Wells Fargo Class Action Lawsuit Filed over Bankruptcy Fees

Mortgage borrowers have filed a class action lawsuit alleging that Wells Fargo incorrectly charged more than $5 million in attorney fees for legal services in personal bankruptcy proceedings.

Lead plaintiffs Roger Meyman and Karl Pickering claim in the Wells Fargo class action lawsuit that they each had entered into residential loan agreements with Wells Fargo Home Mortgage and, several years later, filed personal bankruptcy.

Meyman alleges that in 2003 he took out a residential loan with Wells Fargo and then defaulted and filed for Chapter 7 bankruptcy. After the bankruptcy court issued a stay, Meyman alleges Wells Fargo demanded he pay the amount required to become current on the mortgage, and thus avoided foreclosure and the associated attorneys’ fees and legal costs. However, Wells Fargo still charged Meyman $550 for attorneys’ fees and legal costs associated with foreclosure, according to the class action lawsuit. Pickering also alleges that he took out a mortgage in 2003 and that mortgage was eventually transferred to Wells Fargo Home Mortgage. Pickering filed Chapter 13 bankruptcy and was assessed $250 for attorneys’ fees by Wells Fargo, according to the Wells Fargo lawsuit, even though Pickering also did not get foreclosed.

“Plaintiffs’ underlying loan documents would have allowed WFB to charge a fee to defray the cost of foreclosing on their homes, but WFB did not demand full payment of Plaintiffs’ loans or attempt to foreclose on their homes, and thus incurred no foreclosure costs,” argues the Wells Fargo class action lawsuit. Further, Wells Fargo “charged Plaintiffs fees that would have been permissible only in connection with a foreclosure” and “[Wells Fargo] was not entitled to any such fees merely because it took other steps related to the personal bankruptcies of Plaintiffs.”

The Wells Fargo class action lawsuit acknowledges “[Wells Fargo] did make certain bankruptcy filings on behalf of the entities holding the notes for Plaintiffs’ loans … but the loan documents explicitly stated that if ‘the Note holder has required [payment] immediately in full . . . the Note holder will have the right to be paid back . . . for its costs and expenses in enforcing this Note.'” The lawsuit against Wells Fargo goes on: “The contractual language could not be any more clear…fees are allowed only if immediate payment in full on the note has been ‘required'” and “Plaintiffs and the proposed class members have been harmed because they were charged fees absent any such demand.”

The Wells Fargo class action lawsuit claims that the assessment of attorneys’ fees for these types of transactions constitutes unjust enrichment and a breach of contract. Meyman and Pickering say they represent a class of people who entered into similar agreements with Wells Fargo and were assessed attorneys’ fees as well as those who have a mortgage with Wells Fargo in Minnesota.

Meyman and Pickering are represented by Nina Wasow and Margo Hasselman of Lewis Feinberg Lee Renaker & Jackson PC, Bert Black and Bryce M. Miller of Schaefer Halleen LLC, David Friedman of Friedman Iverson, and Randall Smith and Richard J. Fuller.

The Wells Fargo Bankruptcy Fee Class Action Lawsuit is Meyman, et al v. Wells Fargo Home Mortgage Inc., et. al., Case No. 3:14-cv-02355, in the U.S. District Court for the Northern District of California.