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Lester v. Wells Fargo Bank NA

United States District Court, W.D. Louisiana, Shreveport Division

March 27, 2017





         Before the Court are two Rule 12(b)(6) Motions to Dismiss. See Record Documents 36 & 42. The first motion (Record Document 36) was filed by Defendant Jeremy Harris d/b/a Jeremy Harris Appraisals (“Harris”) and the second motion was filed by Defendants Wells Fargo Bank, N.A., as servicer for U.S. Bank National Association, as Trustee for Citigroup Mortgage Loan Trust 2007 - WFHE4; Ruth Millican; Daniel Bennigsdorf; Jesse Swift; Sheri Jackson; and John Doe (collectively referred to as the “Wells Fargo Defendants”). Both motions are unopposed. For the reasons set forth below, Harris' motion is GRANTED and the WFB Defendants' motion is GRANTED as to all claims except Plaintiff Joanna Pruitt Lester's (“Lester”) Telephone Consumer Protection Act claim against Wells Fargo Bank, N.A.


         Lester is the mortgagor of immovable property located at 5927 Buncombe Road in Shreveport, Louisiana (“the Property”). See Record Document 34 at ¶ 8. Lester originally acquired the Property in April 2007 with financing from Wells Fargo Bank, N.A. (“WFB”) in the form of a $264, 000 variable rate mortgage loan, as well as a second mortgage loan from another lender for $66, 000. See id. at ¶¶ 8-9. The rate on the first loan was 8.95% with a balloon payment. See id. at ¶ 8. The rate on the second mortgage was 12.75%. See id. at ¶ 9. Lester alleges that WFB, specifically Wells Fargo Home Mortgage Consultant Ruth Millican (“Millican”), “fraudulently” told her that she could apply to refinance the first loan “at a much better rate” after six months. Id. at ¶ 10. Lester maintains that when she contacted WFB after six months, she “was told that [she] could not apply [for refinance] because of the adjustable rate for both the [first] and [second] mortgages.” Id.

         In 2008, Lester lost her part-time job as a federal employee. See id. at ¶ 11. Lester alleges that she immediately contacted WFB by telephone to ask for mortgage assistance. See id. She maintains that she was told she “had to be at least 3 months in arrears before any assistance would be considered.” Id. Lester alleges that she relied on this statement and “got 3 months behind on [her] mortgage risking foreclosure.” Id. In 2010, Lester applied for and received a loan modification. See id. at ¶ 12. According to Lester, she completed the trial period and agreed to a monthly payment; yet, “after only 3 payments [she] received notification from WFB stating that the monthly mortgage was increasing to an amount nearly to where it was originally.” Id.

         In 2011, Lester began to attend “HOME SAVE” events in Dallas, Texas. See id. at ¶ 13. These events were sponsored by the Neighborhood Assistance Corporation of America (“NACA”). See id. Lester alleges that at these events, NACA representatives told her that she “met the requirements to receive a modification of [her] loan.” Id. Yet, when she and NACA met with WFB at these events, WFB informed her that they would not be able make a decision that day as to her modification. See id. Lester later learned that WFB sold her mortgage and this was part of the reason her request for modification was denied. See id. at ¶¶ 14-15.

         Lester subsequently “sought the protection of the Court” and filed bankruptcy. Id. at ¶ 15. She voluntarily dismissed her bankruptcy after allegedly being “told that as long as [she] was in bankruptcy . . . WFB would not negotiate or even discuss a loan modification.” Id. Lester alleges that “when [she] voluntarily dismissed [her] [b]ankruptcy case, [she] was told by WFB that no foreclosure proceedings would be pursued by WFB until after [she] and WFB completed their effort to get [her] mortgage modified if possible.” Id. at ¶ 17.

         Foreclosure proceedings were instituted against Lester on September 22, 2011, in the First Judicial District for the Parish of Caddo (“foreclosure proceeding”). See id. at ¶ 18. The foreclosure sale was set on November 13, 2013. However, after communications with representatives for Lester, the foreclosure sale was cancelled. See id. The foreclosure proceeding was dismissed by motion dated June 13, 2014. WFB eventually offered to modify Lester's loan. See id. at ¶ 27.

