Court Denies Dismissal of Action Against Wells Fargo

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August 11, 2017: The U.S. District Court, Maine denied Wells Fargo's motion to dismiss an action brought against them, and the the Bank of New York Mellon Trust Company, N.A., for their misrepresentation of amounts owed on a mortgage loan and attempts to collect amounts not owed by the Plaintiff Borrower.  As alleged in the complaint, Wells Fargo (known as America's Servicing Company- ASC), acting as Bank of New York’s agent, unlawfully communicated with the Plaintiff during the course of her five-year Chapter 13 bankruptcy proceeding, and again following her bankruptcy discharge in violation of the Automatic Stay and Discharge Injunction provisions of the bankruptcy code.  The Plaintiff Borrower claimed that Wells Fargo, acting as Bank of New York’s agent, also violated the Maine Consumer Credit Code, 9-A M.R.S.A. § 9-403 (2017); the federal Fair Debt Collection Practices Act, 15 U.S.C.A. §§ 1692, et seq; and the Maine Fair Debt Collection Practices Act, 32 M.R.S.A. §§ 11001, et seq. 

The Plaintiff Borrower surrendered the property in her Chapter 13 bankruptcy and the mortgage debt was discharged.  She was no longer personally liable of the debt.  In addition, The Bank of New York had obtained a foreclosure judgment on the property and the redemption period on the loan had expired, extinguishing the borrower's rights in the property.  Wells Fargo, however, continued to send notices to the borrower seeking monthly payments, and increasing principal balance, and including a due date and payment coupons with each statement.  They also stated they would charge insurance premiums to the borrower's account.  Despite several notices to cease such communications, Wells Fargo continued to inundate the borrower with statements alleging amounts due and notices regarding force placed insurance premiums, loss mitigation options, and foreclosure.  

The Court found that such facts as alleged could support the Plaintiff Borrower's claims for bankruptcy code violations and unfair debt collection conduct.  

The Court found:

  • "as a consequence of the Bankruptcy Court’s Confirmation Order dated January 11, 2011, ASC was left to enforce its “state law interests” established by the Foreclosure Judgment, and it was no longer a secured creditor of the Bankruptcy Estate. Contrary to ASC’s argument, the Confirmation Order did not result in a res judicata bar to Lamprey’s claims"
  • "Because the Defendants have failed to show that the Bankruptcy Code was explicitly or implicitly intended to 'occupy the field' regarding the rights of a creditor secured by a mortgage in real estate, field preemption does not apply." 

  • "the Bankruptcy 'Code and the FDCPA are not irreconcilable and creditors are under the obligation to follow both.'"

Attorneys Andrea Bopp Stark and Christopher Keach, along with Gary Goldberg from Terry Garmey & Associates represent the borrower.  Attorney Barry Schklair presented at oral argument on the Motion to Dismiss.  This decision can be found at  Lamprey v. Wells Fargo et al, 2:16-cv-00570-JDL, 2017 WL 3470570. 

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