UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ANDREW J. MAXWELL, not individually, )

but as Trustee for the estate of Eduardo )

Garcia and Julia Escamilla, now known as )

Julia Garcia; EDUARDO GARCIA; )

JULIA GARCIA; and their minor children, )

individually, )

)

Plaintiffs, ) No. 20 C 2402

)

v. ) Judge Rebecca R. Pallmeyer

)

WELLS FARGO BANK, N.A., )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

Plaintiffs Eduardo and Julia Garcia and their two children, B. and M., filed this lawsuit last 

year, together with Andrew J. Maxwell, the trustee of the Garcias’ bankruptcy estate, to challenge 

Defendant Wells Fargo Bank’s failure to refinance the Garcias’ home mortgage in 2010. In 2002, 

the Garcias took out a mortgage loan with Defendant Wells Fargo to purchase a home in 

LaGrange Park, Illinois. Four years later, not long before the 2008 housing crisis, the Garcias 

refinanced their mortgage at a subprime adjustable rate. In February 2008, their monthly 

mortgage payment skyrocketed, and by September 2008, they could no longer afford the monthly 

payments. In January 2009, Wells Fargo filed an action to foreclose on the Garcias’ property. At 

that point, the Garcias began making requests that Wells Fargo grant them a loan modification 

under the Family Home Affordable Modification Program (hereinafter “HAMP”). Although the 

Garcias met the threshold criteria to receive a loan modification from Wells Fargo under HAMP, 

a software error mistakenly concluded that the Garcias were not eligible. Wells Fargo rejected 

their requests. Eventually, Wells Fargo foreclosed on the mortgage, the house sold in a judicial 

sale, and the deficiency judgment on the foreclosure sale forced the Garcias into bankruptcy. 

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In 2019, the Garcias received a letter from Wells Fargo notifying them that Wells Fargo 

had discovered the software error that resulted in the rejection of their loan modification request. 

The Garcias declined the $24,500 that Wells Fargo offered in apology and instead filed this lawsuit 

[1], alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act

(“ICFA”) (Count I) and gross negligence (Count II). Now, Wells Fargo asks this court to dismiss 

both counts [14] for failure to state a claim upon which relief can be granted. For the reasons 

stated below, the court grants Wells Fargo’s motion as it relates to Plaintiffs’ negligence claim but 

denies the motion as it relates to Plaintiffs’ ICFA claim. The court also rules that only Maxwell, 

as trustee of the Garcias’ estate, has standing to continue to pursue either of these claims.

BACKGROUND

The facts as alleged in the complaint are as follows: Plaintiffs Eduardo and Julia Garcia 

purchased the property at 407 Beach Avenue, LaGrange Park, IL 60526 on December 12, 2002 

for $203,000. (Compl. ¶ 62.) They financed the purchase with a mortgage from Defendant Wells 

Fargo. (Id. ¶ 12.) Immediately thereafter, the Garcias moved into this property (hereinafter “the 

Garcia House”) along with their children, B. and M. Garcia. (Id. ¶ 62.) Both children were under 

the age of ten at the time (id.), and one had a need for special education. (Id. ¶ 63.) Eduardo 

and Julia specifically chose to live in LaGrange Park because its school district had a good special 

education program (id. ¶ 64), and the Garcias considered themselves lucky to have found their 

home at this price, as it was the only one in the area that they could afford. (Id. ¶ 66.) When the 

family bought the Garcia House, it was “in desperate need of extensive repairs and updating.” 

(Id.) In the nine years that the Garcias owned and lived in the house, they completely rehabilitated 

it themselves, investing over $40,000 and extensive time in doing so. (Id. ¶ 67.)

On January 26, 2006, the Garcias refinanced their mortgage at a subprime adjustable 

rate. (Id. ¶ 68.) In February 2008, the monthly payment was adjusted upward; the significant 

increase in the amount due prompted the Garcias to attempt to refinance their mortgage again. 

(Id. ¶¶ 70–71.) Unfortunately, due to the housing market crash associated with the Great 

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Recession, the value of their home had plummeted, and they were unable to refinance a second 

time. (Id. ¶ 71.) At the time, Mrs. Garcia was still working, but Mr. Garcia, who had been selfemployed, was no longer working. (Id. ¶¶ 73–74.) By September 2008, the family was unable to 

make their full monthly payments. (Id. ¶ 74.) At some point before November 2008, the Garcias 

began seeking a loan modification from Wells Fargo; the Garcias believed they would be able to 

pay a reasonable modified mortgage payment. (Id. ¶¶ 75, 80.) According to the complaint, the 

Garcias “submitted application after application, document after document, seeking a forbearance 

or a modification” that would allow them to stay in the Garcia House. (Id.) On November 20, 

2008, the Garcias received the first of several letters from Wells Fargo denying their request. (Id.

¶ 80; Denial Letters, Ex. A to Compl. [1-1] (hereinafter “Denial Letters”), at 2.) That letter also 

stated, “You have failed to adhere to the agreed upon terms of the forbearance plan. Borrower 

did not pay the scheduled repayment plan payment.” (Denial Letters at 2.) The complaint 

provides no other context surrounding this “scheduled repayment plan payment” that the Garcias 

failed to pay, though the court presumes that it refers to the monthly payments that the Garcias 

failed to make in September 2008. (Compl. ¶ 74.) On January 8, 2009, Wells Fargo filed an 

action to foreclose on the Garcias’ property. (Id. ¶ 76.) 

Over the next two years, the Garcias continued their efforts to obtain a loan modification, 

working with a housing counselor and repeatedly submitting applications and necessary 

documentation. (Id. ¶ 77.) During that time, Mr. Garcia remained unable to find work. (Id. ¶ 78.) 

