Cannon v. Wells Fargo Bank, N.A.
952 F. Supp. 2d 1
D.D.C.2013Background
- Andrea Cannon obtained a mortgage from Wachovia (now Wells Fargo) on property in D.C.; her deed of trust allowed the lender to obtain insurance at borrower’s expense if borrower failed to maintain coverage.
- Cannon had continuous voluntary insurance on the property (Scottsdale, then Great American) during the relevant period; Wells Fargo sent force-placed insurance (LPI) notices and a 90-day binder from QBE showing a premium charged to Cannon’s account.
- Cannon alleges Wells Fargo and its affiliate Wells Fargo Insurance arranged LPI through QBE First (and QBE Insurance), added premiums to borrower accounts, and retained/refunded amounts as part of a kickback scheme (40% to QBE, 60% to Wells Fargo).
- Cannon’s proposed amended complaint asserted breach of contract (against Wells Fargo), unjust enrichment (against QBE defendants), negligence, fraud, and fraudulent concealment arising from placement of an “Additional Named Insured Certificate” and LPI charges.
- The District Court evaluated Cannon’s motion for leave to amend under Rule 15, but denied amendment where proposed claims would be futile because they could not survive a Rule 12(b)(6) challenge; the Court allowed amendment only as to the breach of contract claim (which Wells Fargo did not oppose).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Leave to amend breach of contract claim | Cannon seeks to revise breach allegations to include the Additional Named Insured Certificate and LPI conduct | Wells Fargo did not oppose amending breach claim | Granted — Cannon may amend breach claim during discovery |
| Unjust enrichment (QBE defendants) | QBE was unjustly enriched by retaining premium portions and not returning premiums when coverage existed | QBE: unjust enrichment depends on breach of contract; express contract governs so unjust enrichment is inappropriate | Denied — claim would be futile because it depends on breach-of-contract success |
| Negligence (all defendants) | Procurement/placement of Certificate created a special/fiduciary duty independent of contract | Defendants: duties alleged arise from the deed of trust; tort cannot rest on contractual duties | Denied — negligence claim is contract-based and not a separate tort |
| Fraud / fraudulent concealment (Wells Fargo & QBE) | Defendants concealed LPI, misrepresented authorization, delayed cancellation; concealment tolls limitations | Defendants: allegations are indistinguishable from contract disputes and fail Rule 9(b) particularity; fraudulent concealment is not an independent cause of action | Denied — fraud claims futile (no independent tort duty; plaintiff conceded concealment is not a standalone claim); concealment allegations may be pleaded only to toll limitations as to timely breach claims |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaint must plead factual content allowing reasonable inference of liability)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard for claims)
- In re Interbank Funding Corp. Securities Litig., 629 F.3d 213 (D.C. Cir. 2010) (amendment may be denied if proposed claims would not survive a motion to dismiss)
- Whiting v. Am. Ass’n of Retired Persons, 637 F.3d 355 (D.C. Cir. 2011) (unjust enrichment claim dependent on contract may be dismissed)
- Choharis v. State Farm Fire & Cas. Co., 961 A.2d 1080 (D.C. 2008) (fraud/negligence claims must be separable from breach-of-contract; duty must be independent of contract)
- Plesha v. Ferguson, 725 F. Supp. 2d 106 (D.D.C. 2010) (unjust enrichment generally unavailable where express contract governs)
- Carter v. Bank of America, N.A., 888 F. Supp. 2d 1 (D.D.C. 2012) (tort must exist independently of contract to survive dismissal)
- Busby v. Capitol One, N.A., 772 F. Supp. 2d 268 (D.D.C. 2011) (elements of negligence under D.C. law)