandemic. Beginning in August 2021, she submitted three loan-assistance applications to Wells Fargo. She alleged that Wells Fargo confirmed receiving the applications but did not promptly facilitate communication or provide adequate instructions for completing paperwork.

Moore alleged that Wells Fargo’s conduct caused foreclosure costs, late fees, credit damage, and emotional distress. Her Second Amended Complaint asserted two claims: a claim under 12 C.F.R. § 1024.38, a mortgage-servicing regulation under the Real Estate Settlement Procedures Act, and a claim under California Business and Professions Code § 17200, California’s Unfair Competition Law.

Motion to Amend

Moore sought permission to file a Third Amended Complaint based on new evidence obtained during discovery. The proposed complaint relied on a July 2, 2021 letter from Wells Fargo stating that Moore had completed a successor-in-interest data form and that Wells Fargo had updated the account to list her as a successor in interest.

The court explained that a successor in interest confirmed under the applicable regulation is treated as a borrower for purposes of the mortgage-servicing rules, including the rule Moore sought to invoke. The court found that the proposed amendment was not futile and that Wells Fargo had not shown sufficient prejudice. Moore’s motion for leave to file the Third Amended Complaint was therefore granted.

Motion to Dismiss

A motion under Federal Rule of Civil Procedure 12(b)(6) asks whether the complaint states a legally sufficient claim for relief. The court generally accepts well-pleaded factual allegations as true at this stage but does not accept conclusory allegations or unreasonable inferences.

As to the § 1024.38 claim, Wells Fargo argued that the regulation does not provide a private right of action, meaning that a private person cannot sue under that provision. The court agreed, citing the Consumer Financial Protection Bureau’s rulemaking and decisions from courts in the district. Wells Fargo’s motion to dismiss was granted as to the § 1024.38 claim.

As to the California Unfair Competition Law claim, Wells Fargo argued that Moore could not show that its alleged conduct caused her injury because the loan was already in default before her loan-assistance applications. The court noted that California law requires a plaintiff to have suffered an injury in fact and lost money or property because of the alleged unfair competition. The court concluded that Moore’s allegations that Wells Fargo’s conduct caused foreclosure fees, costs, attorney’s fees, and emotional distress were sufficient at the motion-to-dismiss stage. Wells Fargo’s motion to dismiss this claim was denied.

Disposition

Judge Araceli Martinez-Olguin granted Moore’s motion for leave to amend. The court granted Wells Fargo’s motion to dismiss in part and denied it in part: the motion was granted as to the § 1024.38 claim and denied as to the California Business and Professions Code § 17200 claim. The order disposed of Docket Nos. 24 and 35.