Foley v. Wells Fargo Bank, N.A.
772 F.3d 63
| 1st Cir. | 2014Background
- Foley applied in 2005 for a Pick-a-Payment mortgage from World Savings, FSB, later Wells Fargo, and obtained a loan of $455,000 with payments around $1,600.
- Housing market collapse and Foley’s job loss around 2008 led to financial hardship; he intermittently paid through 2011 and sought a loan modification.
- In 2011 Wells Fargo settled a California class action; Foley was a Settlement Class B member and the settlement required consideration for HAMP, then MAP2R, with a waterfall process toward a 31% debt-to-income target.
- Settlement included servicing obligations to provide clear explanations for denials and to notify borrowers that they were still being considered for a modification in foreclosure communications.
- During 2011–2013 Foley pursued HAMP but faced delayed, inconsistent communications, denial letters lacking explanations, and a looming foreclosure, prompting AG intervention in 2013.
- Foley filed a four-count pro se Massachusetts state court complaint alleging breach of contract, statutory claims under Ch. 244, §§ 35A/35B, breach of the implied covenant, and a Massachusetts 93A claim, which Wells Fargo removed to federal court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court erred in treating the Rule 12(b)(6) motion as summary judgment | Foley was denied a fair opportunity to present evidence. | Wells Fargo summarized the record; district court could convert if appropriate. | Remand contract claims; improper conversion without notice. |
| Whether Foley adequately pleaded breach of the settlement agreement (Counts One and Four) | Bank failed to fairly consider MAP2R and failed to explain denials. | Settlement required consideration; denial letters satisfied requirements. | Contract claims pleaded; remanded for further proceedings. |
| Whether Foley adequately pleaded breach of the implied covenant of good faith and fair dealing | Discretionary power was exercised in bad faith by inadequate consideration and disclosure. | No independent breach beyond consideration occurred. | Implied covenant claim pleaded; remanded for further proceedings. |
| Whether Foley's Massachusetts statutory claims (Ch. 244, §§ 35A, 35B) were properly pleaded | Content of notices and MAP2R-related rights were misrepresented or omitted. | Claims were not adequately pleaded with specific subsections and notices identified. | Dismissed; not adequately pleaded. |
| Whether the statutory claims are preempted by HOLA | Preemption not applicable to state rights asserted. | HOLA preempts the state claims. | Not addressed on the merits; preemption not necessary to resolve this appeal. |
Key Cases Cited
- Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) (standard for plausibility under Rule 12(b)(6))
- Watterson v. Page, 987 F.2d 1 (1st Cir. 1993) (well-pleaded facts; documents attached; light most favorable to plaintiff)
- Bartlett v. Dep't of the Treasury (I.R.S.), 749 F.3d 1 (1st Cir. 2014) (notice and conversion standards under Rule 12(d))
- Whiting v. Maiolini, 921 F.2d 5 (1st Cir. 1990) (harmless error in failure to give notice of conversion to summary judgment)
- Rodríguez-Machado v. Shinseki, 700 F.3d 48 (1st Cir. 2012) (ralphing approach to pleadings; avoiding 'pigs hunting for truffles')
- Ericson v. Playgirl, Inc., 140 Cal. Rptr. 921 (Cal. Ct. App. 1977) (nominal damages available for breach of contract)