CLASS ACTION COMPLAINT FOR BREACH OF CONTRACT, BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING, VIOLATION OF THE UNFAIR COMPETITION LAW, AND PROMISSORY ESTOPPEL.
THE 9TH CIRCUIT COURT OF APPEALS REVERSED THE LOWERS COURT'S DISMISSAL ON AUGUST 8, 2013
Wells Fargo Mortgage Modification Lawsuits Revived by 9th Circuit Court of Appeals
In a separate action involving Wells Fargo, a U.S. Court of Appeals held that the bank must face lawsuits by home loan borrowers for refusing to offer them permanent mortgage modifications.
The federal government’s 2009 Home Affordable Modification Program requires the bank to offer permanent adjustments to homeowners who met the terms of a trial-period modification, a three-judge panel of the U.S. Court of Appeals in San Francisco ruled.
“The program seems to have created more litigation than it has happy homeowners,” the judges said in yesterday’s decision.
Reversing a lower-court dismissal of two separate lawsuits, the panel rejected the conclusion Wells Fargo was only bound if it had actually offered the borrowers a fully executed copy of a modification agreement.
NOONAN, Circuit Judge, concurring:
Read as a whole the TPP between Corvello and Wells Fargo makes no sense. It is self-contradictory. Page one promised Corvello in two places that if his representations were accurate and if he were in compliance with the Trial Period Plan, the Lender “would provide” him “with a Loan Modification Agreement.” Paragraph 2G stated: “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 of a Modification Agreement and (iii) the Modification Effective Date has passed.”
Wells Fargo drafted this document, and Wells Fargo must be held responsible for it. The document promises a substantial benefit to Corvello if he meets its terms. The document then makes these benefits illusory because they depend entirely on the will of Wells Fargo. To say, “I give $100 for your watch but I will decide whether I pay you $100” is not to make a contract but to engage in a flim-flam or, in plain words, to work a fraud. You promise so that the other will perform. You reserve your promise so that the promise is empty while you have gotten what you wanted from the promisee. 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. Wells Fargo did no better.
The cases are Corvello v. Wells Fargo Bank NA, 11-16234 and Lucia v. Wells Fargo Bank NA, 11-16242, U.S. Court of Appeals for the Ninth Circuit (San Francisco).