United States District Court, D. Massachusetts
ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
(DOC. NO. 180)
Sorokin United States District Judge
Johnathan Foley sued Defendant Wells Fargo for failure to
consider him for a mortgage loan modification in accordance
with an approved Class Action Settlement Agreement. Foley
alleges breach of contract, violation of Massachusetts
General Laws Chapter 93A, and breach of the implied covenants
of good faith and fair dealing. Wells Fargo has moved for
summary judgment on all claims (Counts I, III, and IV). Doc.
No. 180.The Court ALLOWS Wells Fargo's Motion for Summary
Judgment on Counts I, III, and IV of the Amended Complaint
and DISMISSES this action.
parties and the Court are familiar with the background of
this case. See Foley v. Wells Fargo, N.A., 772 F.3d
63 (1st Cir. 2014). A brief summary of the parties'
relationship, largely derived from the stipulated facts, Doc.
No. 201, and Foley's affidavit, Doc. No. 59-3, follows.
Applying the familiar summary judgment standard, the Court
draws all reasonable inferences and resolves all disputed
issues of material fact in Foley's favor. Further facts
are discussed in the course of the analysis of Foley's
March 7, 2005, Jonathan Foley purchased a home for $650, 000
at 61 Oceanside Drive, Unit 61, Hull, Massachusetts. Doc. No.
59-3 at ¶¶ 3-4. To finance the home, Foley obtained
a $450, 000 “Pick-a-Payment” mortgage from World
Savings Bank, FSB requiring him to pay $1, 670.42 a month.
Id. at ¶¶ 4-6. Years later, World Savings
Bank, FSB became Wells Fargo Bank, N.A. Doc. No. 201 at
the housing crash of 2008, the value of Foley's home
dropped significantly. Doc. No. 59-3 at ¶ 6. Shortly
thereafter, he also lost his job. Id. at ¶ 7.
Despite these hardships, he continued to make his monthly
mortgage payments until depleting his savings in October
2010. Id. at ¶ 7-11. Over the next several
months, Foley failed to deliver full and timely monthly
mortgage payments. Doc. No. 201 at ¶¶ 6-7.
in December 2010, Wells Fargo entered a Settlement Agreement
to resolve an ongoing California class action lawsuit over
the Pick-a-Payment mortgage loan scheme. Id. at
¶ 9. The class action Plaintiffs alleged the
Pick-a-Payment loans violated the Truth-in-Lending Act,
California unfair competition and consumer protection laws,
and implied covenants of good faith and fair dealing because
the loans failed to adequately disclose certain loan
conditions to borrowers, such as interest rates and payment
schedules. Doc. No. 81-2, Ex. A at ¶ 2. The parties
reached a nationwide settlement. Foley was a member of
“Settlement Class B” under the terms of the
Settlement Agreement. Doc. No. 201 at ¶ 10. As a Class B
Member, Foley was entitled to be considered for a
Home Affordable Modification Program (“HAMP”)
loan and, if unqualified, to be considered for a
MAP2R loan modification. Doc. No. 81-2, Ex. A at §
HAMP is a government program with its own eligibility
requirements, the MAP2R modification program was created by
Wells Fargo specifically for the purposes of the Settlement
Agreement. Id. at § VI(E)(1). To be eligible
for a MAP2R modification, the bank inputs several variables
into a determination process, known as the MAP2R Waterfall.
Id. at § VI(E)(5). If the bank follows the
Waterfall and cannot reduce the borrower's debt-to-income
ratio to 31%, then it is not required to offer a MAP2R
modification. Id. If denied for either a HAMP or
MAP2R modification, the Settlement Agreement requires Wells
Fargo to notify the applicant of the decision with “a
written explanation.” Id. at §
January 28, 2011, the Court-approved Class Action Notice was
sent via first class mail to Foley. Doc. No. 201 at ¶
22. The Settlement became officially effective in September
2011 and Wells Fargo sent Foley a request for mortgage
assistance (“RMA”) packet in November 2011. Doc.
