19 F. Supp. 3d 663
S.D.W. Va2014Background
- Refinanced home in June 2006 with Wells Fargo note for $181,800 and a $20,000 Greentree HELOC; by 2007 plaintiff faced payment difficulties and sought modifications; Wells Fargo allegedly offered modifications in 2008, 2009, and 2010 but allegedly did not honor them; modification finally obtained May 8, 2010 but payments remained noncompliant; by 2012 Wells Fargo commenced foreclosure and plaintiff sued; Complaint asserts five counts against Wells Fargo, U.S. Bank, and Greentree including unconscionable contract, breach of fiduciary duty, joint venture/agency, illegal fees, and misrepresentation/conduct in debt collection; court grants in part and denies in part, dismissing Counts I, III, IV; discovery and WVCCPA context are noted throughout; the court ultimately concludes no substantive unconscionability and dismisses Counts I and III, but denies Count V and leaves Count IV disposed of differently.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Substantive unconscionability based on loan value | McFarland argues loan exceeded home value rendering it unconscionable | Lender claims excess value is not inherently one-sided | Not substantively unconscionable to exceed home value; dismisses Count I |
| Net tangible benefit requirement | Loan failed to provide net tangible benefit to borrower | Net tangible benefit not required for unconscionability | Irrelevant to unconscionability; Count I dismissed |
| Joint venture and agency liability | Defendants liable under joint venture and agency theories | No viable underlying wrong or fiduciary relationship; insufficient evidence | Count III dismissed; Wells Fargo and U.S. Bank cannot be vicariously liable |
| Illegal fees under WVCCPA (Count IV) | Fees charged post-default were illegal | Fees are reasonable expenses incurred in realizing on security interest and may be charged | Count IV dismissed as to illegality; however analyzed under 46A-2-115 with reasonableness required |
| Misrepresentations in debt collection under WVCCPA (Count V) | Wells Fargo misrepresented loan modifications and collection practices | Agreements existed; misrepresentation shown via signed modification agreements | Count V denied in part; plaintiff allowed to pursue misrepresentation theories |
Key Cases Cited
- Genesis Healthcare Corp. v. Tucker, 729 S.E.2d 808 (2012) (unconscionability framework; sliding scale; case-by-case)
- Quicken Loans, Inc. v. Brown, 737 S.E.2d 640 (2012) (total cost as factor among others for unconscionability; not per se exceedance rule)
- Brown v. Genesis Healthcare Corp., 729 S.E.2d 217 (2012) (establishes unconscionability doctrines and case-by-case evaluation)
- Elmore v. State Farm Mut. Auto. Ins. Co., 504 S.E.2d 893 (1998) (fiduciary relationship generally not recognized without special relationship)
- White v. AAMG Const. Lending Ctr., 700 S.E.2d 791 (2010) (special lender-borrower relationship may create fiduciary duties)
- Glascock v. City Nat. Bank of W. Va., 576 S.E.2d 540 (2002) (lender-borrower special relationship duty to disclose)
- Dunn v. Rockwell, 689 S.E.2d 255 (2009) (recognizes independent claims like joint venture/conspiracy)
- In re Sullivan, 346 B.R. 4 (Mass. Bankr. 2006) (outside-state example of unconscionability arguments)