Estate of Dorothy Da v. Wells Fargo
2011 U.S. App. LEXIS 581
| 7th Cir. | 2011Background
- Davis, an elderly African-American homeowner, obtained a 1999 mortgage that was later found fraudulent in an earlier suit against Mortgage Express.
- Mortgage Express assigned the loan to Provident Bank, which foreclosed in 2002 and eventually Wells Fargo acquired the loan.
- Litton Loan Servicing later took over loan servicing; Litton proposed a loan modification in 2005.
- Davis and her estate sued Wells Fargo and Litton for unconscionability, fraud, HOEPA, ECOA, and FHA claims; district court dismissed many claims as time-barred and some on merits, granting summary judgment on one FHA claim.
- Davis’s estate appealed, challenging the dismissal of several claims; the court affirmed in part and reversed for one ECOA pleading issue, ultimately granting summary judgment for defendants on FHA race-discrimination and other related claims.
- Key events within the limitations window included Litton’s 2005 loan modification proposal, Wells Fargo’s 2007/earlier notices, and Litton’s 2007 payoff demand, but the 1999 contract formation fell outside applicable statutes of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether unconscionability is time-barred | Davis argues unconscionability extends to later enforcement actions | Defendants contend unconscionability hinges on contract formation outside the limitations period | Unconscionability claim barred by statute of limitations |
| Fraud elements viability | Davis alleged concealment and misrepresentation regarding fees and payments | Lack of demonstrated reliance and damages defeats fraud claim | Fraud claim dismissed for lack of reliance/damages |
| HOEPA timeliness and applicability | Events after 1999 could trigger HOEPA protections | HOEPA claim time-barred and inapplicable to a closed-end loan | HOEPA claim affirmed as time-barred and not extended by later events |
| ECOA applicability under extension/offer to modify | Davis was an applicant or received an extension of credit via modification offer | No timely application or change in existing credit; claim dismissed | ECOA claim deemed defective at summary judgment but harmless error |
| FHA race-discrimination claim | There was racially discriminatory conduct in loan modification and collection | No admissible evidence of discrimination within 2-year window; disputes struck | Summary judgment for defendants; no triable issue of discriminatory intent or impact under FHA/ECOA |
Key Cases Cited
- Razor v. Hyundai Motor America, 854 N.E.2d 607 (Ill. 2006) (unconscionability analysis includes procedural/substantive grounds; later events may be relevant)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (pleading must show plausible claims, not mere speculation)
- Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state plausible claims)
- Swanson v. Citibank, N.A., 614 F.3d 400 (7th Cir. 2010) (illustrates pleading with discrimination claims; requires specific discrimination allegations)
- Hartigan v. E & E Hauling, Inc., 607 N.E.2d 165 (Ill. 1992) (fraud elements include knowledge, intent, and reliance)
- Enterprise Recovery Sys., Inc. v. Salmeron, 927 N.E.2d 852 (Ill. App. 2010) (Illinois fraud elements; reliance/damages required)
- Lombardi, Inc. v. Smithfield, 11 A.3d 1180 (Del. 1989) (illustrative point not cited directly in opinion)
- Bloch v. Frischholz, 587 F.3d 771 (7th Cir. 2009) (ECOA/FHA discrimination standards; requires evidence of discrimination)