ORIGINAL CREDITOR PROFILE:
WELLS FARGO BANK, N.A.
Wells Fargo Bank,
N.A. is a major national bank headquartered in Sioux Falls, South Dakota. It is
a prolific litigator in Texas courts. In Harris County, for example, a party
search on the district clerk’s website yields more than 3000 cases filed in the
county's civil district courts. A large proportion of these, however, are
foreclosure cases, and some are garnishment cases that are docketed separately
even though they arise from a previous lawsuit.
This post will focus
on credit card debt suit involving
cards issued by Wells Fargo Bank, N.A. (“Wells Fargo” or “WFBNA”). It should be
noted, however, that Wells Fargo also sues on Personal Loan Agreements, and that those lawsuits have a number of
distinct characteristics. For one, the underlying contract and TILA disclosures
look different. As is true of other major banks, there are other entities with
similar sounding names. See FDIC listing below.
WELLS
FARGO COLLECTS ITS OWN DEBT
Like Discover Bank
and American Express, Wells Fargo sues as original creditor to collect money
owed on defaulted credit card accounts (rather than selling them off to debt buyers, a practice Chase Bank USA, N.A. is known for). Wells Fargo
utilizes one major lawfirm to sue customers in Texas: VINCENT LOPEZ SERAFINO
JENEVEIN, P.C. ("VINCENT"). Mark Rechner and Thomas Sellers are the
attorneys on the pleadings.
WELLS
FARGO CREDIT CARD AGREEMENTS
Wells Fargo
cardmember agreements (which the bank calls customer agreements) are extremely verbose. A pro se litigant who appealed an
adverse judgment recently complained that she could not make sense of it even
though she had a college degree and other people of similar level of education
could not understand it either. Card agreements, of course, are written by
lawyers for other lawyers, especially the select number of lawyers known as
judges. After all, banks want to make sure they win if they are sued by
aggravated customers, not to mention hordes of them being rounded up for a
class action. Cardmember agreements are carefully drafted, so as to give as
much leverage to the creditor, but to also hold up in count.
That said, once a WFB
cardmember agreement becomes an exhibit in litigation, it offers a convenience
factor that somewhat compensates for the excessive length: the sections are
numbered, thus making it easier to reference them, if necessary to support an argument by the defense. Other CMAs, but contrast,
are much harder to deal with, and are often not even legible because the font
of the fine print is too small, and the quality of the reproduction poor. Chase
and HSBC argreements are notorious for this problem.
Wells Fargo
Cardmember Agreement: Two Parts
A standard Wells
Fargo credit card contract actually consists of the multiple parts: The
cardmember agreement proper, which has the unwieldy title "CONSUMER
CREDIT CARD CUSTOMER AGREEMENT & DISCLOSURE STATEMENT VISA® OR MASTERCARD®"
(“Customer Agreement”), and an additional credit terms document that contains
TILA disclosures and is referred to as "Important Terms Of Your Credit
Card Account" (“Terms Document”), which is found on the enclosed
letter/card carrier. A third component is also mentioned: any subsequent
disclosures, but, depending on the age of the account by the time it went
into default, there may not have been any such supplemental change notices. All
accounts must have the additional Terms Document, however, because that
document contains the credit terms that federal law requires to be set forth in
writing when the account is opened, and the Wells Fargo customer agreements do
not contain all of the material terms. -- > Truth in Lending Act (TILA) Disclosures
The division of the
contract into two components makes sense. The Customer Agreement is generic and
covers a large segment of the customer base (possibly even all of them at a
particular point in time), while the Terms Document will vary across the
population of customers as it will reflect differential pricing (higher or
lower interest rates and other terms) for individual segments reflecting different
cardholders' creditworthiness and credit utilization patterns. The industry
calls this risk-based pricing, but risk-management is not the only reason.
Banks want to maximize profits by charging interest rates as high as the market
(customers) will bear.
What happened with
the Terms Document? (TILA Disclosures)
The first paragraph
of the Customer Agreement incorporates the Terms Document by reference, but the
Terms Document itself is typically omitted when Wells Fargo moves for summary
judgment. Counsel for the Defendant may thus want to point out to the court
that the plaintiff has failed to prove up the essential terms of the contract,
and cite the Williams v. Unifund case in support. The argument may not always carry the
day, but it is legally sound under existing case law, and worth making.
Choice of law: SD
Although Wells Fargo
Bank is associated with the West Coast, the contractual choice of law in
its Customer Agreements is South Dakota. WFBNA moved its headquarters from SAN
FRANCISCO, CA to SIOUX FALLS, SD in 2004. Other Wells Fargo entities are
located elsewhere, including one in Texas. See FDIC list at the bottom of this
page. The reason major national banks choose South Dakota is the favorable
legal climate there: No limits on interest rates that may be contracted for.
Citicorp, based in New York, did the same thing, and is running its credit card
operation out of South Dakota through Citibank, N.A., and previously Citibank
(South Dakota) N.A..
The Wells Fargo
choice-of-law paragraph states as follows:
This Agreement and your account, as
well as our rights and duties and your rights and duties regarding this
Agreement and your account, will be governed by and interpreted in accordance
with the laws of the United States and, to the extent applicable, the law of
the State of South Dakota, regardless of where you reside or use your account
at any time.
