A federal appellate case from Hawaii, Bald v. Wells Fargo, recently focused on a putative class action initially filed by plaintiffs who alleged that Well Fargo Bank violated Hawaii state law when it unreasonably caused damages during the non-judicial sale of their homes by failing to take reasonable steps to conduct foreclosure proceedings in a way that would obtain the best price. Specifically, the plaintiffs alleged that Wells Fargo violated its duty when it advertised a notice of sale stating that only a quitclaim deed would be given to the buyer and when it failed to publish notices that foreclosure auctions were postponed.
In that case, the court ruled in favor of Wells Fargo’s motion to dismiss, citing that oral announcement of foreclosure postponement was sufficient and that Hawaii state law did not require a specific form of deed to be offered to bidders. Ultimately, it was ruled by the district court that the bank did not violate its common law duty to prevent unnecessary injury to debtors.
- In its appellate ruling, the U.S. Court of Appeals, Ninth Circuit ruled against Well Fargo’s initial argument that the plaintiffs in this case were not consumers. Because the underlying transaction involved the plaintiffs’ committing money to a personal investment with the bank, the court ruled that they did have standing as consumers.
- As alleged by the plaintiffs, their reason for appeal stems from the district court’s error in dismissing its claims that Wells Fargo’s conduct was unfair or deceptive. Because a mortgagee (Wells Fargo) must exercise reasonable efforts to not oppress debtors, the plaintiffs sufficiently argued that the bank’s advertising of only quitclaim deeds was a violation of its common law duty to secure the best possible value under the circumstances, as a warranty deed, which Wells Fargo did offer in many instances, would have increased the value of the property being sold. They also sufficiently argued that the bank’s postponement of foreclosure auctions without publishing a notice to the public was unfair and a breach of terms in their mortgages.
- In addition to successfully arguing that Wells Fargo’s conduct was “unfair” under Hawaii law, the plaintiffs alleged that they sustained special and general damages, which would be sufficient to withstand a motion to dismiss. Ultimately, the court rules to reverse the lower court’s decision to dismiss the case.
Bald v. Wells Fargo is an illustration of the fact that consumers have rights during all phases of their relationship with lenders, including during the foreclosure process. If you have questions about foreclosure, debt, or other consumer law issues, contact a Chicago consumer lawyer from Atlas Consumer Law to discuss your case.