Shelby E. Watson v. Wells Fargo Home Mortgage, Inc.
438 S.W.3d 404
Mo.2014Background
- Watson sued Wells Fargo under the Missouri Merchandising Practices Act (MMPA) alleging bad faith loan modification negotiations and wrongful foreclosure.
- Trial court granted summary judgment for Wells Fargo, ruling actions were not “in connection with” the sale since Wells Fargo wasn’t an original party to the loan.
- The Missouri Supreme Court, following Conway v. CitiMortgage, held wrongful-foreclosure claims against a loan servicer can be MMPA actionable even if not originally a party to the loan.
- The court held the loan-modification negotiations were not “in connection with” the original loan sale because the original terms did not require renegotiations and the negotiations contemplated a new agreement.
- Watson’s loan originated in 2006 with Mortgage Resources; Wells Fargo began servicing; foreclosure occurred after modification discussions; the case was remanded for further proceedings and attorney-fee determinations on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether wrongful foreclosure was “in connection with” the loan sale | Watson argues foreclosure rights arose from the loan sale. | Wells Fargo contends it was not enforcing original loan terms. | Yes; wrongful-foreclosure claims can be MMPA actionable as in Conway. |
| Whether loan-modification negotiations were “in connection with” the loan sale | Watson argues negotiations relate to the sale of the loan. | Wells Fargo argues negotiations were not part of the original loan sale. | No; negotiations not in connection with the sale of the original loan. |
| Whether Ward v. West County delimitation affects the case | Watson relies on Ward to claim lack of good faith supports MMPA claim. | Wells Fargo contends Ward is inapplicable to modification negotiations. | Ward is inapplicable to the modification-negotiation context. |
Key Cases Cited
- Conway v. CitiMortgage Inc., 438 S.W.3d 410 (Mo. banc 2014) (holds loan-sale “in connection with” the sale extends through the life of the loan for wrongful-foreclosure claims)
- Ward v. West County Motor Co., Inc., 403 S.W.3d 82 (Mo. banc 2013) (recognizes a lack of good-faith claim under MMPA; not controlling here)
- ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (de novo review standard for summary-judgment on appeal)