Memo in Supp Motion for Preliminary Injunction WF

8/2/2019 Memo in Supp Motion for Preliminary Injunction WF

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

WILFREDO and ODALID BOSQUE,

VERA VICENTE MEEK,JENNIFERWILLIAMS, JENNIFER RYAN and

GARY VOLTAIRE, and PAUL

MONTERO, on behalf of themselves and

all others similarly situated,

Plaintiffs,

vs.

WELLS FARGO BANK, N.A. d/b/aWELLS FARGO HOME MORTGAGE

d/b/a AMERICAS SERVICING

COMPANY,

Defendant.

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C.A. NO. 10-10311-FDS

MEMORANDUM IN SUPPORT OF PLAINTIFFS' MOTION FOR

PRELIMINARY INJUNCTION TO PREVENT DEFENDANT FROM

FORECLOSING ON THEIR MORTGAGES

Case 4:10-cv-10311-FDS Document 30 Filed 09/15/10 Page 1 of 28


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TABLE OF CONTENTS

Page

I. INTRODUCTION ...................................................................................................1

II. FACTUAL BACKGROUND..................................................................................2

1. Mr. Montero's Experience With Wells Fargo...........................................2

2. Mr. Montero's Experience With Wells Fargo Is Common......................4

III. LEGAL STANDARD ..............................................................................................7

IV. ARGUMENT............................................................................................................7

1. Plaintiffs Are Likely To Succeed On The Merits......................................7

A. Plaintiffs Will Likely Succeed On Their Breach Of

Contract Claim.................................................................................8

1. The TPP Agreements Are Valid, Enforceable

Contracts...............................................................................8

a. The Language of the TPP Agreements is

Enforceable...............................................................8

b.

The TPP Agreement is Supported byConsideration ...........................................................10

2. Plaintiffs Have Suffered Damages......................................13

B. Plaintiffs Will Succeed On Their Promissory

Estoppel Claim .................................................................................13

C. Plaintiffs Are Also Likely to Succeed On Their

Chapter 93A Claim..........................................................................14

D. Plaintiffs Are Likely to Succeed on Their Claim For

Breach of the Implied Covenant of Good Faith andFair Dealing......................................................................................16

2. Absent Injunctive Relief, Plaintiffs Have No Adequate Remedy At

Law And Will Suffer Irreparable Harm ...................................................17

3. The Balance Of Harm Weighs In Plaintiffs Favor..................................18



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4. The Requested Injunction Will Serve The Public Interest ......................19

V. CONCLUSION ........................................................................................................21



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TABLE OF AUTHORITIES

Page

Cases

Air Line Pilots Ass'n, Intern. v. Guilford Transp. Industries, Inc .,

399 F.3d 89 (1st Cir. 2005) ............................................................................................................7

Aoude v. Mobil Oil Corp.,

862 F. 2d 890 (1st Cir. 1988) .......................................................................................................18

Beacon Theatres, Inc. v. Westover,359 U.S. 500 (1959) .......................................................................................................................7

Brown v. Guiliani,

158 F.R.D. 251 (E.D.N.Y. 1994) ...................................................................................................7

Buckles v. Weinberger,

387 F. Supp. 328 (E.D. Pa. 1974) ..................................................................................................7

Charlesbank Equity Fund II v. Blinds To Go, Inc.,370 F.3d 151 (1st Cir. 2004) ..........................................................................................................7

Ciardi v. Hoffmann-LaRoche, LTD,

No. 993244, 2000 WL 33162197 (Mass. Super. Ct. Sept. 29, 2000) ..........................................15

College Loan Corporation v. SLM Corporation,

396 F.3d 588 (4th Cir. 2004)........................................................................................................10

Dodd v. Commercial Union Ins. Co.,373 Mass. 72 (1977).....................................................................................................................15

Don v. Soo Hoo,

75 Mass. App. Ct. 80 (2009) ........................................................................................................13

Fall River Housing Joint Tenants Council, Inc. v. Fall River Housing Authority,

15 Mass. App. Ct. 992 (1983) ......................................................................................................10

FundQuest Inc. v. Travelers Cas. & Sur. Co.,Civil Action No. 09-11471-RGS, 2010 WL 2223301 (D. Mass. Jun. 4, 2010) ...........................15

George W. Wilcox, Inc. v. Shell Eastern Petroleum Products,

283 Mass. 383 (1933).....................................................................................................................8

In re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation,

MDL No. 1715, 2006 WL 1525661 (N.D. Ill. May 30, 2006).......................................................7

Kozinski v. Schmidt,409 F. Supp. 215 (E.D. Wis. 1976) ................................................................................................7

Lawson v. Affirmative Equities Company, L.P.,

341 F. Supp. 2d 51 (D. Mass. 2004) ............................................................................................14

Liss v. Studeny,

450 Mass. 473 (2008)...................................................................................................................16

iii



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Loranger Constr. Corp. v. E.F. Hauserman Co.,376 Mass. 757 (1978)...................................................................................................................10

Marine Contractors Co., Inc. v. Hurley,365 Mass. 280 (1974)...................................................................................................................12

Revere v. Boston/Logan Airport Assoc.,

443 F. Supp. 2d 121 (D. Mass. 2006) ............................................................................................8

Savin Corp. v. Rayne,

No. 00-CV-11728-PBS, 2001 WL 34815751 (D. Mass. Mar. 26, 2001) ......................................7

See United States v. President and Fellows of Harvard College,323 F. Supp.2d 151 (D. Mass. 2004) .............................................................................................9

Shammas v. Merchants Nat'l Bank,

No. Civ. A. 90-12217N, 1990 WL 354452 (D. Mass. Nov. 9, 1990) ..........................................17

Slaney v. Westwood Auto, Inc.,

366 Mass. 688 (1975)...................................................................................................................15

Speakman v. Allmerica Financial Life Ins.,367 F. Supp. 2d 122 (D. Mass. 2005) ..........................................................................................16

Steinke v. Sungard Fin. Sys.,

121 F.3d 763 (1st Cir. 1997) ........................................................................................................14

T.W. Nickerson, Inc. v. Fleet Nat. Bank,456 Mass. 562 (2010)...................................................................................................................16

Targus Group Intern., Inc. v. Sherman,

76 Mass. App. Ct. 421 (2010) ........................................................................................................8

Tufankjian v. Rockland Trust Co.

