Real Property – Homeowners’ HAMP & Contract Claims Dismissed

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Spaulding v. Wells Fargo Bank NA (Lawyers Weekly No. 13-01-0391, 20 pp.) (Davis, J.) No. 12-1973, April 19, 2013; USDC at Baltimore, Md. (Russell, J.) 4^th Cir.

Holding: Maryland homeowners who were denied a mortgage loan modification under the federal Home Affordable Modification Program cannot sue their mortgage servicer Wells Fargo Bank under HAMP or under various state law theories of recovery, and the 4^th Circuit upholds dismissal of their lawsuit.

HAMP has given rise to a large number of civil claims by mortgagors against financial industry firms. The claims here arise with that general background.

In early 2010, appellants became unable to make their full monthly mortgage payments and wrote a “hardship letter” to defendant Wells Fargo, and the parties began a series of communications about appellants’ request for a loan modification and Wells Fargo’s requests for additional documentation. Appellants ultimately were denied a HAMP modification, and foreclosure proceedings began.

Appellants sued Wells Fargo in Maryland state court, asserting claims for breach of implied-in-fact contract, negligence, violations of the Maryland Consumer Protection Act, negligent misrepresentation and common law fraud. Wells Fargo removed the action to federal court on the basis of diversity. The district court dismissed the complaint, saying that Congress created no private right of action for denial of a HAMP application and plaintiffs did not allege that a Trial Period Plan (TPP) agreement was in place or even that it was offered.

We hold the district court correctly granted Wells Fargo’s motion to dismiss all five counts.

Appellants argue there was sufficient consideration on their side to form an implied-in-fact contract, and Wells Fargo bound itself by entering into an agreement with the U.S. Treasury to participate in HAMP, consenting to being publicly listed as a HAMP participant, telling appellants it would consider them for HAMP eligibility and regularly sending “HAMP Starter Kits” to distressed homeowners. As a matter of law, none of this conduct is sufficient to constitute a “meeting of the minds” evidencing a contract, implied-in-fact or otherwise.

The negligence claim fares no better. Absent a duty of care, there can be no liability in negligence. Banks typically do not have a fiduciary duty to their customers. Here, there was no express or implied contract, and no tort duty could arise as a matter of law.

The state consumer protection claims also fail. Appellants have not identified any contradictory correspondence sent by Wells Fargo. The alleged false statements described by appellants were demonstrably not false. Appellants’ vague generalization about a false statement is not sufficiently particular to comply with Rule 9(b)’s heightened pleading requirements.

The court also did not err in dismissing appellants’ claims for negligent misrepresentation and common law fraud.

Judgment for the bank affirmed.