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Foley v. Wells Fargo Bank, N.A.

United States District Court, D. Massachusetts

May 1, 2017

WELLS FARGO, N.A., s/h/m to Wachovia Mortgage FSB, f/k/a World Savings FSB, Defendants.


          Leo T. Sorokin United States District Judge

         Plaintiff 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.


         The 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 claims.

         On 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 ¶¶ 2-3.

         After 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.

         Subsequently, 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 § VI(E)(5).

         While 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 § VI(E)(8)(d).

         On 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 ¶ 18.

         Throughout 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.

         Wells 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.


         Foley 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. Id.

         Wells 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 litigation.[1] 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.


         Summary 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).


         A. Count I: Breach of Contract

         In 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).

         1. Failure to Consider Foley for a MAP2R Modification

         The 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.

         a. Full Consideration for a Loan Modification

         As a 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.” Id.

         In 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 detail.[2] Doc. 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.

         The 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.

         Not 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.[3] 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 that obligation.

         b. Misapplication of MAP2R Formula

         Next, 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 for DTI.

         Ultimately, 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.

         c. The MAP2R Calculation

         Additionally, 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 ...

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