May 25, 2017


                                                         Supreme Court

                                                         No. 2016-71-Appeal.
                                                         (KC 11-60)


       Joanne C. Miller               :

               v.                     :

 Wells Fargo Bank, N.A. et al.        :




        NOTICE: This opinion is subject to formal revision before
        publication in the Rhode Island Reporter. Readers are requested to
        notify the Opinion Analyst, Supreme Court of Rhode Island,
        250 Benefit Street, Providence, Rhode Island 02903, at Telephone
        222-3258 of any typographical or other formal errors in order that
        corrections may be made before the opinion is published.
                                                                  Supreme Court

                                                                  No. 2016-71-Appeal.
                                                                  (KC 11-60)


             Joanne C. Miller                 :

                     v.                       :

       Wells Fargo Bank, N.A. et al.          :


              Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

                                          OPINION

       Justice Goldberg, for the Court. This case came before the Supreme Court on April 6,

2017, pursuant to an order directing the parties to appear and show cause why the issues raised in

this appeal should not be summarily decided. The plaintiff, Joanne C. Miller (plaintiff or

Miller), appeals from a Superior Court judgment, after a nonjury trial, entered in favor of the

defendant, Wells Fargo Bank, N.A. (defendant or Wells Fargo). The plaintiff argues on appeal

that: (1) the defendant breached federal guidelines regarding loan modification review and

improperly foreclosed on her home while her loan modification request was pending; (2) the

defendant breached the covenant of good faith and fair dealing; and (3) the plaintiff’s reliance on

the federal regulations, as well as the defendant’s failure to adhere in good faith to those

regulations, should have estopped the defendant from foreclosing on the property. After careful

review of the record, the memoranda submitted by the parties, and the oral arguments, we are

satisfied that cause has not been shown, and thus, this appeal may be decided at this time. For

the reasons set forth in this opinion, we affirm the judgment of the Superior Court.




                                               -1-
                                       Facts and Travel

       This case arises from the unfortunate foreclosure of a residential property as a result of

defaulted mortgage payments and the borrower’s inability to receive a loan modification or a

subsequent rescission of foreclosure. The loan at issue was secured by a residential mortgage on

property located at 233 Beach Avenue in Warwick, Rhode Island.1 In August 2009, as a result of

changed financial circumstances, Miller, the borrower, could not afford her upcoming monthly

mortgage payment on her home, which she occupied with her four children.2 Miller timely

contacted Wells Fargo, the lender, to explain her changed circumstances and to explore a new

payment plan.    At that time, the scheduled monthly mortgage payment for August was

$1,645.30. With only $900 set aside, Miller offered to allocate these funds towards the August

payment and to pay the remaining balance as part of her next scheduled payment. Although

Miller’s proposal was not accepted, the Wells Fargo representative suggested that Miller might

be eligible for a loan modification, which was designed to prevent foreclosure for qualified

borrowers.3 However, this suggested lifeline proved to be ephemeral, and Miller entered into a

bureaucratic quagmire.



1
  On March 30, 2005, Miller executed a promissory note and mortgage for $204,000. The
scheduled monthly mortgage payment was $1,645.30.
2
  Several recent events in Miller’s personal life had materially changed her financial position.
For instance, Miller had recently divorced from her husband, the co-obligator of the mortgage
note; a court order reduced the monthly child-support payments for her four children; and, as a
real estate broker with an income based on sales commissions, Miller’s income was inherently
sporadic and a recent property sale she negotiated had fallen through.
3
  President Obama, in February 2009, signed into law the Homeowner Affordability and Stability
Plan to stabilize the housing market by assisting struggling homeowners in obtaining financial
relief and avoiding foreclosure. In March 2009, the United States Department of Treasury issued
national guidance for loan modifications throughout the mortgage industry and subsequently
expanded that guidance through a series of policy announcements. This included the Home
Affordable Modification Program (HAMP), a uniform mortgage modification program, designed
                                              -2-
       It began on September 3, 2009, when Miller received a packet from Wells Fargo, which

contained financial forms that she needed to complete and return by September 18, 2009, in

order to begin the application process.     In accordance with the federal Home Affordable

Modification Program (HAMP) guidelines, Miller was required to submit current and verifiable

evidence of income as proof of her eligibility for the program. 4 As such, a mere request for

modification, standing alone, would not stay the foreclosure process because Wells Fargo

reserved the right to declare default on the mortgage and, according to HAMP, to proceed with

the foreclosure until the loan modification request was evaluated.