57 Mass. App. Ct. 173 (2003) ......................................................................................................17

United Church of Medical Center v. Medical Center Com.,

689 F.2d 693 (7th Cir. 1982) ........................................................................................................18

United States. v. Boston Scientific Corp.,167 F. Supp. 2d 424 (D. Mass. 2001) ............................................................................................8

V. & F.W. Filoon Co. v. Whittaker Corp.,12 Mass. App. Ct. 932 (1981) ......................................................................................................10

Weiner v. Pictorial Paper Package Corp.,

303 Mass. 123 (1939).....................................................................................................................8

Williams v. Geithner,Civil No. 09-1959 ADM/JJG, 2009 WL 3757380 (D. Minn. Nov. 9, 2009) ...........................9, 12

Wit v. Commercial Hotel Co.,253 Mass. 564 (1925)...................................................................................................................12

Statutes

M.G.L. c. 93A ............................................................................................................................7, 8, 14

iv



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Other Authorities

Restatement (Second) of Contracts ..............................................................................................11, 17

Samuel Williston,A Treatise on the Law of Contracts (4th ed. 2008) ..............................................11

Rules

Fed. R. Civ. P. 23 .................................................................................................................................1

Fed. R. Civ. P. 65 ...............................................................................................................................18

Regulations

940 C.M.R. 25.01 ............................................................................................................................15

940 C.M.R. 3.05 ..............................................................................................................................15

940 C.M.R. 3.16 ..............................................................................................................................15

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I. INTRODUCTION

Paul Montero seeks preliminary injunctive relief on behalf of a provisional class of

Massachusetts homeowners1 (collectively, Plaintiffs) to prevent Defendant, Wells Fargo Bank,

N.A. d/b/a Wells Fargo Home Mortgage d/b/a Americas Servicing Company, (Wells Fargo or

Defendant) from executing foreclosures until a decision on the merits has been made in this case

as to whether Wells Fargo is contractually or otherwise obligated to provide them with permanent

loan modifications.2

Mr. Monteros circumstances are not unusual. As described in Plaintiffs Expert Report,3

the Second Amended Complaint [Docket No. 26] (SAC),

4

as well as elsewhere,

5

it is well

documented that many homeowners have recently found themselves in strenuous financial straits,

and such difficulties are compounded by the failure of large mortgage servicers like Wells Fargo to

convert Trial Period Plan (TPP) Agreements into permanent Home Affordable Modifications as

promised. To avoid foreclosure, Mr. Montero applied to Wells Fargo for a HAMP loan

modification. After receiving Mr. Montero's HAMP application, Wells Fargo determined that he

1Plaintiffs simultaneously are filing a Motion for Provisional Class Certification pursuant to Fed. R. Civ. P.

23(b)(2), seeking provisional certification of a class of borrowers defined as all Massachusetts borrowers

who entered into a written Trial Period Plan (TPP) Agreement with Wells Fargo and made the paymentsidentified in Section 2 of the TPP Agreement, other than borrowers to whom Wells Fargo sent either:

(a) a Home Affordable Modification Agreement prior to the date of class certification, or

(b) a written denial of eligibility on or before the Modification Effective Date identified in Section 2 ofthe borrower's TPP Agreement.2Plaintiffs additionally seek preliminary injunctive relief requiring Wells Fargo to immediately notifymembers of the provisional class of the pendency of this action and the identity of provisional class counsel.

The injunction, if entered, will preserve the status quo for borrowers who are at risk of losing their families

source of shelter and probably their most valuable financial asset.3Expert Report of Christopher Wyatt, attached as Exhibit 1 to Declaration of Kevin Costello (filed

simultaneously with this motion) (Wyatt Report), at 3-4.4SAC, 16-21.5See e.g., Paul Kiel and Olga Pierce, Homeowner Questionnaire Shows Banks Violating Govt ProgramRules. ProPublica (2010), available athttp://www.propublica.org/article/homeowner-questionnaire-shows-

banks-violating-govt-program-rules (last visited on September 7, 2010) (although about 1.3 million

homeowners have begun trial periods, only about 30% of those homeowners have received permanentmodifications).



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was eligible for a HAMP modification based on the information and documentation he provided.

This eligibility determination included a positive outcome under the Net Present Value (NPV)

analysis. As a result of its finding of eligibility, Wells Fargo offered Mr. Montero a TPP

Agreement. Wells Fargo expressly promised to provide Mr. Montero with a Home Affordable

Modification in exchange for his compliance with the requirements of the TPP Agreement.6

Wells

Fargo further promised that the modification would be effective the first day of the month in which

the last Trial Period Payment is due. SAC, Ex. 12 at 2. Despite Mr. Monteros compliance with

the TPP Agreement, Wells Fargo did not offer him a Home Affordable Modification, nor did it

notify him that it had changed its eligibility determination prior to the end of the trial period.

Instead, Wells Fargo has now commenced the foreclosure process, and came within hours of

executing a foreclosure sale before agreeing only to postpone it. His home remains subject to a

rescheduled foreclosure sale at any time.

Massachusetts homeowners with loans serviced by Wells Fargo are faced with similar

circumstances. Wyatt Report at 16-18. These homeowners complied with their TPP Agreements,

yet are either in foreclosure, like Mr. Montero, or in an indefinite and stressful state of uncertainty.7

II. FACTUAL BACKGROUND

1. Mr. Montero's Experience With Wells Fargo

In 2009, Mr. Montero applied for a HAMP loan modification. Affidavit of Paul Montero, 6

("Montero), filed separately; SAC, 121. Mr. Monteros application included documentation of

6The TPP Agreements signed by Mr. Montero and each borrower in the provisional class provide that if the

borrower complies with the requirements of the TPP Agreement, the Lender will provide me with a Home

Affordable Modification Agreement. See e.g, SAC, Ex. 12, p. 1.7This is a particularly threatening state of affairs in Massachusetts, a non-judicial foreclosure state, becauseany Plaintiff or class member can be in Mr. Montero's situation with very little notice under Massachusetts

law. By its very nature, the Massachusetts non-judicial foreclosure process occurs between private parties

outside the sphere of the judicial system, without litigation. Therefore, borrowers do not and will not have anopportunity to raise the issues here as a defense to foreclosure in a court proceeding.



