Date: 11-14-2015

Case Style: Mary Ellen and David Wolf v. Wells Fargo and Carrington Mortgage Services

Case Number:

Judge: Not Available

Court: District Court, Harris County, Texas

Plaintiff's Attorney: William Craft Hughes, Houston, Brandy Wingate Voss, McAllen, for Appellees.

Defendant's Attorney:
Peter C. Smart, Houston, Thomas V. Panoff and Lucia Nale, Chicago, IL, for Appellants.

Description: Houston, TX - Plaintiffs Awarded $5 Million on Mortgage Fraud Claim

Mary Ellen and David Wolf sued Wells Fargo and Carrington Mortgage Services on fraud theories claiming that the Defendants fabricated a transfer document so that they could foreclose in the Wolfs' property which was security for a $400,000 loan from Carrington.

In June 2006, the Wolfs refinanced their mortgage via a home equity loan of $400,000 from New Century. To memorialize the loan, the Wolfs executed a promissory note and a deed of trust in favor of New Century.

On August 1, 2006, three entities executed a Pooling and Servicing Agreement, creating the Carrington Mortgage Loan Trust, Series 2006-NC3 (“the Trust�): New Century as “Servicer;� Wells Fargo as “Trustee;� and an entity who is not a party to the present case as “Depositor.� The purpose of the Trust was that loans conveyed into the Trust would be securitized for sale to investors.

Wells Fargo and Carrington claimed that the Wolfs' loan was conveyed into the Trust and thus assigned to Wells Fargo it in its capacity as trustee. On October 20, 2009, Wells Fargo filed with the Harris County clerk a document entitled “Transfer of Lien, indicating it was executed by Croft as an officer of New Century. The document
purported to show a transfer of the Wolfs’ note and deed of trust from New Century to Wells Fargo, effective September 30, 2009.

Wells Fargo appointed Carrington (successor in interest to New Century, which had filed bankruptcy) as Wells Fargo’s attorney-in-fact, with full authority to take actions relative to the loans securitized into the Trust. In December 2010, Carrington sent the Wolfs a notice of intent to foreclose because they were delinquent on the loan. When the Wolfs failed to cure, Wells Fargo filed an application to proceed with a non-judicial foreclosure. In support, Wells Fargo filed an affidavit of Croft, indicating he was signing as an officer of Carrington and attorney in fact for Wells Fargo.

The Wolfs then filed the present suit, alleging appellants were attempting a wrongful foreclosure and the documents intended to support the foreclosure were fraudulent. Because of the filing of this suit, the separate foreclosure action was abated and dismissed. Appellees have filed a counterclaim in the present suit, requesting permission to proceed with the foreclosure.

The Wolfs amended their petition several times to further define the basis for their claims. The Wolfs alleged that (1) their loan was not properly securitized into the Trust in the manner required under the Pooling and Servicing Agreement and other pertinent documents and thus Wells Fargo is not owner and holder of the loan instruments, and (2) appellants filed the Transfer of Lien in the Harris County real property records in a fraudulent attempt to cure defects in the original attempt to convey the loan into the Trust.

The Wolfs asserted a claim for violations of Texas Civil Practice and Remedies Code section 12.002, which provides in pertinent part:

(a) A person may not make, present, or use a document or other record with:

(1) knowledge that the document or other record is a fraudulent court record or a fraudulent lien or claim against real or personal property or an interest in real or personal property;
(2) intent that the document or other record be given the same legal effect as a court record or document of a court created by or established under the constitution or laws of this state or the United States or another entity listed in Section 37.01, Penal Code, evidencing a valid lien or claim against real or personal property or an interest in real or personal property; and
(3) intent to cause another person to suffer:
(A) physical injury;
(B) financial injury; or
(C) mental anguish or emotional distress.
. . .
(b) A person who violates Subsection (a) . . . is liable to each injured person for:
(1) the greater of:
(A) $10,000; or
(B) the actual damages caused by the violation;
(2) court costs;
(3) reasonable attorney’s fees; and
(4) exemplary damages in an amount determined by the court.
Tex. Civ. Prac. & Rem Code Ann. § 12.002 (West Supp. 2014).

According to the Wolfs, Wells Fargo violated section 12.002(a) by filing the Transfer of Lien in the real property records and, therefore, the Wolfs are entitled to the damages prescribed under section 12.002(b). The Wolfs also sought actual and exemplary damages based on claims for negligence, gross negligence, unjust enrichment, and “money had and received.� Further, the Wolfs included a request for declaratory relief.

Outcome: Plaintiffs' verdict for $5 million including $150,000 in financial injuries, $40,000 for mental anguish, $5 million in punitive damages and $190,000 in attorney’s fees.

Plaintiff's Experts:

Defendant's Experts:

Comments: