wigod - lender-appelllee's brief (seventh circuit)

No. 11-1423

LORI WIGOD

Plaintiff-Appellant,

v.

WELLS FARGO BANK, N.A. d/b/aWELLS FARGO HOME MORTGAGE f/k/a

WACHOVIA MORTGAGE, FSB,

Defendant-Appellee.

On Appeal from the United States District Court For the Northern District of Illinois,

Case No. 1:10-cv-2348The Honorable Blanche M. Manning, United States District Judge.

BRIEF FOR DEFENDANT-APPELLEE WELLS FARGO BANK, N.A.

Michael J. HayesJessica A. Baer

K&L GATES LLP70 W. Madison St., 3100

Chicago, IL 60602Tel: (312) 372-1121 Fax: (312) 312-8000

Irene C. Freidel (counsel of record)David D. Christensen

K&L GATES LLPState Street Financial Center

One Lincoln StreetBoston, MA 02111Tel: (617) 261-3100 Fax: (617) 261-3175

Counsel for Defendant-Appellee Wells Fargo Bank, N.A.

UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

Case: 11-1423 Document: 21 Filed: 09/14/2011 Pages: 63Case: 11-1423 Document: 22 Filed: 09/14/2011 Pages: 63

CIRCUIT RULE 26.1 DISCLOSURE STATEMENT

Appellate Court No:

Short Caption:

To enable the judges to determine whether recusal is necessary or appropriate, an attorney for a non-governmental party oramicus curiae, or a private attorney representing a government party, must furnish a disclosure statement providing thefollowing information in compliance with Circuit Rule 26.1 and Fed. R. App. P. 26.1.

The Court prefers that the disclosure statement be filed immediately following docketing; but, the disclosure statement mustbe filed within 21 days of docketing or upon the filing of a motion, response, petition, or answer in this court, whichever occursfirst. Attorneys are required to file an amended statement to reflect any material changes in the required information. The textof the statement must also be included in front of the table of contents of the party's main brief. Counsel is required tocomplete the entire statement and to use N/A for any information that is not applicable if this form is used.

[ ] PLEASE CHECK HERE IF ANY INFORMATION ON THIS FORM IS NEW OR REVISED AND INDICATE WHICH INFORMATION IS NEW OR REVISED.

(1) The full name of every party that the attorney represents in the case (if the party is a corporation, you must provide thecorporate disclosure information required by Fed. R. App. P 26.1 by completing item #3):

(2) The names of all law firms whose partners or associates have appeared for the party in the case (including proceedingsin the district court or before an administrative agency) or are expected to appear for the party in this court:

(3) If the party or amicus is a corporation:

i) Identify all its parent corporations, if any; and

ii) list any publicly held company that owns 10% or more of the party’s or amicus’ stock:

Attorney's Signature: Date:

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Please indicate if you are Counsel of Record for the above listed parties pursuant to Circuit Rule 3(d). Yes No

Address:

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rev. 01/08 AK


Pat

Typewritten Text

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TABLE OF CONTENTS

I. JURISDICTIONAL STATEMENT..................................................................................1

II. STATEMENT OF ISSUES PRESENTED FOR REVIEW..............................................2

III. STATEMENT OF THE CASE..........................................................................................3

IV. STATEMENT OF FACTS ................................................................................................5

A. The HAMP Program ............................................................................................5

1. The creation of HAMP .............................................................................5

2. The Servicer Participation Agreement...................................................6

3. HAMP guidelines .....................................................................................7

B. The Wigod Loan .................................................................................................10

V. SUMMARY OF ARGUMENT.......................................................................................11

VI. STANDARD OF REVIEW .............................................................................................13

VII. ARGUMENT ...................................................................................................................14

A. The District Court Correctly Held That Wigod’s State Law Claims Are An Impermissible End-Run Around The Lack Of A Private Right Of Action In EESA And HAMP.............................................................................14

B. Wigod’s State Law Claims As Applied Are Preempted ...............................21

1. Wigod’s claims are barred under principles of conflict preemption ..............................................................................................21

2. Wigod’s state law claims are subject to field preemption by virtue of the Home Owners’ Loan Act (“HOLA”).............................25

C. Wigod Failed To Allege A Breach Of Contract With Respect To Her TPP. .......................................................................................................................29

1. The TPP is not an enforceable “offer.” ................................................30

2. Wigod has not alleged facts reflecting “consideration.”...................32

3. The TPP does not contain “definite and certain terms.”...................34


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D. The District Court Properly Dismissed Wigod’s Promissory Estoppel Claim. ...................................................................................................................36

E. The District Court Correctly Held That Wigod Failed To Allege A Valid ICFA Claim. ..............................................................................................37

1. Wigod offers no well-pleaded factual allegations that Wells Fargo intended Wigod to rely on its alleged deception....................37

2. Wigod failed to allege that she suffered actual damages. ................38

3. The District Court properly held that Wigod’s claim that Wells Fargo engaged in unfair conduct did not state a claim under ICFA..........................................................................................................40

F. The District Court Properly Dismissed Wigod’s Misrepresentation Claims Because She Failed To Plead That She Justifiably Relied Upon Statements In The TPP. ......................................................................................41

G. The Moorman Or Economic Loss Doctrine Bars Wigod’s Negligence-Based Claims; Wigod Failed To Sufficiently Allege The Elements Of

Each Such Claim. ............................................................................................................44

1. Dismissal of Wigod’s negligence-based claims should be affirmed based on the “economic loss doctrine.” ..............................44

2. Dismissal of Wigod’s negligent hiring claim should be affirmed....................................................................................................46

3. The District Court’s dismissal of Wigod’s negligent or fraudulent misrepresentation/concealment should be affirmed. ...47

(a) Wigod failed to allege with specificity facts showing that Wells Fargo had a scheme to defraud Wigod. ......................47

(b) Wigod failed to allege that she was damaged by Wells Fargo’s conduct. ..........................................................................47

(c) Wigod failed to allege that Wells Fargo owed her a duty. ...48

VIII. CONCLUSION................................................................................................................49

CERTIFICATE OF COMPLIANCE WITH FED. R. APP. PROC. 32(a)(7) ..........................50


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TABLE OF AUTHORITIES

Federal Cases

A/S Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chemical Group, Inc.,873 F.2d 155 (7th Cir. 1989)............................................................................................30

Adams v. U.S. Bank,2010 WL 2670702 (E.D. Mich. July 1, 2010) .................................................................48

American United Logistics, Inc. v. Catellus Development Corp.,319 F.3d 921 (7th Cir. 2003)............................................................................................45

Ashcroft v. Iqbal,129 S. Ct. 1937 (2009) ..........................................................................................13, 40, 44

Association Benefit Services, Inc. v. Caremark RX, Inc.,493 F.3d 841 (7th Cir. 2007)......................................................................................29, 34

Aux Sable Liquid Products v. Murphy,526 F.3d 1028 (7th Cir. 2008)..........................................................................................22

Ayers v. General Motors Corp.,234 F.3d 514 (11th Cir. 2000)........................................................................16, 17, 19, 21

Baltazar v. Premium Capital Funding,2011 WL 3841450 (D. Utah Aug. 26, 2011) ..................................................................20

Barinaga v. JP Morgan Chase & Co.,749 F. Supp. 2d 1164 (D. Or. 2010)................................................................................34

Bell Atlantic v. Twombly,550 U.S. 544 (2007) ..........................................................................................................13

Biggins v. Wells Fargo & Co.,266 F.R.D. 399 (N.D. Cal. 2009) .....................................................................................29

Bosque v. Wells Fargo Bank, N.A.,762 F. Supp. 2d 342 (D. Mass. 2011) ............................................................24, 25, 31-32

Bower v. Jones,978 F.2d 1004 (7th Cir. 1992)..........................................................................................47

Boyd v. U.S. Bank, N.A., ex rel. Sasco Aames Mortgage Loan Trust,--- F. Supp. 2d ----, 2011 WL 1374986 (N.D. Ill. Apr. 12, 2011)............................21, 41

Broder v. Cablevision Systems Corp.,418 F.3d 187 (2d Cir. 2005).......................................................................................15, 16

Brown v. First Tennessee National Association,753 F. Supp. 2d 1249 (N.D. Ga. 2009) ...............................................................16, 17, 24


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Buckman Co. v. Plaintiffs’ Legal Committee,531 U.S. 341 (2001) ..............................................................................................23, 24, 25

Business Systems Engineering, Inc. v. International Business Machines Corp.,547 F.3d 882 (7th Cir. 2008)............................................................................................34

Casey v. FDIC,583 F.3d 586 (8th Cir. 2009)............................................................................................27

Catalan v. GMAC Mortgage Corp.,629 F.3d 676 (7th Cir. 2011)............................................................................................45

Cobb-Alvarez v. Union Pacific Corp.,962 F. Supp. 1049 (N.D. Ill. 1997)..................................................................................30

Conboy v. AT &T Corp.,241 F.3d 242 (2d Cir. 2001).................................................................................15, 16, 18

Contempo Design, Inc. v. Chicago & Northeast Illinois District Council of Carpenters,226 F.3d 535 (7th Cir. 2000)............................................................................................33

Copeland-Turner v. Wells Fargo Bank, N.A,--- F. Supp. 2d ----, 2011 WL 2650853 ((D. Or. July 6, 2011) ................................26, 28

Costigan v. CitiMortgage, Inc.,2011 WL 3370397 (S.D.N.Y. Aug. 2, 2011) ...................................................................36

Cox v. Mortgage Electronic Registration Systems, Inc., 2011 WL 2600700 (D. Minn. June 30, 2011) .................................................8, 14, 17, 20

Cozzi Iron & Metal, Inc. v. U.S. Office Equipment, Inc.,250 F.3d 570 (7th Cir. 2001)............................................................................................44

Crawford Supply Group, Inc. v. Bank of Am., N.A.,2011 WL 3793913 (N.D. Ill. Aug. 25, 2011) ..................................................................15

Dersch Energies, Inc. v. Shell Oil Co.,314 F.3d 846 (7th Cir. 2002)............................................................................................15

Duffy v. Ticketreserve, Inc., 722 F. Supp. 2d 977 (N.D. Ill. 2010) ..............................................................................41

Edwards v. Aurora Loan Services, LLC,--- F. Supp. 2d ----, 2011 WL 2340939 (D.D.C. June 14, 2011)..................................7, 8

First Place Bank v. Skyline Funding, Inc.,2011 WL 3273071 (N.D. Ill. July 27, 2011)....................................................................45

Fletcher v. OneWest Bank, FSB,--- F. Supp. 2d ----, 2011 WL 2648606 (N.D. Ill. June 30, 2011)......................14, 20, 25

Freedom Mortgage Corp. v. Burnham Mortgage Corp., 750 F. Supp. 2d 978 (N.D. Ill. 2010). .............................................................................45


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Frye v. L’Oreal USA, Inc.,583 F. Supp. 2d 954 (N.D. Ill. 2008) ..............................................................................38

Gade v. National Solid Wastes Management Association,505 U.S. 88 (1992) ............................................................................................................22

Geier v. American Honda Motor Co.,529 U.S. 861 (2000) ..........................................................................................................23

Geva v. Leo Burnett Co., 931 F.2d 1220 (7th Cir. 1991)..........................................................................................36

Graham v. Midland Mortgage Co.,406 F. Supp. 2d 948 (N.D. Ill. 2005) ..............................................................................49

Grill v. BAC Home Loans Servicing LP,2011 WL 127891 (E.D. Cal. Jan. 14, 2011)...............................................................31, 34

Grochowski v. Phoenix Construction,318 F.3d 80 (2d Cir. 2003).........................................................................................15, 16

Haehl v. Wash. Mutual Bank, F.A.,277 F. Supp. 2d 933 (S.D. Ind. 2003) .............................................................................27

Hicklin Engineering, L.C. v. Bartell,439 F.3d 346 (7th Cir. 2006)..............................................................................................1

Hollymatic Corp. v. Holly Systems, Inc.,620 F. Supp. 1366 (N.D. Ill. 1985)..................................................................................47

Hukic v. Aurora Loan Services,588 F.3d 420 (7th Cir. 2009)............................................................................................13

Ibrahim v. Mid-Atlantic Air of DC, LLC,F. Supp. 2d, 2011 WL 3489110 (D.D.C. Aug, 10, 2011) ..............................................16

In re Ocwen Loan Servicing, LLC Mortgage Servicing Litigation,491 F.3d 638 (7th Cir. 2007)................................................................................25, 26, 27

In re Orthopedic Bone Screw Products Liability Litigation,193 F.3d 781 (3d Cir. 1999).............................................................................................16

In re Salvador,--- B.R. ----, 2011 WL 1833188 (Bankr. M.D. Ga. May 12, 2011) ..........................34, 36

Kim v. Carter’s Inc.,598 F.3d 362 (7th Cir. 2010)............................................................................................38

Lonberg v. Freddie Mac,2011 WL 838943 (D. Or. Mar. 4, 2011)..........................................................................31

Lucia/Corvello v. Wells Fargo Bank, N.A.,--- F.Supp.2d ----, 2011 WL 3134422 (N.D. Cal. Apr 22, 2011) ................20, 31, 36, 42


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Lund v. CitiMortgage Inc., 2011 WL 1873690 (D. Utah May 17, 2011) .............................................................31, 42

Marcus & Millichap Inv. Services of Chicago, Inc. v. Sekulovski,639 F.3d 301 (7th Cir. 2011)......................................................................................13, 44

Marks v. Bank of America, N.A.,2010 WL 2572988 (D. Ariz. June 22, 2010) ...................................................................17

