WIGOD v. WELLS FARGO BANK (March 7, 2012)
In 2009, the Secretary of the Treasury set aside $50 billion in federal money to assist homeowners facing foreclosure. The Secretary negotiated agreements with mortgages servicers, including Wells Fargo, to induce them to refinance the mortgages they serviced. Lori Wigod submitted a request to Wells Fargo for such a refinance. She submitted financial information and Wells Fargo determined that she was eligible for the program. Wigod and Wells Fargo entered into a Trial Period Plan agreement, as required by the Program. Although Wigod complied with the requirements of the trial plan, Wells Fargo refused to offer her a permanent loan modification. Wigod filed a seven-count complaint for breach of contract, promissory estoppel, breach of Wells Fargo's agreement with the Secretary, negligent hiring and supervision, fraudulent misrepresentation and concealment, negligent misrepresentation and concealment, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. Judge Manning (N.D. Ill.) dismissed all counts. Smith appeals.
In their opinion, Seventh Circuit Judges Ripple (concurring) and Hamilton and District Judge Myerscough affirmed in part, reversed in part, and remanded. The Court considered each of Wigod’s claims and concluded that: a) she adequately alleged an offer, consideration, and clear and definite enough terms to state a state-law claim for breach of the Trial Period Plan agreement; b) she adequately alleged a promise and her reliance sufficient to state a state-law promissory estoppel claim; c) the economic loss doctrine forecloses her negligent hiring and supervision, negligent misrepresentation, and negligent concealment claims; d) she adequately alleged Wells Fargo's fraudulent misrepresentation, her reasonable reliance, and a sufficient "scheme" to state a claim for promissory fraud, e) her fraudulent concealment claim fails in that she failed to show that there was any special fiduciary-like relationship between her and Wells Fargo, and f) she adequately stated a claim for a violation of the Illinois consumer fraud statute. The Court turned to Wells Fargo's contention that Wigod’s claims were preempted, either by field preemption or conflict preemption. The Court rejected the argument that the Home Owners Loan Act "occupies the field" and preempts Wigod’s state law claims. That Act only preempts state laws when they interfere with federal regulation, which Wigod’s claims do not. The Court also concluded that the state-law claims were not preempted by conflict preemption. Finally, the Court addressed Wells Fargo's argument that there should be no state-law claim since Congress did not create a private right of action under the Program. The absence of a private right of action in a federal statute does not prevent a plaintiff from pursuing a state-law claim related to the statute.
Judge Ripple wrote a concurring opinion expressing his view that the United States should have filed an amicus curiae brief to assist in the Court in its disposition of the issues.