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Kern v. Wells Fargo Bank, N.A.

United States District Court, S.D. Texas, Houston Division

June 28, 2019

Kirk L. Kern and Jacqueline Kern, Plaintiff,
Wells Fargo Bank, N.A., Defendant.



         Pending before the court is defendant Wells Fargo Bank, N.A.'s (“Wells Fargo”) motion for summary judgment. Dkt. 12. Also pending before the court are Wells Fargo's objections to the summary judgment evidence plaintiffs Kirk L. Kern and Jacqueline Kern (collectively, the “Kerns”) submitted in response to Wells Fargo's motion for summary judgment. Dkt. 21. After considering the motions, responses, replies, and applicable law, the court is of the opinion that the motion for summary judgment should be GRANTED and Wells Fargo's objections should be OVERRULED AS MOOT.

         I. Background

         The Kerns had a mortgage loan with Wells Fargo. Dkt. 12-1 (Exh. A). The Kerns allege that in October 2008, Wells Fargo employees told the Kerns to send half of their monthly payment amount in order to qualify for a loan modification. Dkt. 1-2 at 10; Dkt. 14-1 at 2. From November 2008 to March 2008, the Kerns made their monthly payments on their mortgage but only sent half the amount owed each month. Dkt. 12-5 (Exh. E). In April 2009, the parties entered into a Temporary Modification Agreement. Dkt. 12-8 (Exh. H). The Temporary Modification Agreement reduced the Kerns' monthly payment until April 2010. Dkt. 1-2 at 5; Dkt. 12-9 (Exh. I). From May 2009 through April 2010, the Kerns made payments in accordance with the Temporary Modification Agreement. Dkt. 12-5 (Exh. E).

         After the Temporary Modification Agreement period ended, the Kerns made payments in accordance with the original terms from May 2010 to April 2011. Id. Beginning in May 2011, the Kerns made no payments to their mortgage loan. Id. In July 2011, Wells Fargo sent the Kerns a letter regarding modifications to loans under the Home Affordable Modification Program (“HAMP”). Dkt. 12-11 (Exh. 11). However, the Kerns continued to not make any payments on their mortgage loan, and in August 2011 the Kerns defaulted on their mortgage. Dkt. 12-5 (Exh. E); Dkt. 12-10 (Exh. J).

         The Kerns have now sued Wells Fargo for fraud. Dkt. 1-2. The Kerns allege that Wells Fargo: (1) instructed the Kerns to default on the mortgage so that they would be eligible for HAMP eligibility; (2) falsely informed the Kerns several times that Wells Fargo did not have the required documentation for a HAMP application and had the Kerns re-submit their documentation numerous times; (3) made misrepresentations regarding approval of a “temporary modification of their mortgage with reduced ‘trial payments' pursuant to” the HAMP program; and (4) omitted the fact it was conducting inspections and charging for those inspections. Id. at 10-16.

         Wells Fargo has moved for summary judgment on the Kerns' fraud claim. Dkt. 12.

         II. Legal Standard

         A. Summary Judgment

         A court shall grant summary judgment when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for the nonmoving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548 (1986). If the moving party meets its burden, the burden shifts to the non-moving party to set forth specific facts showing a genuine issue for trial. Fed.R.Civ.P. 56(e). The court must view the evidence in the light most favorable to the non-movant and draw all justifiable inferences in favor of the non-movant. Envtl. Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir. 2008).

         II. Analysis

         To prevail on a common law fraud claim, a plaintiff must prove: (1) that a material representation was made; (2) the representation was false; (3) the representation was either known to be false or asserted without knowledge of the truth when made; (4) the representation was intended to be acted upon; (5) the representation was relied upon; and (6) the representation caused injury. Allstate Ins. Co. v. Receivable Fin. Co., 501 F.3d 398, 406 (5th Cir. 2007) (quoting In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001)). Wells Fargo challenges certain elements for each of the Kerns' fraud allegations.[1] Dkt. 12 at 11-12.

         1. The Kern's Allegation that Wells Fargo Induced the Kerns to Default

         Wells Fargo argues that the Kerns did not rely on Wells Fargo's representations. Dkt. 12 at 12. Wells Fargo argues that the summary judgment evidence proves that the Kerns defaulted on the loan because they could no longer afford it, not ...

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