To compensate, Mrs. Garcia began working as much overtime as possible, leaving Mr. Garcia to 

attend the court dates and meet housing counselors without her. (Id. ¶¶ 78–79.) Although Mrs. 

Garcia is bilingual, Mr. Garcia speaks predominantly Spanish and had to bring one of his children

to act as an interpreter. (Id. ¶ 79.) Wells Fargo denied at least four separate loan modification 

requests from the Garcias, sending denial letters on November 20, 2008; November 12, 2010; 

December 1, 2010; and February 7, 2011. (Id. ¶ 80; Denial Letters at 2–7.) In the February 7, 

2011 letter, Wells Fargo noted that the Garcias’ monthly income was $2,759.64 while their 

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monthly expenses were $4,565.92. (Denial Letters at 7.) On February 18, 2011—eleven days 

after sending the final denial letter—Wells Fargo purchased the Garcia House in the foreclosure 

proceedings for $144,500. (Compl. ¶ 81.) Wells Fargo’s final judgment against the Garcias was 

for $296,182.64, leaving the Garcias with a deficiency of $151,682.64 after the judicial sale. (Id.

¶ 85.)

Throughout the foreclosure process, the Garcias worried about ensuring the family could 

stay in LaGrange Park so that their child could continue receiving quality special education 

services from the LaGrange Park school district. (Id. ¶ 88.) When they applied for rental units, 

however, the Garcias were repeatedly rejected due to their poor credit stemming from the 

foreclosure. (Id. ¶ 89.) On March 29, 2011, the judicial sale was approved, and the court entered 

an eviction order against the Garcias. (Id. ¶ 83.) The day before Wells Fargo forced them to 

move out of the house, the Garcias “hastily signed” a lease for an apartment in Brookfield, Illinois 

in order to avoid becoming homeless. (Id. ¶ 91.) The apartment was “very small” and “in poor 

condition.” (Id.) The Garcias believed the apartment was in the LaGrange school district when, 

in fact, it was one block outside of that district; after the Garcias “begged and pleaded,” the school 

district agreed to permit their child to continue the child’s education within the district. (Id. ¶¶ 91–

92.) In order to live in this apartment, however, the Garcias had to part with their two dogs, as 

the apartment did not allow pets. (Id. ¶ 93.)

On May 26, 2011, the Garcias—facing a $151,682.64 deficiency—filed for Chapter 7 

Bankruptcy. (Id. ¶¶ 85–86.) They continued to search for a rental property but struggled due to 

their poor credit. (Id. ¶¶ 89–90, 94.) Some people in the real estate industry in LaGrange Park 

even told them they were “looking in the wrong area,” leading them to feel “severe and substantial 

humiliation and embarrassment.” (Id. ¶ 90.) Eventually, the Garcias moved to Cicero, Illinois, the 

only place they could find an apartment that did not require a credit check. (Id. ¶ 94.) 

On or about July 26, 2019, Wells Fargo sent a letter to the Garcias (hereinafter “July 2019 

letter”) with the subject line: “We made a mistake when we reviewed you for payment assistance.” 

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(Id. ¶ 99; July 2019 Apology Letter, Ex. B to Compl. [1-2] (hereinafter “First Apology Letter”), at 1.) 

The letter stated as follows:

We have some difficult news to share. When you were considered for a loan 

modification, you weren’t approved, and now we realize that you should have 

been. We based our decision on a faulty calculation, and we’re sorry. If it had 

been correct, you would have been approved for a trial modification.

We want to make things right.

We realize that our decision impacted you at a time you were facing a hardship. 

We’ve carefully considered what we can do for you. You’ll find a payment enclosed 

to help make up for your financial loss. You may cash this check without waiving 

or releasing any rights you may have, and you retain the right to pursue all other 

applicable legal remedies. We’re also reaching out to the consumer reporting 

agencies to ask them to remove any negative reporting.

(First Apology Letter at 1.) Along with this letter, Wells Fargo sent the Garcias a check for 

$14,500. (Compl. ¶ 102.) The letter also offered to pay for the costs of mediation, should the 

Garcias choose to seek to mediate disputes with Wells Fargo, and notified the Garcias that 

lawyers had recently filed a class action lawsuit on behalf of borrowers subject to the loan 

modification error.1

 (First Apology Letter at 1.)

The “faulty calculation” in the Wells Fargo letter related to a determination of whether, 

when the Garcias had applied for loan modifications in 2010 and 2011,2 they met the threshold 

requirements for a mortgage modification under the Family Home Affordable Modification 

Program (hereinafter “HAMP”). (Compl. ¶¶ 23–27.) Introduced pursuant to the Emergency 

Economic Stabilization Act of 2008, HAMP required mortgage servicers—such as Wells Fargo—

1 The class action suit in question, Hernandez v. Wells Fargo Bank, N.A., settled on 

October 12, 2020. No. C 18-07354 WHA, 2020 WL 6020593, at *7 (N.D. Cal. Oct. 12, 2020). 

Neither party has commented on whether the Garcias qualify as class members in that case, nor, 

if so, whether the Garcias have opted out or plan to opt out of the class in question.

2 The complaint also lists a rejection letter from November 20, 2008, but, according 

to Wells Fargo’s quarterly statements filed with the SEC, the errors in question affected loan 

modification requests between April 13, 2010 and October 20, 2015. (Compl. ¶¶ 95–98.) Thus, 

if the quarterly statements are accurate, only the November 12, 2010; December 1, 2010; and 

February 7, 2011 denials were affected by the software error. (Id. ¶ 80; see generally Denial 

Letters.)

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to offer loan modifications to borrowers who met certain threshold requirements. (Id. ¶ 24.) 

