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Suing Wells Fargo in small claims in CA

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I want to sue Wells Fargo in small claims for ~$3800 (+ whatever else I can) because they incorrectly paid a flood policy out of my escrow account. The flood payment goes to FEMA so there is no recovery option there. This thread is in reference to this one  if you want the details.

I walk by the small claims courthouse every day on the way to work, so if I can sue in CA, it'd be very convenient for me.

I was changing flood insurance providers on my home and it boils down to these dates:

  • 1/19/2016 - I called WF and informed them I'm switching insurance providers and to place a stop payment on the bad insurance.

    • They did this, but the stop payment expired 3/14/2016 and they did not inform me of the expiration. This is the core of the issue.

  • 3/14/2016 - Stop payment that I placed expired. They did not tell me it would expire. I would have never thought it would expire.
  • 3/21/2016 - Bad insurance sends bill for $3800 to Wells Fargo, Wells Fargo pays it.
  • 3/31/2016 - This is the policy expiration date. I place new flood insurance the same day and also have the good insurance company on the phone with Wells Fargo during the process. There was never a gap in coverage.

Some questions I have:

  • I don't know the correct venue. Can I sue in CA small claims?

    • The insured property is in Indiana
    • I was living in CA on 3/14/2016 and WF made the incorrect payment on 3/21/2016

  • Can I claim any additional damages above the 3800 they paid?

    • My time?

  • Is this a terrible idea?

    • I have everything clearly documented/dated and it's really clear to me that they failed to inform me of the stop payment, and they assisted in placing the new insurance


Moderator Comment: Thank you for your participation. Please note that there is also discussion about this topic Here. — Dec. 24, 2016 @ 7:32pm
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Most Recent Posts
Another update. My demand letter got some attention. The same woman who initially denied me was reassigned it and I'll h... (more)

Al3xK (Jan. 18, 2017 @ 2:23p) |

Filed lawsuit today! I went earlier in person but screwed up one thing on the paperwork, so I had to correct & mail in. ... (more)

Al3xK (Feb. 23, 2017 @ 11:44a) |

Thanks for the update!

cheezedawg (Feb. 23, 2017 @ 2:12p) |

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Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.

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The whole point of small claims is to make it easy to make a claim and present your case and it seems like you have all the ducks lined up. You literally show up in court, present your facts, other side present their facts and the judge usually makes the decision on the spot, but not always.

I don't know if you can sue for additional damages but you can include the cost to file the claim.

This is one of the many reasons why I insist on having NO escrow when getting a loan.

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soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
  Sorry, OP.

​You may as well try social media and news outlets.  WF maybe more willing to pay you to go away now since they are in such bad press right now.

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Shouldn't this be in your other thread?

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Here's a preview of what you have to look forward to: https://www.fatwallet.com/forums/finance/1537658

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What about suing the broker?

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soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
  Even still...I'd think an arbitrator would side with me.

@TravelerMSY - The other thread was kind of all over the place and was about going after the broker, not WF. It probably could have been in the same thread. Not sure if it's worth re-posting this in there, and closing this or what...

@Ecuadorgr - I've considered that too. I'd have to go to Indiana I'd think to do it, and I don't have as clear of a paper trail against them. I do have a clear failure on their part to submit documentation...albeit the docs wouldn't have mattered as the policy was already in place.

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Al3xK said:   I want to sue Wells Fargo in small claims for ~$3800 (+ whatever else I can) because they incorrectly paid a flood policy out of my escrow account. The flood payment goes to FEMA so there is no recovery option there. This thread is in reference to this one  if you want the details.

I walk by the small claims courthouse every day on the way to work, so if I can sue in CA, it'd be very convenient for me.

I was changing flood insurance providers on my home and it boils down to these dates:

  • 1/19/2016 - I called WF and informed them I'm switching insurance providers and to place a stop payment on the bad insurance.

    • They did this, but the stop payment expired 3/14/2016 and they did not inform me of the expiration. This is the core of the issue.

  • 3/14/2016 - Stop payment that I placed expired. They did not tell me it would expire. I would have never thought it would expire.
  • 3/21/2016 - Bad insurance sends bill for $3800 to Wells Fargo, Wells Fargo pays it.
  • 3/31/2016 - This is the policy expiration date. I place new flood insurance the same day and also have the good insurance company on the phone with Wells Fargo during the process. There was never a gap in coverage.

Some questions I have:

  • I don't know the correct venue. Can I sue in CA small claims?

    • The insured property is in Indiana
    • I was living in CA on 3/14/2016 and WF made the incorrect payment on 3/21/2016

  • Can I claim any additional damages above the 3800 they paid?

    • My time?

  • Is this a terrible idea?

    • I have everything clearly documented/dated and it's really clear to me that they failed to inform me of the stop payment, and they assisted in placing the new insurance



 WF does a lot of business in multiple parts of CA.  So a CA venue wouldn't cause WF inconvenience.

OTOH, an IN venue would cause you (extreme) inconvenience, since you live 1k+ miles away from that state.

Generally, you CAN'T sue for your time.  But you might get to recover a day's pay, if your court doesn't offer night/weekend hours.

NOT a terrible idea, since WF CLEARLY screwed you over.  What defense would WF raise?

Finally, you might get around WF's arbitration clause, if you can show that
CA Gov said: "...[Your] case is not amenable to arbitration on the ground that arbitration would not reduce the probable time and expense necessary to resolve the litigation"

CA Gov 

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speedracer714 said:   The whole point of small claims is to make it easy to make a claim and present your case and it seems like you have all the ducks lined up. You literally show up in court, present your facts, other side present their facts and the judge usually makes the decision on the spot, but not always.

I don't know if you can sue for additional damages but you can include the cost to file the claim.

This is one of the many reasons why I insist on having NO escrow when getting a loan.

  Some lenders give an interest rate discount for using an escrow account for property taxes.  But it really doesn't make sense to use it for insurance.  

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Isn't it more the bad insurance fault vs Wells Fargo? When did you cancel the insurance and switch companies?

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good luck with that, hope you have a lot of time and patience to deal with the years of bullsh!t youre gonna encounter

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If you knew you were switching insurance companies in January, why did they send you a bill in March? It sounds like you didn't actually cancel the policy and expected a non-payment to take care of that for you. I think you share fault on this one, and maybe even a majority of the fault.

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I'd file suit in small claims and sees what happens. Something tells me that although you might not be able to get a refund from FEMA it won't be a problem for WellsFargo once they actually try/care.

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Al3xK said:   
soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
  Even still...I'd think an arbitrator would side with me.

@TravelerMSY - The other thread was kind of all over the place and was about going after the broker, not WF. It probably could have been in the same thread. Not sure if it's worth re-posting this in there, and closing this or what...

@Ecuadorgr - I've considered that too. I'd have to go to Indiana I'd think to do it, and I don't have as clear of a paper trail against them. I do have a clear failure on their part to submit documentation...albeit the docs wouldn't have mattered as the policy was already in place.

  
Arbiters know which side of their bread is buttered.

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Those that want to get on OP for not "cancelling" the insurance, you can re-read all that same advice in thisthread and talk about it there since it's still open for comment.

Long story short, he thought he did.

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 For situations like this, I sure wish my iPhone just automatically recorded everything.

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WF web site says The stop payment will remain in effect for six months for checks and indefinitely for ACH items. To remove a stop payment, please call 1-800-TO-WELLS (1-800-869-3557) or visit a local store. Placing a stop payment order does not release you from any contractual agreements. You may still be held to the terms of the agreement. https://www.wellsfargo.com/help/faqs/order-checks/
Are you aware of this? 

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soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.Arbitration does not preclude small claims.

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I would think the OP would have a better chance against the broker in small-claim.

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user9876 said:   WF web site says The stop payment will remain in effect for six months for checks and indefinitely for ACH items. To remove a stop payment, please call 1-800-TO-WELLS (1-800-869-3557) or visit a local store. Placing a stop payment order does not release you from any contractual agreements. You may still be held to the terms of the agreement. https://www.wellsfargo.com/help/faqs/order-checks/ 
Are you aware of this? 

