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Miller v. Wells Fargo Bank, N.A.

Supreme Court of Rhode Island

May 25, 2017

Joanne C. Miller
Wells Fargo Bank, N.A. et al.

         Kent County Superior Court (KC 11-60) Associate Justice Allen P. Rubine

          For Plaintiff: Corey J. Allard, Esq.

          For Defendant: David M. Bizar, Pro Hac Vice Michael E. Jusczyk, Esq. Randall L. Souza, Esq. Lauren J. O'Connor, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.



         This case came before the Supreme Court on April 6, 2017, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. The plaintiff, Joanne C. Miller (plaintiff or Miller), appeals from a Superior Court judgment, after a nonjury trial, entered in favor of the defendant, Wells Fargo Bank, N.A. (defendant or Wells Fargo). The plaintiff argues on appeal that: (1) the defendant breached federal guidelines regarding loan modification review and improperly foreclosed on her home while her loan modification request was pending; (2) the defendant breached the covenant of good faith and fair dealing; and (3) the plaintiff's reliance on the federal regulations, as well as the defendant's failure to adhere in good faith to those regulations, should have estopped the defendant from foreclosing on the property. After careful review of the record, the memoranda submitted by the parties, and the oral arguments, we are satisfied that cause has not been shown, and thus, this appeal may be decided at this time. For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

         Facts and Travel

         This case arises from the unfortunate foreclosure of a residential property as a result of defaulted mortgage payments and the borrower's inability to receive a loan modification or a subsequent rescission of foreclosure. The loan at issue was secured by a residential mortgage on property located at 233 Beach Avenue in Warwick, Rhode Island.[1] In August 2009, as a result of changed financial circumstances, Miller, the borrower, could not afford her upcoming monthly mortgage payment on her home, which she occupied with her four children.[2] Miller timely contacted Wells Fargo, the lender, to explain her changed circumstances and to explore a new payment plan. At that time, the scheduled monthly mortgage payment for August was $1, 645.30. With only $900 set aside, Miller offered to allocate these funds towards the August payment and to pay the remaining balance as part of her next scheduled payment. Although Miller's proposal was not accepted, the Wells Fargo representative suggested that Miller might be eligible for a loan modification, which was designed to prevent foreclosure for qualified borrowers.[3] However, this suggested lifeline proved to be ephemeral, and Miller entered into a bureaucratic quagmire.

         It began on September 3, 2009, when Miller received a packet from Wells Fargo, which contained financial forms that she needed to complete and return by September 18, 2009, in order to begin the application process. In accordance with the federal Home Affordable Modification Program (HAMP) guidelines, Miller was required to submit current and verifiable evidence of income as proof of her eligibility for the program.[4] As such, a mere request for modification, standing alone, would not stay the foreclosure process because Wells Fargo reserved the right to declare default on the mortgage and, according to HAMP, to proceed with the foreclosure until the loan modification request was evaluated.

         On September 14, 2009, Wells Fargo sent Miller a letter informing her that she needed to pay the loan delinquency amount in full by October 14, 2009, or else Wells Fargo would proceed with the foreclosure. However, it was not until October 29, 2009, that Miller received a letter denying her loan modification plan. According to this letter, Wells Fargo denied the modification plan as a result of Miller's alleged failure to provide the necessary information within the timeframe required by her trial modification period workout plan. Miller contends that there was no evidence that she agreed to a trial modification period workout plan or that such a plan had been prepared. On or about November 3, 2009, Miller received yet another letter from Wells Fargo-her third letter in three weeks-which indicated that certain financial information must be submitted within ten days, notwithstanding the October 29, 2009, rejection. Although she complied, Miller nonetheless received several more letters from different regional offices throughout the country, stating that Wells Fargo had not received the requested information. Although Miller continuously sent Wells Fargo substantial information regarding her financial situation, Wells Fargo, on January 15, 2010, notified Miller of the foreclosure sale, which was held on March 10, 2010. On March 28, 2010, Miller requested rescission of the foreclosure. She alleged that a Wells Fargo employee, Natura Gibbons (Gibbons), made representations that the foreclosure would be rescinded. On August 12, 2010, Miller's request for rescission was denied.[5]

         On January 14, 2011, Miller, acting pro se, brought suit against Wells Fargo in Kent County Superior Court. Miller's original, handwritten, complaint-consisting primarily of the facts surrounding her efforts to obtain a loan modification-indirectly alleged "fraudulent representation" as the cause of action. On March 2, 2011, Miller filed an amended complaint, alleging that Wells Fargo had violated the Deceptive Trade Practices Act. Miller sought injunctive relief to prevent Wells Fargo from initiating the eviction proceeding and requested that Wells Fargo return her home with clear title and provide compensation for her lost wages as well as her pain and suffering. On October 12, 2011, the Superior Court granted Miller's motion to further amend the complaint.

         In this amended complaint, which is the focus of this appeal, Miller asserted six causes of action: (1) violation of the Rhode Island Mortgage Foreclosure Consultant Regulation, G.L. 1956 chapter 79 of title 5; (2) violation of the Rhode Island Deceptive Trade Practices Act, G.L. 1956 chapter 13.1 of title 6; (3) violation of the "mortgage-related provisions of the Omnibus Appropriations Act of 2009"; (4) breach of the implied covenant of good faith and fair dealing; (5) breach of the Uniform Commercial Code, chapter 2 of title 6A; and (6) promissory estoppel based on a statement made by Wells Fargo's alleged agent/employee, Gibbons.

         A bench trial was held in November 2014, throughout which Miller acted pro se. On December 17, 2014, Miller filed a posttrial motion to amend her complaint to conform to the trial evidence, which was denied by the Superior Court justice.[6] Wells Fargo moved for judgment as a matter of law on all six counts, which the Superior Court justice granted in a written decision. On March 30, 2015, the Superior Court justice found that, although Miller testified at trial that she had provided the necessary financial documents before September 18, 2009, she failed to submit any documentary evidence to corroborate her testimony. The Superior Court justice also found that, before the October 29, 2009, letter denying the requested loan modification, Wells Fargo had received a significant amount of information sufficient to have verified Miller's sources of income and to have evaluated the loan modification request.

         Nonetheless, the Superior Court justice ruled in favor of Wells Fargo on all counts.[7] The Superior Court justice held that, because Wells Fargo was under no contractual obligation to modify or consider a loan modification, there were no facts to support a finding that Wells Fargo breached its duty of good faith and fair dealing. Additionally, because Miller failed to produce sufficient evidence that Gibbons was an employee of Wells Fargo, the Superior Court justice was not satisfied that any promises to rescind the foreclosure were made, upon which Miller could have relied to her detriment. Thus, he concluded that Miller failed to establish a claim ...

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