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his financial eligibility, including documents verifying his income and financial situation. Montero,

7; SAC, 121. Wells Fargo offered Mr. Montero a verified income TPP Agreement under

HAMP. Montero, 7; SAC, Ex. 12 [Docket No. 26-12] (Mr. Montero's TPP Agreement). The TPP

Agreement called for monthly mortgage payments (Principal, Interest, Taxes and Insurance) of

$1395.43 per month for three months: February, March and April 2010. Montero, 8; SAC, Ex. 12

at 2. Mr. Montero accepted the TPP Agreement by returning the executed TPP Agreement to Wells

Fargo along with supporting documentation. See Montero, 8; SAC, 123.

The first sentence of the TPP Agreement provides: If I am in compliance with this Loan

Trial Period and my representations in Section 1 continue to be true in all material respects, then the

Lender will provide me with a Loan Modification Agreement, as set forth in Section 3 [below], that

would amend and supplement (1) the Mortgage on the Property, and (2) the Note secured by the

Mortgage. Montero, 9; SAC, Ex. 12 at 1. Section 2 states that the effective date of the

modification will be the month after the last Trial Period Payment is due and provides that TIME

IS OF THE ESSENCE under this plan. SAC, Ex. 12 at 2 (emphasis in original). Section 3 of the

TPP Agreement references the means by which the principal balance and monthly payment amounts

of the permanent modification will be calculated. SAC, Ex. 12 at 3.

Mr. Montero timely made each of the payments described in the TPP Agreement due in

February, March and April 2010 in full. Montero, 12; SAC, 128. He also made a full payment

May 2010. Montero, 12. Mr. Montero was informed by a Wells Fargo representative not to make

a payment in June 2010, until he received modification paperwork with new figures. Montero,

13. Since the TPP Agreement began, Mr. Montero has timely responded to all of Wells Fargo's

information and document requests by supplying the documents and information requested.



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Montero, 16. In addition, Mr. Montero has certified that all of the information that he has

provided to Wells Fargo was truthful and accurate. SAC, Ex. 12 at 1.

Instead of offering Mr. Montero a permanent Home Affordable Modification, Wells Fargo

hired a law firm to pursue foreclosure proceedings against him. Montero, 19-21. This began a

month-long period of extreme anxiety, in which Mr. Montero made repeated inquiries to both Wells

Fargo and its law firm, and offered to make the June and July trial period payments. Montero,

22-28, 30. Mr. Monteros efforts to receive an explanation as to the status of his permanent

modification and to stop his foreclosure were largely unsuccessful up until the day before the

scheduled auction. Montero, 28-29. Mr. Montero was not notified until the eve of the

foreclosure that the foreclosure sale would not occur on August 4, 2010, and instead would be

postponed. Montero, 29.

Mr. Monteros home remains subject to a rescheduled foreclosure sale at any time. As a

result of Wells Fargo's failure to honor its TPP Agreement, Mr. Montero is at imminent risk of

losing his shelter and family home, despite Wells Fargos determination that he was eligible for a

Home Affordable Modification, and his compliance with his TPP Agreement. Foreclosure would

be devastating for Mr. Montero.

2. Mr. Montero's Experience With Wells Fargo Is Common

As described more fully in Plaintiffs' memorandum in support of their Motion for

Provisional Class Certification and the expert report of Christopher Wyatt, scores of Massachusetts

borrowers are in immediate need of the injunctive relief Mr. Montero seeks. Wyatt Report at 16-17.

Like Mr. Montero, these borrowers have mortgage loans serviced by Wells Fargo. They applied for

HAMP loan modifications and were determined eligible, a process that included a positive NPV

test, before being offered TPP Agreements. Wyatt Report at 7-8. Despite complying with their



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TPP Agreements, Wells Fargo failed to honor its promise to provide Home Affordable

Modifications to these borrowers on the Modification Effective Dates specified in each borrowers

TPP Agreement. Many of these homeowners, like Mr. Montero, are at risk of foreclosure, despite

the fact that servicers are not supposed to proceed to a foreclosure during the Trial Period or before

determining a borrowers eligibility for HAMP. Wyatt Report at 9, 17-18.

As further evidence of the common circumstances of many Massachusetts borrowers,

Counsel have filed declarations from three additional borrowers who are not named plaintiffs in this

action, but who are in circumstances similar to those of Mr. Montero. See Declarations of Franco

Zeppa (Zeppa), Mary and Bruce Gracia (Gracias), and Gina Mestone (Mestone), attached,

respectively, as Exs. 2-4 to Declaration of Kevin Costello, filed simultaneously with this motion.

These borrowers were found eligible for HAMP and entered into TPP Agreements with Wells

Fargo. Zeppa, 15 (TPP Agreement accepted in October, 2009); Gracias, 11 (TPP Agreement

accepted September 2009); Mestone, 6 (TPP Agreement accepted December 2009). Despite

complying with the terms of their TPP Agreements, none of them have received Home Affordable

Modifications or a written denial of such, on or before the Modification Effective Dates specified in

their TPP Agreements. Zeppa, 34; Gracias, 48-49; Mestone, 12, 14. They all now face

threats of foreclosure, as detailed below.

At the time Mr. Zeppa entered into his TPP Agreement, Wells Fargo determined that he was

eligible for HAMP, which included a finding that his income was appropriate. Wyatt Report at 7-8.

Mr. Zeppa responded to every document request made by Wells Fargo and has provided Wells

Fargo with income documentation and continued proof of eligibility. Zeppa, 17-20. However,

seven months after Mr. Zeppa started his trial period, Wells Fargo denied him a Home Affordable

Modification on the basis that his monthly payment ratio was less than 31%. Id. at 21. Mr. Zeppa



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received two more subsequent denial notices all with different denial reasons. Id. at 24, 26. At

the same time, Mr. Zeppa was also receiving communication from Wells Fargo indicating that his

loan modification was still being reviewed and requesting more documentation, which Mr. Zeppa

had already provided. Id. at 23, 27. Despite a pending claim, Wells Fargo caused a foreclosure

sale on Mr. Zeppas home to be scheduled for September 14, 2010. Id. at 29. Although that sale

was postponed, Mr. Zeppa recently learned that Wells Fargo intends to execute a foreclosure

against his home on October 18, 2010. Id. at 30.