McInroy v. BAC Home Loan Servicing, LP,2011 WL 1770947 (D. Minn. May 9, 2011) .............................................................17, 19

Medtronic, Inc. v. Lohr,518 U.S. 470 (1996) ..........................................................................................................24

Mehta v. Wells Fargo Bank, N.A.,737 F. Supp. 2d 1185 (S.D. Cal. Aug. 26, 2010)......................................................33, 34

Mizrahi v. Wells Fargo Home Mortgage,2010 WL 2521742 (D. Nev. June 16, 2010) ...................................................................34

Morales v. Chase Home Finance LLC,2011 WL 1670045 (N.D. Cal. Apr. 11, 2011).................................................................20

Nadan v. Homesales, Inc., 2011 WL 3584213 (E.D. Cal. Aug. 12, 2011).......................................................8, 20, 34

Nance v. Maxwell Federal Credit Union (MAX),186 F.3d 1338 (11th Cir. 1999)..................................................................................16, 20

Nash v. GMAC Mortgage, LLC,2011 WL 2470645 (D.R.I. May 18, 2011).......................................................................20

National Railroad Passenger Corp. v. National Association of Railroad Passengers,414 U.S. 453 (1974) ..........................................................................................................15

Norman v. Niagara Mohawk Power Corp.,873 F.2d 634 (2d Cir. 1989).............................................................................................16

Olson v. Jenkens & Gilchrist,461 F. Supp. 2d 710 (N.D. Ill. 2006) ..............................................................................49

Parmer v. Wachovia,2011 WL 1807218 (N.D. Cal. Apr. 22, 2011).................................................................28

Poco v. Wachovia Mortgage Corp.,2011 WL 2633298 (N.D. Cal. July 5, 2011) ...................................................................28

Pommier v. People Bank Marycrest,967 F.2d 1115 (7th Cir. 1992)..........................................................................................35

Prince-Servance v. BankUnited, FSB,2007 WL 3254432 (N.D. Ill. Nov. 1, 2007) ....................................................................27


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Rackley v. JPMorgan Chase Bank, National Ass’n,2011 WL 2971357 (W.D. Tex. Jul 21, 2011).............................................................20, 33

Remo v. Wachovia Mortgage, 2011 WL 3448234 (N.D. Cal. Aug. 5, 2011)............................................................26, 28

Runnemede Owners, Inc. v. Crest Mortgage Corp.,861 F.2d 1053 (7th Cir. 1988)..........................................................................................43

Salgado v. America’s Servicing Co.,2011 WL 3903072 (D. Ariz. Sept. 6, 2011) ....................................................................33

Sato v. Wachovia Mortgage, FSB,2011 WL 2784567 (N.D. Cal. July 13, 2011) .................................................................26

Schultz v. Prudential Insurance Co. of America,678 F. Supp. 2d 771 (N.D. Ill. 2010) ..............................................................................41

Schilke v. Wachovia Mortgage, FSB,758 F. Supp. 2d 549 (N.D. Ill. 2010) ..............................................................................27

Shurtliff v. Wells Fargo Bank, N.A.,2010 WL 4609307 (D. Utah Nov. 5, 2010) ....................................................................31

Siegel v. Shell Oil Co.,612 F.3d 932 (7th Cir. 2010)............................................................................................37

Silvas v. E*Trade Mortgage Corp.,514 F.3d 1001 (9th Cir. 2008)..........................................................................................27

Snyder v. Wachovia Mortgage,2010 WL 2736945 (E.D. Cal. July 12, 2010) ..................................................................29

Steffens v. American Home Mortgage Servicing, Inc.,2011 WL 901812 (D.S.C. Jan. 5, 2011) .............................................................................8

Stolba v. Wells Fargo & Co.,2011 WL 3444078 (D.N.J. Aug 08, 2011)................................................20, 31, 42-43, 49

Teamsters Local 282 Pension Trust Fund v. Angelos,839 F.2d 366 (7th Cir. 1988)............................................................................................44

Touche Ross & Co. v. Redington,442 U.S. 560 (1979) ..........................................................................................................15

Umland v. PLANCO Financial Services, Inc.,542 F.3d 59 (3d Cir. 2008)...............................................................................................15

Vida v. OneWest Bank, F.S.B., 2010 WL 5148473 (D. Or. Dec. 13, 2010) ......................................................................31

Wachovia Bank, N.A. v. Schmidt,546 U.S. 303 (2006) ............................................................................................................1


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Warren v. Bank of America,2011 WL 2116407 (S.D. Ga. May 24, 2011)...................................................................17

Williams v. Geithner,2009 WL 3757380 (D. Minn. Nov. 9, 2009).........................................................8, 17, 19

Zarif v. Wells Fargo Bank, N.A., 2011 WL 108560 (S.D. Cal. Mar. 23, 2011)..............................................................28, 29

Zoher v. Chase Home Financing,2010 WL 4064798 (S.D. Fla. Oct. 15, 2010) ...................................................................24

State Cases

Adler v. William Blair & Co.,648 N.E.2d 226 (Ill. App. Ct. 1995)..........................................................................43, 44

Anand v. Marple,522 N.E.2d 281 (Ill. App. Ct. 1988)................................................................................35

Chatham Surgicore, Ltd. v. Health Care Service Corp.,826 N.E.2d 970 (Ill. App. Ct. 2005)................................................................................47

Connick v. Suzuki Motor Co.,675 N.E.2d 584 (Ill. 1996)....................................................................................48, 49, 51

Cooney v. Chicago Public Schools,943 N.E.2d 23 (Ill. App. Ct. 2010).................................................................................39

DiLorenzo v. Valve & Primer Corp.,807 N.E.2d 673 (Ill. App. Ct. 2004)................................................................................33

Duran v. Leslie Oldsmobile, Inc.,594 N.E.2d 1355 (Ill. App. Ct. 1992)..............................................................................37

Fox Associates, Inc. v. Robert Half International, Inc.,777 N.E.2d 603 (Ill. App. Ct. 2002)................................................................................45

Luciani v. Bestor,436 N.E.2d 251 (Ill. App. Ct. 1982)................................................................................43

Magna Bank of Madison County v. Jameson,604 N.E.2d 541 (Ill. App. Ct. 1992)..........................................................................48, 49

McErlean v. Union National Bank of Chicago,414 N.E.2d 128 (Ill. App. Ct. 1980)..........................................................................34, 35

Mitchell v. Norman James Construction Co.,684 N.E.2d 872 (Ill. App. Ct. 1997)................................................................................46

Moorman Manufacturing Co. v. National Tank Co.,435 N.E.2d 443 (Ill. 1982)..........................................................................................44, 45


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Morris v. Harvey Cycle and Camper, Inc.,911 N.E.2d 1049 (Ill. App. Ct. 2009)........................................................................38, 40

Mulligan v. QVC, Inc.,888 N.E.2d 1190 (Ill. App. Ct. 2008)..............................................................................38

Neptuno Treuhand-Und Verwaltungsgesellschaft Mbh v. Arbor,692 N.E.2d 812 (Ill. App. Ct. 1998)................................................................................48

Oliveira v. Amoco Oil Co.,776 N.E.2d 151 (Ill. 2002)................................................................................................40

Petty v. Chrysler Corp.,799 N.E.2d 432 (Ill. App. Ct. 2003)................................................................................39

Price v. Philip Morris, Inc.,848 N.E.2d 1 (Ill. 2005)........................................................................................38, 39, 40

Ross v. May Co.,880 N.E.2d 210 (Ill. App. Ct. 2007)................................................................................32

Schmidt v. Landfield,169 N.E2d 229 (Ill. 1988).................................................................................................43

Suburban 1, Inc. v. GHS Mortgage, LLC,833 N.E.2d 18 (Ill. App. Ct. 2005)..................................................................................37

Teachers Insurance & Annuity Association of America v. LaSalle National Bank,691 N.E.2d 881 (Ill. App. Ct. 1998)................................................................................49

Van Horne v. Muller,705 N.E.2d 898 (Ill. 1998)................................................................................................46

State Statutes

815 ILL. COMP. STAT. 505/10a ..........................................................................................4, 37, 38

Federal Statutes and Regulations

12 C.F.R. § 560.1 ..........................................................................................................................26

12 C.F.R. § 560.2 ....................................................................................................................26, 27

12 U.S.C. § 1461 ...........................................................................................................................25

12 U.S.C. § 5201 .............................................................................................................................5

12 U.S.C. § 5211 .............................................................................................................................5

12 U.S.C. § 5213 .............................................................................................................................5

12 U.S.C. § 5219 .............................................................................................................................5


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12 U.S.C. § 5220 .............................................................................................................................5

12 U.S.C. § 5519 .......................................................................................................................5, 17

12 U.S.C. § 1553 ...........................................................................................................................26

28 U.S.C. § 1291 .............................................................................................................................2

28 U.S.C. § 1332 .........................................................................................................................1, 2

28 U.S.C. § 1348 .............................................................................................................................1

Pub. L. No. 111-203, Stat. 13776 (2010) ....................................................................................26

Other Authorities

3 SAMUEL WILLISTON, A TREATISE ON THE LAW OF CONTRACTS § 7:18 (4th ed. 2008).....33-34


I. JURISDICTIONAL STATEMENT

Plaintiff-appellant Lori Wigod (“Wigod”) filed this action against Wells Fargo Bank,

N.A. (“Wells Fargo”) on April 15, 2010. (Dckt. 1.) Wigod’s jurisdictional statement is not

complete or entirely correct. The District Court had original jurisdiction over Wigod’s

suit pursuant to both 28 U.S.C. §§ 1332(a) and 1332(d).

First, there is diversity of citizenship. Wigod is a citizen of Illinois. (Amended

Complaint (Dckt. 1) (“AC”) ¶11.)1 Wells Fargo is a national banking association with its

main office in South Dakota. (AC ¶12.) For jurisdiction purposes, national banking

associations are deemed “citizens of the States in which they are respectively located.”

28 U.S.C. § 1348. This statutory language means that a national banking association is a

citizen of the state in which its main office, as set forth in its articles of association, is

located, Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 318 (2006), and its principal place

of business is not relevant to the jurisdictional analysis. See Hicklin Eng’g, L.C. v. Bartell,

439 F.3d 346, 347-48 (7th Cir. 2006).

The amount in controversy exceeds $75,000. Wigod seeks specific performance of a

purported contract to modify her $728,500 mortgage loan serviced by Wells Fargo.

(Mortgage, Dckt. 30-1 ¶E; AC ¶¶69-70, 83 & Prayer for Relief ¶¶C, H.) Wigod also seeks

compensatory and punitive damages, as well as attorneys’ fees. (AC, Prayer for Relief

¶¶A-J.) Pursuant to 28 U.S.C. § 1332(a), complete diversity exists.

1 Citations to the record are indicated by the relevant district court docket number (“Dckt.”) and page range. Citations to the Joint Appendix are indicated by “App.” and page range.


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Jurisdiction also exists under the Class Action Fairness Act (“CAFA”), 28 U.S.C.

§ 1332(d), because (i) the nationwide putative class consists of at least 100 proposed

class members (AC ¶50); (ii) the citizenship of at least one putative class member is

different from that of Wells Fargo (see supra and AC ¶9); and (iii) the aggregate amount

in controversy exceeds $5,000,000, exclusive of interest and costs (AC ¶¶9, 51).

On January 25, 2011, the District Court granted Wells Fargo’s Rule 12(b)(6) motion to

dismiss with prejudice. (Dckt. 59 (“Order”), 60.) This Court has jurisdiction over

Wigod’s appeal under 28 U.S.C. § 1291, which vests the Courts of Appeals with

“jurisdiction of appeals from all final decisions of the district courts of the United

States.” 28 U.S.C. § 1291.

II. STATEMENT OF ISSUES PRESENTED FOR REVIEW

A. Whether the District Court correctly dismissed Wigod’s claims seeking to

establish a violation of federal law and Congress provided no private right action under

that law.

B. Whether the District Court’s decision should be affirmed under principles of

conflict preemption where the claims, if successful, would require Wells Fargo to

provide Wigod with a loan modification for which she does not qualify.

C. Whether the District Court’s decision should be affirmed under principles of

field preemption (under the federal Home Owners’ Loan Act) where those claims, if

successful, would substantially interfere with the ability of Wells Fargo to service

residential mortgage loans.


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D. Whether the District Court correctly dismissed Wigod’s misrepresentation claims

because she failed to plead that she justifiably relied upon statements in her HAMP

Trial Period Plan.

E. Whether the District Court correctly held that Wigod failed to plead the elements

of a claim under the Illinois Consumer Fraud Act (“ICFA”), including that Wigod’s

failure to plead that she relied on any alleged deception or that Wigod suffered actual

damages when she continues to be bound by the terms of her original loan documents.

F. Whether the District Court could have properly dismissed Wigod’s state law

claims, including her claim for breach of contract, on other grounds in the record.

III. STATEMENT OF THE CASE

Wigod filed this lawsuit to challenge Wells Fargo’s determination that she was not

eligible for a permanent mortgage loan modification under the federal government’s

Home Affordable Modification Program (“HAMP”) and applicable investor guidelines.

Wigod claims that Wells Fargo breached its obligations to her by “violating” and/or

“ignor[ing]” HAMP guidelines. (Pl. Brief 21, 22.) In her Amended Complaint, Wigod

seeks to represent a putative class of “[a]ll homeowners nationwide who have entered

into a [Trial Payment Plan (“TPP”)] Agreement with Wells Fargo for the purposes of

modifying their home mortgages and, despite having complied with all terms of the

TPP Agreement, have not received from Wells Fargo an offer for permanent

modification.” (AC ¶47.) Alternatively, Wigod seeks to represent a similarly-defined

putative class limited to Illinois homeowners. (AC ¶48.)