  I was not aware of this. It says there is a fee for stop-payment, and I didn't incur a fee, so it makes me think it's different somehow for escrow accounts. I screenshot it just in case.

@ZenNuts - I would have a good case against them, I just have to sue them in Indiana I would expect, which is difficult to do. I think I have a good case against both of them. With WF, that link on their website that the above user just linked plus one of their other reps told me recently (on record) that it is supposed to last 5 days before the due date, and that I believe I was never told in the first place could/would make a judge think they're not clear at all on their policy and it's reasonable to expect the payment not to occur.  I have hard evidence against the broker for failing to send the cancellation documents that wouldn't have mattered anyway because it was 4 days after the date...but I still have a documented failure to do what they said they would.  I figure I'd start with WF.

I'm just worried that WF won't show up, I'll get a default judgement...then what? Or even worse, they'll somehow cancel my loan and say the whole thing is due...can they do that?

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scripta said:   
soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
Arbitration does not preclude small claims.

  
Wells will have it moved to a higher court, then invoke the arbitration clause.

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gatzdon said:   
scripta said:   
soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
Arbitration does not preclude small claims.

  
Wells will have it moved to a higher court, then invoke the arbitration clause.

  My loan was packaged and sold to Wells Fargo. I don't see any arbitration or resolution clauses really. It just defers to RESPA law. I've been reading through that too and it doesn't say anything about legal recourse for resolutions that I see off hand. 

Forgive my ignorance, but how can they just "move it to a higher court"?

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Al3xK said:   
gatzdon said:   
scripta said:   
soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
Arbitration does not preclude small claims.

  
Wells will have it moved to a higher court, then invoke the arbitration clause.

  My loan was packaged and sold to Wells Fargo. I don't see any arbitration or resolution clauses really. It just defers to RESPA law. I've been reading through that too and it doesn't say anything about legal recourse for resolutions that I see off hand. 

Forgive my ignorance, but how can they just "move it to a higher court"?

  
You can read it backwards or follow the links to the beginning and read it forwards.  It's the roadmap that most banks will follow.  Guarantees everyone not willing to spend 10's of thousands (or even > $100k) will give up before it becomes 'precedent' or newsworthy.

https://www.fatwallet.com/forums/finance/1527451

Think you're special or it's different because it's Wells and not Citi

https://consumerist.com/2016/09/23/senators-to-wells-fargo-ceo-d...

Wells is using the terms of the fake accounts to move real claims to arbitration (and apparently succeeding in doing it).
 

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Not trying to be rude, just being blunt. I don't agree with the practice and think it is disgusting.

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Al3xK said:   
gatzdon said:   
scripta said:   
soxfan1 said:   Wells has arbitration language in everything.  It's unlikely they're going to allow you to go through small claims.
Arbitration does not preclude small claims.

  
Wells will have it moved to a higher court, then invoke the arbitration clause.

  My loan was packaged and sold to Wells Fargo. I don't see any arbitration or resolution clauses really. It just defers to RESPA law. I've been reading through that too and it doesn't say anything about legal recourse for resolutions that I see off hand. 

Forgive my ignorance, but how can they just "move it to a higher court"?

 some banks have moved lawsuits to a "higher court" as a scare-mongering tactic.  you're supposed to see that Citi spent $500k+ over a $150 dispute and give up.

that's selection bias, though. for every $500k+ dispute, how many has Citi quietly settled for peanuts?  99.9%, out of fear that 1 guy might win big and post a blueprint of his success online?

focus on your case's merits, not on big-bank propaganda.  sue WF, and see what happens. 

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This is really an issue between you and the insurance co or the insurance broker and has little to do with WF. If you didn't cancel the policy then you would still owe the $3800 even if WF did stop payment on it. Why can't you call the company that incorrectly billed you $3800 and get a refund if you cancelled the policy?

