Wells Fargo Bank, N.A. v. Williford, et al. / Wells Fargo Bank, N.A. v. Williford, et al.
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IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
WELLS FARGO BANK, N.A.
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C.A. No. 09L-07-295 MJB
Plaintiff,
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NON-ARBITRATION
v.
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In Rem
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Sci. Fa. Sur Mortgage Action
EVAN O. WILLIFORD, and,
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Mortgage Record 200771101DIONNE D. WILLIFORD,
)
0094999
)
Defendants.
)
_______________________________________________________________
WELLS FARGO BANK, N.A.
Plaintiff,
v.
EVAN O. WILLIFORD, and,
DIONNE D. WILLIFORD,
Defendants.
)
)
)
)
)
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)
)
)
)
C.A. No. N11C-08-090 MJB
JURY TRIAL DEMANDED
Submitted: May 24, 2012
Decided: August 21, 2012
Upon Defendants’ Motion for Summary Judgment Dismissing In Personam Action, DENIED.
OPINION & ORDER
Geoffrey G. Grivner, Esquire, and Mark Pfeiffer, Esquire, Buchanan Ingersoll & Rooney PC,
Wilmington, Delaware, Attorneys for Wells Fargo Bank, N.A. and Federal Home Loan
Mortgage Corporation.
Sarah M. Rutigliano, Esquire, and Lisa Keil Cartwright, Esquire, Atlantic Law Group,
Wilmington, Delaware, Attorneys for Wells Fargo Bank, N.A.
Evan O. Williford, Esquire, Newark, Delaware, Attorney for Evan O. Williford and Dionne D.
Williford.
BRADY, J.
Introduction
This action began as a scire facias sur mortgage action, originally brought on July 26,
2009 by Wells Fargo Bank, N.A. (“Wells Fargo”) against Evan and Dionne Williford (“the
Willifords”), for foreclosure of Wells Fargo’s interest in property located in Newark, Delaware.
On August 28, 2009, counsel for Wells Fargo requested that the Court place this action on the
dormant docket, advising that Wells Fargo entered into a modification agreement with the
Willifords, and that Wells Fargo intended to proceed to foreclose if the Willifords failed to honor
the terms of their agreement. 1 The Court placed the action on the dormant docket on September
15, 2009. Wells Fargo filed a Direction for Entry of Default Judgment with the Court on May 7,
2010, and then moved to vacate the default judgment and provide the Willifords an opportunity
to answer Wells Fargo’s Complaint on May 14, 2010. In July 2010, the Willifords filed an
Answer with Counterclaims against Wells Fargo and Federal Home Mortgage Corporation, as a
third party defendant, (collectively, “Defendants”), asserting breach of contract and promissory
estoppel allegations and seeking declaratory judgment setting forth the parties’ rights and
obligations in connection with the mortgage that is the subject of the litigation. In August 2011,
the Willifords commenced an in personam action against Wells Fargo and Federal Home
Mortgage Corporation, alleging that Wells Fargo offered, and the Willifords accepted, a hardship
loan modification under the federal Home Affordable Modification Program (“HAMP”). The in
personam Complaint contains claims for fraud, deceptive trade practices, breach of contract,
breach of the covenant of good faith and fair dealing, and promissory estoppel. On September
22, 2011, the Court granted a motion to consolidate the actions.
1
Letter from Kathryn E. Burritt, Paralegal to Michelle Berkley-Ayres, Esquire, Atlantic Law Group, LLC, to
Judicial Case Manager to the Hon. M. Jane Brady (Aug. 28, 2009).
2
On November 17, 2011, the Court granted summary judgment to dismiss the Willifords’
counterclaims in the foreclosure action, on two bases. First, the Willifords’ counterclaims were
permissive and therefore barred by law. 2 Second, pursuant to explicit limiting language, a
HAMP trial period plan agreement (“TPP”) between the Willifords and Wells Fargo was not a
modification of the original mortgage agreement, either outright or pursuant to conditions
precedent, and therefore did not discharge, replace, pay, or satisfy the Willifords’ obligations
under the original mortgage agreement. 3 The Court’s ruling focused on the limited defenses and
counterclaims permitted by Delaware law in scire facias sur mortgage actions. 4
Defendants filed the present Motion for Summary Judgment to dismiss the in personam
action on April 24, 2012. The Willifords filed their Response to the Motion on May 17, 2012.
