Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Home owner’s price fixing claim against Wells Fargo dismissed on standing grounds, (Jun 26, 2013)

By Jody Coultas, J.D.

A home owner’s antitrust and California Unfair Competition Law (UCL) claims against Wells Fargo, N.A. and First American Loanstar have been dismissed by the federal district court in San Francisco. The home owner who was unable to obtain modification of a mortgage loan with Wells Fargo lacked standing to pursue the antitrust claim, and jurisdiction was lacking to consider state law claims (Rockridge Trust v. Wells Fargo, N.A., June 24, 2013, Spero, J.).

While Wells Fargo and the home owner were discussing a possible foreclosure and then a potential modification to the loan, Wells Fargo executed a Second Substitution of Trustee naming First American as trustee. The home owner alleged that the companies fixed the terms of the mortgage loan and loan modification in violation of the California Cartwright Act and Sherman Act, and failed to disclose the principal for which documents were being executed and recorded and failed to record powers of attorney in connection with recorded documents in violation of the UCL.

Because the home owner could not plausibly allege any injury resulting from any alleged price fixing, the court dismissed the antitrust claims for lack of standing. Wells Fargo and First American allegedly formed an unlawful trust to fix the terms of mortgage loans and loan modifications. To have standing, the home owner needed to show an antitrust injury. An antitrust injury is one that the antitrust laws were intended to prevent, and which flows from the invidious conduct that renders defendants’ acts unlawful. The home owner also needed to show that the injury was within the area of the economy that is endangered by a breakdown of competitive conditions. The home owners offered only conclusory allegations of price fixing, and failed to state whether the prices agreed were high or low, reasonable or unreasonable. Therefore, the home owner could not plausibly allege that they suffered any injury as a result of any alleged price fixing. Even if the conclusory allegations were sufficient, the home owner did not allege standing.

The home owner also failed to establish standing to assert the UCL claims based on violations of federal antitrust laws, according to the court. The UCL prohibits acts or practices which are unlawful, unfair, or fraudulent. The statute is written in the disjunctive, so it is violated where a defendant’s conduct violates any of the foregoing prongs. Because the home owner lacked standing to assert the antitrust claims, the UCL claim was dismissed.

A federal question is not presented merely because state law claims incorporate allegations of Home Affordable Modification Program (HAMP) violations, according to the court. Therefore, the court did not have jurisdiction over the UCL claims predicated on HAMP violations. In addition, complete diversity was lacking because the home owner and First American were both citizens of California, according to the court.

The case is No. C-13-01457 JCS.

Attorneys: Ray Khem Shahani for Rockridge Trust. Edward Rick Buell, III (Severson & Werson) for Wells Fargo, N.A.

Companies: Wells Fargo, N.A.; First American Loanstar

Cases: Antitrust StateUnfairTradePractices CaliforniaNews