Facts

Michelle Hayes filed a class action against Wells Fargo Bank N.A., alleging improper banking and loan documentation practices.

PLAINTIFF'S CONTENTIONS:
Hayes alleged that Wells Fargo forced consumers to set up an escrow account for the impounding of taxes and insurance in connection with loan modification services. Hayes alleged that after an escrow account is set up, Wells Fargo's monthly statements reflect that a portion of the payment goes into the escrow account. However, plaintiff alleged that the escrow portion oftentimes fall below the amount needed to cover the taxes and insurance. As a result, the consumer quickly accumulates a large negative balance that results in late fees, penalties, and even foreclosure due to Wells Fargo's practice of paying the insurance and taxes from the escrow account. Plaintiff argued that Wells Fargo's conduct constituted violation of the California unfair competition law and the Consumer Legal Remedies Act.

DEFENDANT'S CONTENTIONS:
Wells Fargo sought to dismiss the purported class action for failure to state a claim because each claim was preempted under the Homeowners' Loan Act. Wells Fargo also argued that Hayes lacked standing to assert a claim for violation of Business and Professions Code for UCL because she lacked standing for lack of injury, or, alternatively, lack of causation.

Result

The court granted Wells Fargo's motion to dismiss with prejudice because the Homeowners Loan Act preempted her claims.