Antitrust Law Daily Wrap Up, ANTITRUST—NDIll: Allegedly Wrongful Foreclosure on Homeowner Not a Sufficient Basis for Antitrust Claim, (Nov 20, 2012)

By E. Darius Sturmer, J.D.

A consumer whose home mortgage loan was allegedly wrongfully foreclosed on by Wells Fargo could maintain claims that the company’s conduct violated several state and federal laws, but not federal antitrust law, the federal district court in Chicago has ruled (Horwitz v. Wells Fargo, November 19, 2012, Guzman, R.) Wells Fargo’s motion to dismiss was granted as to the consumer’s Sherman Act claims and a slander of title claim, but denied in all other respects.

Asserting that the documents evidencing Wells Fargo’s interest in his promissory note and mortgage were fraudulent, the consumer sued Wells Fargo under the Fair Debt Collection Practices Act (FDCPA), the Sherman Act, and the Illinois Uniform Deceptive Trade Practices Act (DTPA). He also filed a claim to quiet title and brought an unjust enrichment claim and the previously mentioned slander of title claim against the company. The consumer’s allegations easily vaulted the “low hurdle” of plausibility, the court held.

Sufficiency of Antitrust Allegations

The antitrust claim, however, was infirm because the consumer failed to assert sufficient facts to satisfy the elements of a viable Sherman Act claim, according to the court. The complaining consumer did aver that: Wells Fargo and his original mortgagor, The Home Loan Center (“HLC”), had an agreement “to produce and record false documents” and “prosecute false foreclosures;” the agreement “prevent[ed] mortgagors from refinancing” by “concealing from [them] … the identity of their mortgagees,” and froze “legitimate banks” out of the mortgage business; and the agreement has resulted in a general decrease in home values “throughout the country,” including that of plaintiff’s home. He did not, however, allege facts that suggested: (1) HLC and Wells Fargo agreed to falsely assign and foreclose on any mortgage other than his own; (2) Wells Fargo was so powerful in the nationwide mortgage market that any such agreement would unreasonably restrain trade; or (3) the general decrease in U.S. home values was attributable to any such agreement.

Other Claims

The court rejected arguments by Wells Fargo that the FDCPA claim was time-barred in whole or in part and that it was not a debt collector governed by the statute. Untimeliness was an affirmative defense that Wells had the burden of proving, the court said. In addition, the consumers’ allegations—that his original mortgagor (The Home Loan Center) did not assign its interest in the note and mortgage in Wells Fargo and that Wells Fargo’s servicing rights on the loan ended in April 2007—could support an FDCPA claim.

The consumer’s quiet title claim was not defeated by his admission that his mortgage was in foreclosure, the court held. Also unpersuasive, in the court’s view, was an argument by Wells Fargo that the consumer’s unjust enrichment and DTPA claims were infirm because he could not allege that the defending company’s conduct had already harmed him or was likely to do so in the future.

Finally, the consumer’s slander of title claim was flawed because he had not specifically alleged special damages, the court added. Charges that Wells Fargo’s actions “decreased the value of [his] home” and “increased the cost of everything he had purchased with credit” did not satisfy Federal Rule of Civil Procedure 9(b)’s standards for pleading fraud with particularity.

The case is: 12 C 1968.

Robert Lee Stone (Property Rights Law Group, P.C.) for Gary Horwitz. Lucia Nale (Mayer Brown LLP) for Wells Fargo Bank, N.A.

Cases: Antitrust ConsumerProtection StateUnfairTradePractices IllinoisNews