The Court heard the Motion on May 24, 2012. For reasons stated herein, the Court DENIES the
Motion.
Factual Background
On August 27, 2009, the Willifords signed and returned to Wells Fargo a TPP to
participate in a loan trial period for the HAMP. 5
The TPP provided that the Willifords’
participation in the trial period could lead to a permanent loan modification. 6 Section 2 of the
TPP provided as follows:
F. If prior to the Modification Effective Date, (i) the Lender does
not provide me a fully executed copy of this Plan and the
Modification Agreement; (ii) I have not made the Trial Period
payments required under Section 2 of this Plan; or (iii) the Lender
determines that my representations in Section 1 are no longer true
2
Wells Fargo Bank, N.A. v. Williford, No. 09L-07-295, 13 (Del. Super. Nov. 17, 2011).
Id.
4
Id. at 8-9.
5
See Pls.’ Resp., Ex. A.
6
See id.
3
3
and correct, the Loan Documents will not be modified and this
Plan will terminate. In this event, the Lender will have all of the
rights and remedies provided by the Loan Documents, and any
payment I make under this Plan shall be applied to amounts I owe
under the Loan Documents and shall not be refunded to me; and
G. I understand that the Plan is not a modification of the Loan
Documents and that the Loan Documents will not be modified
unless and until (i) I meet all of the conditions required for
modification, (ii) I receive a fully executed copy of a Modification
Agreement, and (iii) the Modification Effective Date has passed. I
further understand and agree that the Lender will not be obligated
or bound to make any modification of the Loan Documents if I fail
to meet any one of the requirements under this Plan. . . . 7
The Willifords submitted as Exhibits to their Response to this Motion two untitled
documents dated August 22, 2009, demonstrating a creditor decision to provide the Willifords a
HAMP term extension. 8
Parties’ Contentions
Defendants contend they are entitled to summary judgment for the in personam action in
its entirety under the “law of the case” doctrine. 9 Defendants argue, “The Court has already
decided that the Borrowers were not offered a modification of their mortgage. Since all of
Borrowers claims in the in personam action are premised on the Lenders offering Borrowers a
modification to their mortgage, summary judgment against the Borrowers is warranted.” 10
The Willifords respond that the Court’s opinion in the in rem action does not control the
merits of any claim not asserted as a counterclaim. They argue that the Court’s conclusion that
the TPP was not, in and of itself, a modification to the mortgage does not amount to a forever
preclusion of other claims in this case; the Court barred their counterclaims in the in rem case
7
Id.
Pls.’ Resp. Exs. B & D.
9
Defs.’ Mot. ¶ 9.
10
Id. ¶ 10.
8
4
because they were permissive, and permissive counterclaims are barred in scire facias sur
mortgage actions. The Willifords posit that “numerous courts” have ruled that an action for
breach of contract based upon a HAMP trial period TPP is actionable. 11
They argue that
discovery confirms their “belief that an agreement had been reached to modify the Note and
Mortgage.” 12
Standard of Review
A party may move for summary judgment under Superior Court Civil Rule 56. Upon a
motion for summary judgment, the Court reviews the record in the light most favorable to the
non-moving party and will grant summary judgment only if no genuine issues of material fact
are in dispute. 13 Summary judgment will be denied if material issues of fact exist or if the record
lacks information necessary to clarify application of the law to the circumstances. 14
Discussion
“The law of a case is established when a specific legal principle is applied to an issue
presented by facts which remain constant throughout the subsequent course of the same
litigation.” 15 “The ‘law of the case’ doctrine requires that issues already decided by the same
court should be adopted without relitigation, and ‘once a matter has been addressed in a
procedurally appropriate way by a court, it is generally held to be the law of that case and will
not be disturbed by that court unless compelling reason to do so appears.’” 16
11
Pls.’ Resp. ¶ 11.
