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Greenstein v. Wells Fargo Bank, N.A.

United States District Court, D. Nevada

March 28, 2017

STEVEN J. GREENSTEIN, an individual, Plaintiff,



         Plaintiff Steven Greenstein contends that defendant Wells Fargo Bank, N.A. entered into an oral contract with him during several phone conversations. Greenstein says he called Wells Fargo to discuss modifying his existing home loan and that Wells Fargo agreed to an oral contract to do so. Greenstein sues Wells Fargo for breach of that contract, violation of the covenant of good faith and fair dealing, and fraud. Wells Fargo moves for summary judgment on each of these claims, and I grant Wells Fargo's motion.

         The undisputed evidence makes clear that there was no offer and acceptance of an agreement to modify Greenstein's loan. And even if there were, Nevada's statute of frauds would void the contract because it was not in writing. Without a contract, Greenstein's claims for breach of contract and breach of the implied covenant fail. As to his fraud claim, Greenstein offers no evidence from which a reasonable jury could find that Wells Fargo made a false statement to Greenstein, so this claim must also fail.

         I. BACKGROUND

         Greenstein signed a deed of trust and promissory note for his home loan in 2005, with a principal amount of one million dollars.[1] Wells Fargo was assigned this deed and note the following year.[2] By 2011, Greenstein had made no dent in the million-dollar principal, [3] so he called Wells Fargo to see if he qualified for a loan modification.[4]

         In early 2011, Greenstein (or his father on his behalf)[5] called Wells Fargo several times to discuss modifying or refinancing his loan. The conversations went as one might expect: Greenstein asked what options might available and Wells Fargo offered several. One problem standing in Greenstein's way was that he owed significant principal on his existing loan. Wells Fargo's customer representatives brought this up during these conversations, noting that Greenstein would probably not qualify for certain programs unless he first paid down this principal.[6]

         In these conversations, Greenstein asked Wells Fargo representatives to agree to modify his loan if he paid down his principal, but they would never commit. For example, during one call Greenstein's father asked: “does that mean that you would modify it, in other words, if this mortgage were to be reduced?”[7] The representative responded noncommittally: “Then we could potentially review him for that program.”[8]

         In his opposition, Greenstein focuses on a call he made to Wells Fargo on February 3, 2011. Greenstein asked Wells Fargo whether he would qualify for a modification if he paid down the principal on his loan. The representative replied that if he paid down his principal then “[Wells Fargo] would reassess the financial information” and that Greenstein could then “look into running his financial information based on . . . the new balance and new financial information.”[9] The representative left no doubt that she “can't do a hypothetical if [Greenstein would] get approved for them or not, until the actual changes are made.”[10] On this same call, the representative repeatedly told Greenstein that there were numerous potential modifications he might qualify for (over 20 in total), [11] and that there was no way to know for sure whether he would be approved at that point: “you are not eligible for [a modification] at this time. There's nothing else I can do with that situation. . . . I can't [give] you a hypothetical if [you] pay [the principal down].”[12]

         After these calls, Greenstein did in fact pay down his principal. Over a number of payments, Greenstein paid off over $250, 000 of his loan.[13] Wells Fargo responded by reducing his monthly payments on his existing loan.[14]

         After Greenstein paid down his principal, he submitted to Wells Fargo an application to refinance his mortgage.[15] Wells Fargo's underwriter first requested additional documents from Greenstein.[16] But ultimately, the underwriter denied Greenstein's application for several reasons, including that Greenstein never provided the requested information, his income was not high enough, and he had too many outstanding debts.[17] When Greenstein found out that he was turned down, he stopped making his mortgage payments.[18]

         II. ANALYSIS

         A. Summary Judgment

         Summary judgment is appropriate when the pleadings, discovery responses, and other offered evidence show “there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.”[19] When considering summary judgment, I view all facts and draw all inferences in the light most favorable to the non-moving party.[20]

         If the moving party demonstrates the absence of any genuine issue of material fact, the burden shifts to the non-moving party to “set forth specific facts showing that there is a genuine issue for trial.”[21] The non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts.”[22] He “must produce specific evidence, through affidavits or admissible discovery material, to show” a sufficient evidentiary basis on which a reasonable fact finder could find in his favor.[23]

         B. There are no triable facts as to Greenstein's breach of contract or implied covenant claims.

         Greenstein's breach of contract and breach of the implied covenant claims both require that Greenstein prove a contract exists between him and Wells Fargo.[24] But the undisputed evidence shows that there is no such contract.

         First, Greenstein offers no evidence from which a reasonable jury could find that there was an offer and an acceptance of all the material terms in the loan agreement he alleges.[25]Greenstein does not allege what the material terms of the agreement are, much less provide evidence showing that Wells Fargo agreed to them.[26] Wells Fargo's representatives repeatedly told Greenstein that they could not say whether he would be approved for any sort of modification or refinance until he submitted his application. These representatives suggested that Greenstein might be approved at some point after he applied. But at best Greenstein has shown that Wells Fargo “agree[d] [it might] agree” later, which, “without more, [is] not a binding contract.”[27]

         Greenstein makes much out of Wells Fargo's statements that he should reduce his principal to qualify for a modification or refinance.[28] But that Wells Fargo told Greenstein that he could not qualify unless he paid down his principal is different from telling him that he would qualify if he paid it down (which they never did).[29]

         Second, even if Wells Fargo had entered into an oral agreement to modify Greenstein's loan, Nevada's statute of frauds would void it. Nevada's statute of frauds requires that any agreement related to an interest in land-such as a loan modification-be in writing, otherwise, the contract is void.[30] Other courts have addressed this precise question before, holding that oral agreements to modify loans are void: “‘Modifications to deeds of trust or promissory notes are . . . subject to the statute of frauds.' . . . Thus, the alleged oral ...

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