Arbitration
clauses
Wells Fargo credit
card agreements contain arbitration provisions for arbitration under the FAA,
though South Dakota law is also mentioned. Under the terms of the arbitration
agreement, either the customer or the bank may submit a dispute to binding
arbitration at any time notwithstanding that a lawsuit or other proceeding has
been previously commenced.
This clause allows WFBNA to opt for arbitration when
the customer answers the debt suit with a counterclaim; or to quash a lawsuit
when sued by a consumer independently, but it also allows the cardholder to
assert the arbitration provisions as a defense in a debt collection suit
brought by the bank against him or her. -- > Invoking arbitration agreement whensued for credit card debt.
This is what a
typical arb agreement looks like:
Billing Disputes
Disputes about
charges on account statements are handled through Wells Fargo Card Service with
a PO address in Des Moines, Iowa.
Payments, however,
must be sent to a different address for the same entity in Los Angeles,
California.
TYPICAL
ORIGINAL PETITION IN A WELLS FARGO SUIT ON CREDIT CARD ACCOUNT
In Texas, debt
collection suits involving Wells Fargo credit card accounts are filed by
VINCENT LOPEZ SERAFINO JENEVEIN, P.C., a lawfirm based in Dallas.
The standard VINCENT
pleading typically ignores the choice-of-law issue, and invokes theories of
recovery which are not even viable for collection of a credit card debt (which
requires written credit terms under federal and state laws regulating the
banking sector).
Those theories are unjust enrichment and money had and received, but Wells Fargo's attorney does not move for summary judgment on
those theories. Therefore; it is not worth complaining about them. -- > equitable theories; -- > express contract preclusion of equitable claims; -- > special exceptions to
challenge the opponent's pleadings
Legal fees in
addition to the amount claimed as due on the account
Attorney’s fees are
typically also requested in petitions filed by VINCENT, based on a Texas
statute, rather than a South Dakota one. The amount sought in the trial courts
is typically moderate (less than $1,000), but much higher contingent attorney’s
fees are requested should the consumer unsuccessfully appeal an adverse
judgment ($5000 for each level of appeal). -- > Comparison of attorney fees claims in debt collection suits
SUMMARY
JUDGMENT MOTIONS FILED IN WELLS FARGO CREDIT CARD ACTIONS
WFBNA attorney Mark
Rechner of VINCENT LOPEZ SERAFINO JENEVEIN, P.C., typically moves for summary
judgment with an affidavit of a Wells Fargo representative located in Iowa
(e.g., Jessica Rogers, Melissa J. Blair,Mandy E.L. Wagner); a copy of a
CONSUMER CREDIT CARD CUSTOMER AGREEMENT & DISCLOSURES STATEMENT (see
description above); and a few monthly account statements. There is no bill of
sale as they appear in suits by assignees such as Midland Funding, LLC or CACH, LLC because
WFBNA sues itself as original creditor on defaulted accounts (although there are exceptions). -- > Lawsuits by assignees on Wells Fargo bank debt
The affidavit, which also functions as a business records affidavit, will
normally recite the date of account creation, but the Customer Agreement will
typically be of much more recent vintage (e.g., 2010). Typically, the TILA
Disclosure document (the Terms Document as discussed above) will not be
attached as a summary judgment exhibit even though the Customer Agreement states that it
is part of the customer's contract with Wells Fargo Bank and is referenced numerous times in the small print.
Unlike final account
statements from Target NB, Capital One, and Citibank, the last Wells Fargo
account statement will typically not reflect acceleration of maturity; i.e. it
will show an amount due on a date a few weeks after the end of the current
billing cycle that is significantly less than the amount of the revolving
balance (or it may show chargeoff without prior acceleration of maturity and
zero balance). Additionally, the last statement will show how much of the
minimum payment amount represents the past-due amount.
If the last monthly
statement is deemed admissible for the truth of what is expressly set forth on
it (based on the business records affidavit), it would not support the
proposition that payment was due in full. If the affiant testifies otherwise,
the conflict in the evidence should preclude summary judgment, in addition to
raising an issue of credibility. Wells Fargo's counsel may argue in reply that
the card agreement authorizes acceleration (with reference to paragraph 25
titled "DEFAULT / IMMEDIATE REPAYMENT OF BALANCE IN FULL"), but even
if the contractual basis for this lender remedy is established, the conflict in
the evidence should still preclude resolution of the case by summary
disposition. The last statement would only support a claim for the past-due
portion of the minimum payment amount as damages caused by breach consisting in cessation of monthly payments by the cardholder.
Additionally, if
there is no showing of acceleration of maturity prior to the lawsuit,
defendant's counsel may assert that the presentment requirement has not been
satisfied for attorney fee purposes under Chapter 38 of the Civil Practice and Remedies Code. This issue should be raised in the answer (or amended pleading)
in the form of a specific denial that Plaintiff has met the conditions
precedent for fee recovery.
LINKS
TO PROFILES OF OTHER MAJOR CARD ISSUERS AS PLAINTIFFS
FIA Card Services N.A. suing on Bank of America credit cards
FINANCIAL INSTITUTION ENTITY INFORMATION FROM OCC AND FDIC
 |
| Wells Fargo entities listed on FDIC web site |
 |
| Wells Fargo Bank, National Association: Institutional History |
 |
Wells Fargo Bank listing on the Comptroller's National Bank List
OCC website (November 2013 version) |
.JPG)
.JPG)