Gilmore v. Wells Fargo Bank N.A.
2014 U.S. Dist. LEXIS 173738
| N.D. Cal. | 2014Background
- Plaintiff Kevin Gilmore owns 9556 Virginia Street, Berkeley, CA, inherited the property in 2007 and resides there with his family.
- Loan originated June 21, 2007, for $375,000; servicing transferred through mergers to Wachovia then Wells Fargo.
- Plaintiff alleges Wells Fargo placed hazard insurance on the property and billed him despite his own coverage.
- From 2011–2013, Plaintiff submitted multiple loan modification applications, all denied for various documented reasons.
- In 2014, Plaintiff claimed a material change in finances and submitted a modification application; Wells Fargo acknowledged receipt but later foreclosure activity proceeded.
- Plaintiff asserted five causes of action: HBOR violation, voiding the notice of trustee’s sale, negligence, negligent misrepresentation, and fraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| HBOR immunity under NMS shields Wells Fargo | Gilmore argues immunity does not apply | Wells Fargo contends NMS immunity bars HBOR claim | HBOR claim not barred by NMS immunity |
| Complete loan modification application before notice of sale | Plaintiff had a complete application pending prior to March 14, 2014 | Wells Fargo argues lack of complete prior application | Plaintiff alleged complete application and material change; claim survives to amend as needed |
| Remedies for HBOR violation—void notice vs. injunction | Notice of sale should be void and rescinded | Rescission not available; only injunctive relief and damages post-violation | HBOR claim construed as injunctive-relief claim; 3412 dismissal granted; amend if alleging non-HBOR theory |
| Duty of care in loan modification processing | Wells Fargo owed a duty in processing modification | No duty beyond ordinary lender role | Biakanja factors support a duty to process with reasonable care; negligence claim survives |
| Negligent misrepresentation—Rule 9(b) requirements | Misrepresentation claims should survive with sufficient details | Claim fails Rule 9(b) specificity requirements | Dismissed for failure to plead with Rule 9(b) specificity; leave to amend granted |
Key Cases Cited
- Alvarez v. BAC Home Loans Servicing, L.P., 228 Cal.App.4th 941 (Cal. App. 2014) (duty to exercise care in reviewing loan modifications when defendant agrees to consider)
- Charnay v. Cobert, 145 Cal.App.4th 170 (Cal. App. 2006) (negligent misrepresentation elements; justifiable reliance; standard for deceit)
- Bily v. Young & Co., 3 Cal.4th 370 (Cal. 1992) (negligent misrepresentation requires misrepresentation and justifiable reliance)
- Biakanja v. Irving, 49 Cal.2d 647 (Cal. 1958) (factors for determining duties in financial transactions)
- Mendoza v. City of L.A., 66 Cal.App.4th 1333 (Cal. App. 1998) (negligence elements and duty analysis)