James Tennier v. Wells Fargo Bank
666 F. App'x 689
9th Cir.2016Background
- James and Lois Tennier refinanced their home in December 2007 with a World Savings Bank (later Wells Fargo) Adjustable Rate "Pick‑A‑Payment" mortgage.
- The loan note and a Deferred Interest Acknowledgment expressly warned that payments insufficient to cover interest could cause negative amortization.
- The Truth in Lending Disclosure Statement (TILDS) the Tenniers signed listed monthly payment amounts for the first nine years that, per their expert, did not cover the interest due for those months, resulting in negative amortization and an increased loan balance through spring 2009.
- Plaintiffs sued asserting six claims (fraudulent omission/false representation, breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and two DTPA violations); the district court dismissed unjust enrichment and granted summary judgment for Wells Fargo on the remaining claims.
- The Ninth Circuit reviewed de novo the district court’s grant of summary judgment and affirmed in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraudulent omission / false representation | TILDS payment schedule was misleading/false because listed payments guaranteed negative amortization; Wells Fargo failed to disclose that fact | Loan documents, including TILDS and Deferred Interest Acknowledgment, warned that payments below interest could cause negative amortization; no duty to disclose more | Affirmed — no evidence of misrepresentation or suppression of a fact Wells Fargo was bound to disclose |
| Breach of contract | TILDS implied each listed payment would satisfy monthly interest | Loan documents did not require each listed payment to cover interest; disclosures warned of negative amortization | Affirmed — no contractual breach shown |
| Breach of implied covenant of good faith and fair dealing | Wells Fargo’s conduct subverted the contract’s spirit by listing payments that would cause negative amortization | Disclosures signed by plaintiffs fairly warned them; no evidence Wells Fargo intended to cause payments to fall short of interest | Affirmed — no evidence of conduct frustrating contract’s intent |
| Nevada Deceptive Trade Practices Act violations | TILDS and related materials were deceptive | No evidence of deceptive practices under the DTPA | Affirmed — no DTPA violation shown |
Key Cases Cited
- Samper v. Providence St. Vincent Med. Ctr., 675 F.3d 1233 (9th Cir. 2012) (standard of review for summary judgment)
- Vander v. U.S. Dep’t of Justice, 268 F.3d 661 (9th Cir. 2001) (summary judgment review and inferences to nonmoving party)
- Barmettler v. Reno Air, Inc., 956 P.2d 1382 (Nev. 1998) (elements of false representation/fraud)
- Midwest Supply, Inc. v. Waters, 510 P.2d 876 (Nev. 1973) (suppression of material fact as equivalent to false representation)
- Villalon v. Bowen, 273 P.2d 409 (Nev. 1954) (duty to disclose and suppression as misrepresentation)
- Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 808 P.2d 919 (Nev. 1991) (breach of implied covenant of good faith and fair dealing)