Wells Fargo’s Motion to Dismiss Plaintiff’s Complaint for Fraudulent Misrepresentation is Denied
Judge Dimitroleas, Federal Judge in the Southern District of Florida, ruled that the Homeowner has rights of action for money damages against dubious claims from “holders”, “servicers” and even “trustees.” Wells Fargo’s motion to dismiss the homeowner’s claim for fraudulent misrepresentation was denied.
Wells Fargo now faces a loss in the foreclosure where their witness admitted to being unable to explain the chain of ownership, the balance and the reason why Wells Fargo refused to cooperate in the sale of the property that would have paid them in full.
The fact pattern of this case clearly corroborates the fact that “servicers” are claiming ownership or rights to enforce debts that they don’t own and don’t have any authority to represent the creditor because they are making false claims of securitization. Thus the banks cannot say they actually represent the investors who thought they were buying mortgage backed securities from a funded trust that was originating and acquiring loans. If they admit the facts in reality they are admitting to committing fraud on the investors, the insurers, the guarantors, and of course the borrowers. The presumption regarding ownership or rights to enforce is directly contrary to the actual facts. And the threshold for rebutting those presumptions is fast falling in Federal and State courts.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 14-60975-CIV-DIMITROULEAS
WENDY GRAVE and JOSEPH GRAVE,
WELLS FARGO BANK, N.A.,
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION
THIS CAUSE is before the Court upon Defendant Wells Fargo Bank, N.A.’s Motion to
Dismiss Amended Complaint (the “Motion”) [DE 25], filed herein on August 4, 2014. The
Court has carefully considered the Motion [DE 25], the Response [DE 26], and the Reply [DE
27]. The Court is otherwise fully advised in the premises.
The parties to this action are Plaintiff Wendy Grave (“W. Grave”), Plaintiff Joseph
Grave (“J. Grave” and together with W. Grave, “Plaintiffs”), and Defendant Wells Fargo Bank,
N.A. (“Defendant” or “Wells Fargo”). See [DE 24]. W. Grave applied for financing with Wells
Fargo and offered her home as collateral. [DE 24 ¶¶ 6-8]. Wells Fargo did not provide
disclosures regarding the identity of the lender, the terms of closing, or the terms of repayment
prior to closing. [Id. ¶ 10]. At closing, Plaintiff signed a note and mortgage naming American
Brokers Conduit (“ABC”) as the Payee on the Note and the Mortgagee on the Mortgage. [Id. ¶
12]. ABC, however, is not a registered business entity anywhere in the United States but is a
fictitious name used by multiple entities in multiple states. [Id. ¶¶ 13-14]. Within two days after
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 1 of 8
the closing, the mortgage was assigned twice and was then transferred again by way of merger.
[Id. ¶ 15]. Through forensic analysts, experts, and an investigation into title and securitization,
Plaintiffs discovered that ABC did not fund the loan and, therefore, was not the lender. [Id. ¶
While W. Grave’s loan was current, she made a telephone inquiry to Wells Fargo about
the possibility of a modification based on a faulty appraisal of the property at origination and
personal circumstances. [Id. ¶ 27]. She was told that there was no program under which
modification could be processed unless the borrower was 90 days behind in his/her payments.
[Id. ¶ 30]. This statement was untrue, as HAMP, HARP, and other programs allow for
modifications without the necessity of withholding payments. [Id.]. Instead, the “90 days past
due” was likely a requirement of Wells Fargo’s “in-house” modification, which Wells Fargo
preferred to HAMP modifications because in-house modifications carried higher interest rates.
[Id. ¶ 35]. Wells Fargo knew that its statement was false and that W. Grave would rely upon the
statement, forcing her into an in-house modification or foreclosure. [Id. ¶ 37]. That process
would then allow Wells Fargo to earn more money. [Id.].
In reliance upon Wells Fargo’s false representations, W. Grave stopped paying for 90
days. [Id. ¶ 38]. On the 91st day, as instructed by Wells Fargo, she applied for a loan
modification. [Id. ¶ 39]. Wells Fargo subsequently told W. Grave that she was in default and
that the “investor” had turned down the offer of modification. [Id. ¶ 40].
On or about April 2, 2012, Wells Fargo filed for foreclosure of the property. [Id. ¶ 17].
In a state of panic and confusion, W. Grave entered into a contract to sell the home for $250,000.
[Id. ¶ 42]. The note balance was less than $150,000. [Id.]. If the contract had closed, the
creditor would have been paid in full, and the second mortgage would have been settled as well.
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 2 of 8
[Id.]. Under the terms with the buyers, W. Grave would have had the option to rent the property
and repurchase it at a later time in cash or with financing from a third party. [Id. ¶ 43]. The
buyers applied for and received approval for financing and had sufficient funds to pay the
balance of the purchase price. [Id. ¶ 45]. They paid for the appraisal, the processing of the
application, and any other expenses in anticipation of closing with W. Grave. [Id.].