Mary and Bruce Gracia were initially orally offered a trial modification on September 22,

2009. Gracias, 10. Subsequently, Wells Fargo accepted monthly trial payments from Mr. and

Mrs. Gracia before sending them a written TPP Agreement in January 2010. Gracia, 21. Mr. and

Mrs. Gracia made all timely payments under the written HAMP TPP agreement and provided all

requested documentation. Id. at 24, 26. Nevertheless, on June 8, 2010, more than eight months

after Mr. and Mrs. Gracia began making trial payments, Wells Fargo denied them a loan

modification on the basis that Mr. and Mrs. Gracia did not provide Wells Fargo with the documents

requested, despite Wells Fargos admission that the Gracias had timely provided all the documents

requested. Id. at 32, 34. Wells Fargo scheduled then postponed an August 24, 2010 foreclosure

sale against the Gracias home.Id. at 42. The Gracias remain subject to a rescheduled foreclosure

sale at any time.Id. at 44.

Gina Mestone entered into a trial modification plan with Wells Fargo on December 15,

2009. Mestone, 6. Ms. Mestone timely made each of the payments called for in the TPP

Agreement, and complied with all of Wells Fargos document requests. Id., 7, 9. Ms. Mestone

also continued to make additional payments beyond the end of the trial period. Id., 13.

Nevertheless, Wells Fargo denied Ms. Mestone a Home Affordable Modification, and authorized



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foreclosure proceedings to begin against her home. Id., 14-15. Ms. Mestone is currently living

in a state of stressful anxiety, because the foreclosure process is well underway and a foreclosure

sale against her home could be scheduled at any time. Id., 16.

III. LEGAL STANDARD

Consideration of a preliminary injunction encompasses four factors - likelihood of success,

irreparable harm, balance of the harms and public interest - in deciding the appropriateness of

injunctive relief. Air Line Pilots Ass'n, Intern. v. Guilford Transp. Industries, Inc ., 399 F.3d 89, 95

(1st Cir. 2005). In assessing motions for a preliminary injunction, the First Circuit has adopted a

sliding scale approach..." that requires balancing of the likelihood of success on the merits and

degree of irreparable harm. SeeSavin Corp. v. Rayne, No. 00-CV-11728-PBS, 2001 WL 34815751,

at *3 (D. Mass. Mar. 26, 2001), citingEEOC v. Astra USA, Inc., 94 F.3d 738, 743 (1st Cir. 1996).

The Supreme Court has explained that, "[t]he basis of injunctive relief in the federal courts has

always been irreparable harm and inadequacy of legal remedies."Beacon Theatres, Inc. v.

Westover, 359 U.S. 500, 507 (1959);see also, Charlesbank Equity Fund II v. Blinds To Go, Inc.,

370 F.3d 151, 162 (1st Cir. 2004).8

IV. ARGUMENT

1. Plaintiffs Are Likely To Succeed On The Merits

In their complaint, Plaintiffs have set forth several meritorious claims based on Wells

Fargo's conduct, including breach of contract, violation of M.G.L. c. 93A and its applicable

8Preliminary injunctive relief can flow to a class. See e.g., Kozinski v. Schmidt, 409 F. Supp. 215 (E.D. Wis.1976) (granting preliminary injunctive relief for a class of individuals threatened with loss of heat, utilities,

and shelter);Buckles v. Weinberger, 387 F. Supp. 328 (E.D. Pa. 1974) (granting preliminary injunctive reliefto a class threatened with termination of disability benefits);Brown v. Guiliani, 158 F.R.D. 251 (E.D.N.Y.1994) (granting preliminary injunctive relief to a class to ensure timely receipt of public assistance benefits);

In re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation, MDL No. 1715, 2006 WL 1525661

(N.D. Ill. May 30, 2006) (granting interim injunctive relief to a class of borrowers requiring Defendant toprovide notice of possible Truth In Lending Act rescission rights).



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regulations, promissory estoppel and breach of the implied covenant of good faith and fair dealing.

SAC, 149-159 (breach of contract), 160-167 (good faith and fair dealing), 168-174

(promissory estoppel), 175-181 (M.G.L. c. 93A).9

A. Plaintiffs Will Likely Succeed On Their Breach Of Contract Claim

To show breach of contract under Massachusetts law, a plaintiff must demonstrate that the

parties had a contract supported by valid consideration that the defendant breached, causing damage

to the plaintiff. Revere v. Boston/Logan Airport Assoc., 443 F. Supp. 2d 121, 126 (D. Mass. 2006).

1. The TPP Agreements Are Valid, Enforceable Contracts

The TPP Agreement contains all of the elements of an enforceable contract. Massachusetts

courts consider a contract's language, the circumstances surrounding its formation, its purposes, any

technical meaning words used may have had to the parties and any documents it expressly

incorporates to determine whether it is valid and enforceable. United States. v. Boston Scientific

Corp., 167 F. Supp. 2d 424, 432 (D. Mass. 2001). A contract is enforceable even if certain terms

are left to be fixed at a later date or determined based on later events and the need for further

documents does not preclude the formation of a binding agreement. Targus Group Intern., Inc. v.

Sherman, 76 Mass. App. Ct. 421, 429 (2010).

a. The Language of the TPP Agreements is EnforceableDecades of Massachusetts court decisions confirm the conclusion that the TPP

Agreements are complete, addressing all of the parties duties and obligations, and therefore are

enforceable contracts. The courts are slow to turn a plaintiff out of court for the reason that the

promise given and relied on was so vague that it can be given no effect. Weiner v. Pictorial Paper

Package Corp., 303 Mass. 123, 131 (1939). See also George W. Wilcox, Inc. v. Shell Eastern

Petroleum Products, 283 Mass. 383, 388 (1933) (finding that for a contract to be enforceable, the

9Plaintiffs incorporate the arguments set forth in their Opposition to Defendant's Motion to Dismiss herein.