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Because there is no private right of action under HAMP (or the federal statute under

which the program was created), Wigod brings her claims under Illinois law.

Specifically, Wigod seeks relief based on breach of contract (Count I), promissory

estoppel (Count II), breach of the Servicer Participation Agreement as an intended

third-party beneficiary (Count III), negligent hiring and supervision (Count IV),

fraudulent misrepresentation/concealment (Count V), negligent

misrepresentation/concealment (Count VI), and violation of the ICFA, 815 Ill. Comp.

Stat. 505/1, et seq. (Count VII). Wigod seeks, among other things, contract damages, an

order requiring Wells Fargo to offer Wigod and the putative class members permanent

HAMP modifications, punitive damages, and injunctive relief with respect to Wells

Fargo’s servicing practices and its training and supervision of its servicing employees.

(AC, Prayer for Relief ¶¶A-L.)

On July 23, 2010, Wells Fargo filed a Motion to Dismiss the Amended Complaint.

(Dckt. 28.) On January 25, 2011, the District Court granted the Motion with prejudice.

The District Court held, in part, that Wigod’s “alleged offer to modify came about and

was made wholly under the rubric of HAMP, as were [Wigod’s] alleged actions in

acceptance of the offer, i.e., submitting the required documentation ... [and] remitting

reduced loan payments.” (Order 9 (internal quotation omitted).) The court therefore

found that Wigod “fail[ed] to state a cause of action independent of HAMP, for which

there is no private right of action.” (Id.)


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IV. STATEMENT OF FACTS

A. The HAMP Program

1. The creation of HAMP

In early 2009, the U.S. Department of the Treasury (“Treasury”) established HAMP

pursuant to Sections 101 and 109 of the Emergency Economic Stabilization Act of 2008

(“EESA”). The purposes of EESA include “(1) to immediately provide authority and

facilities that the Secretary of the Treasury can use to restore liquidity and stability to

the financial system of the United States; and (2) to ensure that such authority and such

facilities are used in a manner that…[inter alia] preserves homeownership[.]” 12 U.S.C.

§ 5201. When enacting EESA, “Congress gave Treasury broad powers to stabilize the

financial markets, including the mortgage arena.” Congressional Oversight Panel, April

Oversight Report, at 151-52 (Apr. 14, 2010) (“April Report”), available at

http://cybercemetery.unt.edu/archive/cop/20110401223225/http://cop.senate.gov/r

eports/; see 12 U.S.C. §§ 5211(c), 5213(3).

Specifically, Section 109, captioned “Foreclosure Mitigation Efforts,” “requires [ ] the

Secretary to implement ‘a plan that seeks to maximize assistance for homeowners,’ and

use the authority of the Secretary to ‘encourage’ the servicers of those underlying

mortgages to avail themselves [of] the ‘HOPE for Homeowners Program . . . or other

available programs to minimize foreclosures.’ In addition, the Secretary also ‘may’ use

loan guarantees and credit enhancements to ‘facilitate’ loan modifications ‘to prevent

avoidable foreclosures.’” April Report at 162 (quoting 12 U.S.C. §§ 5219(a)); see also 12

U.S.C. § 5220(b). HAMP uses TARP funds to enhance participation in the program and


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provides monetary incentive payments to borrowers, lenders, and servicers. April

Report at 25; see also (Supplemental Directive (“SD”) 09-01, App. 22-25); SD 10-05 at 6-7,

available at https://www.hmpadmin.com/portal/programs/guidance.jsp; MHA

Handbook Version 3.3, at 106-108.2

2. The Servicer Participation Agreement

On April 13, 2009, Wells Fargo and Fannie Mae, as financial agent for the United

States, executed a Commitment to Purchase Financial Instrument and Servicer

Participation Agreement for HAMP (“SPA”). (App. 98-116.) Wells Fargo and Fannie

Mae executed an Amended SPA on March 16, 2010. (Dckt. 30-4.) The SPA sets forth the

“terms and conditions relating to the respective roles and responsibilities of Program

participants and other financial agents of the government.” (App. 98.) Further, the SPA

provides that Freddie Mac, also as financial agent of the United States, will “fulfill a

compliance role in connection with the Program ,” (id.) and that Wells Fargo’s

“performance of the Services and implementation of the Program shall be subject to

review by Freddie Mac and its agents and designees,” (id., 99, ¶2.D).

By executing the SPA, Wells Fargo agreed to perform the loan modification and

other services described therein and set forth in the “Program guidelines and

2 Prior to August 19, 2010, Treasury published its guidelines in the form of Supplemental Directives, FAQs, among other documents. Since August 2010, Treasury has published a consolidated handbook of programmatic guidance for non-GSE loans, available at https://www.hmpadmin.com/portal/programs/servicer.jsp. This brief generally cites to the original guidance documents applicable to Wigod’s loan, available at https://www.hmpadmin.com/portal/programs/guidance.jsp.


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procedures issued by the Treasury, including , without limitation, the net present value

assessment requirements of the Program,” and any other “supplemental

documentation, instructions, bulletins, letters, directives, or other communications …

issued by the Treasury, Fannie Mae, or Freddie Mac …” (Id., ¶1.A.)

The SPA also provides that disputes between the parties, i.e., Wells Fargo and

Treasury, regarding HAMP requirements will be resolved in accordance with federal

law and through alternative dispute mechanisms. (Dckt. 30-4, ¶12.A.) The SPA states

that “the parties agree to take all reasonable steps to resolve disputes internally before

commencing legal proceedings.” (Id.; App. 104, ¶7.) Consistent with this theme, SD 09-

01 also provides for an issue/resolution appeal process for servicer assessments. (App.

26.)

It is well-established that borrowers, like Wigod, are not intended third-party

beneficiaries of the SPA, and they do not have standing to enforce Wells Fargo’s

obligations under the SPA as to their loans. See, e.g., Edwards v. Aurora Loan Servs., LLC, -

-- F. Supp. 2d ----, 2011 WL 2340939, at *5-6 (D.D.C. June 14, 2011) (collecting cases).

Indeed, Wigod does not appeal the District Court’s ruling that she is not a third-party

beneficiary of the SPA. (Pl. Br. 4, n.4.) Nonetheless, all of Wells Fargo’s obligations

under HAMP at issue in this appeal directly flow from the SPA.

3. HAMP guidelines

On March 4, 2009, the Administration published detailed program guidelines that

set forth the procedures and criteria to be used by servicers to evaluate each borrower’s

HAMP eligibility. See http://www.treasury.gov/press-center/press-


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releases/Pages/200934145912322.aspx. Treasury has since issued supplemental

guidance on numerous occasions to adjust and enhance different components of the

program and to answer questions raised by program participants, primarily loan

servicers. See supra, footnote 2.

The program guidelines set forth a defined loan modification process based on

government and investor criteria. Using the guidelines, the loan servicer evaluates

whether an individual loan may be modified in such a way as to achieve a sustainable

monthly payment amount. Not all loans serviced by Wells Fargo are eligible for

consideration for HAMP. (See SD 09-01, App. 2-3.) For example, some investors do not

participate in HAMP, a result contemplated by HAMP guidelines. (Id., 1, 4

(participating servicers must make an effort to remove investor prohibitions on

modifications; loans with a negative NPV result cannot be modified without express

investor approval).) Further, contrary to Wigod’s repeated statements, the participating

servicer is not required to modify every HAMP-eligible loan. 3

Using the borrower’s verified income information, HAMP guidelines require a

servicer to apply steps known as the “waterfall.” The waterfall is designed to achieve a

monthly mortgage payment that is not more than 31% of a borrower’s total pre-tax

3 EESA does not mandate loan modifications. Williams v. Geithner, 2009 WL 3757380, at *6 (D. Minn. Nov. 9, 2009); see also Nadan v. HomeSales, Inc., 2011 WL 3584213, at *8 (E.D. Cal. Aug. 12, 2011) (“Defendants are correct that lenders ‘retain the right to reject or structure modifications as appropriate to the individual circumstances of the borrower.’”); Cox v. Mortgage Elec. Registration Sys., Inc., 2011 WL 2600700, at *2 (D. Minn. June 30, 2011); Edwards, 2011 WL 2340939, at *6; Steffens v. Am. Home Mortgage Servicing, Inc., 2011 WL 901812, at *4 (D.S.C. Jan. 5, 2011).


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monthly income. (SD 09-01, App. 8-10.) First, the servicer will reduce the interest rate to

as low as 2%. (Id., 9.) Next, if necessary, the servicer will extend the loan term up to 40

years. (Id.) Finally, if necessary, the servicer will forebear repayment of principal until

the loan is paid off and will waive interest on the deferred amount. (Id., 9-10.) Servicers

are also permitted, at their discretion, to forgive principal to achieve the target monthly

payment ratio where principal reduction is not otherwise required. (Id., 10.)

If application of the waterfall does not result in an affordable payment, the loan does

not qualify for a permanent modification. (Id., 8-10.) If application of the waterfall does

produce an affordable payment, the servicer then subjects the loan to a “net present

value” (“NPV”) test. If the NPV test produces a “negative” result (that is, losses from

foreclosure are less than losses from modification), the servicer is not obligated to

modify the loan. (Id., 4.) The servicer retains certain discretion as to how the NPV test is

calculated. (Id., 5.). If a borrower qualifies for a permanent modification, she, among

other things, must successfully complete a trial period plan or TPP. (Id., 17-18.)

Significantly for purposes of this appeal, under original HAMP guidelines and

initial Treasury policy, a participating servicer was authorized to place a borrower in a

TPP before the servicer had obtained all information from the borrower necessary to

make a final determination as to whether the borrower qualified for a permanent

modification. (Id., 5-6, 17 (“[s]ervicers are not required to verify financial information

prior to the effective date of the trial period”).) The servicer would thereafter

permanently modify the borrower’s loan only if all required conditions were met,

including the borrower submitting all necessary income documentation from which the


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servicer can verify the borrower’s qualifications for a permanent modification, the

borrower making all timely payments under the TPP, and the servicer ensuring that all

investor criteria for a modification are satisfied. (Id., 1, 4, 8-9, 17-18.)

As a Congressional Oversight Panel noted in its April Report, the Treasury initially

decided “to allow servicers to offer [TPPs] based on stated or verified income so that the

program could reach a larger number of borrowers in the shortest amount of time in

order to stem the flood of foreclosures that many saw coming. This was part of a

general decision to roll out HAMP very quickly.” (App. 132.)

Under this policy, numerous borrowers were placed in a TPP before they had

submitted all of the necessary documentation from which the servicer could make a

final eligibility determination. As a result, thousands of TPP borrowers – like Wigod –

did not convert to permanent modifications. On January 28, 2010, Treasury issued SD

10-01, which – effective June 1, 2010 – required servicers to verify borrower eligibility

for a permanent modification prior to offering a TPP. (App. 39-51.) Wigod’s loan

preceded this significant program change.4

B. The Wigod Loan

Wigod obtained a mortgage loan from Wachovia Mortgage, FSB on or about

September 4, 2007. (AC ¶29.) (Wachovia later merged into Wells Fargo.) The $728,500

loan was secured by Wigod’s condominium. At some time thereafter, Wigod found

herself in imminent default on her mortgage loan. In April 2009, she contacted Wells

4 Wells Fargo independently made this change in March 2010.


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Fargo to apply for a loan modification. (Id. ¶ 30.) Determining that she was eligible to

start a TPP modification under the new HAMP program, Wells Fargo provided Wigod

with a trial plan in May 2009. (Id. ¶ 31, 34.)

After receiving and executing her TPP, Wigod alleges that she sent further

documents to Wells Fargo “that were necessary to determine her eligibility.” (Id.¶ 32.)

Wigod also made each of the four modified payments due under her TPP. (Id. ¶ 37.) At

the end of the trial period, Wells Fargo did not provide Wigod with a permanent

modification agreement. (Id. ¶ 39.)

On November 13, 2009, Wells Fargo sent Wigod a letter stating that it could not

adjust the terms of her mortgage because “we are unable to get you to a modified

payment amount that you could afford per the investor guidelines on your mortgage.”

(App. 121.) On November 15, 2009, Wells Fargo notified Wigod that it considered her

loan to be in default. (AC ¶ 42.) Over the next several months, Wigod unsuccessfully

challenged Wells Fargo’s decision not to permanently modify her loan. (Id. ¶ 43.)

Wigod believes that Wells Fargo “wrongfully concluded that she did not qualify for an

offer for permanent modification.” (Id.)

V. SUMMARY OF ARGUMENT

The District Court properly dismissed this lawsuit as a matter of law and numerous

grounds support affirmation of the District Court’s judgment. Wigod is not entitled to a

permanent modification under HAMP, and Wells Fargo was under no obligation to

permanently modify Wigod’s loan solely because Wigod made payments under her

TPP and provided Wells Fargo with requested documentation. A critical component of


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the loan modification process is verification by the servicer that the borrower satisfies all

government and investor criteria for a permanent modification. Wigod did not satisfy

these criteria, and she does not allege that she did. Instead, Wigod attempts to use state

law to compel Wells Fargo to permanently modify her loan under HAMP even though

doing so would directly contradict HAMP guidelines and Wells Fargo’s contractual

obligations to the United States.

Wells Fargo’s HAMP obligations flow directly from its SPA with the Treasury.