         Lester again got behind on the mortgage payment based on a change in [her] income and the fact that [her] youngest son just started college.” Id. at ¶ 28. Lester contacted WFB, applied for a modification, and was denied. See id. Lester gave up hope of retaining her “Dream House” and contacted WFB to explore options for exiting the Property in a way that would be beneficial to all parties involved. Id. at ¶ 30. By letter dated July 2015, WFB informed Lester of options that may be available in case of default to avoid foreclosure. See id. at ¶ 31. Lester contacted WFB and was directed to Daniel Bennigsdorf (“Bennigsdorf”). Lester inquired about a modification and the possibility of a sale before foreclosure. See id. Bennigsdorf contacted Jeremy Harris Appraisals and ordered an appraisal of Lester's property. See id.

         Jeremy Harris (“Harris”) conducted an “Exterior Only” appraisal of the Property. See id. at ¶ 45. The appraisal was conducted on August 11, 2015 and valued the property at $255, 000. See id. at ¶ 48. Lester alleges that the house appraised over 20% below the assessed value. See id. at ¶ 45. Lester maintains that the appraisal should have valued the Property “between a low of $299, 000 and a high of $350, 000.” Id. at ¶ 48. She contends Harris used inferior “comps” and “comps” that should have been adjusted upward. Id. at ¶ 45. Lester alleges that Harris grossly undervalued the property and has the reputation for doing so to homes in African-American neighborhoods. See id. at ¶¶ 45-49. Lester maintains that Harris and WFB colluded to damage and defraud her. See Id. at ¶¶ 49-50.

         Lester alleges that Bennigsdorf sent her Harris' “very low and fraudulent appraisal” that was based on the “default service value” of her property, not the “current market value” of her property. Id. at ¶ 32. Lester responded to the “fraudulent appraisal” and received a telephone call from WFB representative Jesse Swift (“Swift”). Id. at ¶ 35. Lester alleges that Swift made misleading statements, pretending WFB had no intention of foreclosing and sent her letters stating that he was there to help, all while he was attempting to influence the new appraiser retained by WFB to perform another appraisal. See id. at ¶¶ 35-36.

         In September 2015, Lester also received a letter from WFB representative Sheri Jackson (“Jackson”) regarding Lester's response to the appraisal. See id. at ¶ 41. Jackson indicated that it may be necessary to order a new appraisal, but Lester never received notice that a new appraisal was ordered. See id. Jackson sent several subsequent letters informing Lester that her inquiry was in progress. See id. at ¶ 43. Jackson ultimately notified Lester that WFB had determined that she did not meet the requirements for a modification. See id.

         Lester brought this action on September 28, 2015, against WFB and Harris. See Record Document 1. The Court ordered Lester to file an amended and restated complaint, which she did on April 7, 2016. See Record Documents 31, 33 & 34. Lester named additional defendants, Millican, Bennigsdorf, Swift, Jackson, and John Doe. See Record Document 34. Lester alleges a myriad of causes of action, including: (1) breach of contract; (2) fraud; (3) negligent and intentional misrepresentation; (4) negligent and intentional infliction of emotional distress; (5) collusion generally; (6) unfair and deceptive trade practices under the Louisiana Unfair Trade Practices Act (“LUTPA”); (7) violations of the Racketeer Influenced and Corruption Organizations Act (“RICO”); (8) violations of the Telephone Consumer Protection Act (“TCPA”); (9) violations of the Federal Trade Commission Act (“FTCA”) Section 5; (10) violations of the Truth in Lending Act (“TILA”); (11) violations of the Uniform Standards of Professional Appraisal Practice (“USPAP”); violations of the Louisiana Civil Code Articles 2315-2324; (13) collusion to deprive her of her constitutional rights based upon racial discrimination; and (14) violations of 18 U.S.C. § 1341-1343 (mail fraud and wire fraud). It is unclear to the Court which causes of action Lester asserts against the various Defendants.


         A. Rule 12(b)(6) Standard.

         Rule 8(a)(2) of the Federal Rules of Civil Procedure governs the requirements for pleadings that state a claim for relief, requiring that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” The standard for the adequacy of complaints under Rule 8(a)(2) changed from the old, more plaintiff-friendly “no set of facts” standard to a “plausibility” standard found in Bell Atlantic v. Twombly and its progeny. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007). Under this standard, “factual allegations must be enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555-556, 127 S.Ct. at 1965. If a pleading only contains “labels and conclusions” and “formulaic recitation of the elements of a cause of action, ” the pleading does not meet the standards of Rule 8(a)(2). Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (citation omitted).

