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Pearson v. Wells Fargo, N.A.

United States District Court, W.D. Washington, Seattle

June 2, 2014

PEGGY PEARSON, individually and as a representative of her class, Plaintiff,
v.
WELLS FARGO, N.A., WELLS FARGO HOME MORTGAGE, INC., Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO STAY PROCEEDINGS

JAMES L. ROBART, District Judge.

I. INTRODUCTION

Before the court is Defendants Wells Fargo Bank, N.A. and Wells Fargo Home Mortgage's (collectively "Wells Fargo") motion to stay proceedings. (Mot. (Dkt # 17).) Relevant to the present action are class-settlement proceedings pending in the Southern District of Florida. See Fladell v. Wells Fargo Bank N.A., No. 0:13-cv-60721 (S.D. Fla. March 17, 2014). Wells Fargo asks the court to stay proceedings until Fladell 's final settlement approval hearing on September 18, 2014. (Mot. at 2.) The court has considered the motion, the parties' submissions filed in support of and opposition thereto, the balance of the record, and the applicable law. Considering itself fully advised, the court GRANTS Defendants' motion.

II. BACKGROUND

A. Factual Background

This case concerns Wells Fargo's alleged force-placed flood insurance practices. "A person who borrows money to finance the purchase of residential property may be required by the lender to obtain acceptable flood insurance on the real property securing the loan." Cannon v. Wells Fargo Bank N.A., 917 F.Supp.2d 1025, 1029 (N.D. Cal. 2013). In such cases, "[w]hen a borrower does not maintain the insurance... the lender steps in to purchase the insurance for the borrower." Id. This is called force-placed insurance or lender-placed insurance. Id.

On May 6, 2005, Ms. Peggy Pearson refinanced a loan with Washington Mutual Bank, F.A. (Compl. (Dkt. # 1) ¶ 23.) Ms. Pearson secured the loan with a mortgage on her home located in La Conner, Washington. ( Id. ) Allegedly, Washington Mutual did not require Ms. Pearson to carry flood insurance. ( Id. ¶ 24.) Ms. Pearson's mortgage was transferred to Wells Fargo in 2007. ( Id. ¶ 25.) Ms. Pearson claims that despite the fact that she was not required to carry flood insurance, Wells Fargo sent letters informing her that it required borrowers to carry flood insurance and that Wells Fargo had secured a flood insurance policy for her in the amount of $193, 200.00. ( Id. ¶¶ 26-29.) Allegedly, the flood insurance "had a $1, 739 annual premium, which Wells Fargo took from Ms. Pearson's escrow account." ( Id. ¶ 29.) Subsequently, Ms. Pearson bought a different policy from Hartford Insurance Company which covered the full replacement cost of her home. ( Id. ¶ 30.) The annual premium on the Hartford policy was $1, 158, roughly twothirds the amount of the Wells Fargo premium. ( Id. ) Ms. Pearson claims that she notified Wells Fargo that she had taken out the Hartford policy. ( Id. ¶ 31.) She claims that Wells Fargo indicated that the Hartford policy was adequate and that Wells Fargo had cancelled the policy it force-placed. ( Id. ) Wells Fargo, however, did not reimburse her for the premiums she paid under the force-placed policy. ( Id. )

B. Procedural Background

Ms. Pearson filed the present putative class action on behalf of herself and the proposed class of:

[a]ll persons who have or had a loan or line of credit with Defendants secured by their residential property in Washington and were required by Defendants to purchase or maintain flood insurance on their property within six (6) years prior to this action's filing date through the date of class certification in this action.

( Id. ¶ 40.) Ms. Pearson's claims stem from the general theory that not only was Wells Fargo's requirement that she carry excessively expensive flood insurance "fraudulent" and "deceptive, " but that Wells Fargo acted as a broker for its affiliated flood-insurance companies, unjustly receiving "kick-back" commissions for the flood insurance Wells Fargo force-placed. ( Id. ¶¶ 27, 33-34.) She asserts causes of action for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, breach of fiduciary duty, and violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., and the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq. ( See generally id. )

On May 1, 2014, Wells Fargo filed a motion to stay proceedings in this case until after the final class action settlement approval hearing in a similar action, Fladell v. Wells Fargo Bank, N.A. (Mot. at 2.) The Fladell hearing is scheduled for September 18, 2014. ( Id. ) The Fladell action is similar to the present case. Plaintiffs filed a class action in the Southern District of Florida against Wells Fargo and several other insurance defendants. ( See Mot. Ex. C at 2-3.) Like Ms. Pearson, the Fladell plaintiffs brought claims stemming from the general theory that Wells Fargo and its affiliated insurance companies forced homeowners to pay excessive premiums for force-placed flood insurance and that Wells Fargo unjustly profited from kick-backs. ( Id. at 3.) The Fladell plaintiffs brought claims for, among others, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, violations of TILA, tortious interference with a business relationship, and breach of fiduciary duty. ( See id. at 32-43.)

Before Fladell could go to trial, however, Chief Judge Moreno preliminarily approved a class-wide settlement. ( See Mot. Ex. A.) The proposed settlement class includes:

All borrowers in the United States who within the Class Period... were charged by the Wells Fargo Defendants under a hazard, flood, flood gap or wind-only LPI Policy for residential property, and who, within the Class Period, either (i) paid to the Wells Fargo Defendants the Net Premium for that LPI Policy or (ii) did not ...

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