Borrowers who met those requirements could lower their mortgage payments to a manageable 

level—typically 31 percent of the borrower’s monthly income. (Id.) In order to participate in HAMP 

as a mortgage servicer, Wells Fargo executed a Servicer Participation Agreement (hereinafter 

“SPA”) with the Treasury Department. (April 2009 Servicer Participation Agreement, Ex. A to Pl.’s 

Opp’n [17-1] (hereinafter April 2009 SPA); HAMP Directive, Ex. B to Pl.’s Opp’n [17-2] (hereinafter 

“HAMP Directive”); Amended and Restated Commitment to Purchase Financial Instrument and 

Servicer Participation Agreement (2010), https://www.treasury.gov/initiatives/financial-stability/

TARP-Programs/housing/mha/Documents_Contracts_Agreements/wellsfargobankna_

Redacted.pdf (last visited Mar. 29, 2021) [hereinafter “March 2010 SPA”].) Wells Fargo executed 

one SPA on April 13, 2009 (April 2009 SPA at 12), and an updated SPA on March 16, 2010. 

(March 2010 SPA at 14.) In return for participating in HAMP, Wells Fargo became eligible to 

receive incentive payments based on the number of modified loans it provided, as well as how 

successful those modified loans were at reducing monthly mortgage payments and preventing 

defaults.3

 (HAMP Directive at 23.)

Wells Fargo admitted in the July 2019 letter that when the Garcias applied for loan 

modifications in 2010 and 2011, they met the HAMP threshold requirements for a mortgage 

modification. (Compl. ¶ 26; First Apology Letter at 1.) Yet Wells Fargo failed to offer the Garcias 

a loan modification based on what the July 2019 letter described as a “faulty calculation” that 

erroneously stated that the Garcias did not meet those requirements. (Compl. ¶ 27; First Apology

3 Plaintiffs assert that the government promised to pay Wells Fargo up to $6.5 billion 

in exchange for Wells Fargo’s willingness to participate in HAMP. (Pl.’s Opp’n [17] at 4.) As 

explained in the March 2010 SPA, “[t]he value of the Agreement is limited to $6,406,790,000,” 

labeled as the “Program Participation Cap” (March 2010 SPA at 4)—a number that appears to 

include compensation payments for Wells Fargo, as well as money for investors and borrowers 

that Wells Fargo is required to either remit to investors or apply to borrowers’ mortgage loan 

obligations. (April 2009 SPA at 3 ¶¶ 4.B., 4.D.; HAMP Directive at 23 (“The amount of funds 

available to pay servicer, borrower and investor compensation in connection with each servicer’s 

modifications will be capped pursuant to each servicer’s Servicer Participation Agreement 

(Program Participation Cap).”).)

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Letter at 1.) Wells Fargo discovered this error as early as August 3, 2018 when it disclosed in a 

quarterly report to the Securities and Exchange Commission (“SEC”) that a “calculation 

error . . . affected certain accounts that were in the foreclosure process between April 13, 2010, 

and October 20, 2015, when the error was corrected . . . . ” (Compl. ¶¶ 95–96.) The report to the 

SEC stated that, based on this error, approximately 625 customers were incorrectly denied a loan, 

and “[i]n approximately 400 of these instances . . . a foreclosure was completed.” (Id.) As set 

forth in the next quarterly report, a subsequent expanded review of this and related errors led 

Wells Fargo to increase those numbers to 870 and 545, respectively. (Id. ¶¶ 97–98.)

As the court reads the July 2019 letter, acceptance of the $14,500 payment would not 

have precluded the Garcias from pursuing other claims against Wells Fargo. The Garcias 

themselves evidently did not see things this way. Believing that the $14,500 check enclosed in 

the July 2019 letter was insufficient to “make things right,” and unable to trust Wells Fargo, the

Garcias chose not to cash the check and instead sought legal representation. (Id. ¶¶ 104–07.) 

Wells Fargo representatives began calling in the following weeks and months to ask when the 

Garcias planned to cash the check. (Id. ¶ 105.) On October 31, 2019, the Garcias informed the 

Wells Fargo representative who had called them that they had retained counsel and that any 

further communication should be with their attorney. (Id. ¶ 108). On November 18, 2019, Wells 

Fargo sent the Garcias a second letter (hereinafter “November 2019 letter”) that included a 

second check—this time for $10,000. (Id. ¶ 109.) The letter stated, “[W]e’ve further considered 

how our decision may have affected you. We have decided to provide additional compensation, 

which is enclosed with this letter. We take this matter seriously and are sorry that this happened.” 

(November 18, 2019 Apology Letter, Ex. C to Compl. [1-3] (hereinafter “Second Apology Letter”), 

at 1.) This letter again informed the Garcias about the pending class action lawsuit related to the 

error that caused the Garcias’ loan denial and reminded the Garcias that cashing the enclosed 

check would not amount to waiving or releasing any rights. (Id.) On November 25, 2019, Wells 

Fargo sent the Garcias a third letter, reminding them that they had still not cashed the original 

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$14,500 check. (November 25, 2019 Apology Letter, Ex. D to Compl. [1-4] (hereinafter “Third 

Apology Letter”), at 1.)

On March 30, 2020, the Garcias filed this lawsuit against Wells Fargo [1], alleging a 

violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (hereinafter 

“ICFA”), as well as gross negligence. (Compl. ¶¶ 121–39.) In supporting these claims, the 

Garcias allege that Wells Fargo’s issues run far deeper than this simple “faulty calculation.” (Id.

¶ 29.) The complaint alleges that the government provides mortgage servicers a free software 

tool for use in determining whether family homeowners meet threshold requirements. (Id. ¶ 32.) 

