SUPREME COURT OF MISSOURI 

en banc 

SHELBY E. WATSON, ) 

 ) 

 Appellant, ) 

 ) 

v. ) No. SC93769 

 ) 

WELLS FARGO HOME ) 

MORTGAGE, INC., ET AL., ) 

 ) 

 Respondents. ) 

APPEAL FROM THE CIRCUIT COURT OF THE CITY OF ST. LOUIS

The Honorable Bryan L. Hettenbach, Judge 

Opinion issued August 19, 2014 

Shelby Watson appealed from the trial court’s judgment in favor of Wells Fargo 

on her Missouri Merchandising Practices Act (MMPA), section 407.0201

 claim, in which 

she maintained Wells Fargo engaged in bad faith negotiations of a loan modification and 

wrongfully foreclosed on a deed of trust. The trial court held that since Wells Fargo’s 

actions were not done before or at the time of the extension of credit in the original loan, 

and Wells Fargo was not an original party to that transaction, its actions were not “in 

connection with” the sale of the original loan. 

                                                           

1

 All references are to RSMo Supp. 2013 unless otherwise noted. 
 This case, like Conway v. CitiMortgage Inc., --- S.W.3d --- (Mo. banc 2014) (No. 

SC93951), decided today, raises the issue of when the actions of a loan servicer who was 

not a party to the initial transaction are “in connection with” the initial sale of the loan. 

In Conway, it was determined that a plaintiff may state a claim under the MMPA against 

a loan servicer who was not a party to the initial transaction for the alleged wrongful 

foreclosure on a deed of trust. 

Here, Watson alleged that Wells Fargo violated the MMPA in two ways: (1) 

wrongfully foreclosing on the deed of trust; and (2) engaging in bad faith negotiations of 

a loan modification, even though there was no obligation to renegotiate under the terms 

of the original loan. To the extent Watson’s allegations relate to the wrongful 

foreclosure, summary judgment is not appropriate pursuant to Conway. However, 

because Wells Fargo was not enforcing the terms of the original loan when it negotiated 

the loan modification, its actions did not violate the MMPA as they were not “in 

connection with” the sale of the original loan. The trial court’s judgment is affirmed in 

part and reversed in part, and the case is remanded. 

Factual Background 

To finance the purchase of a new home in 2006, Shelby Watson obtained a loan 

from Mortgage Resources in the Midwest that was secured by a deed of trust on the 

property. The deed of trust stated that Mortgage Resources was not under any obligation 

to renegotiate the terms of the loan. Wells Fargo began servicing the loan soon 

thereafter. 

When Watson became unable to make the monthly payments, she requested a loan 
modification from Wells Fargo. According to Watson, her request was approved, but she 

did not learn of the approval until after the deadline to accept the new terms. Wells Fargo 

then invited her to apply for a second modification. Watson contends that she accepted 

the second modification and that Wells Fargo ratified the modification. According to 

Wells Fargo, the two parties engaged in discussions related to the loan modification but 

never reached an agreement. Wells Fargo foreclosed on the property and sold it to 

Fannie Mae. 

Watson then filed a single-count petition alleging that Wells Fargo violated the 

MMPA. Wells Fargo filed a motion for summary judgment, arguing that Watson could 

not produce evidence that Wells Fargo’s actions were done “in connection with” the sale 

of the loan. Wells Fargo argued that its actions did not relate to any claims or 

representations made before or at the time Watson first obtained the loan and that it was 

not a party to the transaction when Watson first obtained the loan. The trial court entered 

judgment for Wells Fargo, and Watson appeals. This Court granted transfer pursuant to 

Mo. Const. art. V, sec. 10. 

Standard of Review 

 An appellate court’s review of a motion for summary judgment is essentially de 

novo. ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 

376 (Mo. banc 1993); Rule 74.04. Summary judgment is appropriate when a moving 

party shows there are no genuine issues of material facts and the party is entitled to 

judgment as a matter of law. ITT Commercial Fin., 854 S.W.2d at 376. Since the review 

is de novo, a trial court’s order may be affirmed on a different basis than that used at trial. 