Wigod is not an intended third-party beneficiary under the agreement, nor does she

have a private right of action to enforce the program’s requirements. Numerous federal

cases establish that state laws should not be used as a stand-in for a federal cause of

action when Congress provided no such rights in the governing statute.

Further, Wigod’s state law claims, as applied, are subject to both conflict and field

preemption. As to the first, compliance with Wigod’s proposed standards and those

imposed on Well Fargo under HAMP guidelines directly conflict and, as to the latter,

Wigod’s claims would substantially interfere with Wells Fargo’s ability to service

residential mortgage loans. In addition, Wigod’s claims would frustrate Congressional

objectives by discouraging servicer participation in HAMP, interfering with federal

oversight and enforcement of the program, and imposing fifty states’ laws on an

already complex, but defined, federal modification program.

To the extent that Wigod is permitted to enforce HAMP through state law, she has

nonetheless failed to plead the required elements of each of her claims. For example,

Wigod could not plead misrepresentation because she has not – and could not – allege


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that she justifiably relied on statements in her TPP where that document clearly stated

that Wigod would not receive a permanent HAMP modification unless all “conditions

were met.” Wigod could not plead a violation of ICFA because, among other things, she

has not alleged that Wells Fargo intended that she rely on any alleged deception or that

she suffered any actual damages. While Wigod ceased making mortgage payments long

ago (even though she continues to live in her property), she has never been relieved of

her obligations under her original loan documents and Wells Fargo has never waived

its right to collect such payments as Wigod’s loan servicer. For all of the reasons stated

by the District Court, and on grounds discussed more fully below, Wells Fargo

respectfully requests that this Court affirm the District Court’s judgment in full.

VI. STANDARD OF REVIEW

This Court reviews de novo a district court’s dismissal for failure to state a claim.

Hukic v. Aurora Loan Servs., 588 F.3d 420, 434 (7th Cir. 2009). When reviewing a motion

to dismiss, the Court must ask whether the plaintiff has made allegations that “raise a

right to relief above the speculative level” and “state a claim to relief that is plausible on

its face.” See Bell Atl. v. Twombly, 550 U.S. 544, 555, 570 (2007); see also Ashcroft v.

Iqbal, 129 S. Ct. 1937, 1949 (2009). In addition, the Court may affirm dismissal on any

grounds in the record below, even where those grounds were not the basis of the

district court’s opinion. See Marcus & Millichap Inv. Servs. of Chi., Inc. v. Sekulovski, 639

F.3d 301, 312 (7th Cir. 2011).


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VII. ARGUMENT

A. The District Court Correctly Held That Wigod’s State Law Claims Are An Impermissible End-Run Around The Lack Of A Private Right Of Action In EESA And HAMP.

HAMP provides the determinative law that governs the outcome of Wigod’s claims;

those claims, to be resolved, would require litigation of contested issues of federal law,

for example, regarding the requirements that Wells Fargo was obligated to follow under

HAMP, and whether Wells Fargo satisfied those requirements. Because the outcome of

Wigod’s claims depends almost, if not, entirely upon application of federal law

standards, her claims cannot be resolved under state law. For that reason, Wigod’s

claims are HAMP claims in disguise, and the District Court correctly concluded that

they are an end-run around the lack of a private right of action in EESA and HAMP. If

Congress had intended courts to be adjudicating whether a borrower qualified for a

loan modification under EESA or HAMP, it would have provided a private right of

action – but it chose not to do so.5 The District Court’s decision that Wigod “fail[ed] to

state a cause of action independent of HAMP, for which there is no private right of

action” should be affirmed.

While Wigod asserts that there is no rule of law that supports the District Court’s

holding (Pl. Br. 18, and citing Fletcher v. OneWest Bank, FSB, --- F. Supp. 2d ----, 2011 WL

2648606, at *4 (N.D. Ill. June 30, 2011)), she is incorrect. “It is a principle of statutory

construction that ‘when legislation expressly provides a particular remedy or remedies,

5 It is beyond dispute (as Wigod recognizes) that neither EESA nor HAMP provides borrowers with the right to privately enforce its terms to obtain a permanent HAMP modification. See, e.g., Cox, 2011 WL 2600700, at *3; (Pl. Br. 12-13, 15-16.)


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courts should not expand the coverage of the statute to subsume other remedies.’”

Conboy v. AT &T Corp., 241 F.3d 242, 253 (2d Cir. 2001) (quoting Nat’l R.R. Passenger

Corp. v. Nat’l Ass’n of R.R. Passengers, 414 U.S. 453, 458 (1974)); Dersch Energies, Inc. v.

Shell Oil Co., 314 F.3d 846, 857 (7th Cir. 2002); see also Umland v. PLANCO Fin. Servs., Inc.,

542 F.3d 59, 67 (3d Cir. 2008) (reading federal law into contract “would contradict

Congress’s decision not to include expressly a private right of action”). “[W]hen

Congress wished to provide a private damage remedy, it knew how to do so and did so

expressly.” Touche Ross & Co. v. Redington, 442 U.S. 560, 572 (1979). Congress did not

provide a private remedy to borrowers who seek to challenge HAMP eligibility

determinations.

Broder v. Cablevision Systems Corp., 418 F.3d 187 (2d Cir. 2005), is instructive. There, a

cable TV customer sued Cablevision for breach of contract because, by offering certain

rates to some but not all of its customers, Cablevision violated the uniform rate

requirement of 47 U.S.C. § 543(d), among other laws. Id. at 192. Through state law,

Broder sought a declaratory judgment stating that Cablevision had violated 47 U.S.C.

§ 543(d). Id. at 195. Federal law provided cable customers with no private right of

action, and the court held that “the lack of a private right of action … could not be

avoided via a breach of contract claim” because “a federal court should not strain to

find in a contract a state-law right of action for violation of a federal law under which

no private right of action exists.” Id. at 198 (citing Grochowski v. Phoenix Constr., 318 F.3d

80 (2d Cir. 2003)). The Second Circuit similarly held in Grochowski that a state-law suit

for breach of a construction contract referencing prevailing wage schedules under the


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Davis-Bacon Act could not avoid that Act’s lack of a private right of action to enforce

those wage schedules. 318 F.3d at 85; see also Ibrahim v. Mid-Atl. Air of DC, LLC, --- F.

Supp. 2d ----, 2011 WL 3489110, at *2 (D.D.C. Aug, 10, 2011) (same).

Broder also held that the lack of a private right of action could not be avoided by

bringing claims under New York’s deceptive practices statute (GBL § 349). There, the

court cited its earlier decision in Conboy, 241 F.3d 242, where the Second Circuit held

that a “plaintiff cannot circumvent the lack of a private right of action for violation of a

New York state law by pleading his claim under GBL § 349.” Broder, 418 F.3d at 199.

The Broder court noted, “[w]ere we to hold … that GBL § 349 may be used to assert a

private right of action for violation of a federal law otherwise lacking one, we would

essentially be attributing to the New York legislature an intent to thwart Congress’s

intentions on a significant scale.” Id.; see also Ayers v. Gen. Motors Corp., 234 F.3d 514,

524-25 (11th Cir. 2000) (borrower cannot use federal or state RICO to enforce federal

regulations that lack private right of action); In re Orthopedic Bone Screw Prods. Liab.

Litig., 193 F.3d 781, 791 (3d Cir. 1999); Nance v. Maxwell Fed. Credit Union, 186 F.3d 1338,

1342-43 (11th Cir. 1999) (affirming dismissal of state law conspiracy claim because

enforcement of rights secured by federal law without private right of action “would

permit plaintiffs to make an ‘end run’ around [the] federal statutory structure”); Norman

v. Niagara Mohawk Power Corp., 873 F.2d 634, 637-38 (2d Cir. 1989) (same); Brown v. First

Tenn. Nat’l Ass’n, 753 F. Supp. 2d 1249, 1260 (N.D. Ga. 2009) (plaintiff could not use

federal and state RICO to enforce VA lending guidelines where Congress provided only


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administrative remedies and lender participation was encouraged). The same principle

applies here.

Congress placed responsibility on Treasury for implementing HAMP and for issuing

guidance that sets forth the HAMP standards to be applied by servicers. See 12 U.S.C.

§ 5519(a); see also Cox, 2011 WL 2600700, at *2; Williams, 2009 WL 3757380, at *3. Freddie

Mac, the United States’ financial agent, is responsible for enforcing HAMP and ensuring

that servicers comply with HAMP guidance. (App. 25, 98); Warren v. Bank of Am., 2011

WL 2116407, at *3 (S.D. Ga. May 24, 2011); McInroy v. BAC Home Loan Servicing, 2011 WL

1770947, at *3 (D. Minn. May 9, 2011) (“HAMP designates Freddie Mac as the program’s

sole enforcement agent and provides consumers with a procedure for filing complaints

with Freddie Mac.”); Marks v. Bank of Am., N.A., 2010 WL 2572988, at *6 (D. Ariz. June

22, 2010) (“[b]y delegating compliance authority to one entity, Freddie Mac, Congress

intended that a private cause of action was not permitted”).6

It would be inconsistent with HAMP’s structure to provide borrowers with a right to

seek judicial enforcement of HAMP guidelines through state law thus shifting

interpretation of HAMP’s requirements from the Treasury, and its agents, to the courts.

See, e.g., Ayers, 234 F.3d at 524-25; Brown, 753 F. Supp. 2d at 1258. Not only would

6 Wigod seeks to challenge not only Wells Fargo’s determination that she did not qualify for a permanent HAMP modification, but also Wells Fargo’s procedures for complying with HAMP, including the manner in which it hired and supervised employees to meet its HAMP obligations. These obligations flow to Wells Fargo through its SPA. The Treasury is authorized, and uses its authority, to monitor and enforce the manner in which servicers are meeting their obligations under the SPA, and Wigod has no standing to do so.


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numerous federal judges begin interpreting HAMP but, under Wigod’s approach, each

state’s laws would be added to the mix, thus offering the prospect of numerous

different interpretations being applied to the same servicer. This would undermine

authority provided exclusively to governmental agencies by Congress.7 Nothing in the

case law or EESA supports this result.

As the Second Circuit noted analogously in Conboy, where a federal agency (there,

the FCC) is responsible for interpreting and implementing a federal statute, a private

right of action would be inconsistent with those powers “because ‘[p]rivate litigation

tends to transfer regulatory interpretation and discretion from the agency to the

courts.’” 241 F.3d at 253 (quoting Conboy v. AT&T Corp., 84 F. Supp. 2d 492, 501

(S.D.N.Y. 2000). The Second Circuit continued:

a private right of action would place the FCC’s “interpretive function squarely in the hands of private parties and some 700 federal district judges, instead of in the hands of the Commission … The result would be to deprive the FCC of necessary flexibility and authority in creating, interpreting, and modifying communications policy.” New England Tel. & Tel. Co. v. Public Utils. Comm’n, 742 F.2d 1, 6 (1st Cir. 1984) [Breyer, J.]. It is highly unlikely, therefore, that Congress intended to create a private right of action for violations of FCC regulations. Such a right would “threaten[] the sound development of a coherent nationwide communications policy – a central objective of the [Communications] Act.” Id. at 5.

7 EESA appoints a Special Inspector General of the Trouble Asset Relief Program (“SIGTARP”), which includes HAMP. The SIGTARP conducts audits and investigations, with subpoena power, with respect to TARP. The SIGTARP is also responsible for issuing quarterly reports to Congress. 12 U.S.C. § 5231. EESA also gives oversight authority to the Financial Stability Oversight Board to make recommendations to Treasury, submit reports to Congress, and report fraud to the Attorney General or the Special Inspector General for TARP. 12 U.S.C. § 5214. The Treasury also issues monthly and quarterly reports regarding servicers’ compliance with HAMP. (See, e.g., Dckt. 30-3.)


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241 F.3d at 253; see also Ayers, 234 F.3d at 524-25; Brown, 753 F. Supp. 2d at 1258.

A finding by this Court affirming the District Court’s decision would not mean that

Wigod or any other borrower would be without a remedy. A borrower who wishes to

challenge a HAMP determination, or pursue a HAMP complaint, has several options

including, for example: (1) using the extensive escalation process initiated by calling the

HOPE Hotline (see Williams, 2009 WL 3757380, at *3); (2) submitting a complaint to

Freddie Mac (see McInroy, 2011 WL 1770947, at *3); or (3) submitting a complaint to the

OCC, the agency that oversees national banks, including Wells Fargo.8

More specifically, Fannie Mae contracts with the non-profit Homeownership

Preservation Foundation to operate the HOPE Hotline through which borrowers may

escalate concerns regarding how their HAMP application was handled.9 See

Congressional Oversight Panel, December Oversight Report at 78, (Dec. 14, 2010),

available at http://cybercemetery.unt.edu/archive/cop/20110401223225/

http://cop.senate.gov/reports/. Complaints from borrowers asserting that their

modifications were wrongly denied are escalated to HUD-approved counselors who

will initiate a three-way call with the servicer and borrower to resolve the issue. Id. If

the counselor is unable to resolve the issue, the complaint may then be sent to the

8 See http://www.helpwithmybank.gov/contact-us/contact-the-occ.html.

9 Fannie Mae requires servicers to provide a Borrower Notice, which must include the HOPE Hotline number (and an explanation that the borrower can seek free assistance from HUD-approved housing counselors and can request assistance in understanding the notice by asking for MHA HELP), to all borrowers who have been evaluated for HAMP but were not offered a TPP, were not offered a HAMP modification, or are at risk of losing eligibility for HAMP because they have failed to provide required financial documentation. (See SD 09-08, Dckt. 47-4, 1-4.)