Rather than using that free software, Plaintiffs alleges, Wells Fargo chose to develop its own 

automated decision-making tool. (Id. ¶¶ 31–32.) Plaintiffs allege that, between 2010 and 2018, 

Wells Fargo failed both to verify that its software was correctly calculating customers’ eligibility for 

a mortgage modification and to properly audit the software for compliance with government 

requirements. (Id. ¶ 31.) This led Wells Fargo to fail to detect multiple systematic errors that 

would persist uncorrected for years and ultimately to deny a loan modification to the Garcias. (Id.

¶¶ 31, 36.)

In 2010, the Office of Comptroller of the Currency (hereinafter “OCC”) found numerous 

deficiencies in Wells Fargo’s mortgage modification and foreclosure practices. (Id. ¶ 37.) Wells 

Fargo pledged to correct these deficiencies in two 2011 consent orders in which it agreed, among 

other things, to engage in ongoing testing for compliance with HAMP and to ensure the Bank’s 

mortgage modification practice was regularly reviewed. (Id. ¶¶ 39–40.) The responsible 

individuals at Wells Fargo, however, failed to fulfill these obligations over the course of several 

years so that by 2015—four years after the 2011 consent orders—the OCC found Wells Fargo 

was still failing to either maintain testing for compliance with HAMP or to ensure that deficiencies 

in the mortgage modification practice could be identified and promptly remedied. (Id. ¶ 43.) As 

a result of these shortcomings, Wells Fargo continued to fail to catch errors, leading the mortgage 

servicer to “wrongly deny mortgage modifications to 184 customers between March 2013 and 

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October 2014” and to wrongly deny mortgage modifications to 625 more customers based on an 

error discovered in October 2015. (Id. ¶¶ 46–47.) In the three years after that, related errors 

would affect 870 more customers. (Id. ¶ 51.)

In this lawsuit, the Garcias argue that these overarching behaviors lend support to their 

gross negligence and ICFA claims. Now, Wells Fargo has filed a motion to dismiss both counts 

[14] for failure to state a claim.4

 

DISCUSSION

The relevant question on a 12(b)(6) motion for failure to state a claim is whether the 

complaint contains sufficient allegations to “state a claim to relief that is plausible on its face.” 

Firestone Fin. Corp. v. Meyer, 796 F.3d 822, 827 (7th Cir. 2015) (quoting Ashcroft v. Iqbal, 556 

U.S. 662, 678 (2009)). The court accepts as true all well-pleaded factual allegations and draws 

all reasonable inferences in favor of the plaintiff. See Hutchison v. Fitzgerald Equip. Co., Inc., 

910 F.3d 1016, 1025 (7th Cir. 2018). But the court need not similarly accept “legal conclusions 

or threadbare recitals of the elements of a cause of action, supported by mere conclusory 

statements.” Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009) (internal quotations omitted). In 

reaching its decision, the court can also consider “documents attached to the complaint, 

documents that are critical to the complaint and referred to in it, and information that is subject to 

proper judicial notice.” Henderson v. Marker, No. 13 CV 2621, 2014 WL 886833, at *1 (N.D. Ill. 

Mar. 5, 2014) (quoting Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019–20 (7th Cir. 

2013)). Wells Fargo asserts that Plaintiffs have failed to adequately plead either their negligence 

claim or their ICFA claim. The court will examine each argument in turn.

4 Plaintiffs assert that “Wells Fargo’s arguments completely ignore the claims of the 

Garcia children,” and therefore, Wells Fargo concedes the viability of those claims. (Pl.’s Opp’n 

at 1.) The court finds no merit in this argument. The complaint did not explain how the children’s 

claims were, in any way, distinct from Mr. and Mrs. Garcia’s claims, and Plaintiffs did not highlight 

any reason that Wells Fargo’s arguments would affect the Garcia parents’ claims any differently 

than the Garcia children’s claims.

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A. Negligence

To state a claim for negligence in Illinois, a plaintiff “must establish the existence of a duty 

of care owed by the defendant.” Calles v. Scripto-Tokai Corp., 224 Ill. 2d 247, 270, 864 N.E.2d 

249, 263 (2007). The mere existence of a relationship between a borrower and lender does not, 

in itself, create such a duty. LaSalle Bank Nat’l Ass’n v. Paramont Props., 588 F. Supp. 2d 840, 

852–53 (N.D. Ill. 2008) (“Illinois does not, and would not, recognize a general duty of care owed 

by lenders to borrowers”) (collecting cases); cf. Miller v. Am. Nat’l Bank & Tr., 4 F.3d 518, 520 

(7th Cir. 1993) (“Under the law of Illinois . . . a bank generally owes no fiduciary duty to its 

depositors . . . The relationship consists simply of an arms-length transaction between debtor and 

creditor.” (internal citations omitted)). Nor do Plaintiffs argue, or identify any caselaw suggesting,

that a lender develops such a duty by entering loan modification negotiations with a borrower.5

 

Instead, Plaintiff argues that Wells Fargo voluntarily entered into an SPA with the Treasury 

Department, requiring it to consider consumers for loan modification under the HAMP guidelines, 

and therefore, “Wells Fargo’s conduct is properly analyzed under the negligence standard for a 

voluntary undertaking.” (Pl.’s Opp’n at 5.)

In Illinois, “one who undertakes, gratuitously or for consideration, to render services to 

another is subject to liability for . . . harm caused to the other by one's failure to exercise due care 

in the performance of the undertaking.” Rhodes v. Ill. Cent. Gulf R.R., 172 Ill. 2d 213, 239, 665 

N.E.2d 1260, 1273 (1996). In such a situation, the duty of care which arises is “limited to the 

extent of the undertaking.” Id. “[W]hether a voluntary undertaking has been assumed is 

necessarily a fact-specific inquiry.” LM ex rel. KM v. United States, 344 F.3d 695, 700 (7th Cir. 

