Wigod v. Wells Fargo Bank, N.A.
2012 U.S. App. LEXIS 4714
| 7th Cir. | 2012Background
- Wigod sought Illinois state-law claims against Wells Fargo for failing to complete a permanent HAMP loan modification after a four-month trial period.
- Wells Fargo offered a Trial Period Plan (TPP) that promised a permanent modification if Wigod met requirements and her representations remained true.
- After Wigod timely paid four trial payments and complied with disclosures, Wells Fargo declined to issue a permanent modification.
- Treasury directives guided HAMP via a waterfall method and an NPV test to determine eligibility and modification terms; the plan framed a binding offer contingent on conditions.
- Wigod alleged Wells Fargo misrepresented and concealed key facts, and she pursued breach of contract, promissory estoppel, fraud, and ICFA claims; the district court dismissed several claims as premised on HAMP.
- On appeal, the Seventh Circuit held Wigod stated viable state-law claims (contract, promissory estoppel, fraudulent misrepresentation, ICFA) and that federal law did not preempt them.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TPP constitutes an enforceable contract | Wigod's breach claim rests on Wells Fargo's obligation to offer a permanent modification after TPP compliance. | TPP conditioned further modification on later actions by Wells Fargo; no enforceable offer was made until those actions occurred. | TPP created an enforceable offer to modify upon Wigod's compliance. |
| Whether the TPP's consideration supported contract formation | Wigod incurred new detriments (escrow, disclosures) beyond existing duties; adequate consideration. | The modification was contingent; consideration may be lacking or insufficient. | TPP provided valid consideration to support contract formation. |
| Whether Wigod adequately pled fraudulent misrepresentation | Wells Fargo made an unambiguous promise of a permanent modification; plaintiff relied to her detriment. | Any misstatement of future intent is not actionable absent a scheme; reliance not plausible. | Fraudulent misrepresentation adequately pled; scheme exception could apply. |
| Whether ICFA claim is viable | Wells Fargo engaged in deceptive and unfair practices by misrepresenting modification prospects and causing pecuniary injury. | HAMP does not create private rights; no intent to deceive shown; no injury shown. | ICFA claim plausibly stated; intent not required for unfair/deceptive acts; injury alleged. |
| Whether Moorman/economic-loss doctrine bars negligent-hiring and negligent-misrepresentation claims | Not applicable since extra-contractual duties may exist. | Economic-loss Moorman doctrine bars purely economic injury arising from contractual relations. | Moorman bars negligent-hiring and negligent-misrepresentation claims. |
Key Cases Cited
- Dumas v. Infinity Broadcasting Corp., 416 F.3d 671 (7th Cir. 2005) (promissory estoppel elements and consideration)
- McHenry Savings Bank v. Autoworks of Wauconda, Inc., 399 Ill. App.3d 104 (Ill. App. 2010) (open terms contract enforceability in Illinois)
- Catalan v. GMAC Mortg. Corp., 629 F.3d 676 (7th Cir. 2011) (Moorman doctrine and extracontractual duties)
- Astra USA, Inc. v. Santa Clara County, 131 S. Ct. 1342 (2011) (absence of private right of action and preemption context)
- Ocwen Loan Servicing, LLC Mortg. Servicing Litigation, 491 F.3d 638 (7th Cir. 2007) (field preemption under HOLA and remedies; state-law claims permitted)