Jay Neil v. Wells Fargo Bank, N.A. , 596 F. App'x 194 ( 2014 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2390
JAY NEIL; ERIKA K. NEIL,
Plaintiffs – Appellants,
v.
WELLS FARGO BANK, N.A., d/b/a Wells Fargo Home Mortgage; BWW LAW
GROUP, LLC; EQUITY TRUSTEES, LLC; BANC OF AMERICA FUNDING CORP.,
2005-4 TRUST,
Defendants – Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (1:13-cv-00644-CMH-JFA)
Argued: October 28, 2014 Decided: December 30, 2014
Before MOTZ, SHEDD, and WYNN, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
ARGUED: Jessica Michelle Carter, Christopher Edwin Brown, TUCKER
& ASSOCIATES, PLLC, Vienna, Virginia, for Appellants. Amy
Sanborn Owen, BRIGLIAHUNDLEY, PC, Fairfax, Virginia, for
Appellees. ON BRIEF: Todd Lewis, THE LEWIS LAW GROUP, P.C.,
Arlington, Virginia, for Appellants. John D.V. Ferman, Nicholas
V. Cumings, BRIGLIAHUNDLEY, PC, Fairfax, Virginia, for Appellees
BWW Law Group, LLC and Wells Fargo Bank, N.A., d/b/a Wells Fargo
Home Mortgage.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Jay and Erika K. Neil (the “Neils”) appeal the district
court order dismissing their breach of contract and related
claims against Wells Fargo Home Mortgage (“Wells Fargo”). For
the following reasons, we vacate the dismissal order of the
claims and remand for further proceedings consistent with this
opinion. 1
I.
In 2005, the Neils borrowed $604,000, evidenced by a
promissory note and deed of trust, to purchase property located
in Centreville, Virginia. Wells Fargo was the original lender
and the servicer of the note. In April 2009, the Neils applied
to Wells Fargo for a loan modification and provided
documentation regarding their financial status which indicated
that they were unable, or would soon be unable, to pay their
monthly loan payment. This application was denied by Wells Fargo
in June 2009.
In October 2009, Wells Fargo, using the financial
1
The district court dismissed all ten counts of the Amended
Complaint. However, the Neils appeal only the dismissal of four
claims: breach of contract (Count 1), slander of title (Count
2), abuse of process (Count 3), and remove cloud on title (Count
4). The district court dismissed Counts 2, 3, and 4 on the basis
that there was no enforceable contract between the Neils and
Wells Fargo. Wells Fargo raises alternate grounds for affirmance
of the dismissal of these claims; however, we leave that for the
district court to address in the first instance.
2
information submitted by the Neils in that loan modification
application, mailed the Neils several documents, including a
document labeled “Home Affordable Modification Program Loan
Trial Period (Step One of Two-Step Documentation Process”) (the
“TPP”). This paperwork relates to a federal program designed to
assist homeowners at risk of foreclosure called the Home
Affordable Modification Program (“HAMP”). The TPP offered the
Neils a short-term, three month reduced monthly payment plan
under their existing promissory note, apparently to help keep
the Neils afloat so they could pursue a modification of their
loan through this federal program. The reduced payment was based
on the estimated amount that would be due under their note if
the Neils ultimately qualified for HAMP.
In response, the Neils signed the TPP and submitted the
first reduced monthly payment to Wells Fargo. In September 2010,
Wells Fargo informed the Neils that they did not qualify for a
permanent modification under HAMP because the net present value
(“NPV”) calculation of their proposed loan modification was not
sufficient. 2 (J.A. 88–89). Following the denial of a HAMP
modification, the Neils defaulted on their loan, and their
2
Under HAMP, a loan servicer must calculate the NPV of the
proposed modification in order to determine whether a mortgagor
qualifies for a modification through HAMP. The NPV calculation
involves evaluating the NPV of a borrower’s existing loan with
the NPV of a hypothetical HAMP-modified loan to determine
whether it would be more profitable to modify the loan or to
proceed to foreclosure.
3
property was sold at a foreclosure sale in March 2013.
In May 2013, the Neils filed suit seeking to overturn the
foreclosure sale, arguing, among other things, that the TPP is
an enforceable contract that obligated Wells Fargo to
permanently modify the terms of the Neils’ loan. On motion of
Wells Fargo, the district court dismissed the case for failure
to state a claim after the court determined that the TPP was not
a contract because there was no valid consideration. 3
II.
We review de novo the district court’s grant of the Wells
Fargo motion to dismiss. Spaulding v. Wells Fargo Bank, N.A.,
714 F.3d 769, 776 (4th Cir. 2013). In conducting this review,
we accept as true the facts alleged in the Neils’ complaint and
construe those facts in the light most favorable to the Neils.
Id. Ultimately, a complaint should not be dismissed under Rule
12(b)(6) “unless it appears certain that the plaintiff can prove
3
The district court held in the alternative that the Neils
did not state a claim for breach of contract because there is no
legal right to a loan modification under HAMP. (J.A. 164).