5 The court notes that cases cited by Wells Fargo do not address this issue in the 

negligence context. Kinsella v. Cap. One, No. 17 C 05236, 2018 WL 5884520, at *5 (N.D. Ill.

Nov. 9, 2018) (in the fraud context); Bank of Am., N.A. v. 108 N. State Retail LLC, 401 Ill. App. 3d 

158, 165–75, 928 N.E.2d 42, 50–58 (1st Dist. 2010) (in the context of succeeding on the merits 

of the underlying foreclosure); FirstMerit Bank v. Quanstrom-Rose, 12 C 10051, 2013 WL 

6577028, at *4 (N.D. Ill. Dec. 13, 2013) (unclean hands defense); N. Tr. Co. v. VIII S. Mich., 276 

Ill. App. 3d 355, 368, 657 N.E.2d 1095, 1104–05 (1st Dist. 1995) (covenant of good faith and fair 

dealing).

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2003). Here, Plaintiffs argue that Wells Fargo voluntarily entered into the SPA with the Treasury 

Department, creating a duty of care owed by Wells Fargo to the Garcias and other consumers 

who would rely on Wells Fargo to modify their loans according to the HAMP guidelines. The court 

is not persuaded.

To begin, Plaintiffs have identified no case in which a court held that entering into a 

contract with the federal government constitutes a voluntary undertaking to protect third-party 

beneficiaries of that contract. Indeed, Plaintiffs have cited only three cases that speak to voluntary 

undertaking law in Illinois at all, and in two of those cases, the relevant court did not find a duty 

arising out of a voluntary undertaking. Rhodes, 172 Ill. 2d at 240, 665 N.E.2d at 1273 (rejecting 

an argument that “a party voluntarily undertakes a legal duty to rescue an injured stranger by 

simply calling the police”); LM ex rel. KM, 344 F.3d at 702 (noting that, although the court did not 

reach the question in this case, the plaintiff was unlikely to have been able to establish any 

element necessary to show a voluntary undertaking). In the third case, Rowe v. State Bank of 

Lombard, 125 Ill. 2d 203, 217, 531 N.E.2d 1358,1365 (1988), the court held that a voluntary 

undertaking did create a duty of care. But that case involved a commercial landlord who 

“assumed a duty to take reasonable precautions to prevent unauthorized entries by individuals

possessing [the] keys [to personal offices]” and has little relevance here. Id. at 221–22, 531 

N.E.2d at 1367. The caselaw cited by Plaintiffs does not appear to support a conclusion that by 

entering the SPA with the Treasury Department, Wells Fargo assumed a voluntary undertaking 

to protect the rights of the Garcias and all other consumers in their position.

A number of other courts have concluded that violations of the HAMP guidelines do not 

create a duty of care that could support a negligence claim on the part of borrowers. See Fed. 

Nat’l Mortg. Ass’n v. Carr, No. 3:12–cv–1295, 2013 WL 5755083, at *4 (M.D. Tenn. Oct. 23, 2013)

(“As these cases demonstrate, Tennessee law does not impose any ‘special duty’ on financial 

institutions acting as mortgagees, even when they review HAMP modification requests and fail to 

adhere to the HAMP guidelines.”) (collecting cases); see also Brown v. U.S. Bank Nat’l Ass’n, No. 

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3:19-cv-1-TCB, 2019 WL 5388000, at *2 (N.D. Ga. Aug. 19, 2019) (citing Moragon v. Ocwen Loan 

Servicing, LLC, No. 6:17-cv-2028-Orl-40KRS, 2018 WL 3761036, at *7 (M.D. Fla. June 22, 2018))

(“The law is clear that HAMP cannot serve as the basis for a negligence claim.”).6

With this in mind, and without authority for the argument that Wells Fargo voluntarily 

undertook to protect the Garcias’ rights simply by executing the SPA with the Treasury 

Department, the court declines to find that HAMP—or Wells Fargo’s decision to enter the SPA—

created a duty here. For that reason, the court dismisses Plaintiffs’ negligence claim without 

prejudice.

7

B. ICFA violations

Next, Wells Fargo asks the court to dismiss Plaintiffs’ claim under the ICFA. The ICFA “is 

a regulatory and remedial statute intended to protect consumers, borrowers, and business 

persons against fraud, unfair methods of competition, and other unfair and deceptive business 

6 In Wigod v. Wells Fargo Bank, N.A., the Seventh Circuit explained that, among the 

eighty or so federal cases it had examined in which plaintiffs alleged HAMP-related claims, courts 

had almost uniformly rejected two arguments: (1) that HAMP created a private right of action, and 

(2) that plaintiffs might recover as third-party beneficiaries of a lender’s contract to enter an SPA. 

673 F.3d 547, 559 n.4 (7th Cir. 2012). With this in mind, one might conclude that Plaintiffs’ state 

law claims here are attempts to evade these federal law barriers, and to dismiss Plaintiffs’ claims 

on that ground. But the Seventh Circuit in Wigod explicitly rejected a similar argument from 

defendant that plaintiff’s state law claims “[we]re ‘HAMP claims in disguise’ and an ‘impermissible 

end-run around the lack of a private action in . . . HAMP.’” Id. at 581. The Seventh Circuit allowed 

plaintiff’s state law claims to proceed, explaining in part, “There is no general rule that where a 

state common law theory provides for liability for conduct that is also violative of federal law, a 

suit under the state common law is prohibited so long as the federal law does not provide for a 

private right of action.” Id. at 582 (internal quotations omitted).