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counseling agencies’ management who will consult with higher-level officials at the

servicer. Id. If the complaint remains unresolved at this stage, it is escalated to the

HAMP Solution Center at Fannie Mae. Id. Complaints alleging that the servicer did not

adhere to HAMP guidelines can be further escalated to the MHA Compliance

Committee at Treasury, which is authorized to require the servicer to change a

modification decision. Id. at 79. Accordingly, the lack of a private right of action does

not leave a borrower who seeks to challenge a negative HAMP outcome without a

process to do so.

Numerous courts in federal jurisdictions around the country agree with the District

Court in this case that a plaintiff may not pursue a state law cause of action that seeks to

do nothing more than enforce HAMP. See, e.g., Baltazar v. Premium Capital Funding, 2011

WL 3841450, at *4 (D. Utah Aug. 26, 2011) (dismissing state law claims that “are nothing

more than disguised HAMP claims.”); Nadan, 2011 WL 3584213, at *8; Stolba v. Wells

Fargo & Co., 2011 WL 3444078, at *3 (D.N.J. Aug 08, 2011) (citing Wigod decision); Rackley

v. JPMorgan Chase Bank, Nat’l Ass’n, 2011 WL 2971357, at *3 (W.D. Tex. Jul 21, 2011)

(same); Cox, 2011 WL 2600700, at *3 (dismissing state law claims predicated on HAMP);

Nash v. GMAC Mortgage, LLC, 2011 WL 2470645, at *12 (D.R.I. May 18, 2011);

Lucia/Corvello v. Wells Fargo Bank, N.A., --- F. Supp. 2d ----, 2011 WL 3134422, at *6-7

(N.D. Cal. Apr 22, 2011) (same); Morales v. Chase Home Fin. LLC, 2011 WL 1670045, at *5

(N.D. Cal. Apr. 11, 2011) (same).10

10 The two cases that have expressly rejected Judge Manning’s decision are in the Northern District of Illinois: Fletcher v. OneWest Bank, FSB, --- F. Supp. 2d ----, 2011 WL


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HAMP was not intended to benefit every borrower, and, in EESA, Congress

recognized that not every foreclosure is “avoidable.” Indeed, placing borrowers in

modified loans that they cannot afford would perpetuate, rather than alleviate, the

financial circumstances that EESA was intended to address. Wigod’s state law claims

are not contract claims or unfair and deceptive practices claims. At their core, they are

challenges to Wells Fargo’s determination that Wigod did not qualify for a HAMP

modification agreement. Because Wigod does not have a right to seek a private remedy

for a HAMP denial, the District Court properly dismissed her claims as a matter of law.

See Ayers, 234 F.3d at 525.11

B. Wigod’s State Law Claims As Applied Are Preempted.

1. Wigod’s claims are barred under principles of conflict preemption.

The Court should reject Wigod’s argument on appeal that her claims are not

preempted by federal law.12 As applied and if successful, Wigod’s state law claims

would mandate a result directly at odds with HAMP, that is, the provision of HAMP

2648606 (N.D. Ill. June 30, 2011) and Boyd v. U.S. Bank, N.A., ex rel. Sasco Aames Mortgage Loan Trust, Series 2003-1, --- F. Supp. 2d ----, 2011 WL 1374986 (N.D. Ill. Apr. 12, 2011). For all of the reasons set forth above, including the supporting authority cited herein, Wells Fargo respectfully believes that Boyd and Fletcher were incorrectly decided.

11 Neither EESA’s savings clause (Pl. Br. 19) nor HAMP’s caution to servicers that they must be in compliance with “all federal, state, and local laws” changes the analysis; neither of these provisions provides a private right of action. Indeed, HAMP guidelines state that servicers must be in compliance with Section 5 of the FTC Act (App. 12), under which private individuals have no right of action.

12 Wigod did not offer any arguments to the District Court regarding preemption. However, because she does so here, Wells Fargo responds.


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loan modifications to borrowers who do not meet the Treasury’s guidelines for

qualification. Under those circumstances, “state law ‘[would] stand[] as an obstacle to

the accomplishment and execution of the full purposes and objectives of Congress.’”

Gade v. Nat’l Solid Wastes Mgmt. Assoc., 505 U.S. 88, 98 (1992) (internal quotations

omitted).

As this Court stated in Aux Sable Liquid Products v. Murphy, 526 F.3d 1028, 1034 (7th

Cir. 2008):

To determine whether state and federal law are in conflict, it is necessary to examine the federal statute as a whole and identify its purpose and intended effects. … This analysis requires that we consider the relationship between state and federal laws as they are interpreted and applied, not merely as they are written. … the crucial inquiry is whether state law differs from federal law in such a way that achievement of the congressional objective ... is frustrated. (internal quotations and citations omitted).

Here, Wigod’s state law claims, if successful, would frustrate Congressional objectives

in enacting EESA, which was, in part, to stabilize the economy and provide a program

to mitigate “avoidable” foreclosures.13 Wigod seeks an order that her TPP was a

contract that obligated Wells Fargo to provide her with a permanent modification once

she made her trial payments and provided requested documentation. If Wigod were to

obtain the relief she seeks, Wells Fargo could be ordered to either modify her loan,

leading to the perverse result of placing Wells Fargo in default of its SPA with the

government, (App. 102, ¶6.A.1), pay Wigod damages, or both.

13 EESA does not contain an express preemption provision.


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Moreover, the Treasury’s authority, and the remedies it utilizes, would be “skewed”

by imposing on servicers private claims to enforce HAMP brought under the various

states’ statutory and common laws. See, e.g., Buckman Co. v. Plaintiffs’ Legal Committee,

531 U.S. 341, 348 (2001). State law claims challenging servicers’ HAMP determinations

and efforts to comply with the program would “inevitably conflict,” not only with

HAMP guidelines themselves, but with the Treasury’s responsibility to enforce HAMP

consistently with the Administration’s “judgment and objectives.” Id. at 349-50

(“complying with the FDA’s detailed regulatory scheme in the shadow of 50 States’ tort

regimes will dramatically increase the burdens facing” program participants, “burdens

not contemplated by Congress in enacting” the federal statutes at issue).

In Geier v. Am. Honda Motor Co., 529 U.S. 861 (2000), the Supreme Court held that a

negligence action, based on a failure to install driver’s side airbags, was impliedly

preempted because it would have impermissibly conflicted with a Department of

Transportation standard that required manufacturers to install such airbags in only

certain cars. Id. at 881-82. In reaching its conclusion, the Court noted that “the rules of

law that judges and juries create or apply in such suits may themselves similarly create

uncertainty and even conflict, say, when different juries in different States reach

different decisions on similar facts.” Id. at 871.

By imposing after-the-fact private claims on a servicer that is bound to apply the

Treasury’s HAMP standards to each borrower, a servicer will be subjected to standards

that not only differ from federal law (and its contractual requirements under the SPA),

but also from the standards set in courtrooms in different states. The imposition on


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participating servicers of legal duties at odds with the requirements of EESA and

HAMP would render compliance with the varying standards impossible.

As in Buckman, servicers – as HAMP participants – could be discouraged from

engaging in HAMP altogether to avoid being exposed to unpredictable civil liability in

connection with the public modification program. See Zoher v. Chase Home Financing,

2010 WL 4064798, at *4 (S.D. Fla. Oct. 15, 2010) (“[f]inding an implied private right of

action for mortgagors would discourage servicers from participating in the program

because they would be exposed to significant litigation expenses”); see also Brown, 753 F.

Supp. 2d at 1255. While Wigod argues that subjecting servicers to state enforcement

actions would encourage better performance under HAMP (Pl. Br. 22), she neglects to

consider that HAMP is a largely voluntary, not mandatory, program designed to benefit

the public at large by bringing greater stability to the housing market. Exposing

servicers to varying state standards and class action penalties under this remedial

program – not to mention putting borrowers in modified loans they still cannot afford –

would serve to frustrate, not further EESA’s purpose.

Significantly, and contrary to Wigod’s argument, that some or all of Wigod’s state

law claims are preempted does not mean that all state law claims against a servicer

“that supposedly touch upon the HAMP” (Pl. Br. 11) would be barred. For example,

tort causes of action based on fraudulent conduct could parallel federal HAMP

requirements. See Medtronic, Inc. v. Lohr, 518 U.S. 470, 481-82 (1996).14 But, these are not

14 In Bosque v. Wells Fargo Bank, N.A., the court rejected the perceived argument that no HAMP related claims could proceed under state law. But that is not the argument


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the types of claims present here. Wigod is not suing for damages under state law based

on an established violation of federal law; by this lawsuit, she is seeking to use state law

as a vehicle to establish that a violation of federal standards occurred in the first

instance. Under the precedent of the Supreme Court and this Court, conflict preemption

alone supports affirmation of the District Court’s decision. See, e.g.,Buckman, 531 U.S. at

353.

2. Wigod’s state law claims are subject to field preemption by virtue of the Home Owners’ Loan Act (“HOLA”).

In her brief, relying in large part on Fletcher, Wigod argues that her claims are not

subject to field preemption under HAMP. (Pl. Br. 20-21.) She also expressly states that

the claims are not preempted by the National Bank Act. (Id. 22 n.13.) But this argument

is misplaced. First, there is no dispute that HAMP does not occupy the field of

mortgage servicing or loan modifications and thus field preemption under HAMP is

not relevant to the analysis of whether Wigod’s claims should be preempted by federal

law. Second, Fletcher misapplied this Court’s decision in In re Ocwen Loan Servicing, LLC

Mortgage Servicing Litig., 491 F.3d 638 (7th Cir. 2007). Ocwen stands, in part, for the

proposition that, under the facts presented there, the Home Owners’ Loan Act, 12

U.S.C. §§ 1461, et seq. (“HOLA”) did not preempt a basic breach of contract claim. Id. at

presented here (and, in fact, it was not the argument presented in Bosque). 762 F. Supp. 2d 342, 351 (D. Mass. 2011). Wells Fargo does not urge the Court to find that any state law claim that has any connection to HAMP is barred, but instead only those claims that seek relief based on conduct directly regulated by HAMP.


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643-44. Wigod’s claims are not analogous because they implicate federal legislative

purposes not at issue in Ocwen.

However, as a matter of law, Wigod’s breach of implied contract, concealment,

negligent hiring/supervision, and ICFA claims are preempted by HOLA, and

implementing regulations promulgated by the Office of Thrift Supervision (“OTS”), 12

C.F.R. §§ 560.1, et seq., because the claims would substantially interfere with Wells

Fargo’s ability to service residential mortgage loans.15 HOLA empowered the OTS to

regulate federal savings banks, including the preemption of conflicting state laws.

Ocwen, 491 F.3d at 642. Indeed, HOLA’s implementing regulations state that “[the] OTS

hereby occupies the entire field of lending regulation for federal savings associations. 12 C.F.R.

§ 560.2(a) (emphasis added).16

15 While Wells Fargo is a national bank regulated by the National Bank Act rather than HOLA, Wigod’s loan was originated and initially serviced by Wachovia Bank FSB, a federal savings bank regulated by HOLA. (AC ¶29; App. 119 (TPP signed by Wachovia)). See Remo v. Wachovia Mortgage, 2011 WL 3448234, at *2 n.5 (N.D. Cal. Aug.5, 2011) (applying HOLA preemption to loan originated by Wachovia in 2008). Wells Fargo subsequently acquired Wachovia, which is now a division of Wells Fargo. (AC ¶29.) Because Wachovia originated and initially serviced Wigod’s loan, including executing Wigod’s TPP, the HOLA preemption analysis applies to Wigod’s claims. See, e.g., Sato v. Wachovia Mortg., FSB, 2011 WL 2784567, at *5 (N.D. Cal. July 13, 2011). Regardless, the preemption analysis under either HOLA or the National Bank Act is the same. See Copeland-Turner v. Wells Fargo Bank, N.A., --- F. Supp. 2d ----, 2011 WL 2650853, at *9 n.6 (D. Or. July 6, 2011).

16 The preemptive scope of HOLA was modified with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 13776 (2010). However, the Act does not apply to transactions predating the Act’s July 21, 2010 effective date. See 12 U.S.C. § 1553. Here, Wigod’s loan was originated in 2007 and the TPP was dated in 2009, and thus any changes to HOLA are inapplicable to the instant analysis.


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OTS regulations specifically preempt state laws that purport to impose requirements

regarding, among other activities, the “[p]rocessing [and] servicing” of mortgage loans

as well as disclosures concerning loans. 12 C.F.R. §§ 560.2(b)(9), (10). Accordingly,

federal law preempts any actions that obstruct a federal savings bank’s ability to fully

exercise its residential mortgage “credit activities,” including its right to service

mortgage loans without state law interference. See Casey v. FDIC, 583 F.3d 586, 594-95

(8th Cir. 2009). The preemptive scope of HOLA includes state laws of general

application which more than “incidentally affect the lending operations” of federal

savings banks. See 12 C.F.R. § 560.2(c). The application of Section 560.2(c) is to be

interpreted narrowly and any doubts to be resolved in favor of preemption. Silvas v.

E*Trade Mortgage Corp., 514 F.3d 1001, 1005 (9th Cir. 2008).

Further, whether a claim brought under a state law of general application, such as

Wigod’s ICFA claim, is preempted by HOLA “turns on the conduct at issue, not the

label given to the putative cause of action.” Schilke v. Wachovia Mortgage, FSB, 758 F.

