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Hart v. Wells Fargo Home Mortgage, Inc.

United States District Court, W.D. Missouri, Central Division

October 11, 2016

MICHAEL D. HART and PATTY S. HART, Plaintiffs,
v.
WELLS FARGO HOME MORTGAGE, INC., et. al., Defendants.

          ORDER

          Nanette K. Laughrey United States District Judge

         Pro se Plaintiffs Michael and Patty Hart bring this suit concerning their mortgage loan against Defendants Wells Fargo Home Mortgage, Inc., Wells Fargo & Company, and Wells Fargo Bank, NA. The Defendants move to dismiss under Fed.R.Civ.P. 12(b)(6) for failure to state a claim Doc. 12. The motion is granted.

         I. Background [1]

         The Harts obtained a mortgage loan from Wells Fargo[2] using their residence as collateral. Wells Fargo was not only the loan originator, but the loan servicer. Starting around 2007, the Harts began experiencing financial difficulties. Both of the Harts lost their jobs in 2010 and Mr. Hart was incarcerated from 2012 to May 2014. Their reduced income, plus living expenses and the high interest rate on their loan, caused the Harts "extreme difficulty" in making their mortgage payments. Doc. 1-2, p. 3 of 14, ¶ 13. The Harts also found that, "[s]ince [their] home [had] suffered a severe loss in value from the time of its purchase, attempts at refinancing through equity ... proved futile." Id. at ¶ 14. Wells Fargo "approved a loan modification sometime in 2014 for" the Harts. Id., p. 9 of 14, ¶ 49. That modification appears to have been a temporary one.

         In early 2015, the Harts "sent a letter of hardship and their complete financial file to" Wells Fargo. Id., p. 3 of 14, ¶ 15. Wells Fargo mailed the Harts letters, indicating it was investigating the Harts' situation and promising a prompt response. Communications between the Harts and Wells Fargo regarding the status of the Harts' modification request continued for months. The Harts accrued escalating late fees and other penalties, their credit was affected, and it was "impossible for them to obtain financial products and loans from other institutions to assist" them "in making the full payments on their loan[.]" Id. at ¶ 19. Wells Fargo "failed to grant a permanent modification[.]" Id., p. 4 of 14, ¶ 21. The loan is now in default and the property is at risk of foreclosure. Id., p. 5 of 14, ¶ 27.

         The Harts' six-count complaint alleges claims for fraud, deceit, negligent misrepresentation, negligence, violation of unfair competition laws, declaratory judgment, reformation, and breach of the implied covenant of good faith and fair dealing.

         II. Discussion

         Under Rule 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief" Fed.R.Civ.P. 8(a)(2). Though this pleading standard does not require "detailed factual allegations, " the complaint must include sufficient factual allegations to provide the grounds on which the claim rests. Twombly, 550 U.S. 544');">1550 U.S. 544, 556 (2007). A pleading that offers labels, conclusions, a formulaic recitation of elements, or naked assertions devoid of factual enhancement does not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Only well-pleaded facts are accepted as true, while "[t]hreadbare recitals of the elements of a cause of action" and legal conclusions are not. Id. "[L]egal conclusions can provide the framework of a complaint, [but] they must be supported by factual allegations." Id. at 679. See also Ashcroft, 556 U.S. at 678 (a court need not "accept as true legal conclusions, even those stated as though they are factual allegations").

         When reviewing a pro se complaint, the Court construes it liberally and draws all reasonable inferences from the facts in favor of the plaintiff Topchian v. JP Morgan Chase Bank, N.A., 760 F.3d 843, 849 (8th Cir. 2014).

         A. Count I: Fraud, Deceit, and Negligent Misrepresentation

         1. Fraud

         To survive a motion to dismiss a claim of fraud, a plaintiff must plead sufficient facts to establish: "(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it should be acted on by the person in the manner reasonably contemplated; (6) the hearer's ignorance of the falsity of the representation; (7) the hearer's reliance on the representation being true; (8) the hearer's right to rely thereon; and (9) the hearer's consequent and proximately caused injury." Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 131-32 (Mo. 2010).

         Further, Fed.R.Civ.P. 9(b) requires a party to "state with particularity the circumstances constituting fraud." Conclusory allegations that a defendant's conduct was fraudulent and deceptive are not sufficient to satisfy the rule. Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009). The plaintiff must plead "such matters as the time, place and contents of false representations, as well as the identity of the person making the misrepresentation and what was obtained or given up thereby." Freitas v. Wells Fargo Home Mortg., Inc., 703 F.3d 436, 439 (8thCir. 2013) (quoting Abels v. Farmers Commodities Corp., 259 F.3d 910, 920 (8th Cir. 2001)). "In other words, Rule 9(b) requires plaintiffs to plead the who, what, when, where, and how: the first paragraph of any newspaper story." Id. (quoting Summerhill v. Terminix, Inc., 637 F.3d 877, 880 (8th Cir. 2011)).

         In Count I, the Harts allege that Wells Fargo "at various times" "knowingly misrepresented" "the nature and terms of the loan; ... that the loan was a good financial decision for [the Harts]; ... the modification process of the loan; and the grossly inflated value of [their home] that [Wells Fargo] used to justify the loan." Doc. 1-2, p. 4 of 14, ¶ 24. They further allege that Wells Fargo knowingly or fraudulently induced them to take out the loan, knowing they "were unlikely to ever be able to pay [it] off." Id., at ¶ 25. Wells Fargo also falsely represented that a loan modification would "become considered, granted, and/or permanent if [the Harts] paid the mortgage amount, on time and in full[, ]" and such representations "directly contradicted Defendants' own policies and procedures." Id., at ¶ 26. Also, Wells Fargo represented to the Harts that they were "still on a trial modification course, when in fact, " their "payments were still be recorded as insufficient." Id.

         The Harts do not plead sufficient facts to establish the elements of a fraud claim For example, they fail to allege the terms of the loan they are referring to and when it was taken out, or the terms of the temporary modification they obtained. They do not allege the time, place and contents of the allegedly false representations, the identity of the person making the misrepresentations, and what they gave up as a result of each such representation. They do not allege what Wells Fargo' policies and procedures were, nor indicate how the alleged misrepresentation violated them Thus, the ...


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