3 
Id. at 387-88. 

Analysis 

Watson alleges that Wells Fargo violated the MMPA by: (1) negotiating the loan 

modification in bad faith; (2) using an unequal bargaining power to obtain Watson’s 

signature on the modification agreement; (3) falsely stating she had rescinded the 

modification agreement after accepting it to justify proceeding with the foreclosure sale; 

(4) foreclosing on the property despite promising to postpone foreclosure proceedings 

during the modification discussions; and (5) failing to provide notice of the foreclosure 

sale in violation of section 443.325, RSMo 2000. These allegations can be divided into 

two categories: those relating to the loan modification negotiations and those relating to 

the alleged wrongful foreclosure. Allegations (1) through (3) fall into the loan 

modification category, while allegations (4) and (5) relate to the alleged wrongful 

foreclosure. At issue in this case is whether these actions were done “in connection with” 

the original loan transaction.2

 

The MMPA, as first adopted by the legislature in 1967, protects consumers by 

expanding the common law definition of fraud “to preserve fundamental honesty, fair 

play and right dealings in public transactions.” State ex rel. Danforth v. Independence 

Dodge, Inc., 494 S.W.2d 362, 368 (Mo. App. 1973); see Huch v. Charter Commc’ns, 

                                                           

2

 Watson also argues that the loan modification negotiations constitute a separate sale under the 

MMPA and that Wells Fargo actions were “in connection with” the loan modification 

negotiations. However, Watson did not raise this argument below. Because litigants may not 

raise an argument for the first time on appeal, this point will not be considered. See State v. 

Carter, 415 S.W.3d 685, 689 (Mo. banc 2013). After remand, Watson may seek leave to file an 

amended petition that includes these claims. This Court offers no opinion as to whether these 

claims are actionable under the MMPA. 

4 
Inc., 290 S.W.3d 721, 725-26 (Mo. banc 2009). For this purpose, section 407.020.1 

makes the “act, use or employment by any person” of any unfair or deceptive practice 

done “in connection with the sale or advertisement of any merchandise” unlawful 

(emphasis added). The use of an unlawful practice is a violation of the MMPA “whether 

committed before, during or after the sale,” so long as it was made “in connection with” 

the sale. See section 407.020.1. Section 407.025.1, RSMo 2000, permits private 

individuals to bring an action under the MMPA,3

 and courts may award a prevailing 

party punitive damages and attorney fees. 

                                                           

While the MMPA states that a violation can happen at any time before, during or 

after a sale, it does not set out when an unlawful act is committed “in connection with” 

the sale. In Conway v. CitiMortgage, decided today, this Court examined “in connection 

with” in the loan collection context. In Conway, the plaintiffs alleged that the defendants 

wrongfully foreclosed on the deed of trust that the plaintiffs executed when they 

purchased their property. --- S.W.3d at --- (Mo. banc 2014) (No. SC93951). Conway

held that when the operative transaction is the procurement of a loan, the “sale” is not 

complete when the lender extends the credit, but continues throughout the time the 

borrower is making payments on the loan. Id. at --- (slip op. at 7). The enforcement of 

the loan’s terms is “in connection with” the sale of the loan because the sale continues for 

the life of the loan. Id. at --- (slip op. at 7). In the context of an alleged wrongful 

foreclosure, the plaintiff was able to state a claim under the MMPA against the 

3

 Section 407.100, RSMo 2000, allows the attorney general to pursue a cause of action under the 

MMPA as well. 

5 
foreclosing entity, regardless of whether that entity was a party when the loan was first 

procured, because “a party’s rights to collect a loan is part of that sale and, therefore, ‘in 

connection with’ the loan.” Id. at --- (slip op. at 7). Following this analysis, summary 

judgment is not appropriate with respect to Watson’s wrongful foreclosure allegations. 

The loan modification negotiations, however, were not “in connection with” the 

sale of this loan because that was not a service the lender agreed to sell or the borrower 

agreed to buy when the parties agreed to the loan. For the purposes of the MMPA, a loan 

is a bundle of services. Even though the sale of the loan continues until those services are 

completed, the extent of those services – the rights and obligations of the parties with 

respect to the loan – is fixed at the outset when the parties agree to the terms of the loan. 