Id. ¶ 2.
13
Ebersole v. Lowengrub, 180 A.2d 467, 469 (Del. 1962); Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979);
14
Ebersole, 180 A.2d at 468.
15
Gannett Co., Inc. v. Kanaga, 750 A.2d 1174, 1181 (Del. 2000) (citing Kenton v. Kenton, 571 A.2d 778, 784 (Del.
1990)).
16
May v. Bigmar, Inc., 838 A.2d 285, 288 (Del. Ch. 2003) aff'd, 854 A.2d 1158 (Del. 2004).
12
5
The “law of the case” doctrine applies to the present case, because the facts have
remained constant since the Court’s decision dismissing the counterclaims in the in rem
proceeding. That decision required the Court to analyze the parties’ TPP to infer whether they
intended to modify the original mortgage agreement, in which case the Willifords could have had
a proper defense to the foreclosure action.17 The Court found that “because the [TPP] was not a
modification of the parties’ original mortgage agreement, the Willifords’ counterclaims, which
arise out of the [TPP], do not arise out of the original mortgage agreement.” 18
Defendants take the position that the Court decided that Wells Fargo did not offer the
Willifords a modification of their mortgage. 19 That argument is premised upon an inaccurate
reading of the decision. The Court ruled in its November 17, 2011 Opinion only that the TPP did
not, in and of itself, constitute a modification of the original mortgage agreement. The Court
resolved that “[t]he agreement, by a reading of its ordinary language, demonstrates Wells
Fargo’s intent that the payments the Willifords made pursuant to the TPP apply toward the
amount the Willifords owed under the original mortgage agreement without immediately
modifying the original mortgage agreement.” 20 “Law of the case” doctrine binds the Court only
to the holding that the TPP was not a modification of the original mortgage agreement. The
finding that the TPP did not constitute an immediate and effective modification does not preempt
the possibility that a trier of fact could find that Wells Fargo extended an offer of modification to
the Willifords, through the TPP, other communications and dealings between the parties, or a
combination thereof.
17
The only permissible defenses in a scire facias sur mortgage action are payment, satisfaction, or a plea in
avoidance, meaning an assertion the plaintiff has no right to payment. See Wilmington Trust Co. v. The Bethany
Group Ltd. P’ship, 1999 WL 288686, at *7 (Del. Super. June 3, 1993); LaSalle, 2005 WL 1284049, at *2.
18
Wells Fargo Bank, N.A. v. Williford, No. 09L-07-295, 14 (Del. Super. Nov. 17, 2011).
19
Defs.’ Mot. at 4.
20
Wells Fargo Bank, N.A. v. Williford, No. 09L-07-295, 11 (Del. Super. Nov. 17, 2011).
6
In their Motion, Defendants construe a statement in the Court’s November 17, 2011
Opinion, that the TPP did not promise the Willifords a modification of the original mortgage
agreement “either outright or pursuant to conditions precedent” 21 to mean that the TPP could not
constitute an offer by Wells Fargo to modify the mortgage, even if the parties fulfilled the
conditions precedent laid out in the TPP. 22 The Court has reviewed recent case law on issues
relating to HAMP TPP agreements, and writes now to clarify its holding.
HAMP agreements are the subject of litigation throughout the United States. A split of
authority exists as to the question of whether a TPP can constitute an enforceable offer to
permanently modify an original loan. 23 A majority of courts espouse the view that the parties
must fulfill the conditions 24 imposed by a HAMP TPP, including that a lender provide a
borrower a fully executed copy of the TPP and modification agreement, for a TPP to yield a
binding contract for a permanent loan modification. 25 It follows that the same courts rule that,
without pleading receipt of a fully executed copy of a permanent loan modification, a plaintiff
cannot properly plead a breach of contract because no contract exists. 26
Under an alternative reading of HAMP TPP agreements, a line of cases led by the
Seventh Circuit Court of Appeals decision in Wigod v. Wells Fargo Bank, N.A., 27 have held that
21
Id. at 11.
See Pls.’ Resp., Ex. A. §§ 2.F. & 2.G.