No. 201 at ¶ 24-26. In January 2012, Wells Fargo sent a
letter denying Foley's request for mortgage assistance
because he had not provided the documents necessary for
consideration. Id. at ¶ 28. In August 2012, the
bank sent Foley a notice of foreclosure. Doc. No. 59-3 at
this time, Foley alleges that he repeatedly attempted to
contact the bank and re-submit the necessary information, but
was met with silence, misinformation, and general
incompetence on the part of Wells Fargo. Doc. No. 59. at
¶¶ 19-26; Doc. No. 201 at ¶¶ 26-28. After
being told by a bank employee that his loan modification
application was either lost or never received, Foley was sent
a new RMA in December 2012 that was eventually processed in
February 2013. Doc. No. 185 at ¶¶ 4-11; Doc. No.
201 at ¶ 31. Wells Fargo sent Foley two letters in
response to this RMA. Doc. No. 186-13; Doc. No. 186-14. The
first letter, dated February 18, explained his ineligibility
for HAMP because his “proposed modified monthly payment
amount would be more than 42%” of his gross monthly
income. Doc. No. 186-13 at 2. The second letter, dated
February 19, also denied him for an unspecified “number
of mortgage assistance options” due to “excessive
financial obligations” without any direct mention of
the MAP2R program. Doc. No. 186-14 at 2. On April 5, 2013,
Foley received a Notice of Foreclosure with a foreclosure
date of May 8, 2013. Doc. No. 59-3 at ¶ 28. Convinced
that Wells Fargo was wrongfully attempting to foreclose on
his home, Foley, on April 8, 2013, sought assistance from the
Massachusetts Attorney General's Office (“AG's
Office”). Doc. No. 59-3 at ¶ 30; Doc. No. 201 at
¶ 43. The AG's Office then contacted Wells Fargo and
suggested that, due to a change in Foley's financial
situation, he may now be eligible for a loan modification.
Id. at ¶¶ 43-44. In light of this new
information, the bank postponed foreclosure and sent Foley a
new RMA application in May 2013. Id. at ¶ 46.
Fargo processed the second RMA application from Foley on June
27, 2013. Doc. No. 185 at ¶¶ 8-11. Foley was once
again found ineligible for HAMP and MAP2R. Id. Wells
Fargo sent Foley two denial letters on June 27, 2013, nearly
identical to the two February denial letters. Doc. No. 201 at
¶¶ 56-57. One letter specified that Foley's
“proposed modified monthly payment amount would be more
than 42%” of his gross monthly income thus making him
ineligible for HAMP. Doc. No. 186-13 at 2. The second letter
contained no express mention of MAP2R or any calculation, but
denied him for a “number of mortgage assistance
options” due to “excessive financial
obligations.” Doc. No. 186-23 at 2. Foley found these
written explanations insufficient and contacted the AG's
Office once more while Wells Fargo resumed foreclosure
proceedings. Doc. No. 59-3. at ¶ 46-47. On July 16,
2013, the AG's Office wrote to Wells Fargo a second time
via email requesting the bank clarify under which specific
programs it had evaluated Foley's application. Doc. No.
201 at ¶ 58. On July 17, 2013, a bank representative,
Justin Forbes, then called Foley to clarify his loan
modification denials. Doc. No. 201 at ¶ 59. As discussed
in greater detail below, Forbes explained unequivocally that
Foley failed to qualify for the MAP2R program due to an
“excessive forbearance.” Doc. No. 184-10 at 6-8.
filed his initial Complaint against Wells Fargo pro se in
Plymouth Superior Court on August 1, 2013. Doc. No. 1 at 1.
The Complaint consisted of four counts. Count I alleged
breach of contract; Count II alleged violation of M.G.L
chapter 244, section 35A and 35B; Count III alleged violation
of M.G.L. chapter 93A; and Count IV alleged breach of the
implied covenants of good faith and fair dealing.
Fargo removed the case to federal court. Doc. No. 1.
Thereafter, Judge Saylor denied a preliminary injunction and
subsequently dismissed the case. Doc. No. 32; Doc. No. 34.