7 Wells Fargo also argued here that the economic loss doctrine bars Plaintiff’s 

negligence claim. “The economic loss doctrine, also known as the Moorman doctrine in Illinois, 

bars recovery in tort for purely economic losses arising out of a failure to perform contractual 

obligations.” Gray Ins. Co. v. Zosky, No. 13 CV 3593, 2014 WL 3881546, at *5 (N.D. Ill. Aug. 6, 

2014) (citing Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 81–82, 435 N.E.2d 443, 448–49 

(1982)). See also Wigod, 673 F.3d at 567 (economic loss doctrine barred recovery for negligent 

servicing of plaintiff’s mortgage loan). It is not clear whether the economic loss rule would apply 

here given that Plaintiffs alleged non-economic damages along with associated physical ailments, 

such as fibromyalgia, migraines, and stomach and gastro-intestinal problems brought on by the 

stress and anxiety caused by these incidents. (Compl. ¶ 115.) The court need not decide the 

issue today but will do so if it is raised in response to an amended complaint alleging negligence.

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practices.” Siegel v. Shell Oil, 612 F.3d 932, 934 (7th Cir. 2010) (quoting Robinson v. Toyota 

Motor Credit Corp., 201 Ill. 2d 403, 416–17, 775 N.E.2d 951, 960 (2002)). To state a claim under 

the ICFA, a plaintiff must allege “(1) a deceptive or unfair act or practice by the defendant; (2) the 

defendant's intent that the plaintiff rely on the deceptive or unfair practice; and (3) the unfair or 

deceptive practice occurred during a course of conduct involving trade or commerce.” Id. In 

addition, “a plaintiff must demonstrate that the defendant's conduct is the proximate cause of the 

injury.” Siegel, 612 F.3d at 935 (citing Oliveira v. Amoco Oil Co., 201 Ill. 2d 134, 149, 776 N.E.2d 

151, 160 (2002)). Plaintiffs in this case allege that Wells Fargo’s actions were unfair. (Compl. 

¶ 125.); see Robinson, 201 Ill. 2d at 417, 775 N.E.2d at 961 (“Recovery may be had for unfair as 

well as deceptive conduct.”). Wells Fargo argues that the court should dismiss Plaintiffs’ claims 

because Plaintiffs have failed to identify an unfair act or practice and because Plaintiffs have failed 

to allege that the identified act or practice caused Plaintiffs’ injuries. The court rejects both 

arguments.

1. Unfair practice

In determining whether a given act or course of conduct is unfair, Illinois courts look to 

three factors: “(1) whether the practice offends public policy; (2) whether it is immoral, unethical, 

oppressive, or unscrupulous; [and] (3) whether it causes substantial injury to consumers.” 

Robinson, 201 Ill. 2d at 417–18, 775 N.E.2d at 960–61. “All three criteria do not need to be 

satisfied to support a finding of unfairness. A practice may be unfair because of the degree to 

which it meets one of the criteria or because to a lesser extent it meets all three.” Saccameno v. 

Ocwen Loan Servicing, LLC, 372 F. Supp. 3d 609, 630 (N.D. Ill. 2019) (quoting Rickher v. Home 

Depot, Inc., 535 F.3d 661, 665 (7th Cir. 2008)). On balance, the complaint here contains sufficient 

allegations of unfair practices under these criteria.

First, “[a] practice offends public policy under ICFA where it violates statutory or 

administrative rules establishing a certain standard of conduct.” Saccameno, 372 F. Supp. 3d at 

630; see also Newman v. Metro. Life Ins. Co., 885 F.3d 992, 1002 (7th Cir. 2018) (holding conduct 

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was unfair based on a violation of a state statute and a state administrative rule). In fact, “a 

plaintiff may predicate an ICFA unfairness claim on violations of other statutes or 

regulations . . . that themselves do not allow for private enforcement.” Lowry v. Wells Fargo Bank, 

N.A., No. 15 C 4433, 2016 WL 4593815, at *6 (N.D. Ill. Sept. 2, 2016) (quoting Boyd v. U.S. Bank, 

N.A., 787 F. Supp. 2d 747, 753 (N.D. Ill. 2011)). The Garcias have alleged that Wells Fargo’s 

“deficient auditing and compliance procedures . . . repeatedly violated HAMP and other legal 

regulatory requirements . . . . ” (Compl. ¶¶ 33, 37–44.) Courts in this district have repeatedly held 

that “a plaintiff may predicate an ICFA unfairness claim on violations of . . . HAMP . . . . ” Boyd, 

787 F. Supp. 2d at 752; accord Lowry, 2016 WL 4593815, at *7 (“Failure to honestly and 

effectually implement HAMP guidelines constitutes an unfair business practice under the ICFA.”). 

This factor thus favors a finding of unfairness.8

Second, Plaintiffs may also argue that Wells Fargo’s conduct was “immoral, unethical, 

oppressive, or unscrupulous.” Under the ICFA, a practice meets that standard “if it imposes a 

lack of meaningful choice or an unreasonable burden on the consumer.” Saccameno, 372 F. 

Supp. 3d at 631 (internal quotations omitted). In support of this factor, Plaintiffs cite Saccameno,

8 In support of their allegations of unfairness, Plaintiffs also note that Wells Fargo’s 

behavior violated the two consent decrees that it signed in 2011. (Compl. ¶¶ 39–45.) Courts in 

this district have found violations of consent decrees to be acts that offend public policy. 