The deed of trust executed in the original transaction specifically stated that there was no 

obligation to engage in renegotiations. In engaging in loan modification negotiations, 

Wells Fargo was not enforcing the terms of the loan but rather contemplating creating a 

new agreement. Its actions were not “in connection with” the sale of the original loan. 

Watson further argues that an obligation to act in good faith arises at the time of 

the transaction. Watson contends that since a seller’s breach of this duty will often not 

occur until long after the terms of a sale are finalized, the loan modification negotiations 

were “in connection with” the original transaction. For support, she relies on Ward v. 

West County Motor Co., Inc., 403 S.W.3d 82 (Mo. banc 2013). In Ward, the defendant 

filed a motion to dismiss the plaintiffs’ MMPA claims, which alleged in relevant part that 

the defendant acted in bad faith in telling the plaintiffs that deposits they paid were 

refundable when they were, in fact, nonrefundable. Id. at 83-84. Relying on 15 CSR § 

6 
7 

                                                           

60-8.040, which states a failure to act in good faith is an unfair practice under the 

MMPA, this Court determined that an allegation of a lack of good faith was a ground for 

relief under the MMPA. Id. at 86. 

Watson’s reliance on Ward is misplaced. While a lack of good faith may give rise 

to a MMPA claim, Ward is inapposite in this case because Watson does not argue that 

Wells Fargo was enforcing the terms of the initial loan in bad faith. Rather, she argues 

that Wells Fargo engaged in loan modification negotiations in bad faith. As noted above, 

the loan modification negotiations were not related to the enforcement of the original 

loan terms, so a lack of good faith in the negotiations cannot be “in connection with” the 

sale of the original loan. 

Conclusion 

For the foregoing reasons, the trial court’s judgment is affirmed in part and 

reversed in part, and the case is remanded.4

 

_________________________ 

Mary R. Russell, Chief Justice 

Breckenridge, Fischer, and 

Wilson, JJ., concur; Draper, J., 

concurs in part and dissents in 

part in separate opinion filed; 

Stith and Teitelman, JJ., 

concur in opinion of Draper, J. 

4

 Prior to the submission of this case on appeal, Watson filed a motion for her attorney fees on 

appeal pursuant to section 407.025.1, RSMo 2000. On remand, the trial court should determine 

the appropriate amount of attorney fees for counsel’s appellate work. Berry v. Volkswagen Grp. 

of Am., Inc., 397 S.W.3d 425, 435 (Mo. banc 2013). 
SUPREME COURT OF MISSOURI 

en banc

SHELBY E. WATSON, ) 

 ) 

 Appellant, ) 

 ) 

v. ) No. SC93769 

 ) 

WELLS FARGO HOME ) 

MORTGAGE, INC., ET AL., ) 

 ) 

 Respondents. ) 

OPINION CONCURRING IN PART AND DISSENTING IN PART 

 I concur with the principal opinion’s holding that summary judgment was not 

appropriate with respect to Watson’s wrongful foreclosure allegations. I respectfully 

dissent however, from the principal opinion’s holding concerning Watson’s loan 

modification allegations. Under these facts, and given Wells Fargo’s position as the 

original loan servicer for the initial mortgage loan, clearly the loan modification was “in 

connection with” the original loan. The principal opinion holds that because Wells Fargo 

was not enforcing the original loan terms when it negotiated Watson’s loan modification, 

its actions were not “in connection with” the sale of the original mortgage loan. I believe 

the principal opinion has construed the phrase “in connection with the sale” 

incongruously to this Court’s holding in Conway v. CitiMortgage Inc., -- S.W.3d -- (No. 
SC93951) (Mo. banc 2014), decided today, and this holding amounts to a distinction 

without a difference. Such a narrow reading permits an original loan servicer, Wells 

Fargo, to escape liability for its bad faith negotiations that had a relationship to the 

refinancing of the original loan and the execution of the foreclosure that cost Watson her 

home. 

