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Mikulski v. Wells Fargo Bank, N.A.

United States District Court, E.D. Wisconsin

August 25, 2017

SCOTT MIKULSKI, Plaintiff,
v.
WELLS FARGO BANK, N.A., SELENE FINANCE LP, and PREMIUM MORTGAGE ACQUISITION TRUST. Defendants.

          DECISION AND ORDER

          WILLIAM E. DUFFIN, U.S. MAGISTRATE JUDGE.

         I. Facts and Procedural History

         Plaintiff Scott Mikulski filed the present action against defendants Wells Fargo Bank, N.A. (Wells Fargo), Selene Finance, LP (Selene), and Premium Mortgage Acquisition Trust (the Trust), alleging claims under the Real Estate Settlement Procedures Act (RESPA), state common law, and Wisconsin Statute §224.77(1), and seeking injunctive relief. (ECF No. 19.) Defendants Selene and the Trust move for dismissal of the action under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. (ECF No. 21.) The parties have fully briefed the motion, which is ready for resolution. All parties have consented to the full jurisdiction of a magistrate judge. (ECF Nos. 6, 13, 16.)

         Wells Fargo commenced a foreclosure action against Mikulski in April of 2011 in Waukesha County Circuit Court. (ECF No. 19, ¶ 9.) The court entered a judgment of foreclosure in October of 2011. (ECF No. 19, ¶ 10.) Mikulski subsequently "attempted to cure any alleged default on his home mortgage by filing for bankruptcy protection; however, he was unable to cure those defaults." (ECF No. 19, ¶ 11.)

         In spring 2016 Mikulski submitted a loan modification application to Wells Fargo and Selene, the servicer of the loan. (ECF No. 19, ¶¶ 12-14.) Shortly thereafter Mikulski received notice that he was denied a loan modification. (ECF No. 19, ¶ 15.) Believing incorrect information was used in analyzing his eligibility for a loan modification, Mikulski, by his attorney, sent a letter dated August 4, 2016, to Selene, purporting to provide Selene with the "correct" information and asking to have his application re-run. (ECF No. 19, ¶ 19; see also ECF No. 21-4.) Mikulski alleges that Selene never responded to or investigated this inquiry. (ECF No. 19, ¶¶ 28-29.)

         Selene's alleged failure to respond or investigate Mikulski's inquiry of August 4, 2016, forms the basis of Count I of Mikulski's First Amended Complaint. (ECF No. 19.) Mikulski's allegations that Wells Fargo and Selene used incorrect information and improperly analyzed his loan modification application, and that all defendants improperly acted to sell Mikulski's home at a sheriff's sale, form the bases of Counts II, Ill. and IV. (ECF No. 19.) In response to the motion to dismiss, Mikulski concedes that his third cause of action applies only to Wells Fargo (ECF No. 23 at 9), a defendant who has not moved for dismissal.

         II. Motion to Dismiss Standard

         "To survive a motion to dismiss under Rule 12(b)(6), a complaint must provide enough factual information to 'state a claim to relief that is plausible on its face' and 'raise a right to relief above the speculative level.'" Thulin v. Shopko Stores Operating Co., 771 F.3d 994, 997 (7th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)). The court accepts as true all well-pleaded facts and then determines whether the facts give rise to an entitlement of relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

         III. Analysis

         The Home Affordable Mortgage Program (HAMP) emerged as a result of Congress's "response to rapidly deteriorating financial market conditions in the late summer and early fall of 2008." Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 556 (7th Cir. 2012). The Secretary of the Treasury created the program to encourage home loan servicers to modify loans of qualifying homeowners who were in danger of default. Id. Although HAMP created obligations upon participating loan servicers, it did not create a private right of action whereby homeowners could sue servicers for violations of HAMP guidelines. Id. at 559, n.4. Thus, Mikulski does not allege that the defendants' violation of HAMP guidelines directly gives rise to a cause of action. (ECF No. 23 at 1.) Rather, Mikulski asserts that "[d]efendants, by violating HAMP Guidelines, have violated other state and federal laws." (ECF No. 23 at 1.)

         The moving defendants contend that Mikulski is effectively attempting to bring a private right of action under HAMP by "retraining" a violation of HAMP guidelines as various other legal claims. (ECF No. 21 at 6.) But the moving defendants' argument represents a rehashing of the "end-run" argument rejected by the court in Wigod. See Id. at 581-86. In Wigod, in addition to making various preemption arguments, Wells Fargo argued that the plaintiff's state law claims were an impermissible "end-run" around the fact that Congress did not create a private cause of action under HAMP. Id. at 576-86. Referring to this argument as "novel, " the court found it to be without legal support. Id. at 581. "The absence of a private right of action from a federal statute provides no reason to dismiss a claim under a state law just because it refers to or incorporates some element of the federal law." Wigod, 673 F.3d at 581.

         For example, Wisconsin created a private right of action against a mortgage banker who "[v]iolate[es] any ... federal or state statute, rule, or regulation that relates to practice as a mortgage banker ...." Wis.Stat. § 224.77(1)(k). Although Congress chose not to create a private right of action for violations of HAMP, Wisconsin seemingly did essentially just that. Therefore, the court rejects the contention that Mikulski's claims are barred on the ground that each represents an impermissible attempt to create a private right of action under HAMP. Accordingly, the court finds it necessary to address the merits of each claim Mikulski raises as to the moving defendants.

         A. The RE SPA Claim

         The First Cause of Action in the First Amended Complaint alleges "Violations of RESPA, 12 U.S.C. §§ 2605(e)(1) and (2)." Specifically, it alleges that "Selene did not properly analyze and assess Milulski's loss mitigation application, in that Selene (among other problems) used incorrect information to determine Mikulski's modification eligibility." (ECF No. 19, ¶ 26.) It alleges that the August 4, 2016 letter was a qualified written request (QWR) under RESPA (¶ 27), that Selene's failure to respond to the QWR violated 12 U.S.C. § 2605(e)(2) (¶ 30), and that Mikulski suffered damages "as a result of the denial of a loan modification." (ECF No. 19, ¶ 31.) The First Amended Complaint does not allege that the Trust (or Wells Fargo) violated RESPA. Therefore, as to this claim the only defendant is Selene.

         A QWR is "written correspondence (other than notices on a payment coupon or similar documents) from the borrower or her agent that requests information or states reasons for the borrower's belief that the account is in error. 12 U.S.C. § 2605(e)(1)(B). To qualify, the written request must also include the name and account of the borrower or must enable the servicer to identify them. Id." Catalan v. GMAC Mortg. Corp., 629 F.3d 676, 680 (7th Cir. 2011).

         The United States Court of Appeals for the Seventh Circuit has held that no "magic language" is required before a servicer must recognize written correspondence as a QWR requiring a timely response. Catalan, 629 F.3d at 687. Thus, correspondence need not contain the phrase "qualified written request." Baehl v. Bank of Am., N.A., No. 3:12-cv-00029-RLY-WGH, 2013 U.S. Dist. LEXIS 46445, at *10 (S.D. Ind. Mar. 25, 2013) (citing Vician v. Wells Fargo Home Mortg., No. 2:05-cv-144, 2006 U.S. Dist. LEXIS 26141, 2006 WL 694740, at *4 (N.D. Ind. Mar. 16, 2006)). ...


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