Foley appealed. Doc. No. 36. The First Circuit reversed the
dismissal of Counts I and IV of the Complaint. See
Foley, 772 F.3d 63. After remand, Foley amended the
Complaint to reinstate Count II's unfair trade practices
claim and Count III's 93A claim. Doc. No. 59. Wells Fargo
filed a Motion to Dismiss Counts II and III, Doc. No. 85, and
a Motion to Transfer to the Northern District of California,
Doc. No. 80. Foley filed a Motion for a Preliminary
Injunction preventing Wells Fargo from foreclosing on his
home. Doc. No. 64. The Court denied the Motion to Transfer,
allowed the Motion to Dismiss as to Count II, denied the
Motion to Dismiss as to Count III, and entered a preliminary
injunction enjoining foreclosure pending the
Doc. No. 109. Presently before the Court is Wells Fargo's
motion for summary judgment on Counts I, III, and IV of the
Amended Complaint. Doc. No. 180.
judgment shall be granted when the moving party demonstrates
“that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). Here, Wells Fargo bears the
burden of demonstrating the absence of a genuine issue of
material fact essential to Foley's case at trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The Court views the facts in the light most favorable to the
non-moving party, Foley. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Count I: Breach of Contract
Count I of the Amended Complaint, Foley alleges a breach of
contract arising from Wells Fargo's supposed failure to:
(a) consider him for a MAP2R modification of his loan under
the terms of the Settlement Agreement; and (b) to explain
clearly the basis for his denial. The contract at issue is
the Class Settlement Agreement, which is governed by
California law. See Foley v. Wells Fargo Bank, N.A.,
772 F.3d 63, 76 (1st Cir. 2014). The elements of this claim
are clear and were set forth by the First Circuit. See
Id. In order to survive Wells Fargo's motion for
summary judgment, Foley must demonstrate: “1) the
existence of a contract; 2) [his] performance or excuse for
non-performance; 3) [Wells Fargo's] breach; 4) and
resulting damages to [him]” Id. (citing
Bellevue v. Prudential Ins. Co. of Am., 23 F.
App'x 809, 810-11) (9th Cir. 2001).
Failure to Consider Foley for a MAP2R Modification
Court discerns three possible theories advanced by Foley as
to how Wells Fargo failed to consider him for a MAP2R loan
modification in accordance with the terms of the Settlement
Agreement: first, that the bank failed to consider him for an
MAP2R modification generally; second, that it utilized an
incorrect formula in the MAP2R Waterfall; and third, that it
made an error in its final calculation. Ultimately these
theories fail and Wells Fargo has demonstrated that it is
entitled to judgment as a matter of law.
Consideration for a Loan Modification
Settlement Class B Member, Wells Fargo was required to
consider Foley for a HAMP loan modification. Doc. No. 81-2,
Ex. A at § VI(E)(5). Additionally, if Foley did not
qualify for or elect to accept the HAMP modification, Wells
Fargo was required to consider him for a MAP2R loan
modification. Id. The Agreement made clear that
“there is no obligation for [Wells Fargo] to offer
MAP2R Modifications to Settlement Class Members who cannot be
qualified under the HAMP or MAP2R guidelines.”
February 2013, Foley's application for a HAMP
modification was first processed by Wells Fargo. Doc. No. 185
at ¶ 4. After determining his ineligibility for HAMP,
Foley was then considered for a MAP2R modification. Doc. No.
185 at ¶¶ 6-7. In June 2013, Foley resubmitted an
application to be reconsidered for both programs and was once
again denied. Doc. No. 201 at ¶ 51. He received letters
of denial on both occasions, although neither expressly
mentioned the MAP2R modification program. Id. at
¶¶ 40-41, 56-57. An affidavit from Elizabeth
Nickel, Wells Fargo's Vice President of Loan
Documentation, describes the processing and subsequent
analysis of each of Foley's modification applications in
No. 185 at ¶¶ 4-11. Specifically, Nickel identified
the information input into the HAMP and MAP2R Waterfalls and
the corresponding results. Id. An additional
affidavit provided by Michael Dolan, a Wells Fargo Operations
Analyst, further explains that the applications were denied
because the proposed modified monthly mortgage payments were
in excess of the required percentages of Foley's gross
monthly income. Doc. No. 21 at ¶¶ 19, 27.
