Miller v. Wells Fargo Bank, N.A.
994 F. Supp. 2d 542
S.D.N.Y.2014Background
- Plaintiff Miller sues Wells Fargo Bank, Wells Fargo Insurance, Assurant, and ASIC over force-placed hazard insurance on his New York property.
- Mortgage requires plaintiff to maintain hazard insurance with a Standard Mortgage Clause and to use escrow funds to pay premiums.
- Bank may force-place insurance if borrower fails to maintain coverage, and force-placed premiums can be added to escrow and change payments.
- Plaintiff's policy lapsed in 2008; in 2009 Wells Fargo purchased ASIC force-placed coverage and billed premiums via escrow.
- Wells Fargo renewed force-placed policies in 2010–2012; plaintiff alleged excessive premiums and unrelated costs; bank allegedly did not rescind for a year.
- Complaint asserts RICO, contract, fiduciary, unjust enrichment, GBL 349, and declaratory/injunctive claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RICO: existence of an enterprise and pattern of racketeering | Miller alleges an association-in-fact enterprise to defraud borrowers. | Enterprise is inadequately pleaded; association lacks unitary purpose. | RICO claim dismissed for lack of a pleaded enterprise. |
| RICO conspiracy | Conspiracy to violate RICO based on the same conduct. | No substantive RICO claim, so conspiracy fails as well. | RICO conspiracy claim dismissed. |
| Breach of contract against Wells Fargo Bank | Force-placed insurance when plaintiff had active coverage breached Mortgage terms. | Bank acted to protect its interest; premiums reasonable under the Mortgage. | Breach claim survives as to force-placing during active coverage; other theories rejected. |
| Implied covenant of good faith and fair dealing | Breach duplicative of contract claim; bank acted in bad faith for profit. | Covenant claim duplicative and thus dismissible. | Dismissed as duplicative of breach of contract claim. |
| GBL § 349 | Deceptive force-placed pricing and notices misled consumers. | Pricing was based on filed rates; no causal link shown to injury. | Dismissed for lack of causation and consumer injury showing. |
Key Cases Cited
- Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17 (2d Cir. 1994) (filed rate doctrine bars unreasonable-rate claims)
- Simon v. KeySpan Corp., 694 F.3d 196 (2d Cir. 2012) (applies filed rate doctrine to insurance context)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility pleading standard set forth)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading requires plausible facts, not mere conclusory statements)
- First Capital Asset Mgmt. v. Satinwood, Inc., 385 F.3d 159 (2d Cir. 2004) (enterprise must be pleaded with participant roles and unity)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (N.Y. 1995) (elements of NY GBL § 349 requires injury causation)