Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Md.: Mortgage holder failed to show an ascertainable loss from allegedly false statements made by Wells Fargo, (Jul 23, 2013)

By Jody Coultas, J.D.

A mortgage holder failed to state a Maryland Consumer Protection Act (CPA) claim against Wells Fargo Bank, N.A. for damages resulting from mental anguish sustained from relying on the bank’s allegedly false representations, the federal district court in Baltimore has held (Butler v. Wells Fargo Bank, N.A., July 22, 2013, Garbis, M.).

After the mortgage holder failed to meet her payment obligations on a promissory note secured by a deed of trust on her residence, Wells Fargo commenced a foreclosure action against the mortgage holder. The mortgage holder then filed for bankruptcy, and obtained a discharge of her debt. Wells Fargo agreed to a consent order issued by the Bankruptcy Court whereby the foreclosure proceeding was halted provided that the mortgage holder kept current with post-petition payment obligations. The mortgage holder again failed to meet the payment obligations. The mortgage holder sought to recover from Wells Fargo based on statements allegedly made by its employees during the course of dealing with her unsuccessful efforts to obtain a loan modification.

The CPA prohibits any unfair or deceptive trade practice in the collection of consumer debts. Unfair or deceptive trade practices include: false or misleading statement, visual description, or other representation of any kind which has the capacity of deceiving or misleading consumers. A person bringing CPA claim must show actual injury or loss sustained as the result of the prohibited practice.

Because the claims failed to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b), the court granted Wells Fargo’s motion to dismiss the CPA claims. The mortgage holder sought damages for the mental anguish stemming from the false state of comfort she was induced into as a result of her reliance on the representations. However, the mortgage holder did not allege when she fell into the "false state of comfort" or when she experienced the mental anguish and its physical manifestations on which she sued.

The complaint lacked allegations as to the specifics of the loan modification, according to the court. The allegations were also insufficient to present a plausible claim of a "false state of comfort" that the loan modification had been approved. The claim at issue differed greatly from claims that a mortgage holder made payments under a modified plan, received inconsistent communication from the mortgage servicer regarding a permanent modification or loan reinstatement, and claimed to have suffered resulting injury in the form of lower credit scores, lost time at work, and emotional distress.

The case is No. MJG-12-2705.

Attorneys: Jason A. Ostendorf (Law Office of Jason Ostendorf LLC) for Gloria Butler. Douglas B. Riley (Treanor Pope and Hughes PA) for Wells Fargo Bank, N.A.

Companies: Wells Fargo Bank, N.A.

Cases: StateUnfairTradePractices MarylandNews