PHILLIP R. CORVELLO, Plaintiff-Appellant, v. WELLS FARGO BANK, NA, DBA America’s Servicing Company, DBA Wells Fargo Home Mortgage, Inc., Defendant-Appellee

APPELLANTS’ OPENING BRIEF Re: Wells Fargo Mortgage Modification Lawsuits Revived by 9th Circuit Court of Appeals

by Barry Fagan
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ISSUES PRESENTED

1. Whether the district court erred in ruling that plaintiffs failed to allege

the existence of binding TPP Agreements.

2. Whether the district court erred by dismissing plaintiffs’ breach of

TPP Agreement claims upon ruling that neither will be able to allege receiving a

fully executed permanent modification agreement, despite well-pleaded allegations

to the contrary.

3. Whether the district court erred by dismissing the claims for breach of

the implied covenant of good faith and fair dealing.

4. Whether the district court erred in ruling that Wells Fargo made no

promise upon which Plaintiffs could reasonable rely for their promissory estoppel claims.

5. Whether the district court erred in ruling that the Lucia plaintiffs

failed to allege a Rosenthal Act claim upon finding they did not convincingly

allege that the TPP Agreement or other modification-related communications were

false, deceptive, or misleading.

6. Whether the district court erred in ruling that Plaintiffs may not assert

UCL claims based on HAMP violations because HAMP does not provide a private

right of action.

7. Whether the district court erred by dismissing Plaintiffs’ UCL claims.

SUMMARY OF THE ARGUMENT

The district court misinterpreted the TPP Agreement, and on that basis,

dismissed with prejudice all of Plaintiffs’ claims. The TPP Agreement “spells out

two conditions precedent to Wells Fargo’s obligation to offer a permanent

modification: [Plaintiffs] had to comply with the requirements of the trial plan, and

[Plaintiffs’] financial information had to remain true and accurate.”

According to Wells Fargo’s TPP offer, Wells Fargo “will provide [Plaintiffs] with a [permanent] Loan Modification Agreement” after the trial period, if they were “in compliance with this Loan Trial Period” and their “representations [] continue to be true in all material respects.” Plaintiffs’ compliance obligations with the loan trial period were spelled out in the TPP, and included requiring timely payment of specified trial period payments, and providing Wells Fargo with documentation of their incomes.

In reliance on Wells Fargo’s TPP offer, Plaintiffs timely made all of their trial period

payments, submitted all required documentation, made all required attestations,

and otherwise complied with all of their obligations according to the TPP

Agreements.

According to the district court, dismissal of Plaintiffs’ breach of contract,

promissory estoppel, Rosenthal Act, and UCL claims were all appropriate (and

amendment was futile) because Plaintiffs will not “be able to allege [] receiv[ing] a

fully executed copy of a [permanent] Modification Agreement.”

The district court’s interpretation of the TPP rewrites the contract, and, as the Seventh

Circuit recently held, would permit Wells Fargo to walk away from its TPP

Agreement for any reason whatsoever. Plaintiffs complied with all terms of the

TPP, but Wells Fargo did not provide the permanent Modification Agreements.

Thus, the Complaints adequately allege a valid offer, acceptance, consideration, a

breach, and damages from Wells Fargo’s breach of the TPP Agreements.

The district court also erred by dismissing Plaintiffs’ implied covenant of

good faith and fair dealing claims. The only reason given by the district court for

dismissing the implied covenant claims was that “Plaintiffs have not sufficiently

alleged the existence of a contract for a permanent loan modification.”

Upon compliance with the TPP Agreement’s requirements, Wells Fargo was

obligated to provide them with permanent modification agreements.

Plaintiffs never alleged that the TPP Agreement was itself a contract for a permanent loan modification. Plaintiffs also allege that Wells Fargo injured their rights to receive

the benefits of the TPP Agreement by failing to service the loans in compliance

with the TPPs, failing to supervise agents, making inaccurate calculations, and

failing to communicate with Plaintiffs about the status of their loan modifications.

The district court erred by dismissing Plaintiffs’ promissory estoppel claims.

Based on a misreading of the Complaints and the TPP Agreement, the district court

ruled that as a matter of law, the TPP Agreement does not require Wells Fargo to

permanently modify mortgages, and that there were no promises made about

permanent loan modifications on which Plaintiffs could reasonably rely.

Whether Plaintiffs’ reliance on Wells Fargo’s promises was reasonable is a

question of fact – not law. Promissory estoppel is adequately alleged.

The 9th Circuit Court of Appeals reversed the lower court's ruling stating:

"Read as a whole the TPP between Corvello and Wells Fargo makes no sense. It is self-contradictory. No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him. “Heads I win, tails you

lose” is a fraudulent coin toss.

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Written by:

Barry Fagan
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