Supp. 2d 549, 556-57 (N.D. Ill. 2010) (citing Ocwen, 491 F.3d at 646); see also Fletcher, 2011

WL 2648606, at *6-7 (ICFA claims preempted); Prince-Servance v. BankUnited, FSB, 2007

WL 3254432, at *5 (N.D. Ill. Nov. 1, 2007); Haehl v. Wash. Mut. Bank, F.A., 277 F. Supp. 2d

933, 942-43 (S.D. Ind. 2003).

Here, Wigod’s state law breach of implied contract, concealment, negligent

hiring/servicing, and ICFA claims, if enforced, would impermissibly impinge upon

Wells Fargo’s ability to service mortgage loans including deciding (1) whether and

under what circumstances to modify a loan; (2) how to staff its servicing operations; (3)


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how to process loan modification applications; and (4) how to disclose implications of

the loan modification process to borrowers. For example, Wigod alleges that Wells

Fargo failed to properly perform servicing functions with respect to HAMP loan

modifications (AC ¶¶73(a), 126) and failed to properly hire, train and supervise its

servicing employees (id. ¶¶73(b), 93, 94, 126; see also id. ¶¶73(c), 110). Wigod’s emphasis

on Wells Fargo’s purported “one-call resolution policy” is a perfect example of her

attempt to regulate Wells Fargo’s servicing practices. (Pl. Br. 41-42.) Regardless of

whether Wells Fargo actually had such a policy Wigod’s ICFA claim, if successful,

would necessarily establish new standards for servicers’ customer relation policies, a

result directly at odds with the presumption of preemption established by HOLA.

Indeed, in Fletcher, upon which Wigod heavily relies, the district court held that claims

based on alleged violations of HAMP guidelines cannot create an ICFA claim because

such claims would be preempted by HOLA. See Fletcher, 2011 WL 2648606, at *6-7.

Because the challenged activities go to the heart of Wells Fargo servicing functions,

the District Court’s dismissal of Wigod’s breach of the implied contract, concealment,

negligent hiring/supervision, and ICFA claims should be affirmed on this alternative

ground. See Remo, 2011 WL 3448234, at *5 (dismissing as preempted state law claims

based on refusal to modify loan); Copeland-Turner, 2011 WL 2650853, at *8-9 (dismissing

as preempted state law claims predicated on representations during modification

process); Poco v. Wachovia Mortgage Corp., 2011 WL 2633298, at *5 (N.D. Cal. July 5, 2011)

(same); Parmer v. Wachovia, 2011 WL 1807218, at *1 (N.D. Cal. Apr. 22, 2011) (claims

based on misleading representations concerning a loan modification preempted); Zarif


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v. Wells Fargo Bank, N.A., 2011 WL 1085660, at *3 (S.D. Cal. Mar. 23, 2011) (HOLA

preempts state law claims predicated on challenges to processing of loan modification

applications); Snyder v. Wachovia Mortgage, 2010 WL 2736945, at *7-9 (E.D. Cal. July 12,

2010); Biggins v. Wells Fargo & Co., 266 F.R.D. 399, 417 (N.D. Cal. 2009).

C. Wigod Failed To Allege A Breach Of Contract With Respect To Her TPP.

Wigod asserts that her TPP was a “valid contract” that required Wells Fargo to offer

her a permanent modification once Wigod made her trial payments and submitted

“necessary documentation to verify her eligibility.” (AC ¶61.) In addition to the reasons

set forth by the District Court, this Court should affirm the dismissal of Wigod’s breach

of contract claim, because Wigod has not alleged facts that would establish the existence

of a valid contract—namely offer and acceptance, consideration, definite and certain

terms, performance of all required conditions, and damages. See Ass’n Benefit Servs., Inc.

v. Caremark RX, Inc., 493 F.3d 841, 849 (7th Cir. 2007). Absent a contract, Wigod cannot

plead a breach.

As an initial matter, analyzing the TPP as a potential contract is improper. As stated

above, under SD 09-01, Wells Fargo was obligated to consider Wigod’s eligibility for

HAMP. (App. 1.) Wigod’s suggestion that she did not receive the “benefit of her

bargain” in the form of a permanent modification rests on the same faulty assumption

that Wigod asserts throughout briefing—that she was eligible for and entitled to a

permanent HAMP modification. (Pl. Br. 38; see also id. 33; AC ¶¶37, 32, 34-38, 43, 66, 79,

86-89.) But there was no “bargain” between Wigod and Wells Fargo, and whether


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Wigod obtained a permanent modification was not subject to negotiation, but rather

dictated by federal guidelines.

1. The TPP is not an enforceable “offer.”

The test for an offer is whether it induces a reasonable belief in the recipient that she

can, by accepting, bind the sender. See Cobb-Alvarez v. Union Pac. Corp., 962 F. Supp.

1049, 1053-54 (N.D. Ill. 1997). A party’s “suggestion” is not an offer if it contains

“suitable language conditioning the formation of a contract on some further step ... such

as approval by corporate headquarters.” Cobb-Alvarez, 962 F. Supp. at 1054; see also A/S

Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chem. Group, Inc., 873 F.2d 155,

157 (7th Cir. 1989).

Here, Wigod’s TPP cannot be reasonably viewed as an “offer,” the acceptance of

which could bind Wells Fargo to permanently modify Wigod’s loan. A TPP has never

been a guarantee of a loan modification.17 The language of the TPP confirms that

permanent modification of Wigod’s loan was conditioned on the receipt and review by

Wells Fargo of additional documentation and the satisfaction of all necessary conditions

to render Wigod eligible for a permanent modification. When signing the TPP, Wigod

acknowledged that she understood that “the [TPP] 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

17 Indeed, SD 10-01 (requiring that all TPPs are based on verified financial data) would not have been issued if Wigod’s theory – that a trial plan guarantees a permanent HAMP modification if three timely payments were made – was correct. (See Dckt. 30-5.)


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of a Modification Agreement, and (iii) the Modification Effective Date has passed.”

(App. 118, ¶2.G; see also AC ¶61 (admitting that Wigod’s eligibility was not determined

when she signed and returned the TPP).) Indeed, the TPP, by its express terms,

terminated if Wells Fargo had not delivered a fully executed TPP and “Modification

Agreement” by November 1, 2009. (App. 118, ¶2.F).

Yet nowhere does Wigod allege – because she cannot – that she received a

modification agreement from Wells Fargo. Numerous federal courts have dismissed

TPP-based contract claims on this ground alone. See, e.g., Lonberg v. Freddie Mac, 2011

WL 838943, at *7 (D. Or. Mar. 4, 2011) (citing collection of cases); Lucia/Corvello, 2011 WL

3134422, at *7; Grill v. BAC Home Loans Servicing LP, 2011 WL 127891, at *4 (E.D. Cal. Jan.

14, 2011); Vida v. OneWest Bank, F.S.B., 2010 WL 5148473, at *6 (D. Or. Dec. 13, 2010)

(“The [TPP] is explicitly not an enforceable offer for loan modification.”); Lund v.

CitiMortgage Inc., 2011 WL 1873690, at *2 (D. Utah May 17, 2011) (the “[TPP] makes clear

that the modification is subject to qualification ….”); Shurtliff v. Wells Fargo Bank, N.A.,

2010 WL 4609307, at *4 (D. Utah Nov. 5, 2010) (same); Stolba, 2011 WL 3444078, at *3;

Rackley, 2011 WL 2971357, at *4.

Bosque v. Wells Fargo Bank, N.A., 762 F. Supp. 2d 342 (D. Mass. 2011), does not

support a finding that Wigod’s TPP is an enforceable offer to permanently modify her

loan. Bosque noted that the plaintiffs asserted that they were “merely entitled to a

decision by Wells Fargo as to whether they will receive a permanent modification by

the modification effective date specified in section 2 of the TPP.” Id. at 349. The Bosque

court held only that “the TPP contains all essential and material terms necessary to


- 32 -

govern the trial period repayments and the parties’ related obligations.” Id. at 352

(emphasis added). Here, however, the central issue of Wigod’s claim is not about the

timing of Wells Fargo’s decision, but rather the decision itself to deny her application

for a permanent modification. (AC ¶¶ 69-70, 83.) As discussed above, there is no legal

support for Wigod’s claim.

2. Wigod has not alleged facts reflecting “consideration.”

Wigod has not alleged – and cannot allege – that she provided valid consideration

for a permanent modification. “The essential element of consideration is a bargained-for

exchange of promises or performances ….” Ross v. May Co., 880 N.E.2d 210, 215 (Ill.

App. Ct. 2007). Here, there was no “bargained-for exchange of promises.” Wigod was

already obligated to make monthly payments under the original terms of her mortgage.

(Mortgage, Dckt. 30-1.) Under Wigod’s TPP, Wells Fargo agreed to accept reduced

monthly payments on Wigod’s representations of financial hardship. (App. 117-119.)

The monthly payment amounts under Wigod’s TPP were substantially less than the

monthly amount owed under Wigod’s original secured obligation to Wells Fargo. (Id.)

When signing the TPP, Wigod also agreed that: “all terms and provisions of the Loan

Documents remain in full force and effect; nothing in this Plan shall be understood or

construed to be a satisfaction or release in whole or in part of the obligations contained

in the Loan Documents. The Lender and I will be bound by, and will comply with, all of

the terms and provisions of the Loan Documents.” (App. 119, ¶4.D.)

The submission of partial payment of an amount undisputedly due and secured by

Wigod’s property cannot – as a matter of law – be considered “bargained-for”


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consideration or the result of a reciprocal agreement. As the Illinois Appellate Court

stated in DiLorenzo v. Valve & Primer Corp., “where a party does what it is already

legally obligated to do, there is not consideration.” 807 N.E.2d 673, 679 (Ill. App. Ct.

2004); see also Contempo Design, Inc. v. Chi. & Ne. Ill. Dist. Council of Carpenters, 226 F.3d

535, 550 (7th Cir. 2000) (en banc); Salgado v. America’s Servicing Co., 2011 WL 3903072, at

*2 (D. Ariz. Sept. 6, 2011) (TPP payments fail to satisfy consideration requirement);

Rackley, 2011 WL 2971357, at *3 (TPP payments and provision of financial information

do not constitute consideration for permanent HAMP modification). Accordingly,

where – as here – a party has a pre-existing duty to perform under the terms of an

original contract, a modification of that contract with no additional consideration does

not result in the formation of a new, enforceable contract.18

Whatever actions Wigod undertook or promises she made in connection with the

TPP, such as providing income information and documentation, were nothing more

than conditions that Treasury required she satisfy so that she could obtain the benefits

of HAMP. As discussed above, HAMP is a taxpayer-funded program and part of a plan

to stabilize the economy. Wigod stood to obtain a financial incentive if she qualified for

benefits under the program. Any actions undertaken by Wigod in compliance with

HAMP constituted conditions, not bargained-for consideration paid for the benefit of

Wells Fargo. See 3 SAMUEL WILLISTON, A TREATISE ON THE LAW OF CONTRACTS (“Williston

18 Wigod’s promise “to keep her information current and to make the temporary payments on time,” (AC ¶63), cannot serve as valid consideration for a permanent modification. See Mehta v. Wells Fargo Bank, N.A., 737 F. Supp. 2d 1185, 1197 (S.D. Cal. 2010).


- 34 -

on Contracts”) § 7:18 (4th ed. 2008); see also Grill, 2011 WL 127891, at *4; Barinaga v. JP

Morgan Chase & Co., 749 F. Supp. 2d 1164, 1174-75 (D. Or. 2010); Mehta, 737 F. Supp. 2d

at 1197-98; Mizrahi v. Wells Fargo Home Mortgage, 2010 WL 2521742, at *3 (D. Nev. June

16, 2010).

3. The TPP does not contain “definite and certain terms.”

There are no allegations in the Amended Complaint that would show that the

parties ever reached a “meeting of the minds” with respect to any of the material terms

of a permanent modification. A valid contract must contain definite and certain terms

“to ensure that the parties in fact have reached an agreement and to provide courts with

a basis for enforcing the obligations that the parties sought to impose upon one

another.” Ass’n Benefit Servs. Inc., 493 F.3d at 850; see also Bus. Sys. Eng’g, Inc. v. Int’l Bus.

Mach. Corp., 547 F.3d 882, 888 (7th Cir. 2008) (offer must be definite as to its material

terms). Among the essential terms in a contract to lend money are the applicable rate of

interest, duration of the loan, and mode of repayment. McErlean v. Union Nat’l Bank of

Chi., 414 N.E.2d 128, 132 (Ill. App. Ct. 1980); see also Nadan, 2011 WL 3584213, at *6-7

(dismissing breach of contract claim because TPP does not provide essential terms); In

re Salvador, --- B.R. ----, 2011 WL 1833188, at *6-7 (Bankr. M.D. Ga. May 12, 2011) (same).

Wigod’s TPP does not contain any of the definite and certain terms that reflect an

agreement by the parties for a permanent loan modification, let alone one that could be

enforced. (App. 117-119.) Indeed, the applicable form permanent modification

agreement provided to servicers by Treasury contains numerous blanks to be filled in,

including the yearly interest rate, the interest rate change date, the monthly principal


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and interest payment, estimated monthly escrow payment amount, total monthly

payment, payment start date, number of monthly payments per interest rate period,

and principal balance. (Id. 123.) Yet, Wigod has not alleged – nor could she – that any of

this information is set forth in her TPP, even though many if not all of such terms may

be modified. (Id. 8-10.). This is so because the TPP is not a permanent modification nor

an enforceable promise to provide a permanent modification.

