Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES— D. Ore.: Wells Fargo not entitled to dismissal of action over its alleged failure to properly disclose loan default information, (Aug 5, 2013)

By Jody Coultas, J.D.

The federal district court in Medford, Oregon, has denied motions to dismiss an Oregon Unfair Trade Practices Act (UTPA) claim filed by homeowners against Wells Fargo Bank, NA (Moore v. Wells Fargo Bank, NA, August 1, 2013, Panner, O.).

The homeowners obtained a mortgage through Wells Fargo and arranged automatic payments of the loan from their bank account. At some point, the monthly loan payment increased by less than $100. The homeowners were unaware of the change and went into arrears. The Notice of Default and Election to Sell stated that the homeowners owned approximately $20,500. While disputing the actual amount, the home was sold. The homeowners alleged that they were unable to a clear accounting of the debt and made payments throughout the entire period.

Wells Fargo move to dismiss the claim on the basis that the action was untimely, the homeowners could not show that their harm was caused by any unlawful practice, and the claim was preempted by federal statutes and regulations.

The statute of limitations did not bar the UTPA claims, according to the court. The UTPA statute of limitations is one year and begins to run when the plaintiff knows or should have known of the alleged misconduct. Because the UTPA claim was based on the dispute over the amount, rather than the existence, of a default, the discovery of the unlawful practices occurred when the homeowners received notice that Wells Fargo asserted an arrearage of approximately $20,500. The homeowners filed their claim within one year from that notice.

There was sufficient evidence of causation between the allegedly deceptive acts by Wells Fargo and the homeowners’ alleged injury, according to the court. The homeowners alleged that Wells Fargo made unlawful misrepresentations as to the amount of their arrearage and that the misrepresentations caused the homeowners to be unable to cure the default and lose their home at a foreclosure sale. The causal connection could be made between the allegedly deceptive acts and injury.

Preemption. The National Bank Act (NBA) did not preempt the UTPA claims, according to the court. The NBA allows national banks to make, arrange, purchase, or sell loans or extensions of credit secured by liens on interests in real estate. However, the NBA does not protect national banks that engage in deceptive or unfair acts from liability under state laws. Because the homeowners’ claim was based on the deceptive acts of Wells Fargo, the claim would not interfere with the intentions of Congress or the bank’s exercise of their power. It was not impossible for Wells Fargo to comply with the UTPA and the NBA.

The case is No. 3:13-cv-00170-PA.

Attorneys: E. Clarke Balcom (Clarke Balcom PC) for H. David Moore. Pilar C. French (Lane Powell, PC) for Wells Fargo Bank, NA.

Companies: Wells Fargo Bank, NA.

Cases: StateUnfairTradePractices OregonNews