In Slack v. Wells Fargo Bank, the plaintiff and her brother held title to their late mother’s home as joint tenants with right of survivorship. In 2006, plaintiff’s brother opened a $100,000 line of credit with Wells Fargo Bank, secured by a mortgage on the property.

The parties dispute whether plaintiff was aware of the line of credit. Only her brother signed the mortgage the day it was opened, but the recorded mortgage included an acknowledgment page bearing plaintiff’s signature (plaintiff claimed the signature was forged). Thereafter, it appeared that Wells Fargo assigned the mortgage to Fannie Mae. Plaintiff’s brother later died, and Wells Fargo attempted to collect the debt from the plaintiff.

In 2012, plaintiff filed a verified complaint seeking to have her brother’s estate declared insolvent, and seeking to “quiet title” on the property and have herself declared the “sole owner.” Neither Wells Fargo nor Fannie Mae was named as a defendant, and the mortgage in issue was not specifically identified in the complaint, although Wells Fargo’s encumbrance of the property was mentioned and Wells Fargo and Fannie Mae were given notice of the proceeding.

In 2013, the Chancery Division found that when the brother died, the line of credit also died and “no longer attach[ed] to the real estate.” The court entered default, nunc pro tunc, against Wells Fargo on the mortgage, although Wells Fargo was not a named defendant. The order memorializing the court’s decision entered default against “all defendants,” declared the brother’s estate insolvent, and found that plaintiff was “the sole owner, in fee” of the property.

Later that year, Fannie Mae notified plaintiff that it was asserting a lien on the property. When plaintiff disclaimed the debt and Fannie Mae notified plaintiff of its intent to foreclose, plaintiff filed the instant suit against defendants Wells Fargo and Fannie Mae, including claims under the Consumer Fraud Act and the Fair Debt Collection Practices Act. The defendant banks filed a motion to dismiss, in lieu of an answer, for failure to state a claim on which relief can be granted.

Plaintiff failed to appear for oral argument on the defendants’ motion to dismiss in the Law Division, and the motion was granted. Although on reconsideration the court allowed plaintiff to argue the underlying motion, the Law Division denied the motion for reconsideration and upheld the dismissal of plaintiff’s claims. It indicated that, contrary to the Chancery Court’s oral opinion, its Order had not discharged the mortgage, which survived the brother’s death under Estate of Zahn, 305 N.J. Super. 260 (App. Div. 1997).

On appeal, the Appellate Division reversed and remanded the dismissal of plaintiff’s complaint. It found that, because the motion court had considered matters outside the four corners of the complaint, the motion should have been converted to a summary judgment motion. Because it was not, and the summary judgement standard was not applied to the motion, a reversal and remand was required. The Appellate Division noted that genuine issues of material fact included whether plaintiff had in fact signed the mortgage, and whether the mortgage had been property assigned to Fannie Mae.

A copy of Slack v. Wells Fargo can be found here –  Slack v. Wells Fargo     

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