SD 09-01 distinguishes between the TPP and the final form Agreement: “Servicers

must use a two-step process for HAMP modifications. Step one involves providing a

Trial Period Plan outlining the terms of the trial period, and step two involves

providing the borrower with an Agreement that outlines the terms of the final

modification.” (Id. 14.) If the trial modification form contained all of the information

necessary for a legal and binding permanent modification, the “step two” final

Agreement would not be necessary, but it is. (Id. 15 (“[i]n step two, servicers must

calculate the terms of the modification using verified income, taking into consideration

amounts to be capitalized during the trial period”).) Because the TPP is silent with

respect to “what the parties agreed to” as to any permanent modification, it cannot be

enforced in a court of law.19 See McErlean, 414 N.E.2d at 132; Anand v. Marple, 522 N.E.2d

281, 281 (Ill. App. Ct. 1988) (affirming dismissal where “parties made only an agreement

to agree and … there was no meeting of the minds”).

19 Because Wigod has failed to allege the existence of a contract, the dismissal of her implied covenant claim (AC ¶¶71-73) should also be affirmed. Pommier v. People Bank Marycrest, 967 F.2d 1115, 1120-21 (7th Cir. 1992).


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D. The District Court Properly Dismissed Wigod’s Promissory Estoppel Claim.

A plaintiff may invoke the doctrine of promissory estoppel only where, among other

things, there is a promise unambiguous in terms and there is reasonable and justifiable

reliance thereon by the promisee. Geva v. Leo Burnett Co., 931 F.2d 1220, 1223 (7th Cir.

1991). As discussed above, no promise existed that was unambiguous in its terms. See

supra, section VII.C.3; In re Salvador, 2011 WL 1833188, at *6-7. The TPP governed the

trial period only and Wells Fargo could not have expected Wigod to rely on it as a

permanent modification of her loan, particularly where the TPP states that the original

loan documents remain in full force and effect. (App. 119 (”all terms and provisions of

the Loan Documents remain in full force and effect; nothing in this Plan shall be

understood or construed to be a satisfaction or release in whole or in part of the

obligations contained in the Loan Documents”).) Moreover, as stated above, HAMP

guidelines clearly contemplated that a TPP was not a guarantee that a permanent loan

modification would be offered. Wigod thus could not have reasonably relied upon the

TPP to promise a permanent modification. See Costigan v. CitiMortgage, Inc., 2011 WL

3370397, at *7 (S.D.N.Y. Aug. 2, 2011) (“[T]he TPP agreement unequivocally states that it

does not constitute a permanent modification of [plaintiff’s] loan.” (emphasis added));

Lucia/Corvello, 2011 WL 3134422, at *8 (“at the time Plaintiffs were offered Trial Period

modifications, there was no promise that Plaintiffs would be found eligible for

permanent loan modification on which Plaintiffs could reasonably rely”).


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E. The District Court Correctly Held That Wigod Failed To Allege A Valid ICFA Claim.

To adequately plead a violation of ICFA, Wigod is required to allege: (1) a deceptive

or unfair act or practice by Wells Fargo; (2) Wells Fargo’s intent that Wigod rely on the

deception or unfair practice; (3) that the deceptive or unfair practice occurred in the

course of conduct involving trade or commerce; (4) actual damage to Wigod; and (5)

such damages were proximately caused by the deception. See Siegel v. Shell Oil Co., 612

F.3d 932, 934-35 (7th Cir. 2010); see also 815 ILL. COMP. STAT. § 505/10a. Wigod failed to

do so, and the District Court’s decision dismissing Wigod’s ICFA claim should be

affirmed.

1. Wigod offers no well-pleaded factual allegations that Wells Fargo intended Wigod to rely on its alleged deception.

Wigod argues that the District Court applied the wrong standard by requiring her to

allege that Wells Fargo intended to deceive her, rather than that Wells Fargo intended

that Wigod rely on its alleged deceptive conduct. (Pl. Br. 34-37.) Regardless of which

standard applies, Wigod has not identified any allegations that Wells Fargo intended

Wigod to rely on any alleged deception. Indeed, Wigod cannot do so as the Amended

Complaint is devoid of any such allegations. (AC ¶123-127.) See Suburban 1, Inc. v. GHS

Mortgage, LLC, 833 N.E.2d 18, 22 (Ill. App. Ct. 2005).20

20 Contrary to Wigod’s argument, (Pl. Br. 35 n.21), “reliance remains an element of a private cause of action [under the ICFA].” See Duran v. Leslie Oldsmobile, Inc., 594 N.E.2d 1355, 1362 (Ill. App. Ct. 1992).


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2. Wigod failed to allege that she suffered actual damages.

The Court also should reject Wigod’s attempts to argue that she suffered “actual

damages” under ICFA. The actual damage element of a private ICFA action requires

that Wigod suffered “actual pecuniary loss.” See Kim v. Carter’s Inc., 598 F.3d 362, 365

(7th Cir. 2010) (actual damage element “requires that the plaintiff suffer ‘actual

pecuniary loss’”); Mulligan v. QVC, Inc., 888 N.E.2d 1190, 1196-97 (Ill. App. Ct. 2008).

ICFA “provides remedies for purely economic injuries,” and the “failure to allege

specific actual damages … in the form of specific economic injuries” precludes an ICFA

claim. Morris v. Harvey Cycle & Camper, Inc., 911 N.E.2d 1049, 1053 (Ill. App. Ct. 2009).

Actual damages “must be calculable and measured by the plaintiff’s loss.” Id. (citation

omitted). With regard to claims for consumer fraud, “Illinois courts have adopted the

benefit-of-the-bargain rule. ” Mulligan, 888 N.E.2d at 1196; see also Frye v. L’Oreal USA,

Inc., 583 F. Supp. 2d 954, 957 (N.D. Ill. 2008). The rule is based on the theory that

“plaintiff is entitled to be placed in the same financial position she would have been

absent the misrepresentation.” Frye, 583 F. Supp. 2d at 957 (citing Price v. Philip Morris,

Inc., 848 N.E.2d 1, 5-6 (Ill. 2005)). Wigod has not pled a viable claim for actual damages.

Wigod’s suggestion that the District Court’s dismissal of the ICFA claim was based

on the “presumption” that Wigod’s reduced payments under the TPP would leave her

with more financial resources, rather than fewer, is erroneous. (See Pl. Br. 37.) Wigod

was obligated to make monthly principal and interest payments under the terms of her

original loan documents, an amount that exceeded the reduced TPP payments. (TPP,

App. 117-119.) In light of Wigod’s pre-existing indebtedness to Wells Fargo, the District


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Court concluded, not presumed, that the TPP left Wigod with more resources than she

would have been without a TPP and thus, as a matter of law, failed to allege pecuniary

loss caused by Wells Fargo’s alleged conduct.21

Wigod also does not allege actual pecuniary loss under the benefit of the bargain

test. Like the plaintiff in Frye, Wigod alleges that she would not have entered into a TPP

absent Wells Fargo’s misrepresentation. (AC ¶105.) Wigod did not, however, allege

how she would have spent the money that she otherwise paid under her TPP. While

Wigod complains that her money could have been put “towards other potential

remedies that she might otherwise have pursued to save her home,” (Id. ¶¶75, 125), she

does not allege what those might have been. Nor does Wigod allege that the value of

her home was diminished during the trial plan period. Accordingly, Wigod has failed

to adequately allege that her TPP had any economic consequences.

Last, Wigod’s assertions that missed opportunities constitute actionable injuries fails

for a number of reasons. (See Pl. Br. 38, 39; AC ¶¶75, 125.) Under Illinois law,

“[t]heoretical harm” and damages “predicated on mere speculation, hypothesis,

conjecture or whim” are insufficient. Price v. Philip Morris, Inc., 848 N.E.2d 1, 5 (Ill. 2005);

Cooney v. Chi. Pub. Schs., 943 N.E.2d 23, 31 (Ill. App. Ct. 2010); Petty v. Chrysler Corp., 799

N.E.2d 432, 439 (Ill. App. Ct. 2003). Rather, Wigod “must have been harmed in a

concrete, ascertainable way.” Price, 848 N.E.2d at 5. Wigod’s allegations regarding

21 Wigod also stopped making her mortgage payments in May 2010, but, upon information and belief, continues to live in her condominium while her taxes are paid by Wells Fargo.


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missed opportunities are purely theoretical and allege no ascertainable damages.

Nothing prevented Wigod from filing for bankruptcy or attempting to sell her home.

(SD 09-01, App. 2 (“borrower actively involved in a bankruptcy proceeding is eligible

for the HAMP at the servicer’s discretion”); TPP, App. 117-119). Nor does Wigod

provide any factual basis for the notion that she could have sold her home at all, let

alone on undefined “favorable terms.” Wigod’s allegations cannot support her claim for

relief. See Morris, 911 N.E.2d at 1053; Price, 848 N.E.2d at 5; Iqbal, 129 S. Ct. at 1949-50.22

3. The District Court Properly Held That Wigod’s Claim That Wells Fargo Engaged In Unfair Conduct Did Not State A Claim Under ICFA.

Wigod also contends that the District Court erred by dismissing her unfairness claim

under ICFA. But Wigod alleged no facts specific to her loan to support such a claim.

Wigod offered only a litany of complaints against Wells Fargo that Wigod labeled

“unfair, immoral and unscrupulous practices.” (Pl. Br. 41-42; see also AC ¶126.) The

District Court’s silence on this argument does not indicate a failure to consider the

claim, but more likely a conclusion that the claim fails and does not warrant discussion.

See Crawford Supply Group, Inc. v. Bank of Am., N.A., 2011 WL 3793913, at *2-3 (N.D. Ill.

Aug. 25, 2011) (court not required to address every argument in decision).

The conduct alleged in sub-paragraphs (a) through (i) of paragraph 126 of the

Amended Complaint, including Wells Fargo’s alleged “one call resolution policy,”

22 Wigod also did not allege a basis for a finding of proximate causation. She does not allege that Wells Fargo prevented her from seeking bankruptcy relief, from selling her home, or from pursuing any alternative and more preferable solutions to address her debt obligations. See Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 155 (Ill. 2002) (affirming dismissal because no proximate causation).


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consists of a general complaint that provides no connection to Wigod’s loan

modification application. Nothing in paragraph 126 sets forth well-pleaded factual

allegations that – taken as true – would establish conduct that violated ICFA as to

Wigod’s loan. “[N]amed plaintiffs who [seeks to] represent a class must allege and show

that they personally have been injured, not that injury has been suffered by other,

unidentified members of the class to which they belong and which they purport to

represent.” Schultz v. Prudential Ins. Co. of Am., 678 F. Supp. 2d 771, 782 (N.D. Ill. 2010).

None of Wigod’s general allegations explains how Wells Fargo’s conduct vis-à-vis

Wigod violated ICFA or differed from Wigod’s alleged breach of contract claim. See

Duffy v. Ticketreserve, Inc., 722 F. Supp. 2d 977, 992-93 (N.D. Ill. 2010). Accordingly, the

District Court properly dismissed Wigod’s ICFA claim.23

F. The District Court Properly Dismissed Wigod’s Misrepresentation Claims Because She Failed To Plead That She Justifiably Relied Upon Statements In The TPP.

Wigod alleges that Wells Fargo misrepresented that it would permanently modify

her loan if she made her TPP payments and submitted the supporting documentation

required by the TPP. (AC ¶¶ 7, 27, 104, 120.) The District Court, however, properly

held that, as a matter of law, Wigod could not have reasonably relied on a provision of

the TPP that was inherently contradictory to another. (See Order 13-14.) Wigod argues

that the District Court’s analysis was flawed because it assumed that Wigod relied on

23 The district court’s decision in Boyd does not apply here, because, unlike in Boyd, Wigod has not alleged any “unfair” conduct under ICFA that applies to her. In Boyd, the plaintiff alleged that the servicer failed to evaluate his HAMP eligibility and then foreclosed on his property. 2011 WL 1374986, *2. No such allegations are present here.


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the first paragraph of the TPP, while she allegedly relied on Section 3 of the TPP. (Pl. Br.

31-32.) The Court should reject Wigod’s argument. The content of the two paragraphs in

question is materially the same, making Wigod’s alleged distinction irrelevant. (Compare

TPP, App. 117 with App. 119, ¶3.) The first paragraph of the TPP simply uses the title of

Section 2, i.e., “The Loan Trial Period” (App. 118), rather than “Section 2.” Wigod does

nothing more than attempt to create a false distinction between the two paragraphs.

Regardless, as the District Court pointed out, the content on which Wigod

purportedly relied is undermined by Section 2.G, which provides that Wigod’s loan

would not be modified unless, among other things, she met “all of the conditions required

for modification.” (Order 13-14 (quoting TPP ¶2.G) (emphasis in district court opinion).)

Wigod appears to argue that because Section 3 of the TPP references the “requirements

in Section 2,” the requirement in Section 2.G that Wigod “meet all the conditions

required for modification” is somehow immaterial to the misrepresentation analysis.

(Pl. Br. 32.) Wigod, however, provides no factual or legal basis for this suggestion.

Indeed, several courts have expressly held that, as a matter of law, borrowers could not

have reasonably relied on the language of the TPP to promise a permanent

modification. See, e.g., Stolba, 2011 WL 3444078, at *5; Lucia/Corvello, 2011 WL 3134422,

at *8-9; Lund, 2011 WL 1873690, at *3. Wigod is trying to isolate different potions of the

TPP to support her misrepresentation claims, but in doing so, she fails to look at the

TPP as a whole.