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termsneed only be set out with sufficient definiteness and clarity that a court, by interpretation

with the aid of existing and contemplated circumstances, may enforce it.).

The TPP Agreements here at issue contain unequivocal terms.10 The first sentence of the

TPP Agreement, quoted above in Section II(1), contains mandatory language if the homeowner

complies with the agreement, then Wells Fargo will provide him or her with a permanent

modification. One of the few courts to address HAMP issues so far has recognized the binding

nature of this language. See Williams v. Geithner, Civil No. 09-1959 ADM/JJG, 2009 WL

3757380, at *3 (D. Minn. Nov. 9, 2009) (Williams).11 The Williams Court, interpreting HAMP

rules,

12

recognized that servicers evaluate borrower eligibility prior to the offer of a TPP Agreement

and that compliance with an accepted TPP Agreement mandates a permanent modification: If the

loan qualifies for a modification after consideration of all the [eligibility] factors, the servicer is

obligated to provide a trial period loan modification. If the borrower remains current throughout the

trial period, the servicer must then provide a loan modification.Id. 2009 WL 3757380, at *3. It is

this obligation that is memorialized in the TPP Agreement language at issue here.

Moreover, the Home Affordable Modification Agreement promised by the TPP

Agreement is not a generic label -- the term has technical meaning mandating the terms of a

permanent modification under the programs rules. See SAC, Ex. 2 at 12-18. The Court may look

to HAMP and its Supplemental Directives as extrinsic sources providing meaning to the contractual

terms agreed to by the parties. See United States v. President and Fellows of Harvard College, 323

10A more complete description of the TTP Agreements' significant language is contained in Plaintiffs'

Opposition to Defendant's Motion to Dismiss, at 3-4.11

Although the Williams Court ultimately denied Plaintiffs' motion for preliminary injunction, it did so only

after a finding on the likelihood of success prong, decided on claims entirely different from those presenthere.12 The Williams Court cited Treasury rules that state: If the borrower complies with the terms and conditions

of the Trial Period Plan, the loan modification will become effective on the first day of the month following

the trial period as specified in the Trial Period Plan. Ex. 2 to SAC at 18.



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F. Supp.2d 151, 172 (D. Mass. 2004). This is not dependent on whether a private right of action

exists under the federal law. See College Loan Corporation v. SLM Corporation, 396 F.3d 588, 598

(4th Cir. 2004) (College Loan). In College Loan, the Fourth Circuit found that the plaintiffs'

reliance on the Higher Education Act (HEA) standards to establish their breach of contract claim

was not an impermissible effort to assert private right of action under HEA, where, among other

things, the parties voluntarily included the HEA's federal standards in their private contract. Id.

(noting that "...the Supreme Court...has recognized that the availability of a state law claim is even

more important in an area where no federal private right of action exists.").

Here, all of Plaintiffs' TPP Agreements were offered pursuant to HAMP's federal standards.

The precise terms of the promised permanent modification including the interest rate, repayment

term and principal balance are ascertainable by operation of the HAMP waterfall formula that is

designed to reduce the monthly payment to 31% of the borrowers monthly gross income. See SAC,

Ex. 2 at 8-10; Wyatt Report at 7-8. The time for performance is also specified, since the Effective

Date is defined as the first day of the month after the last Trial Period Payment is due and the TPP

Agreement provides that time is of the essence. See SAC, Ex. 12 at 2.

b. The TPP Agreement is Supported by Consideration.The requirement of consideration is satisfied if there is either a benefit to the promisor or a

detriment to the promisee. Fall River Housing Joint Tenants Council, Inc. v. Fall River Housing

Authority, 15 Mass. App. Ct. 992, 993 (1983) (citing Restatement (Second) of Contracts 73, Cmt.

b (1979)). The exchange of mutual promises provides adequate consideration for the enforcement

of a contract. Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 763 (1978). The law

is not concerned with the adequacy of the consideration, as long as it is valuable. V. & F.W.

Filoon Co. v. Whittaker Corp., 12 Mass. App. Ct. 932, 933 (1981).



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Plaintiffs and Wells Fargo exchanged mutual promises under the TPP Agreements. See,

e.g., Montero, 9. For their part, Plaintiffs promised to perform all of the obligations Wells Fargo

required, including, (1) making three timely monthly payments in an amount Wells Fargo

determined, ("[o]n or before each of the following due dates, I will pay the Lender the amount set

forth below ('Trial Period Payment')), (e.g., SAC, Ex. 12 at 3) and (2) providing the information

Wells Fargo required and certifying its accuracy.Id. at 2. In exchange, Wells Fargo promised to

provide a Home Affordable Modification Agreement.Id. at 1-2.

Plaintiffs made payments required by their TPP Agreements in an amount and manner

different from that required by their pre-existing loan documents. Borrowers payments under TPP

Agreements are less than their full monthly mortgage payments, but none of their indebtedness is

forgiven, and their liability is actually increased by the accrual of interest, fees and charges. Wyatt

Report at 5, 7. Plaintiffs' payments in specific amounts requested by Wells Fargo and differing

from their prior obligations (without any reduction in the amount of the debt) satisfies the

requirement of consideration. Such mutual promises to alter the timing and conditions of payment

of a debt constitute consideration. See Restatement (Second) of Contracts 73 ([P]erformance [of

a legal duty] is consideration if it differs from what was required by the duty in a way which reflects

more than a pretense of bargain.); Samuel Williston,A Treatise on the Law of Contracts 7:27 (4th

ed. 2008) (If a debtor does something more or different in character from that which it was legally

bound to do, it will constitute consideration for the promise.).

Plaintiffs also complied with the other terms of their TPP Agreements, by providing

extensive financial information, making binding representations concerning their personal

circumstances and, agreeing to undergo credit counseling if asked, all of which actions were

requested by Wells Fargo and none of which were pre-existing legal obligations. See e.g., SAC, Ex.



