Davis v. Wells Fargo, U.S.
2016 U.S. App. LEXIS 10030
| 3rd Cir. | 2016Background
- Davis executed a mortgage in 2005 (to BNC). Wells Fargo purportedly locked him out in Jan 2008 and later initiated foreclosure; mortgage assignments to Wells Fargo were recorded in 2008 and 2011, which Davis alleges were fraudulent.
- While Davis was on active military duty (2008–2011), Wells Fargo force-placed insurance on the property (carrier disputed: Assurant vs. its subsidiary ASIC). Davis alleges a kickback scheme and excessive premiums.
- In Oct 2011 Wells Fargo made an insurance claim for a roof leak, received a small settlement, did not repair the roof, and the property later suffered structural collapse; Davis’s subsequent claim to Assurant was denied in Oct 2012.
- Davis sued Wells Fargo in federal court in 2012 (trespass and SCRA). That action dismissed the SCRA claim and declined supplemental jurisdiction over trespass; the court noted Davis could refile certain claims in state court but he did not.
- Davis filed a second federal suit in Dec 2014 asserting multiple claims against Wells Fargo and Assurant (breach of contract, negligence, fraud, bad faith, and to set aside assignments). District Court dismissed Wells Fargo claims on res judicata and statute of limitations grounds, and dismissed Assurant for lack of subject-matter jurisdiction (standing) after accepting a corporate declaration distinguishing Assurant from ASIC.
- The Third Circuit affirmed dismissal of Wells Fargo claims (res judicata and limitations), held the District Court erred in treating Assurant’s 12(b)(1) standing challenge as a jurisdictional bar, vacated dismissal as to Assurant, and remanded — but limited the surviving claim against Assurant to breach of contract (other claims time-barred).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Davis’s later claims against Wells Fargo are barred by claim preclusion | Davis: prior 2012 suit raised different legal theories; he lacked knowledge of fraud and other facts then | Wells Fargo: the same operative facts were known (or discoverable) before the 2012 amended complaint, so claims could have been brought earlier | Court: Affirmed — res judicata bars those claims because they arise from the same set of facts known before/at 2012 filing |
| Whether Davis’s trespass claim is timely under Pennsylvania law | Davis: limitations tolled or delayed by Wells Fargo’s alleged misrepresentations | Wells Fargo: two-year statute applies and claim accrued earlier (locked out in 2008; at latest return of access in 2012) | Court: Affirmed dismissal — trespass time-barred under 42 Pa. Cons. Stat. § 5524 |
| Whether suing Assurant (rather than ASIC) defeated Article III standing / subject-matter jurisdiction | Davis: he alleged Assurant was the insurer and acted to deny/handle claims; merits questions remain (including veil issues) | Assurant: submitted declaration that ASIC (its subsidiary) was the actual carrier; thus Davis’s injury not traceable to Assurant and judgment would not redress him | Court: Vacated 12(b)(1) dismissal — distinguishing standing (who may sue) from merits (who is the proper defendant); defendant’s ‘‘wrong-party’’ defense should be judged under Rule 12(b)(6), not as a jurisdictional factual attack |
| Whether Assurant’s claims defenses sustain dismissal under Rule 12(b)(6) | Davis: complaint and integral documents allege Assurant’s name on insurer correspondence and a contract; discovery may show Assurant liable | Assurant: no contractual relationship with Davis; arguments and declaration show ASIC was the carrier; negligence and fraud claims fail | Court: On remand, breach of contract claim against Assurant survives Rule 12(b)(6); bad-faith claim subsumed into contract claim; negligence and fraud claims are time-barred |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury-in-fact, causation, and redressability)
- Bell v. Hood, 327 U.S. 678 (1946) (failure to state a claim is a merits, not jurisdictional, defect)
- Lubrizol Corp. v. Exxon Corp., 929 F.2d 960 (3d Cir. 1991) (elements and purpose of claim preclusion)
- Blunt v. Lower Merion Sch. Dist., 767 F.3d 247 (3d Cir. 2014) (res judicata focuses on essential similarity of underlying events; broad view of cause of action)
- Kulick v. Pocono Downs Racing Ass'n, 816 F.2d 895 (3d Cir. 1987) (when jurisdictional facts are intertwined with merits, treat issue as merits and proceed under Rule 12(b)(6))
- Connelly v. Lane Constr. Corp., 809 F.3d 780 (3d Cir. 2016) (plausibility standard: reasonable expectation that discovery will uncover proof supports surviving a Rule 12(b)(6) motion)