Court Opinion

ID: 2765430
Source: CourtListenerOpinion
Date Created: 2014-12-30 20:00:51.754975+00
Date Added: 2024-06-11T11:27:24.276998
License: Public Domain

UNPUBLISHED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Vacated and remanded by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.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