23
Sutcliffe v. Wells Fargo Bank, N.A., 2012 WL 1622665, * 17, -- F.R.D. --- (N.D. Cal. May 9, 2012).
24
The Plan agreement states: “I understand that the Plan is not a modification of the Loan Documents and that the
Loan Documents will not be modified unless and until (i) I meet all conditions required for the modification, (ii) I
receive a fully executed copy of a Modification Agreement . . . .” Pl.’s Resp. Ex. A, Step One of Two-Step
Documentation Process, ¶ 2.G.
25
See Lucia v. Wells Fargo Bank, N.A., 798 F.Supp.2d 1059, 1066-69 (N.D. Cal. 2011); Bourdelais v. J.P. Morgan
Chase, 2011 WL 1306311, *5 (E.D. Va. Apr. 1, 2011); Stovall v. SunTrust Mortg., Inc., 2011 WL 4402680, *11-12
(D. Md. Sept. 20, 2011).
26
See Lucia v. Wells Fargo Bank, N.A., 798 F.Supp.2d 1059, 1066-69 (N.D. Cal. 2011); Bourdelais v. J.P. Morgan
Chase, 2011 WL 1306311, *5 (E.D. Va. Apr. 1, 2011); Stovall v. SunTrust Mortg., Inc., 2011 WL 4402680, *11-12
(D. Md. Sept. 20, 2011).
27
See Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 562-63 (7th Cir. 2012); Sutcliffe v. Wells Fargo Bank, N.A.,
2012 WL 1622665, *19-*20 (N.D. Cal. May 9, 2012); Gaudin v. Saxon Mortg. Services, Inc., 2011 WL 5825144, *5
(N.D. Cal. Nov. 17, 2011).
22
7
the provision for a modification to be complete only upon a borrower’s receipt of a fully
executed modification agreement from the lender “turns an otherwise straightforward offer into
an illusion” 28 by conferring “unbridled discretion” upon the lender. 29 In Wigod, the lender sent
the borrowers a fully executed copy of a TPP. 30 The Seventh Circuit found that the lender was
obliged to offer the borrowers a permanent modification upon the borrowers’ fulfillment of the
conditions set forth in the agreement, even though the lender did not provide the borrower a fully
executed modification agreement. 31 The court found that the more natural interpretation of the
provisions in section 2.G provided “no permanent modification existed unless and until” the
borrowers met the TPP conditions, the lender executed a modification agreement, and the
effective modification date passed. 32 Elaborating on Wigod, the Eastern District of Pennsylvania
subsequently held, in Cave v. Saxon Mortg. Srvs., Inc., 33 that, rather than providing lenders
unfettered discretion as to their obligations, the provisions in Section 2.G “simply set forth
reasons why the permanent modification would not occur automatically upon the expiration of
the three-month trial period.” 34 The court concluded the TPP obligated the lender to provide the
borrowers a loan modification if they qualified or a written denial if they did not qualify. 35
The issue of whether Wells Fargo’s provision of a modification agreement to the
Willifords was a condition precedent to enforceability of the TPP as an offer to modify the
original mortgage is not squarely before the Court. Therefore, the Court will not adopt either of
the aforementioned approaches to the TPP at this time. However, in light of the federal courts’
readings of the language in Section 2.G of HAMP TPP agreements, the Court reiterates its
28
Wigod, 673 F.3d at 563.
Id.
30
Id.
31
Id.
32
Id.
33
2012 WL 1957588 (E.D. Pa. May 30, 2012).
34
Cave v. Saxon Mortg. Services, Inc., 2012 WL 1957588, *7 (E.D. Pa. May 30, 2012) (emphasis in original).
35
Id. at *7.
29
8
November 17, 2011 holding that the TPP between the parties did not constitute or promise a
modification of the original mortgage agreement. However, whether the TPP amounted to an
offer for a modification is an issue that has been the subject of the cases discussed in the
foregoing paragraphs, and which is still at issue in the present litigation. Therefore, the Court
DENIES Defendants’ Motion for Summary Judgment.
IT IS SO ORDERED.
_________/s/_______________
M. Jane Brady
Superior Court Judge
9
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