Foreclosure Help: Supreme Court’s Judge Spinner Takes on Wells Fargo

Written by Kathleen A. Scanlon

Foreclosure Help:

Round Two: Suffolk County Supreme Court's Judge Spinner Takes on Wells Fargo

Having recently issued a decision canceling an Indymac mortgage lien in another foreclosure action, Judge Spinner turns his attention to the outrageous actions of Wells Fargo and holds the mortgage behemoth liable for trespass, resulting in $155,092.00 judgment, in Wells Fargo v. Tyson.

At the outset, the court pointed out that the Plaintiff sent a per diem attorney to the first settlement conference who had no knowledge of the case so that any potential progress was thwarted.

It is a common problem and a recurring complaint that usually Plaintiff's representative, at these settlement conferences, has no authority to negotiate, thus preventing any meaningful settlement and violating the spirit of the law. Having aroused the ire of numerous judges, you would think that these foreclosure mill law firms would figure out that they had better send counsel with authority to enter into some sort of settlement or at least have the ability to get someone on the phone who has it.

Certain facts were not disputed – that Wells Fargo had a representative enter the premises, without notice, not once but twice. The representative changed the locks despite the fact that the premises were obviously not abandoned by the defendant. Defendant had previously winterized the home, secured it, maintained the exterior of the premises and did not remove his furniture, clothing, food etc. Defendant also visited the home at least once a week and had asked a neighbor to keep an eye on the premises.Foreclosure Help - The Definitive Guide to Foreclosure Defense.  Defense Tactics in Layman's terms - includes motions, pleadings and more. Review Now.

Plaintiff relies on certain language in the mortgage itself: "Lender, and others authorized by Lender may enter on and inspect the Property. They will do so in a reasonable manner and at reasonable times. If it has a reasonable purpose, Lender may inspect the inside of the home or other improvements on the Property. Before or at the time an inspection is made, Lender will give me notice stating a reasonable purpose for such interior inspection." as well as the express provisions in another paragraph regarding abandonment: "If…I have abandoned the Property, then Lender may do and pay for whatever is reasonable and appropriate to protect Lender's interest in the Property…Lender's actions may include but are not limited to: (a) protecting and/or assessing the value of the Property; (b) securing and/or repairing the Property;…Lender can also enter the Property to make repairs, change locks…and take any other action to secure the Property."

In its analysis, the court first noted that mortgage documents and their terms are not negotiable and as such, are contracts of adhesion. Therefore, they are to be construed strictly against the drafter – the plaintiff herein. Belt Painting Corp. v. TIG Insurance Company 100 NY2d 377 (2000). "Under the circumstances presented to this Court, it is appropriate and fair that the terms of the instrument be construed in favor of Defendant."

Using a fair reading of the above language, it is apparent that the Lender's actions must be reasonable and entry can only be upon adequate notice. Further, abandonment of the property is a condition-predicate to entry and the testimony of the defendant substantiated defendant's claims that he had not abandoned the property.

Based upon the foregoing facts, Spinner declared that the Plaintiff engaged in a Trespass on at least two occasions:

Distilled to its very essence, trespass is characterized by one's intentional entry, with neither permission nor legal justification, upon the real property of another, Woodhull v. Town of Riverhead 46 AD3d 802, 849 NYS2d 79 (2nd Dept. 2007). The injury arising therefrom afflicts the owner's right of exclusive possession of the property, Steinfeld v. Morris 258 AD 228, 16 NYS2d 155 (1st Dept. 1939), Kaplan v. Incorporated Village of Lynbrook 12 AD3d 410, 784 NYS2d 586 (2nd Dept. 2004). The elements of a claim for trespass are intent coupled with the entry upon the land that is in possession of another. In order for trespass to lie, general intent is legally insufficient.

Instead, there must be a specific intent, either to enter the land or to engage in some act whereby it is substantially certain that such entry onto the land will result therefrom, Phillips v. Sun Oil Co. 307 NY 328, 121 NE2d 249 (1954). The intent need not be illegal or unlawful, MacDonald v. Parama Inc. 15 AD2d 797, 224 NYS2d 854 (2nd Dept. 1962) but even one who enters the land upon the erroneous belief that he has the right to enter thereon will be held liable in trespass, Burger v. Singh 28 AD3d 695, 816 NYS2d 478 (2nd Dept. 2006). Trespass will lie against a party if entry upon the land was perpetrated by a third party, such as an independent contractor or other party, at the direction of the party to be charged, Gracey v. Van Kamp 299 AD2d 837, 750 NYS2d 400 (4th Dept. 2002).

Turning to the issue of damages, the court expressed that a foreclosure action is an action in equity and as such, it may impose punitive damages. "In a suit in equity, the Court is empowered with jurisdiction to do that which ought to be done." Id. Spinner then turned to address the bank's egregious conduct:

Here, the Court is constrained to find that the conduct of Plaintiff in this matter was both willful and wanton, as evidenced by not one but two unauthorized entries into Defendant's dwelling, occurring in complete derogation of Defendant's right of possession. This conduct becomes even more glaring when consideration is given to the fact that Defendant affirmatively notified Plaintiff that he had secured the property and that it was not abandoned and still contained his personal property.

Even so, Plaintiff maintains that it has entered the property under a color of right, which turns out to be illusory under the circumstances. In spite of these declarations, Plaintiff willfully took it upon itself to enter the property on more than one occasion, doing so unreasonably and without notice, in direct contravention of the terms of its mortgage promulgated to Defendant by its assignor. This is even more distressing when it is considered that Plaintiff breaches its obligations to Defendant under the mortgage, running roughshod over Defendant's rights with a specious claim that it is acting to protect its rights and the property.

In short, the conduct of Plaintiff was nothing short of oppressive and would best be described as heavy handed and egregious, to say the very least. Certainly, the trespass was willful and calculated and was not accidental in any way and the Court finds that Plaintiff did not act in good faith. Under these circumstances, an award of both actual and exemplary damages is necessary and appropriate in order to properly compensate Defendant for the losses he has sustained by way of Plaintiff's shockingly wrongful conduct as well as to serve as an appropriate deterrent to any future outrageous, improper and unlawful deeds.

Unfortunately, it appears that this type of behavior is not unheard of by members of the real estate bar. One member noted that a similar situation occurred with a foreclosure defendant client of his. Although he had secured and winterized the premises, the bank's inspection service alleged the premises were wide open and entered the premises. They also changed the premises, turned the valves to "turn off the water" which instead resulted with the water being turned on. The pipes burst and flooded the home.

The court's actions in Wells Fargo v. Tyson should send a clear and unequivocal message to Lenders and their various contractors that they do not have an absolute right to enter a mortgagor's property and such behavior will not be tolerated.