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Schmidt v. Wells Fargo Bank, N.A.

United States District Court, D. New Jersey

September 14, 2017

WELLS FARGO BANK, N.A., Defendant.


          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiffs Deborah and James Schmidt filed this action on March 14, 2017, against Wells Fargo in connection with Plaintiffs' home loan modification agreement. The complaint alleges that Wells Fargo made misrepresentations to Plaintiffs about their eligibility for a more favorable loan modification; that it misapplied at least one mortgage payment, without explanation; that it failed to provide information about its servicing of Plaintiffs' loan; and that it violated federal law by using an automatic dialing system to repeatedly contact Mrs. Schmidt by phone without her consent. The matter now comes before the Court on Wells Fargo's motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). There was no oral argument. See Fed. R. Civ. P. 78(e). For the following reasons, Wells Fargo's motion to dismiss is GRANTED in part and DENIED in part.

         I. BACKGROUND

         Plaintiffs Deborah and James Schmidt purchased their house in Randolph, New Jersey in 2002 by money mortgage with BNY Company LLC. Complaint (“Compl.”) ¶ 2. On August 29, 2007, Plaintiffs refinanced their house with Defendant Wells Fargo Bank at an annual interest rate of 6.375%. Certification of Aaron M. Bender in Support of Defendant's Motion to Dismiss (the “Bender Cert.”) Ex. B. Plaintiffs made timely mortgage payments through 2008 and 2009 despite serious financial difficulty. Compl. ¶ 4. They were eventually granted a 6-month moratorium on payments from January to June of 2010. Id. Plaintiffs allege they made timely payments from July 1, 2010 through January 3, 2012.

         On April 9, 2009, and December 22, 2009, Plaintiffs applied for a modification under the Home Affordable Mortgage Program (“HAMP”), a federal program launched in the wake of the 2008 financial crisis to help distressed home owners avoid foreclosure. See Heyman v. Citimortgage, Inc., 2014 WL 4637034, at *1 (D.N.J. 2014). Plaintiffs were denied HAMP modifications both times, because they were not yet three months behind on their mortgage payments. Compl. ¶ 4. Plaintiffs allege that on February 19, 2010, “Darian at Wells Fargo . . . suggested that since by then plaintiffs were behind almost 3 payments, they should request a HAMP modification.” Compl. ¶ 4. Deborah Schmidt submitted a HAMP modification request on March 15, 2010. Id. at 6. Plaintiffs were again denied a HAMP modification-this time because Wells Fargo wanted to monitor the progress of Deborah's new business before determining eligibility for a modification. Id. at ¶ 7. Meanwhile, Plaintiffs were given an additional six-month moratorium and instructed by Wells Fargo employee Ben Montang to apply for reconsideration at the end of the moratorium. They did so, but were denied again for a HAMP modification. Id.

         Although Plaintiffs were deemed ineligible for the HAMP program, they agreed to a “non-HAMP” loan modification on October 9th, 2012. Plaintiffs assert that the terms of the modification were unfavorable and that they agreed only out of desperation in order to avoid foreclosure. Wells Fargo allegedly failed to provide Plaintiffs with an amortization schedule or to answer questions about the loan structure despite numerous attempts by Deborah Schmidt to communicate with Wells Fargo by phone and in person. Compl. ¶ 24.[1]

         Plaintiffs allege that on January 27, 2012, Wells Fargo refused to accept Plaintiffs' mortgage payments. Compl. ¶ 4(c). Debora Schmidt made several in-person visits to one of Defendant's locations but was unable to “straighten out the issue of the misapplied payment.” Compl. ¶ 15. According to the complaint, all payments between August 2012 and August 2016 were timely made. Compl. ¶ 19. They fell behind on their mortgage in September, 2016 but were again denied a modification.[2] Plaintiffs received a foreclosure notice on January 15, 2016. Compl. ¶ 19. Plaintiffs insist that all payments were made timely between August 2012 and January 2016. Id. Plaintiffs brought this action on March 14, 2017. A foreclosure complaint was brought against them on March 22, 2017, in the Morris County Superior Court of New Jersey Chancery Division. Bender Cert. Ex A. The complaint further alleges that between January 2013 and January 2017 Plaintiffs received a torrent of “robo-calls” concerning Plaintiffs' debt to Plaintiffs' home and cell phones. Compl. ¶ 22.


         Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998).

         Although a complaint need not contain detailed factual allegations, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Factual allegations must be sufficient to raise a plaintiff's right to relief above a speculative level, to make it “plausible on its face.” See Id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a ‘probability requirement' . . . it asks for more than a sheer possibility.” Iqbal, 129 S.Ct. at 1949 (2009).


         The Court addresses each of Plaintiffs' five Counts in order. Count 1 alleges that Wells Fargo violated the Real Estate Settlement Procedures Act (RESPA) by failing to respond to a written request for information about Plaintiffs' 2012 loan modification. Count 2 alleges that Wells Fargo committed fraud by misrepresenting to Plaintiffs that they were ineligible for a modification under the Home Affordable Mortgage Program (HAMP), forcing Plaintiffs to sign a predatory loan modification instead. Count 3 alleges that Wells Fargo breached the covenant of good faith and fair dealing implied in the parties' loan modification agreement. Count 4 alleges slander of credit. And Count 5 alleges that Wells Fargo violated the Telephone Consumer Protection Act (TCPA) by repeatedly using an automatic dialing system to contact Plaintiff Deborah Schmidt regarding late mortgage payments. Plaintiffs' TCPA claim plausibly states a basis for relief; Counts 1 through 4 do not.

         A. Plaintiffs' RESPA Claim

         Congress passed RESPA “to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the [real estate] settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country.” 12 U.S.C.A. § 2601 (West). The statute requires a servicer to acknowledge and respond to any “qualified written request”[3] for information made by a borrower. The servicer must make any appropriate corrections to the borrower's account or otherwise conduct an investigation into the error and provide the borrower with a written explanation or clarification. 12 § U.S.C.A. § ...

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