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12 at 1. These actions also are sufficient to establish consideration for Wells Fargos promises to

provide a Home Affordable Modification. [I]t is a sufficient legaldetriment to the promisee if it

promises or performs any act, regardless of how slight or inconvenient, which it is not obligated to

promise or perform so long as it does so at the request of the promisor and in exchange for the

promise. Williston,supra, 7:4 (emphasis in original). See also, Wit v. Commercial Hotel Co., 253

Mass. 564, 572 (1925) (It would be a detriment to the promisee, in a legal sense, if he, at the

request of the promisor and upon the strength of that promise, had performed any act which

occasioned him the slightest trouble or inconvenience, and which he was not obliged to perform.)

Furthermore, Wells Fargo received benefit from Plaintiffs' performance, which is

independently sufficient to establish consideration. A bargained-for benefit to the promisor, even

with no legal detriment to the promisee will render a bargain enforceable. Williston, supra, 7:5;

Marine Contractors Co., Inc. v. Hurley, 365 Mass. 280 (1974) (money paid to promisor was

sufficient consideration, even though it came from trust fund rather than from promissee, and was

thus not detrimental to promissee). Wells Fargos benefits include receipt of monthly payments

from Plaintiffs on loans that otherwise were in default (e.g., Montero, 12), receipt of detailed

information about Plaintiffs' personal and financial situation (e.g.,id. at 7), allowing Wells Fargo

to make better underwriting decisions, and Plaintiffs' promise to undergo credit counseling, if Wells

Fargo requested it. See e.g., SAC, Ex. 12 p.1. In addition, after performing the NPV test, Wells

Fargo determined that it would be more beneficial to it to modify Plaintiffs' loans rather than to

foreclose on their mortgages. The NPV is essentially an accounting calculation to determine

whether it is more profitable to modify the loan or allow the loan to go into foreclosure. Williams,

2009 WL 3747380, at *3 n.3. If Wells Fargo were not receiving a benefit from the TPP

Agreements, it would not have extended them to Plaintiffs.



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2. Plaintiffs Have Suffered Damages

The harm resulting from Wells Fargo's breach is easily recognized -- had Wells Fargo

performed under the TPP Agreements, Plaintiffs' loan documents permanently would have been

altered to reflect the terms of a Home Affordable Modification, effective the first day of the month

following the three-month trial period. SAC, Ex. 12; Wyatt Report at 9. Upon modification of their

loan documents, Plaintiffs no longer would have been in default of their mortgage obligations

(which they necessarily were during the trial period), all existing arrearages would have been

capitalized, late fees would have been forgiven and Plaintiffs would have had affordable monthly

payment amounts going forward. Instead, each month that Wells Fargo failed to perform its

obligation under the TPP Agreements, Plaintiffs accrued greater default and foreclosure related fees

and charges, were forced further into delinquency on their mortgages, were in default for a longer

periods of time, and became at a heightened risk of losing their homes to foreclosure. Wyatt Report

at 17-18; SAC at 167. In addition, Plaintiffs' credit is harmed by the extended period of default.

Wyatt Report at 18. These consequences are the natural result of Wells Fargo's breaches.

In addition, had Wells Fargo performed, Plaintiffs would not have been subjected to

foreclosure-related activity after the three-month trial period. Wyatt Report at 17-18. Thus, they

would not have incurred the foreclosure-related fees and costs that they are now required to pay to

cure their defaults. Id. They have lost opportunities to pursue other means of avoiding foreclosure.

Id. These lost opportunities are not speculative. Cf.Don v. Soo Hoo, 75 Mass. App. Ct. 80 (2009)

(affirming award of damages for lost opportunity to obtain a bankruptcy discharge).

B. Plaintiffs Will Succeed On Their Promissory Estoppel Claim

Even if the Court finds that the TPP Agreement does not constitute a binding contract,

Plaintiffs are virtually certain to prevail on their promissory estoppel theory. Promissory estoppel



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permits the enforcement of a contract where, despite the absence of consideration, a plaintiff is able

to show detrimental reliance on another's promises or representations. Lawson v. Affirmative

Equities Company, L.P., 341 F. Supp. 2d 51, 66 (D. Mass. 2004) (Stearns, J.) (citations omitted).

Courts typically invoke the doctrine of promissory estoppel when the formal requirements of

contract formation are absent and when enforcing the promise would serve the interests of justice.

Steinke v. Sungard Fin. Sys., 121 F.3d 763, 776 (1st Cir. 1997).

Absent enforcement of Wells Fargos promises, Plaintiffs will have spent time, money and

resources under TPP Agreements in vain - without ultimately receiving a Home Affordable

Modification. By making all of the payments and otherwise complying with their TPP Agreements,

Plaintiffs relied on Wells Fargo's promises to permanently modify their loans to their detriment -

they spent money that they could have reserved for other uses, such as payment to a bankruptcy

attorney to avoid foreclosure or a down payment for a rental unit if they are unable to avoid

foreclosure. Wells Fargo has also made the option of a short sale less attainable since Plaintiffs are

now further in arrears than when they began their TPP Agreements.

C. Plaintiffs are also Likely to Succeed on their Chapter 93A Claim

It is also highly likely that Plaintiffs will prevail on their claims that Wells Fargo's conduct

in the loan modification process was unfair and deceptive under M.G.L. 93A and its applicable

regulations. As an initial matter, injunctive relief is expressly available under M.G.L. c. 93A, 9:

[a]ny personwho has been injured by another persons use or employment of any method, act or

practice declared to be unlawful by section two or any rule or regulation issued thereundermay

bring an action for damages and such equitable relief, including an injunction, as the court deems

to be necessary and proper.



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"Chapter 93A is a broad remedial statute, creating new substantive rights." Ciardi v.

Hoffmann-LaRoche, LTD,No. 993244, 2000 WL 33162197, at *4 (Mass. Super. Ct. Sept. 29,

2000)(citingLinthicum v. Archambault, 379 Mass. 381, 383 (1979));Dodd v. Commercial Union

Ins. Co., 373 Mass. 72, 78 (1977); Slaney v. Westwood Auto, Inc., 366 Mass. 688, 693 (1975). As

this Court has recognized:

To be held unfair and deceptive under c. 93A, practices involving even worldly-wisebusiness people do not have to attain the antiheroic proportions of immoral,unethical, oppressive or unscrupulous conduct, but need only be within anyrecognized or established common law or statutory concept of unfairness. An act orpractice may be unfair within the statutory meaning [of Mass. Gen. Laws ch. 93A, 2 and 11] without being deceptive or fraudulent.

