Young v. Wells Fargo Bank, N.A.
2013 U.S. App. LEXIS 10189
| 1st Cir. | 2013Background
- Young sought a HAMP modification to avert foreclosure on her Massachusetts home connected to a Wells Fargo/N.A. loan serviced by AHMS.
- Her 1997 purchase and 2006 mortgage (~$282,000) with 7.8% initial rate led to 2008 default amid recession; forbearance and trial modification efforts followed.
- In 2009–2010, Young engaged in a Trial Period Plan (TPP) with monthly trial payments and sought a permanent modification; Wells Fargo sent a permanent modification offer in June 2010, which Young did not sign.
- A January 2010 letter incorrectly stating she was ineligible for a permanent modification caused distress; after counsel's intervention, a permanent modification was eventually offered in June 2010.
- Young alleged emotional distress and sought damages and equitable relief; district court dismissed several claims, leading to this appeal.
- The court reviews de novo the Massachusetts-law claims and addresses contract, covenant, tort, and Chapter 93A issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Count I survive as a contract claim? | Young asserts Wells Fargo breached the TPP by increasing permanent-modification payments and failing to offer a permanent modification by the end of the trial period. | The TPP distinguishes trial payments from permanent terms and allows changes; no breach occurred. | Count I survives; contract ambiguities favor Young, and the complaint plausibly alleges breach. |
| Is Count II duplicative of Count I and properly dismissed? | Count II seeks relief under HAMP/HERA/H4H-related provisions to interpret the contract. | Count II improperly seeks direct rights under HAMP; duplicative of Count I and fails for lack of private right of action under HAMP. | Count II is duplicative and is dismissed. |
| Does the implied covenant of good faith and fair dealing support Young's claim? | Wells Fargo's handling of forbearance and miscommunications show a lack of good faith. | No bad faith shown beyond ordinary contract disputes; delays not enough. | Claim is dismissed; no affirmative showing of bad faith. |
| Do NIED and IIED claims survive? | Defendants’ conduct caused emotional distress including anxiety and sleep loss. | Duty and requisite intent/extreme conduct not shown; claims fail. | NIED and IIED claims are dismissed. |
| Does the Chapter 93A claim survive for damages? | Unfair or deceptive practices caused money damages such as debt, credit harm, and increased interest. | Damage theories are unfounded or not properly pled under 93A. | Chapter 93A claim survives as to damages (economic injury) but remains to be developed; not dismissed outright. |
Key Cases Cited
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (TPP read as definite offer to permanent modification; eligibility guidelines control ultimate terms)
- Markle v. HSBC Mortg. Corp. (USA), 844 F. Supp. 2d 172 (D. Mass. 2011) (TPP as precursor to permanent modification; trial payments vs. modified terms)
- Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119 (2d Cir. 2005) (contract interpretation at motion to dismiss; resolve ambiguities in plaintiff's favor)
- NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012) (contract interpretation and reliance on extrinsic context for ambiguities)
- Rule v. Fort Dodge Animal Health, Inc., 607 F.3d 250 (1st Cir. 2010) (injury under Chapter 93A; economic damages principle and evolving caselaw)