         In deciding a Rule 12(b)(6) motion to dismiss, a court generally “may not go outside the pleadings.” Colle v. Brazos County, Texas, 981 F.2d 237, 243 (5th Cir. 1993).[1] Courts must also accept all allegations in a complaint as true. See Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. However, courts do not have to accept legal conclusions as facts. See Id. Courts considering a motion to dismiss under Rule 12(b)(6) are only obligated to allow those complaints that are facially plausible under the Iqbal and Twombly standard to survive such a motion. See id. at 678-679, 129 S.Ct. at 1949-1950. If the complaint does not meet this standard, it can be dismissed for failure to state a claim upon which relief can be granted. See id. Such a dismissal ends the case “at the point of minimum expenditure of time and money by the parties and the court.” Twombly, 550 U.S. at 558, 127 S.Ct. at 1966.

         B. Claims Against Harris.

         Lester's factual allegations against Harris were set forth above. The allegations as to Harris relate to two areas, conspiracy/collusion and the appraisal. The Court will first address the allegations and claims relating to conspiracy/collusion.

         The actionable element in a claim for civil conspiracy or collusion under Louisiana Civil Code Article 2324 is not the conspiracy itself, but instead the tort which the conspirators agree to perpetrate and which they actually commit in whole or in part. See Aranyosi v. Delchamps, Inc., 98-1325 (La.App. 1 Cir. 1999), 739 So.2d 911, 917 (“Louisiana Civil Code [A]rticle 2324 does not by itself impose liability for a civil conspiracy.”). To recover under such a theory, a plaintiff must establish the existence of an agreement to commit an illegal or tortious act which resulted in the plaintiff's injury. See id. Under federal law, a person injured as the result of a conspiracy to interfere with his civil rights may bring an action under Title 42, United States Code, Section 1985(3). See Suttles v. U.S. Postal Service, 927 F.Supp. 990, 1000-1001 (S.D. Tex.1996). To state a civil rights conspiracy claim, a “plaintiff must allege: (1) a conspiracy involving two or more persons; (2) for the purpose of depriving, either directly or indirectly, a person or class of persons of equal protection of laws; and (3) an act in furtherance of conspiracy; (4) which causes injury to person or property, or deprivation of any right or privilege of a citizen of the United States.” Id. Similar to Louisiana law, a “civil conspiracy is a combination of two or more persons acting in concert to commit an unlawful act, or to commit a lawful act by unlawful means, the principal element of which is an agreement between the parties to inflict a wrong against or injury upon another, and an overt act that results in damage.” Lenard v. Argento, 699 F.2d 874, 882 (7th Cir.1983).

         Here, the entirety of Lester's non-appraisal related allegations pertain to events dating back to 2008 and pre-date the August 11, 2015 appraisal. Harris is not mentioned in the Amended and Restated Complaint until the appraisal is discussed. There are no factual allegations that directly involve Harris, or even refer to Harris, other than those relating to the appraisal. Lester's only avenue to connect Harris with the allegations against the other Defendants is to allege collusion or a civil conspiracy. Yet, her factual allegations relating to a conspiracy or collusion between Harris and WFB are subjective, unexplained, conclusory, and factually unsupported. Lester has not alleged any “agreement” between Harris and the other Defendants to commit any tortious act, nor has she alleged any factual basis to demonstrate that such an agreement existed or was ever even contemplated. In fact, she admits in her Amended and Restated Complaint that WFB confirmed to her by letter that “[A]n appraiser is a third party vendor. We have no control or input into their appraisal process.” Record Document 34 at ¶ 38. As noted by Harris in his motion, he is a third party vendor, on an approved list, assigned by an appraisal service. See Record Document 36-1 at 12. Lester's factual allegations are insufficient to show that Harris ever had any contact with or spoke to WFB. Accordingly, under the pleading mandates set forth in Twombly, Lester has failed to establish the requisite elements to state a cause of action for conspiracy or collusion, whether under Louisiana or federal law, on the part of Harris. The conspiracy and collusion claims, and any and all causes of actions based upon the such claims, are DISMISSED as to Harris. These include claims for violations of RICO, TCPA, [2] TILA, LUTPA, FTCA, Mail Fraud, Wire Fraud, and conspiracy to deprive Lester of her constitutional rights based upon racial discrimination.[3]

         Lester makes specific allegations against Harris relating to the August 2015 appraisal. While Lester's stated claims or causes of action relating to the appraisal are not entirely clear, they appear to encompass: (1) breach of contract; (2) negligent misrepresentation; (3) negligent infliction of emotional distress; (4) fraud (intentional misrepresentation); (5) intentional infliction of emotional distress; and (6) USPAP. Even assuming all of Lester's well-pleaded factual allegations as true, all of these claims fail.

         Breach ...

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