Wells Fargo Can’t Escape Software Glitch Class Action

A class action lawsuit filed against Wells Fargo related to a software malfunction that made some mortgage borrowers lose their homes will continue after a U.S. federal judge denied the bank’s motion to dismiss.

Plaintiffs Monty and Michelle Coordes filed the class action lawsuit in February of this year, claiming that Wells Fargo did not compensate them after a software glitch resulted in hundreds of mortgage loan modifications being denied.

The judge’s opinion states that the Coordes’ sought loan modification assistance from Wells Fargo after Mr. Coordes became temporarily unemployed in 2010. In August 2010, the couple was offered a trial modification, according to the judge’s order.  

After filing for chapter 13 bankruptcy, the couple again looked to Wells Fargo for a loan modification, but were denied, and in 2012, they lost their home in a foreclosure sale.

The judge’s order states that in 2018, Wells Fargo told the public that a calculation in its internal mortgage loan modification software resulted in 625 applications being denied, when they should have been granted. In December 2018, Wells Fargo reported that the number of applications that were denied was actually 870, according to the judge’s order.

The judge states that after Wells Fargo contacted the plaintiffs via a letter and a check for $15,000 (which, after arbitration, turned into $25,000), the plaintiffs filed this class action lawsuit against Wells Fargo for violation of Washington Consumer Protection Act (CPA) and unjust enrichment.

Wells Fargo then filed a motion to dismiss the case for failure to state a claim, says the judge’s order. 

“Specifically, Defendant argues Plaintiffs’ CPA claim is an impermissible attempt to enforce the federal Home Affordable Modification Program (‘HAMP’), which creates no private right of action,” the judge’s order continues.

The judge opined that, “construing the factual allegations in the light most favorable to Plaintiffs, these allegations are sufficient to state a plausible claim for relief.”

In addition, the defendant claimed in its motion to dismiss that the plaintiffs CPA claim was precluded because it looked to enforce the Home Affordable Modification Program (HAMP).

But, the court opined that the plaintiffs’ claim for relief involves behavior that is related to the defendant’s participation in HAMP but is looking to enforce a separate cause of action instead of the actual terms of the HAMP agreement.

The judge’s opinion states, “Although this conduct is related to Defendant’s HAMP participation, Plaintiffs do not seek to enforce HAMP. Instead, Plaintiffs allege this conduct constitutes unfair or deceptive conduct in violation of the CPA.” Thus, the motion to dismiss the case was denied, according to the judge.

Wells Fargo also moved to dismiss the plaintiffs’ unjust enrichment claim arguing that, “the existence of an express contract between the parties precludes a quasi-contract claim.”

“Because the benefits alleged to be the subject of the unjust enrichment are governed by the parties’ express contract, Plaintiffs are not able to maintain their unjust enrichment claim,” wrote the judge.

Did you apply for a loan modification through Wells Fargo? Leave a message in the comments section below.

The plaintiffs are represented by Derek W. Loeser, Chanele N. Reyes, Gretchen Freeman Cappio, Alison E. Chase and Matthew J. Preusch of Keller Rohrback LLP.

The Wells Fargo Loan Modification Class Action Lawsuit is Coordes v. Wells Fargo Bank NA, Case No. 2:19-cv-00052, in the U.S. District Court for the Eastern District of Washington.

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