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gatzdon said:   You can read it backwards or follow the links to the beginning and read it forwards.  It's the roadmap that most banks will follow.  Guarantees everyone not willing to spend 10's of thousands (or even > $100k) will give up before it becomes 'precedent' or newsworthy.

https://www.fatwallet.com/forums/finance/1527451

Think you're special or it's different because it's Wells and not Citi

https://consumerist.com/2016/09/23/senators-to-wells-fargo-ceo-dont-strip-wronged-customers-of-their-day-in-court/

Wells is using the terms of the fake accounts to move real claims to arbitration (and apparently succeeding in doing it).
This doesn't apply if his mortgage papers didn't have an arbitration clause.

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supersnoop00 said:   If you knew you were switching insurance companies in January, why did they send you a bill in March? It sounds like you didn't actually cancel the policy and expected a non-payment to take care of that for youIs this what happened?

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You could always try suing the agent over the mistake. Do you have any evidence at all? Maybe a log of your telephone calls to him?

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gnopgnip said:   This is really an issue between you and the insurance co or the insurance broker and has little to do with WF. If you didn't cancel the policy then you would still owe the $3800 even if WF did stop payment on it. Why can't you call the company that incorrectly billed you $3800 and get a refund if you cancelled the policy?
That's not how these flood policies through FEMA work. If payment is placed the policy is in effect, if it isn't, it's canceled.

I called the big insurance company directly (that the broker placed through) and they said I need to be more "proactive" and to place a stop payment before it renews next year or I can submit in writing the cancellation docs.  "Stop payments" are apparently common here, as if it were not escrow, you just choose not to pay the bill and it's done.

I called the crappy broker to not-renew the policy, not cancel...I think there is a difference as cancel implies it's a policy in effect. They said they'd get it taken care of, but to go ahead and call the bank and have them put a stop payment and it wouldn't get renewed, which I did. This is where WF said the stop-payment was in place and never mentioned an expiration date or anything.

I have evidence against the broker that I did call them on 1/19 (same day as WF), but I didn't record the phone call or anything. I have additional evidence though on 4/5 when I found out it was mistakenly paid, they sent over signed cancellation docs but never passed them along to the main insurance company. That's hard evidence they failed to at least attempt to cancel. Even though once the policy is placed, it can't be undone.

I still think my main beef is with WF. My escrow account isn't a blank checkbook they can just pay whomever and I'm on the hook for it, especially when I called and made it clear what I was doing and to not pay a vendor and they made it clear a stop payment was in place.

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So I posted on avvo.com and 3 CA attorneys all agreed to just sue in small claims ($10k max). Seems like they didn't think it was a problem, so I'm going to sue them. They said I could serve any teller and that counts as adequate service and there is one right next to my work.

What damages can I claim other than the $3803? My time? Interest? Filing fees? Are there any special punitive damages I could claim?  Can I charge interest from the day they paid it or does it have to be since I recently called them?

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Can you contact their "executive office" or whatever WF calls their customer service reps that actually have authority? There should be contact information for them somewhere.

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Al3xK said:   So I posted on avvo.com and 3 CA attorneys all agreed to just sue in small claims ($10k max). Seems like they didn't think it was a problem, so I'm going to sue them. They said I could serve any teller and that counts as adequate service and there is one right next to my work.

What damages can I claim other than the $3803? My time? Interest? Filing fees? Are there any special punitive damages I could claim?  Can I charge interest from the day they paid it or does it have to be since I recently called them?

Laws vary by state, but generally, you can only sue for actual damages and and filing fees. You get to charge interest on the judgement. They don't owe you interest until the court says they owe you money. You don't get toto charge for your time, because you're still trying to prove that they owe you money. There are no punitive damages in small claims court.

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So an update. I sent a firmly worded demand letter today with the details of their mistake and also I filled out the small claims filing forms and put a copy of them with the letter so they know I have everything filled out to sue.

As much fun as suing them in small claims would be, if a letter will get them to pay me, I'll be happy with that.

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Another update. My demand letter got some attention. The same woman who initially denied me was reassigned it and I'll have information no later than Jan 27th.

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Filed lawsuit today! I went earlier in person but screwed up one thing on the paperwork, so I had to correct & mail in. The court is doing service and mailing me a copy back.

I think I recall they mentioning they're a couple months out or something on when the case dates are, so it may be a while, but the thread should have some action eventually.

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Thanks for the update!

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