The purpose of the MMPA is the protection of consumers. Huch v. Charter 

Commc’ns., Inc., 290 S.W.3d 721, 724 (Mo. banc 2009).The MMPA was enacted to 

“supplement the definitions of common law fraud in an attempt to preserve fundamental 

honesty, fair play and right dealings in public transactions.” Chochorowski v. Home 

Depot U.S.A., 404 S.W.3d 220, 226 (Mo. banc 2013). “The statute ... paint[s] in broad 

strokes to prevent evasion thereof due to overly meticulous definitions.” Schuchmann v. 

Air Servs. Heating & Air Conditioning, Inc., 199 S.W.3d 228, 233 (Mo. App. S.D. 2006). 

Section 407.020.1, RSMo 2000, provides that “any deception, fraud, false 

pretense, false promise, misrepresentation, unfair practice or the concealment, 

suppression, or omission of any material fact in connection with the sale... of any 

merchandise ... is declared to be an unlawful practice.” (Emphasis added). Moreover, 

“[a]ny act, use or employment declared unlawful by this subsection violates this 

subsection whether committed before, during or after the sale, advertisement or 

solicitation.” Id. (Emphasis added). 

 In Conway, the principal opinion finds that the phrase “in connection with” the 

sale means there must be a relationship between the sale of merchandise and the alleged 

unlawful action. Conway, -- S.W.3d -- (slip op. at 6). Specifically, the plaintiffs had to 

2 
allege a relationship between the foreclosure actions and the original loan to prevail 

under the MMPA. Id. at --- (slip op. at 6-7).This Court held that, “[f]or the purposes of 

the MMPA, a loan is an agreed upon bundle of services being ‘sold’ by the lender to the 

borrower, and the ‘sale’ of the loan lasts until the last service is performed or the loan is 

repaid.” Id. at --- (slip op. at 2) (Emphasis added). “As long as the plaintiff alleges that 

the misconduct occurred in connection with the services that comprise the ‘sale’ of a 

loan, the actor can be liable under the MMPA.” Id. 

 The principal opinion found Conway did not apply in Watson’s case because the 

bad faith negotiations Wells Fargo engaged in were not pursuant to the terms of the loan 

because the deed of trust specifically stated there was no obligation to engage in 

renegotiations of the financing terms. The principal opinion found Wells Fargo was not 

enforcing the original terms of the loan, but rather was contemplating a new agreement. 

Therefore, the principal opinion reasons Wells Fargo’s actions were not “in connection 

with” the original sale of the mortgage loan. 

While the terms of the original mortgage loan did not contain an obligation to 

renegotiate the financing terms, Wells Fargo chose to do so as part of its “bundle of 

services,” going so far as to execute a binding loan modification. Even if one were to 

accept the premise that the parties were contemplating a new agreement, Wells Fargo still 

had an obligation under the MMPA to avoid engaging in deception, fraud, false pretense, 

false promise, or misrepresentation with respect to those negotiations. There is no way to 

work around the fact that the new agreement would have been “in connection with” the 

original loan as was the case in Conway. Conway further explained that the “sale” 

3 
4 

continues throughout the time the borrower is making payments on the loan and lasts 

until the last service is performed or the loan is repaid. Here, Watson still was receiving 

the “bundle of services” that were “in connection with” the original loan because she had 

not successfully refinanced the terms of her loan during the negotiations. Moreover, 

Wells Fargo had not performed “the last service,” nor had Watson repaid the loan during 

the loan modification negotiations. Therefore, I believe the “sale” continued throughout 

the loan modification process, and, as such, Watson demonstrated the loan modification 

process was “in connection with the sale” for purposes of demonstrating a violation of the 

MMPA. 

Accordingly, I believe the circuit court erred in entering summary judgment in 

Wells Fargo’s favor on Watson’s loan modification allegations. I would reverse the 

circuit court’s judgment and remand the case for further proceedings on all of the 

allegations raised in Watson’s petition. 

 

______________________________ 

 GEORGE W. DRAPER III, JUDGE