Further, in determining justifiable reliance, the Court must consider what Wigod

knew and what she could have discovered “by the exercise of ordinary prudence.” See


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Teamsters Local 282 Pension Trust Fund v. Angelos, 839 F.2d 366, 370 (7th Cir. 1988) (citing

Schmidt v. Landfield, 169 N.E.2d 229, 231-32 (Ill. 1960)); see also Adler v. William Blair &

Co., 648 N.E.2d 226, 232 (Ill. App. Ct. 1995) (“[a] person may not enter into a transaction

with his eyes closed to available information and then charge that he has been deceived

by another”). Illinois law imposes a duty to investigate when the circumstances

“reasonably require, as a matter of prudence, that an investigation be undertaken.” See

Teamsters, 839 F.2d at 371 (citing Luciani v. Bestor, 436 N.E.2d 251, 256 (Ill. App. Ct.

1982)); see also Schmidt, 169 N.E.2d at 231-32. Accordingly, a plaintiff’s reliance is not

justifiable where she had equal knowledge or access to knowledge, or where peculiar

circumstances did not induce plaintiff to rely solely on the representation. See

Runnemede Owners, Inc. v. Crest Mortgage Corp., 861 F.2d 1053, 1058 (7th Cir. 1988);

Schmidt, 169 N.E.2d at 232.

Like the plaintiffs in Adler, Wigod’s TPP clearly informed Wigod that her loan

would not be modified “unless and until … [she] met all conditions required for a

modification” (App. 118.) In addition to inquiring with Wells Fargo regarding the

conditions for receiving a permanent HAMP modification, Wigod could have called the

HOPE Hotline for free assistance from a team of HUD-approved housing counselors.

See supra, Section VII.A. Moreover, plaintiff could have read the publicly-available

Treasury and Fannie Mae guidelines and directives that explain the eligibility,

underwriting, and documentation required for each HAMP application. (App. 2-10.)

Wigod, however, does not allege that she undertook any such investigation. Instead,

she “closed her eyes” to all other provisions of the TPP, as well as the vast amount of


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information regarding HAMP requirements that was publicly available at the time. See

Adler, 648 N.E2d at 232. Absent any alleged inquiry Wigod’s alleged reliance was not

justifiable, as a matter of law.

Wigod’s naked allegations that she “met the financial threshold for permanent

modification prior to entering into the TPP” do not render her alleged reliance on the

TPP justifiable. Wigod’s repeated argument – with no support from well-pled factual

allegations – that Wells Fargo had verified her qualification for a permanent

modification prior to providing her with a TPP is entirely speculative and does not

support a finding of justifiable reliance on the TPP.24 See Iqbal, 129 S. Ct. at 1949-50.

Absent justifiable reliance on any alleged misrepresentation by Wells Fargo, the District

Court properly dismissed Wigod’s misrepresentation claims. See Cozzi Iron & Metal, Inc.

v. U.S. Office Equip., Inc., 250 F.3d 570, 574 (7th Cir. 2001).25

G. The Moorman Or Economic Loss Doctrine Bars Wigod’s Negligence-Based Claims; Wigod Failed To Sufficiently Allege The Elements Of Each Such Claim.

1. Dismissal of Wigod’s negligence-based claims should be affirmed based on the “economic loss doctrine.”

Under Illinois law, the Moorman, or economic loss, doctrine bars a plaintiff from

recovering for purely economic losses under a tort theory of negligence. Moorman Mfg.

Co. v. Nat’l Tank Co., 435 N.E.2d 443, 453 (Ill. 1982). To recover in tort under the

24 Moreover, the Amended Complaint does not allege that Wigod’s loan received a positive NPV result.

25 Alternate grounds for affirming the dismissal of plaintiff’s misrepresentation claims are discussed in detail in Sections VII.G.1, and VII.G.3. See Marcus & Millichap, 639 F.3d at 312 (Court may affirm dismissal “on any basis that appears in the record, even if it was not the district court's ground for dismissing the suit).


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Moorman doctrine, “a party must show harm above and beyond a party’s contractual or

commercial expectations.” Am. United Logistics, Inc. v. Catellus Dev. Corp., 319 F.3d 921,

926 (7th Cir. 2003).26 Accordingly, where two parties are engaged in a commercial

relationship, one party cannot pursue negligence-based claims for economic damages

only. Freedom Mortgage Corp. v. Burnham Mortgage Corp., 720 F. Supp. 2d 978, 1001-02

(N.D. Ill. 2010).

Here, Wigod’s negligent misrepresentation and negligent hiring/supervision claims

arise from her commercial relationship with Wells Fargo as her loan servicer, and

Wigod’s negligence-based claims seek only economic damages. (AC ¶¶97, 102, 122.)

Wigod does not assert that Wells Fargo’s negligence caused her any physical injury or

property damage. Thus, Wigod’s claims fall squarely within the Moorman doctrine, and

dismissal of her negligence-based claims should be affirmed. See Catalan v. GMAC

Mortgage Corp., 629 F.3d 676, 693 (7th Cir. 2011); First Place Bank v. Skyline Funding, Inc.,

2011 WL 3273071, at *6 (N.D. Ill. July 27, 2011) (Moorman doctrine barred negligent

misrepresentation claim against mortgage originator); Freedom Mortgage Corp., 720 F.

Supp. 2d at 1001-02 (dismissing negligent supervision and hiring claims); Fox Assoc.,

Inc. v. Robert Half International, Inc., 777 N.E.2d 603, 610 (Ill. App. Ct. 2002).27

26 A number of exceptions apply to the doctrine, but none is applicable to Wigod’s claims. See Catalan v. GMAC Mortgage Corp., 629 F.3d 676, 693 (7th Cir. 2011) (listing exceptions).

27 Wigod’s claims do not fall into a narrow exception to the Moorman doctrine that applies “where the plaintiff’s damages were proximately caused by a negligent misrepresentation by a defendant in the business of supplying information for the guidance of others in their business transactions.” Catalan, 629 F.3d at 693. Wigod fails


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2. Dismissal of Wigod’s negligent hiring claim should be affirmed.

Beyond the Moorman doctrine, to state a claim for negligent hiring, a plaintiff must

allege a particular unfitness and that such unfitness “rendered the plaintiff’s injury

foreseeable to a person of ordinary prudence in the employer’s position.” Van Horne v.

Muller, 705 N.E.2d 898, 905-06 (Ill. 1998). Moreover, a plaintiff must allege specific facts,

rather than make conclusory allegations, that a defendant “knew or should have

known” about a potential employee’s particular unfitness. See Mitchell v. Norman James

Constr. Co., 684 N.E.2d 872, 889 (Ill. App. Ct. 1997); see also Van Horne, 705 N.E.2d at 906-

07 (affirming dismissal of negligent hiring claim where plaintiff failed to plead specific

facts regarding particular unfitness of employee in question).

Wigod has offered no specific allegations explaining the unfitness of any Wells

Fargo employees at the time of their hiring, and she fails to tie any such allegations to

her loan in particular. Instead, Wigod merely offers conclusory allegations that Well

Fargo’s hires lacked “suitable training, education, experience and skills” and were “ill-

suited” to handle HAMP loan modifications. (AC ¶¶93, 97.) Wigod offers no allegations

to show how any Wells Fargo employees were “ill-suited” for such jobs or how Wells

Fargo “knew or should have known” about their unfitness for HAMP-related positions.

Dismissal of Wigod’s negligent hiring claim should be affirmed. See Van Horne, 705

N.E.2d at 906.

to allege that Wells Fargo is in the business of supplying information for Wigod’s guidance in her business dealings.


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3. The District Court’s dismissal of Wigod’s negligent or fraudulent misrepresentation/concealment should be affirmed.

(a) Wigod failed to allege with specificity facts showing that Wells Fargo had a scheme to defraud Wigod.

To survive a motion to dismiss, Wigod “must be able to point to specific, objective

manifestations of [Wells Fargo’s] fraudulent intent-a scheme or device.” Bower v. Jones,

978 F.2d 1004, 1012 (7th Cir. 1992) (citing Hollymatic Corp. v. Holly Sys., Inc., 620 F. Supp.

1366, 1369 (N.D. Ill. 1985)). Wigod, however, failed to allege any specific facts showing

that Wells Fargo’s future promise to permanently modify Wigod’s loan was part of a

scheme to defraud Wigod. Wigod merely alleges that Wells Fargo “had absolutely no

intention to modify Plaintiff’s mortgage.” See Bower, 978 F.2d at 1012; Chatham Surgicore,

Ltd. v. Health Care Serv. Corp., 826 N.E.2d 970, 977-79 (Ill. App. Ct. 2005). Wigod’s

allegation is belied by the tens of thousands of mortgage loans Wells Fargo has

modified, its voluntary participation in HAMP by executing the SPA, and the incentives

that it receives as a result of participation in the program.

(b) Wigod failed to allege that she was damaged by Wells Fargo’s conduct.

Nothing alleged by Wigod satisfies the damages element of her claim. She alleges

that she did not receive a permanent loan modification, that she made trial plan

payments that could have been used for “other avenues of relief,” that she “lost time ...

and the opportunity to pursue other avenues for saving her home and credit,” that her

credit score was negatively impacted, and that her available credit was cancelled or

reduced. (AC ¶¶108, 113, 118.) However, Wigod was indebted to Wells Fargo under the

terms of her original note and was obligated to make monthly principal and interest


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payments that exceeded the reduced trial payments. Wells Fargo’s decision to allow

Wigod to temporarily make reduced loan payments on her mortgage – presumably to

provide her with time to try and improve their financial circumstances – was intended

to be a benefit and could not have damaged Wigod in light of her pre-existing

indebtedness. See Adams v. U.S. Bank, 2010 WL 2670702, at *4 (E.D. Mich. July 1, 2010).

Wigod’s other allegations, such as lost time and opportunities, as well as damage to her

credit, are simply too speculative and attenuated to sufficiently plead damages

proximately caused by Wells Fargo’s conduct. This is particularly true to the extent that

any of these damages allegedly flow from Wigod’s allegations that Wells Fargo caused

her to default on her loan. (AC ¶¶109-13.) At the time she executed her TPP, Wigod

admitted that she was already on the verge of default (App. 117, ¶1.A) and thus

Wigod’s conclusory allegations that Wells Fargo was to blame for the default are

insufficient to properly plead damages.

(c) Wigod failed to allege that Wells Fargo owed her a duty.

To recover on a fraudulent concealment or negligent misrepresentation claim,

Wigod must adequately allege that Wells Fargo had a duty to communicate accurate

information. Connick v. Suzuki Motor Co., 675 N.E.2d 584, 593 (Ill. 1996); Neptuno

Treuhand-Und Verwaltungsgesellschaft Mbh v. Arbor, 692 N.E.2d 812, 818 (Ill. App. Ct.

1998). However, “[t]here is no duty to speak absent a fiduciary or other legal

relationship between the parties,” and the burden of showing such a relationship

“exists lies with the party seeking relief.” Neptuno, 692 N.E.2d at 817 (citing Magna Bank

of Madison County v. Jameson, 604 N.E.2d 541, 544-45 (Ill. App. Ct. 1992)). As a matter of


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law, a mortgagor does not owe a mortgagee a duty of care. Graham v. Midland Mortgage

Co., 406 F. Supp. 2d 948, 953 (N.D. Ill. 2005) (quoting Teachers Ins. & Annuity Ass’n of Am.

v. LaSalle Nat’l Bank, 691 N.E.2d 881, 888 (Ill. App. Ct. 1998)); see also Stolba, 2011 WL

3444078, at *5 (no duty of care owed by Wells Fargo as servicer); Magna Bank, 604

N.E.2d at 544. While a duty to disclose material facts may arise where a plaintiff places

trust and confidence in a defendant so as to place the defendant in a position of

influence and superiority over the plaintiff, the plaintiff must plead such facts in the

complaint. See Graham, 406 F. Supp. 2d at 953; Connick, 675 N.E.2d at 593.

Wigod’s only allegation regarding Wells Fargo’s duty to communicate accurate

information is entirely conclusory, (AC ¶121), and must be disregarded as it does not

allege that Wigod placed such great trust and confidence in Wells Fargo so as to

warrant a duty of care. See Graham, 406 F. Supp. 2d at 953. Accordingly, dismissal of

Wigod’s fraudulent concealment and negligent misrepresentation claims should be

affirmed. See id.; Olson v. Jenkens & Gilchrist, 461 F. Supp. 2d 710, 719 (N.D. Ill. 2006).

VIII. CONCLUSION

For all the foregoing reasons, Defendant-Appellee Wells Fargo Bank, N.A.

respectfully requests that the judgment of the District Court be affirmed in full.


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CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B)

because this brief contains 13,923 words, excluding the parts of the brief exempted by

Fed. R. App. P. 21(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5)

and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been

prepared in a proportionally spaced typeface using Microsoft Word 2003 in Book

Antiqua 12-point font.

Attorney for Defendant-Appellee Wells Fargo Bank, N.A.

Dated: September 14, 2011

/s/ Irene C. FreidelIrene C. Freidel


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CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on September 14, 2011, I electronically filed the foregoing

with the Clerk of the Court by using the CM/ECF system which will send a notice of

electronic filing to all counsel or parties of record on the attached service list.

/s/ Irene C. FreidelIrene C. Freidel

SERVICE LIST

Case No. 1:10-cv-02348

Jay [email protected] Lezell Woodrow [email protected] S. [email protected] [email protected] McGuire, LLC350 North LaSalle Street, Suite 1300 Chicago, IL 60654

Counsel for Plaintiff-Appellee Lori Wigod