Saccameno, 372 F. Supp. 3d at 630 (citing Lowry, 2016 WL 4593815, at *9) (“A practice offends 

public policy under ICFA where it violates . . . standards of conduct imposed by consent decrees 

and settlement agreements.”). Although Plaintiffs have not alleged precisely when the first of 

these two consent decrees was signed (Compl. ¶ 39), it appears likely, based on the OCC 

website, that it was signed in April 2011. Enforcement Actions Search Tool “Wells Fargo,” Office 

of the Comptroller of the Currency, https://apps.occ.gov/EASearch/Search/Table? Search=wells

%20fargo&CurrentPageIndex=3&Category=&Sort=StartDate&ItemsPerPage=100&AutoComplet

eSelection= (last visited Mar. 30, 2021). In this case, the final letter denying a loan modification 

request from the Garcias was dated February 7, 2011 (Denial Letters at 7), and the judicial sale 

became final on March 29, 2011. (Compl. ¶ 83.) The relevant consent decrees thus appear to 

have been entered into after the Garcias received their final rejection. It was likely, however, that 

those decrees were the product of negotiation over several weeks or months, and the court takes 

note of Plaintiffs’ allegations that Wells Fargo was in violation of those decrees as late as June 

2015. (Id. ¶ 44.) Finally, in April 2018, the OCC stated, “Since at least 2011, the Bank has failed 

to implement and maintain a compliance risk management program commensurate with the 

Bank’s size, complexity and risk profile,” which has “caused the Bank to engage in reckless unsafe 

or unsound practices and violations of law.” (Id. ¶ 53.)

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where Judge Gottschall upheld a jury verdict in favor of Plaintiffs’ ICFA claim against defendant 

mortgage servicer, Ocwen, after Ocwen mistakenly marked her mortgage loan as delinquent and 

continued to treat it as such despite plaintiff’s providing evidence to the contrary. Id. at 620–23, 

632. The Saccameno court held that “a jury could reasonably have concluded that Ocwen's 

conduct left Saccameno with a lack of meaningful choice” because “Saccameno had no choice in 

selecting Ocwen as her loan servicer and she had no ability to get rid of Ocwen after it began 

mishandling her account.” Id. at 631. This case arguably differs in that although Plaintiffs were 

seeking a loan modification from their original lender (Wells Fargo), they presumably could have 

sought refinancing from another lender as well. And this court in Rodriguez v. Chase Home Fin., 

LLC found that a plaintiff challenging a lender’s conduct surrounding plaintiff’s request to modify 

a mortgage fails to allege that defendant’s conduct deprived her of any “meaningful choice” where 

“it was the original (unchallenged) mortgage . . . that put [plaintiff in the financial bind of trying to 

lower her payments.” No. 10 C 05876CH, 2011 WL 5076346, at *4 (N.D. Ill. Oct. 25, 2011). 

Still, Wells Fargo’s behavior in this case might nevertheless be understood as oppressive 

or unscrupulous. Although Wells Fargo suggests otherwise, Plaintiffs have alleged that Wells 

Fargo’s behavior ran far deeper than a simple “faulty calculation.” Rather, in 2010, the Office of 

Comptroller of the Currency found numerous deficiencies in Wells Fargo’s mortgage modification 

and foreclosure practices (id. ¶ 37), including that Wells Fargo “failed to devote adequate 

oversight to its foreclosure processes, failed to ensure compliance with applicable laws, and failed 

to adequately audit its foreclosure procedures.” (Id. ¶ 38.) Wells Fargo also repeatedly failed to 

identify and correct these problems despite repeated pledges to do so, albeit on dates well after 

the bank had denied the Garcias’ loan requests. (Id. ¶¶ 37–61.) For these reasons, the court 

finds that this second factor also suggests Plaintiffs have adequately alleged unfairness.

Third, “[a] practice causes substantial injury to consumers if it causes significant harm to 

the plaintiff and has the potential to cause injury to a large number of consumers.” Saccameno, 

372 F. Supp. 3d at 631 (quoting Stonecrafters, Inc. v. Foxfire Printing & Packaging, Inc., 633 F. 

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Supp. 2d 610, 617 (N.D. Ill. 2009)). If Plaintiffs are able to establish a causal link between Wells 

Fargo’s actions and their injuries, there is no doubt that the harms they suffered were substantial. 

The Garcias lost their home, were forced to file for bankruptcy, had their creditworthiness 

destroyed, lost substantial equity in their home, and suffered a host of emotional damages. 

(Compl. ¶ 115.) Moreover, Wells Fargo’s August 3, 2018 and November 6, 2018 quarterly 

updates to the SEC reveal that this episode was likely not isolated. (Id. ¶¶ 95–98.) See 

Saccameno, 372 F. Supp. 3d at 631–32 (upholding jury finding of “substantial injury” for purposes 

of the ICFA where loan servicer’s conduct caused plaintiff significant emotional distress and “had 

the potential to injure a large number of other consumers”).

Plaintiffs have sufficiently alleged that Wells Fargo’s conduct was unfair under the ICFA.

2. Causation

Next, Wells Fargo argues that Plaintiffs have failed to sufficiently plead that the damages 

they sustained were causally related to the “faulty calculation” that led Wells Fargo to erroneously 

deny the Garcias a loan modification. In particular, Wells Fargo asserts that, even if Wells Fargo 

had approved the request for a loan modification, Plaintiffs fail to allege “whether and how they 

could have made the required payments.” (MTD [15] at 9.) In support of this argument, Wells 

Fargo cites the fact that Mr. Garcia remained unemployed at the time of the requested loan 

modification (id. ¶¶ 73, 78), and that (at least as stated in letters from Wells Fargo itself), by 

February 2011, the time of their final request for a loan modification from Wells Fargo, their 

monthly income was $2,759 while their monthly expenses were $4,565. (Denial Letters at 7.) As 

Wells Fargo points out in its Notice of Supplemental Authority [20], some courts have dismissed 

consumer fraud claims on this basis at the pleading stage. Duncan v. Wells Fargo Bank, N.A., 

No. 319CV00172BRMTJB, 2021 WL 22086, at *5 (D.N.J. Jan. 4, 2021) (“Because Wells Fargo's 

error solely pertained to a trial modification, not a permanent one, Plaintiff pleads no facts 

indicating she would have qualified for a permanent modification or made all of the necessary 

payments to under [sic] a permanent modification until the mortgage was paid off.”); Van Brunt v. 