W. Grave repeatedly asked for estoppel information from Wells Fargo, as is standard for
all real estate transactions. [Id. ¶ 44]. Wells Fargo and its counsel refused to answer the request,
thus interfering with W. Grave’s right to reinstate, right of redemption, and right to close the
contract with the buyers. [Id.]. As a direct and proximate result of Wells Fargo’s refusal to
provide estoppel information, W. Grave has incurred additional damages, attorneys’ fees, and
court costs because the contract for the sale of the home has expired and the prospective buyers
have purchased other investment property. [Id. ¶¶ 44, 46].
On April 2, 2014, Plaintiffs brought this action in the Circuit Court of the Seventeenth
Judicial Circuit in and for Broward County Florida. [Id.] On July 11, 2014, the Court issued an
Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss [DE 23]. On July
21, 2014, Plaintiffs filed the First Amended Complaint, asserting the following three causes of
action: (1) Count I for breach of statutory duties and obligations under the mortgage contract; (2)
Count II for breach of fiduciary duty; and (3) Count III for fraudulent misrepresentation. See
[DE 24 ¶¶ 48-75]. Through the instant Motion [DE 25], Wells Fargo, pursuant to Rules 12(b)(6)
and 9(b) of the Federal Rules of Civil Procedure (the “Rules”), seeks dismissal of Counts I and
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 3 of 8
II. STANDARD OF REVIEW
A. Rule 12(b)(6)
To adequately plead a claim for relief, Rule 8(a)(2) requires “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Under Rule
12(b)(6), a motion to dismiss should be granted only if the plaintiff is unable to articulate
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). “A claim has facial plausibility when the pleaded factual content
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).
When determining whether a claim has facial plausibility, “a court must view a complaint in the
light most favorable to the plaintiff and accept all of the plaintiff’s well-pleaded facts as true.”
Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066 (11th Cir. 2007).
However, the court need not take allegations as true if they are merely “threadbare
recitals of a cause of action’s elements, supported by mere conclusory statements.” Iqbal, 129 S.
Ct. at 1949. “Mere labels and conclusions or a formulaic recitation of the elements of a cause of
action will not do, and a plaintiff cannot rely on naked assertions devoid of further factual
enhancement.” Franklin v. Curry, 738 F.3d 1246, 1251 (11th Cir. 2013). “[I]f allegations are
indeed more conclusory than factual, then the court does not have to assume their truth.”
Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012). In sum, “[t]he plausibility
standard ‘calls for enough fact to raise a reasonable expectation that discovery will reveal
evidence’ of the defendant’s liability.” Miyahira v. Vitacost.com, Inc., 715 F.3d 1257, 1265
(11th Cir. 2013) (quoting Twombly, 550 U.S. at 556).
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 4 of 8
B. Rule 9(b)
Rule 9(b) provides that “in alleging fraud or mistake, a party must state with particularity
the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “Rule 9(b) is satisfied if
the complaint sets forth (1) precisely what statements were made in what documents or oral
representations or what omissions were made, and (2) the time and place of each such statement
and the person responsible for making (or, in the case of omissions, not making) same, and (3)
the content of such statements and the manner in which they misled the plaintiff, and (4) what
the defendants obtained as a consequence of the fraud.” Ziemba v. Cascade Int’l, Inc., 256 F.3d
1194, 1202 (11th Cir. 2001) (internal quotations omitted). The heightened pleading
requirements of Rule 9(b) apply to claims for fraudulent concealment. Aprigliano v. Am. Honda
Motor Co., Inc., 979 F. Supp. 2d 1331, 1342-43 (S.D. Fla. 2013).
A. Count I: Breach of Statutory Duties and Obligations Under the Mortgage Contract
In Count I, Plaintiffs allege, inter alia, the following:
By failing to provide the information as was required by Florida Statute 701.04,
Wells Fargo breached its statutory duty that allow [sic] for a loan to be paid off
prior to its maturity, and, when in a foreclosure action, before the sale pursuant to
the borrower’s right to redeem. The Defendant is pursuing a foreclosure
proceeding in Broward County Circuit Court, Case No.: CACE 12-009341, and it
breached its statutory duty and mortgage contractual duty to allow Wendy Grave,
Plaintiff herein, to pay off her mortgage and exercise her right of redemption.
[DE 24 ¶ 49]. Additionally, Plaintiffs rely on allegations that they had buyers in place to
purchase the home but that the sale failed to close solely because “Wells Fargo refused to
provide estoppel information and did so without any justifiable or good reason.” [Id. ¶¶
The Court finds that Plaintiffs have failed to state a claim for violation of Fla. Stat. §
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701.04. The relevant provision provides that “[w]ithin 14 days after receipt of the written
request of a mortgagor . . . the holder of a mortgage shall deliver or cause the servicer of the
mortgage to deliver to the person making the request . . . an estoppel letter setting forth the
unpaid balance of the loan secured by the mortgage.” Fla. Stat. § 701.04(1). The Court has
found no indication within the statute or case law that a cause of action exists for violation of that
particular provision of § 701.04.