However, at oral argument the Neils stated that that they do not
seek to be placed in the HAMP program; rather they concede (as
the district court found) that there is no private right of
action for an individual seeking a loan modification under HAMP
or the Emergency Economic Stabilization Act of 2008 (EESA),
under which the HAMP program was crafted. Spaulding v. Wells
Fargo Bank, N.A., 714 F.3d 769, 775 (4th Cir. 2013) (noting that
“Congress created no private right of action for the denial of a
HAMP application”). Here, the Neils instead assert that the TPP
was a contract that required Wells Fargo to permanently modify
the loan, even if the modification is not provided through HAMP.
4
no set of facts which would support its claim and would entitle
it to relief.” Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134
(4th Cir. 1993).
We conclude that the district court erred in dismissing the
Neils’ breach of contract claim because the TPP was not
supported by consideration. The parties agree that Virginia law
applies, and under Virginia law, a party must establish three
elements to prove the existence of a valid contract: an offer,
acceptance, and consideration. Chang v. First Colonial Sav.
Bank, 410 S.E.2d 928 (Va. 1991). Here, there was an offer, it
was accepted, and the contract was supported by sufficient
consideration.
First, the TPP was an offer from Wells Fargo to the Neils.
The language of the letter and the TPP itself plainly state that
the TPP constitutes an offer from Wells Fargo for a temporary
modification of the Neils’ loan. See, e.g., J.A. at 77 (“LET US
KNOW THAT YOU ACCEPT THIS OFFER”) (emphasis added); J.A. at 78
(“To accept this offer”) (emphasis added); J.A. at 81 (“to
determine whether I qualify for the offer described in this
Plan”) (emphasis added). Given this express language, we easily
conclude that the TPP constituted a valid offer; an offer for a
modification of the loan from Wells Fargo to the Neils because
it changed (at least for a period of time) the amount the Neils
would be obligated to pay under the mortgage. See Chang, 410
5
S.E.2d at 930; Humble Oil & Ref. Co. v. Cox, 148 S.E.2d 756, 759
(Va. 1966).
Next, the Neils accepted the Wells Fargo offer by signing
the TPP documents and mailing them back to Wells Fargo. 4 Wells
Fargo’s performance under the terms of the TPP constituted its
acknowledgment that the Neils had accepted the offer. See
Galloway Corp. v. S.B. Ballard Constr. Co., 464 S.E.2d 349, 356
(Va. 1995); Sfreddo v. Sfreddo, 720 S.E.2d 145, 152–53 (Va. App.
2012).
Finally, the contract was supported by consideration. Under
Virginia law, consideration represents “the price bargained for
and paid for a promise.” Smith v. Mountjoy, 694 S.E.2d 598, 602
(Va. 2010) (quoting Dulany Foods, Inc. v. Ayers, 260 S.E.2d 196,
202 (Va. 1979)). Consideration may be “a benefit to the party
promising or a detriment to the party to whom the promise is
made.” GSHH-Richmond, Inc. v. Imperial Assocs., 480 S.E.2d 482,
484 (Va. 1997) (quoting Sager v. Basham, 401 S.E.2d 676, 677
(Va. 1991)). Proof of consideration is not a high hurdle;
rather, “[a] very slight advantage to the one party or a
trifling inconvenience to the other is generally held sufficient
4
Wells Fargo did not countersign the agreement as required
by the TPP document, but, here, countersigning is merely a
formality, which is not necessary under Virginia contract law.
See Galloway Corp. v. S.B. Ballard Constr. Co., 464 S.E.2d 349,
356 (Va. 1995) (“The absence of an authorized signature does not
defeat the existence of [a] contract.”).
6
to support the promise.” Brewer v. First Nat. Bank of Danville,
120 S.E.2d 273, 279 (Va. 1961).
In this case, the TPP imposed new obligations on the Neils.
First, it required the Neils to commit to credit counseling: “If
the lender requires me to obtain credit counseling, I will do
so.” (J.A. 81 ¶ F). Further, the acknowledgment from Wells Fargo
confirming receipt of the Neils’ signed acceptance of Wells
Fargo’s offer indicates and reaffirms that when the Neils
“signed [the] Trial Period Plan, [they] agreed to work with a
HUD-approved housing counseling agency.” (J.A. 86). Also, the
Neils provided a Hardship Affidavit indicating they were in
default or would soon be in default, as well as certified to
Wells Fargo that the previously submitted financial information
remained current, true, and accurate. (J.A. 81). Moreover, the
Neils agreed that while the TPP was in effect, Wells Fargo would
report their loan as delinquent to the credit reporting
agencies, even if the reduced monthly payments were timely made
under the TPP, as Wells Fargo had agreed to accept. (J.A. 79).
The Neils additionally agreed to a waiver of foreclosure notices
(J.A. 82; ¶ B), as well as consented to the disclosure of their
personal information and the terms of the TPP to a number of
entities (J.A. 83; ¶ F). It is clear that the TPP obligated the
Neils to more than the “trifling inconvenience” needed to create
an enforceable contract.
7
In sum, Wells Fargo made an offer, the Neils accepted that
offer, and there was sufficient consideration to create a
modification of the contract. 5 We therefore vacate the dismissal
of the Neils’ claims and remand for further proceedings
consistent with this opinion.
VACATED AND REMANDED
5
We express no opinion as to whether the TPP was breached
by Wells Fargo or whether this modification by the TPP led to a
long-term, permanent modification of the loan. We leave for the
district court the issue of what the parties’ respective
obligations were under the TPP.
8