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Wells Fargo Bank, N.A., No. 319CV00170BRMTJB, 2020 WL 7868153, at *5 (D.N.J. Dec. 31, 

2020) (same); see Stanford West v. Wells Fargo Bank, N.A., No. 5:19-CV-286-JMH-MAS, 2020 

WL 6706351, at *3 (E.D. Ky. Nov. 12, 2020) (“[E]ven if the Wests were granted the trial 

modification they were erroneously denied, there was no guarantee Wells Fargo would have 

subsequently given them a permanent loan modification because Wells Fargo was under no 

obligation to do so.”).9

But the court here is not prepared to make findings of fact on this issue. The complaint 

alleges that the Garcias “believed they could pay a reasonable modified mortgage payment” when 

they requested a loan modification. (Compl. ¶ 75.) Notably, Wells Fargo’s own letter to the 

Garcias acknowledged that, “When you were considered for a loan modification, you weren’t 

approved, and now we realize that you should have been.” If, at the summary judgment or trial 

stage, the Plaintiffs are unable to establish that they would have been able to keep up with monthly 

mortgage payments under any new HAMP-style refinancing that they should have been eligible 

for, then the Plaintiffs may not be able to establish their claim at that point. At this stage, however, 

the court concludes Plaintiffs have plausibly alleged that they would have pursued and done what 

was necessary to keep up with a refinanced loan had Wells Fargo offered it. 

Overall, Plaintiffs have successfully alleged that an unfair practice under the ICFA caused 

the Garcias’ bankruptcy and the damages that followed. For that reason, the court denies Wells 

Fargo’s motion to dismiss Plaintiffs’ ICFA claim. 

C. Standing

Wells Fargo argues that the Garcias themselves lack standing to press their claims here.

“In liquidation proceedings, only the trustee [of a bankrupt estate] has standing to prosecute or 

9 Wells Fargo cites the Stanford West case in support of its defense to Plaintiffs’ 

negligence claim as well. In Stanford West, the Eastern District of Kentucky acknowledged that 

“[a]s a general matter, a mortgagee has no duty to reach an agreement on a loan modification 

with a mortgagor in default,” but the court ultimately dismissed the negligence claim on grounds 

of causation rather than duty. Stanford West, 2020 WL 6706351, at *3.

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defend a claim belonging to the estate.” Lightspeed Media Corp. v. Smith, 830 F.3d 500, 505 

(7th Cir. 2016) (emphasis in original) (internal quotations omitted). This remains true so long as 

“all of the elements of the cause of action had occurred as of the time the bankruptcy case was 

commenced, so that the claim is sufficiently rooted in the debtor's prebankruptcy past.” Putzier 

v. Ace Hardware, 50 F. Supp. 3d 964, 982 (N.D. Ill. 2014) (internal quotations omitted); Kleven v. 

Walgreen Co., 373 F. App’x 608, 610 (7th Cir. 2010) (“[I]f the event giving rise to the claim 

occurred before the debtor filed, the claim belongs to the trustee, who has exclusive power to 

prosecute it.”). Here, given that the Plaintiffs argue that the “faulty calculation” and Wells Fargo’s 

failure to detect and correct it led to the Garcias’ bankruptcy, there is no question that the elements 

giving rise to the Garcias’ claims arose before the bankruptcy case was commenced. The final 

letter from Wells Fargo denying a loan modification to the Garcias was dated February 7, 2011

(Denial Letters at 7), while the Garcias filed for bankruptcy in May 2011. (Compl. ¶ 86.)

Plaintiffs do not contest the underlying law on this issue. Instead, they cite the bankruptcy 

case In re Sharif for the premise that once all of the creditors’ claims are paid, the Garcias have 

the right to receive all remaining estate funds. 446 B.R. 870, 884–85 (Bankr. N.D. Ill. 2011). 

Plaintiffs argue that the net impact of the claims against the bankrupt estate and this claim for the 

bankrupt estate is likely to yield profits for the estate. Therefore, Plaintiffs argue, they ought to 

have standing to pursue this claim in the interest of the net recovery that might be returned to 

them after creditors have all been paid. But the court in In re Sharif did not suggest that the 

potential for such recovery restores standing to the original owners of the bankrupt estate. 446 

B.R. at 884–85. Nor do Plaintiffs identify any other case that does so. Among the cases the 

parties have identified on this issue, the court has found no suggestion of the sort of exception 

that Plaintiffs suggest. The court concludes that the Garcias do not have standing to pursue these 

claims moving forward, and all further filings in this case must be filed in the name of Andrew J. 

Maxwell, the trustee of the Garcias’ estate.

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CONCLUSION

For the above-stated reasons, the court grants Defendant Wells Fargo’s motion to dismiss 

[14] in part, dismissing Plaintiffs’ negligence claim without prejudice but allowing Plaintiffs’ ICFA 

claim to proceed. Additionally, the court finds that only Maxwell, as trustee of the bankruptcy 

estate, has standing to continue pursuing these claims.

ENTER:

Dated: March 31, 2021 _________________________________________

REBECCA R. PALLMEYER

United States District Judge

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