And Plaintiffs cite no authority in support of such a cause of
action. Accordingly, the Court concludes that Plaintiffs have not stated a valid claim for
violation of § 701.04. See, e.g., Washington Mut. Bank, F.A. v. Shelton, 892 So. 2d 547, 550
(Fla. 2d DCA 2005) (“[A] civil action arising out of the provisions of Section 701.04 . . . is
necessarily confined to one brought by a person who has fully paid an outstanding mortgage, lien
or judgment, but despite such payment is compelled to sue to obtain a satisfaction in order, in the
usual case, to remove the cloud on the title caused by the previously recorded mortgage, lien or
judgment.” (internal quotation marks omitted)).
Moreover, even if a cause of action did exist, it would require Plaintiffs to establish that
they sent a written request to the holder of the mortgage. Plaintiffs do not allege that they sent a
written request to Wells Fargo, and they negate that Wells Fargo was the lender or an authorized
servicer of the mortgage. See [DE 24 ¶ 57] (“Wells Fargo knew that it was not the lender even
when it said it was, and knew that it was not an authorized servicer.”). Thus, Plaintiffs’ claim
under § 701.04 fails for these independent reasons as well.
The Court acknowledges that causes of action exist under Fla. Stat. § 701.04(2). See, e.g., Kalb v. Nack Holding,
LLC, 79 So. 3d 175, 176 (Fla. 3rd DCA 2012) (“Nack Holding prevailed in its claim that Kalb violated Section
701.04, Florida Statutes (2010), which requires timely recording of satisfactions of judgment.”). That particular
provision–§ 701.04(2)—specifies that “[i]n the case of a civil action arising out of this section, the prevailing party
is entitled to attorney fees and costs,” whereas the provision that Plaintiffs’ rely upon—701.04(1)—contains no
similar language as to a “civil action.”
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 6 of 8
B. Count VIII: Fraudulent Misrepresentation
Plaintiffs make a claim for fraudulent misrepresentation. In support, Plaintiffs, allege
that Wells Fargo, in order to lure Plaintiffs into defaulting on their mortgage, knowingly made
false statements regarding the qualifications for a HAMP modification. See [DE 1-5 ¶¶ 97-101].
The Court finds that Plaintiffs have adequately stated a claim for fraudulent misrepresentation.
“Under Florida law, the elements of fraud are: (1) a false statement concerning a specific
material fact; (2) the maker’s knowledge that the representation is false; (3) an intention that the
representation induces another’s reliance; and (4) consequent injury by the other party acting in
reliance on the representation.” Horne v. Social Sec. Admin., 359 F. App’x 138, 145 (11th Cir.
2010) (citing Lopez–Infante v. Union Cent. Life Ins. Co., 809 So.2d 13, 15 (Fla. 3d DCA 2002)).
“In alleging fraud or mistake, a party must state with particularity the circumstances constituting
fraud or mistake.” Fed. R. Civ. P. 9(b).
Wells Fargo, once again, contends that Plaintiffs do not meet the heightened pleading
standard of Rule 9(b). Wells Fargo asserts that Plaintiffs do not identify who at Wells Fargo
made the false statements or the time(s) and place(s) that the alleged statements were made.
Additionally, Wells Fargo asserts that the alleged facts do not demonstrate damages which arose
directly from the alleged fraud.
The Court disagrees. Plaintiffs allege that Wells Fargo, during a phone call in October
2011, explicitly stated to W. Grave that they could not offer a loan modification until W. Grave
was ninety (90) days behind. [DE 24 ¶ 69]. Wells Fargo also stated that W. Grave should
submit the modification forms after ninety (90) days. See [id.]. Plaintiffs further allege that
Wells Fargo knowingly made those false statements in order to induce Plaintiffs into a potential
foreclosure or in-house modification. See [DE 24 ¶ 73]. Finally, Plaintiffs allege that W. Grave,
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 7 of 8
in response to Wells Fargo’s false representation, waited ninety (90) days before submitting
modification forms and subsequently incurred damages through late fees, delinquency and
default charges, and increased accrued interest. See [DE 24 ¶¶ 70, 74].
These allegations adequately describe the time, place, content, and consequences of the
purportedly false statements made by Wells Fargo. Additionally, Plaintiffs need not identify the
exact Wells Fargo employee who was on the telephone call or parrot the verbatim statements
made by that employee. Rather, Plaintiffs’ allegations must provide Wells Fargo with adequate
notice of the basis for the fraudulent misrepresentation claim. The allegations meet that
standard. Thus, Plaintiffs have satisfied Rule 9(b)’s pleading requirements and have stated a
valid claim for fraudulent misrepresentation.
Accordingly, it is ORDERED AND ADJUDGED as follows:
1. The Motion [DE 25] is GRANTED IN PART AND DENIED IN PART; and
2. Count I is hereby DISMISSED WITH PREJUDICE.
DONE AND ORDERED in Chambers at Ft. Lauderdale, Broward County, Florida, this
5th day of September, 2014.
Copies provided to:
Counsel of record
Case 0:14-cv-60975-WPD Document 28 Entered on FLSD Docket 09/05/2014 Page 8 of 8
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