FundQuest Inc. v. Travelers Cas. & Sur. Co., Civil Action No. 09-11471-RGS, 2010 WL

2223301, at *5 (D. Mass. Jun. 4, 2010) (internal citations omitted).

Among other acts, the Attorney General has decreed that conduct contrary to public policy

in the field of consumer lending violates Chapter 93A. See 940 C.M.R. 3.16. Likewise, conduct

that violates the requirement of good faith and fair dealing applicable to contracts is unfair and

deceptive under 93A, as are deceptive representations and the failure to disclose relevant

information relating to loan modifications offered to borrowers. Id.; 940 C.M.R. 3.05. Under 940

C.M.R. 25.01, failure to adequately describe foreclosure-related services and how they will assist

a borrower in avoiding foreclosure is an unfair and deceptive act.

Wells Fargo has engaged in all of this misconduct among other bad acts, by failing to offer

Plaintiffs Home Affordable Modifications when they complied with their TPP Agreements. Wells

Fargo also violated 93A by stringing Plaintiffs along when they should have received a Home

Affordable Modification the month after they made their last Trial Plan Payment, by repeatedly

asking for income documentation they have already provided, by providing misleading and

incorrect information in conjunction with its denials, and by failing to respond to their inquiries.



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Most egregiously, Wells Fargo acted unfairly and deceptively when it began foreclosure

proceedings on Mr. Montero's and others' homes when they otherwise would have been able to

avoid foreclosure had they received the Home Affordable Modification to which they were entitled.

D. Plaintiffs Are Likely to Succeed on Their Claim For Breach of the Implied

Covenant of Good Faith and Fair Dealing

Every contract implies good faith and fair dealing between the parties to it. The covenant

of good faith and fair dealing requires that neither party shall do anything that will have the effect of

destroying or injuring the right of the other party to the fruits of the contract. T.W. Nickerson, Inc.

v. Fleet Nat. Bank, 456 Mass. 562, 569-570 (2010) (internal quotations and citations omitted). The

essential inquiry when determining whether a party to a contract has breached the covenant of

good faith and fair dealing is to consider whether the challenged conduct conformed to the parties

reasonable understanding of performance obligations, as reflected in the overall spirit of the

bargain. Speakman v. Allmerica Financial Life Ins., 367 F. Supp. 2d 122, 132 (D. Mass. 2005). A

claim for breach of the covenant of good faith and fair dealing does not require a showing of bad

faith. Liss v. Studeny, 450 Mass. 473, 477 & n.3 (2008) (citingNile v. Nile, 432 Mass. 390, 398-399

(2000)).

Wells Fargo, by its actions, made it impossible for Plaintiffs to secure the benefits of their

TPP Agreements. Wells Fargo undermined Plaintiffs' ability to satisfy the requirement to provide

income verification, by losing documents, repeatedly requesting documents it had already received,

giving conflicting and confusing instructions to borrowers and making mistakes in processing

documents. Wyatt Report at 15-16; e.g., SAC 121, 135 (Wells Fargo continually asked Mr.

Montero to resubmit information that he had already submitted). Wells Fargo failed to

communicate with Plaintiffs when it was time for Wells Fargo to permanently modify their loans,

leaving them in a state of limbo. Wyatt Report at 16; e.g., Montero, 13-15 (explaining Mr.



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Montero's attempts to contact Wells Fargo regarding the status of his loan modification and Wells

Fargos inaccurate and conflicting assurance to Mr. Montero). Wells Fargo also failed to

communicate with Plaintiffs concerning accurate information on the status of their loan

modifications before scheduling unlawful foreclosures, leaving them surprised and in a state of

anxiety and panic. Montero, 15-19 (explaining Wells Fargos failure to communicate with Mr.

Montero about any problems with his loan modification before scheduling a foreclosure on his

home). Much of Wells Fargo's failure stems from its wholly inadequate staffing and training.

Wyatt Report at 16.

Wells Fargos behavior very clearly breaches the covenant of good faith and fair dealing.

See, e.g.,Tufankjian v. Rockland Trust Co. 57 Mass. App. Ct. 173, 178-179 (2003) (finding that

bank which agreed to provide financing for auto-dealership violated the covenant of good faith and

fair dealing by conducting itself in a manner at odds with borrower by, inter alia, failing to

complete appraisal on time and using a more expensive appraiser.); Restatement(Second)of

Contracts 205 (examples of breach of the covenant of good faith and fair dealing include evasion

of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect

performance, abuse of a power to specify terms, and interference with or failure to cooperate in the

other party's performance.).

2. Absent Injunctive Relief, Plaintiffs Have No Adequate Remedy At Law and

Will Suffer Irreparable Harm

Irreparable injury and the lack of an adequate remedy at law are demonstrable here. As a

general rule, interference with the enjoyment or possession of land is considered 'irreparable' since

land is viewed as a unique commodity for which monetary compensation is an inadequate

substitute. Shammas v. Merchants Nat'l Bank, No. Civ. A. 90-12217N, 1990 WL 354452 at *14,

(D. Mass. Nov. 9, 1990), citingPelfresne v. Williams Bay, 865 F.2d 877, 883 (7th Cir. 1989)). See



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alsoUnited Church of Medical Center v. Medical Center Com., 689 F.2d 693, 701 (7th Cir. 1982)

(It is settled beyond the need for citationthat a given piece of property is considered to be

unique, and its loss is always an irreparable injury.). If Plaintiffs lost their homes at a foreclosure

auction to a third party bidder, there would be nothing that the Court could do later to fully

compensate them for the injury they suffered by loss of their unique properties.