Subsequently, in two separate recorded telephone calls dated
July 17, 2013, and July 23, 2013, a Wells Fargo customer
service representative, Justin Forbes, expressly advised
Foley that the bank considered him for the MAP2R modification
and that he was denied due to an “excessive
forbearance.” Doc. No. 184-10 at 7-8, 14-15.
July 30, 2013 letter sent in response to the email inquiry
made by the AG's Office also clearly addressed
Foley's ineligibility for both the HAMP and MAP2R
modifications. Doc. No. 83-19 at 2. To be eligible for a HAMP
modification, the proposed modified monthly payment must be
no more than 42% of an individual's monthly gross income.
Id. Foley's proposed payment was 58.03% and thus
properly denied. Id. The MAP2R modification attempts
to reduce the borrower's monthly mortgage payment to 31%
of the borrower's gross monthly income. Doc. No. 81-2,
Ex. A at § VI(E)(5). However, as the letter expressly
states, Wells Fargo was unable to formulate a housing payment
for Foley in accordance with the required gross monthly
income. Doc. No. 83-19 at 2.
only has Foley admitted most of this evidence, he offers no
evidence demonstrating that Wells Fargo failed to fully
consider him for a loan modification. See Doc. No. 201 at
¶¶ 4-75. While his unverified Amended Complaint
alleges that Wells Fargo never provided or performed any of
the relief under the Settlement Agreement, “unverified
allegations in a complaint are not evidence.”
Geshke v. Crocs, Inc., 740 F.3d 74, 78 n.3 (1st Cir.
2014). His affidavit certainly gives examples of Wells Fargo
not returning his calls and providing confusing or incorrect
information. However, it does not offer any insight
concerning the application determination process itself.
See generally Doc. No. 59-3. The Settlement
Agreement required Wells Fargo to process Foley's
application in order to determine his eligibility for a loan
modification. Doc. No. 81-2, Ex. A at § VI(E)(5). The
undisputed evidence establishes that Wells Fargo fulfilled
Misapplication of MAP2R Formula
Foley argues that, in determining whether he was eligible for
a MAP2R modification, there is a material dispute of fact as
to whether Wells Fargo applied the debt-to-income ratio
(“DTI”) or a housing-to-income ratio
(“HTI”). On all matters in this case governing
loan modification and the parties' respective
calculations, the Settlement Agreement controls. The MAP2R
modification program aims “to reduce a Settlement Class
Member's DTI to 31% or less . . . . [O]nce the DTI of 31%
is reached, the loan will be converted to a fully-amortizing
loan and the negative amortization feature will be
eliminated.” Doc. No. 81-2, Ex. B at § III(C)(2).
The Agreement expressly defines DTI as the ratio of the
applicant's first-lien monthly mortgage obligations,
“including monthly amounts for principal, interest,
property taxes, hazard insurance, flood insurance,
condominium association fees, and homeowners' association
fees” to the applicant's gross monthly income.
Doc. No. 81-2, Ex. A at § I(1.22) (emphasis added). At
no point in the Agreement is there a mention of an HTI ratio,
but the undisputed evidence establishes that the HTI applied
by Wells Fargo is identical to the DTI as defined in the
Agreement. The only definition of HTI in the record is
provided in the Elizabeth Nickel affidavit. Nickel defines
HTI as “the ratio between a borrower's monthly
mortgage payment (including principal, interest, taxes,
hazard insurance, and homeowner's insurance/condominium
fees) and the borrower's monthly gross
income.” Doc. No. 185 at ¶ 12 (emphasis added).
She goes on to explain that this is the formula Wells Fargo
applied when it considered Foley for a MAP2R loan
modification. Id. at ¶ 7. Thus, the record
demonstrates that HTI, in this case, is just another acronym
Foley has offered no factual evidence to support his claim
that Wells Fargo miscalculated the DTI (or HTI) ratio. Absent
such a record, Foley cannot maintain that a material question
of fact exists concerning his breach of contract claim.
Foley offers his own personal calculation to determine his
eligibility for MAP2R that reaches a different conclusion
than the Wells Fargo's calculation. The following ...