3. The Balance Of Harm Weighs In Plaintiffs' Favor

The harm Plaintiffs would suffer should Wells Fargo foreclose on their homes during the

pendency of this case far outweighs any harm to Wells Fargo that may be caused by allowing

injunctive relief. Absent injunctive relief, Plaintiffs would be faced with having to pay tens of

thousands of dollars to cure delinquencies and, if they cannot, the loss of their homes.

Wells Fargo and the principals it represents as servicer, on the other hand, are adequately

protected because Plaintiffs' mortgage loans are secured to their homes. Many borrowers are also

continuing to make payments even though they have completed their TPP Agreements. Mr.

Montero is able and willing to continue making payments to Wells Fargo, although Wells Fargo has

refused to accept payments for the last several months. Montero, 24. In circumstances like these,

the Court has discretion to determine that an injunction bond under Fed. R. Civ. P. 65 is

unnecessary, because there is limited risk of monetary loss to the party enjoined.Aoude v. Mobil Oil

Corp., 862 F. 2d 890 (1st Cir. 1988).

Indeed, as indicated above,see Sec. IV(1)(A)(1)(b), absent a mandated finding that Wells

Fargo would benefit from a permanent modification, a particular homeowners could not be found

eligible for HAMP, and would thus not have been tendered a TPP Agreement in the first instance.

Wells Fargo offered Plaintiffs TPP Agreements because it determined that the present value of the

payment stream from their loans would be higher if the loans were modified according to HAMP



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rules, than if they were not. The other relief sought herein, requiring Wells Fargo to immediately

notify class members of the pendency of this action, would impose a minor ministerial task on

Wells Fargo that is far less burdensome than it would be for borrowers to unnecessarily lose their

homes.

4. The Requested Injunction Will Serve The Public Interest

The injunctive relief Mr. Montero seeks correlates with the strong public interest in avoiding

foreclosures. Countless studies, news articles and research discuss the dire consequences of

foreclosures - especially on the massive scale on which they are happening today. Wyatt Report at

3-4. In addition to individuals losing their homes and shelter, foreclosures destroy communities,

contribute to an increase in crime rates, homelessness and decrease cities' and towns' tax revenue.

These problems are exacerbated by the current economic downturn generated by decreasing

housing values.

The Obama Administration has explicitly noted the incompatibility of pursuing foreclosure

against homeowners that have complied with their obligations under a TPP Agreement. Under

Supplemental Directive 10-02 (attached as Exhibit 5 to the Declaration of Kevin Costello), the

Treasury Department explicitly ordered servicers participating in HAMP to refrain from

commencing foreclosure proceedings, and to suspend active foreclosure processes, against those

homeowners under consideration for HAMP. See Ex. 5 to Costello Decl. at 4-7. Wells Fargos

actions, documented by Plaintiffs here, are thus manifestly against the public interest.

Further, injunctive relief would serve the public purposes embodied in the Obama

Administration's recent pronouncements and initiatives regarding the importance of turning trial

plans into permanent loan modifications. In November 2009, the Chief of Treasurys



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Homeownership Preservation Office (HPO), Phyllis Caldwell, explained the necessity and

importance of the Administration's then "Mortgage Modification Conversion Drive":

We are encouraged by the pace at which trial modifications are now being made to

provide immediate savings to struggling homeowners. We now must refocus ourefforts on the conversion phase to ensure that borrowers and servicers know whattheir responsibilities are in converting trial modifications to permanent ones.13

According to David Stevens, the HUD Assistant Secretary for Housing and FHA

Commissioner, HUD's "top priority," is "[e]ncouraging borrowers to move through the process of

converting trial modifications to permanent modifications."14 Most recently, Treasury is focusing

on, "improving the homeowner experience and holding servicers accountable for their performance.

Increased transparency through more robust reporting of servicer-specific data will contribute

handily to those efforts.15 The Government Accountability Office, in its most recent review of

HAMP, recommended that Treasury finalize and issue consequences for servicer noncompliance

with HAMP requirements as soon as possible.16

These initiatives and public statements recognize the failure of servicers to comply with

HAMP. The federal government is expending vast amounts of time and money to ensure

unnecessary foreclosures like Mr. Montero's are avoided. The injunctive relief Mr. Montero seeks

on his own behalf and on behalf of the provisional class is directly in line with this current and

compelling public policy.

13MakingHomeAffordable.gov, Press Release: Obama Administration Kicks Off Mortgage Modification

Conversion Drive (November 30, 2009), available athttp://makinghomeaffordable.gov/pr_11302009.html(last visited September 13, 2010).14Id.15

MakingHomeAffordable.gov, Administration Releases April Loan Modification Report, Announces NewServicer Performance Measures, available athttp://makinghomeaffordable.gov/pr_05172010.html (lastvisited September 13, 2010).16

U.S. Government Accountability Office, Troubled Asset Relief Program:

Further Actions Needed to Fully and Equitably Implement Foreclosure Mitigation Programs, GAO-10-634,p. 47, (June 2010).



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V. CONCLUSION

For the foregoing reasons, Mr. Montero respectfully requests that this Court grant his motion

for injunctive relief.

Respectfully submitted,Paul Montero,By his attorneys,

/s/ Gary KleinGary Klein (BBO 560769)Shennan Kavanagh (BBO 655174)Kevin Costello (BBO 669100)

RODDY KLEIN & RYAN727 Atlantic AvenueBoston, MA 02111-2810Tel: (617) 357-5500Fax: (617) 357-5030

Stuart Rossman (BBO 430640)Charles Delbaum (BBO 543225)NATIONAL CONSUMER LAW CENTER7 Winthrop Square, 4th floorBoston, MA 02110Tel: (617) 542-8010Fax: (617) 542-8028

Michael Raabe (BBO 546107)NEIGHBORHOOD LEGAL SERVICES170 Common Street, Suite 300Lawrence, MA 01840Tel: (978) 686-6900Fax: (978) 685-2933

Dated: September 15, 2010



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CERTIFICATE OF SERVICE

I hereby certify that this document filed through the ECF system will be sent electronicallyto the registered participants as identified on the Notice of Electronic File (NEF) and paper copieswill be sent to those indicated as non-registered participants on September 15, 2010.

/s/ Gary Klein

Gary Klein


Documents

Memo in Supp Motion for Preliminary Injunction WF