       On September 14, 2009, Wells Fargo sent Miller a letter informing her that she needed to

pay the loan delinquency amount in full by October 14, 2009, or else Wells Fargo would proceed

with the foreclosure. However, it was not until October 29, 2009, that Miller received a letter

denying her loan modification plan.        According to this letter, Wells Fargo denied the

modification plan as a result of Miller’s alleged failure to provide the necessary information

within the timeframe required by her trial modification period workout plan. Miller contends

that there was no evidence that she agreed to a trial modification period workout plan or that

such a plan had been prepared. On or about November 3, 2009, Miller received yet another letter

from Wells Fargo—her third letter in three weeks—which indicated that certain financial

information must be submitted within ten days, notwithstanding the October 29, 2009, rejection.

to provide eligible borrowers the opportunity to modify their mortgage loans in order to make
them more affordable. Under HAMP, a servicer will utilize the uniform loan modification
process to provide a borrower with sustainable monthly payment plans. Under the servicer
participation agreement, participating servicers are required to consider all eligible mortgage
loans unless otherwise prohibited by the rules of the agreement and/or other investor servicing
agreements.
4
  In attempting to apply for a loan modification, Miller had submitted five “hardship letters.”
However, the trial justice also found that, by October 29, 2009, Wells Fargo had received a
substantial amount of information necessary to verify and evaluate Miller’s sources of income
for the purposes of the loan modification request.
                                               -3-
Although she complied, Miller nonetheless received several more letters from different regional

offices throughout the country, stating that Wells Fargo had not received the requested

information. Although Miller continuously sent Wells Fargo substantial information regarding

her financial situation, Wells Fargo, on January 15, 2010, notified Miller of the foreclosure sale,

which was held on March 10, 2010. On March 28, 2010, Miller requested rescission of the

foreclosure.   She alleged that a Wells Fargo employee, Natura Gibbons (Gibbons), made

representations that the foreclosure would be rescinded. On August 12, 2010, Miller’s request

for rescission was denied.5

       On January 14, 2011, Miller, acting pro se, brought suit against Wells Fargo in Kent

County Superior Court. Miller’s original, handwritten, complaint—consisting primarily of the

facts surrounding her efforts to obtain a loan modification—indirectly alleged “fraudulent

representation” as the cause of action. On March 2, 2011, Miller filed an amended complaint,

alleging that Wells Fargo had violated the Deceptive Trade Practices Act.           Miller sought

injunctive relief to prevent Wells Fargo from initiating the eviction proceeding and requested

that Wells Fargo return her home with clear title and provide compensation for her lost wages as

well as her pain and suffering. On October 12, 2011, the Superior Court granted Miller’s motion

to further amend the complaint.

       In this amended complaint, which is the focus of this appeal, Miller asserted six causes of

action: (1) violation of the Rhode Island Mortgage Foreclosure Consultant Regulation, G.L. 1956

chapter 79 of title 5; (2) violation of the Rhode Island Deceptive Trade Practices Act, G.L. 1956

chapter 13.1 of title 6; (3) violation of the “mortgage-related provisions of the Omnibus

Appropriations Act of 2009”; (4) breach of the implied covenant of good faith and fair dealing;

5
  It was disclosed at oral argument that Miller has resided in the home throughout these
proceedings and was paying for the occupancy and use of the premises.
                                               -4-
(5) breach of the Uniform Commercial Code, chapter 2 of title 6A; and (6) promissory estoppel

based on a statement made by Wells Fargo’s alleged agent/employee, Gibbons.

          A bench trial was held in November 2014, throughout which Miller acted pro se. On

December 17, 2014, Miller filed a posttrial motion to amend her complaint to conform to the trial

evidence, which was denied by the Superior Court justice.6 Wells Fargo moved for judgment as

a matter of law on all six counts, which the Superior Court justice granted in a written decision.

On March 30, 2015, the Superior Court justice found that, although Miller testified at trial that

she had provided the necessary financial documents before September 18, 2009, she failed to

submit any documentary evidence to corroborate her testimony. The Superior Court justice also

found that, before the October 29, 2009, letter denying the requested loan modification, Wells

Fargo had received a significant amount of information sufficient to have verified Miller’s

sources of income and to have evaluated the loan modification request.

          Nonetheless, the Superior Court justice ruled in favor of Wells Fargo on all counts. 7 The

Superior Court justice held that, because Wells Fargo was under no contractual obligation to

modify or consider a loan modification, there were no facts to support a finding that Wells Fargo

breached its duty of good faith and fair dealing. Additionally, because Miller failed to produce



6
    This issue is not before us on appeal.
7
   The issues decided by the Superior Court justice and not raised on appeal, provide that: (1)
Wells Fargo was excluded from the Rhode Island Mortgage Foreclosure Consultant Regulation
because Wells Fargo was a business of the United States “relating to banks”; (2) Wells Fargo’s
alleged violation of the Rhode Island Deceptive Trade Practices Act, G.L. 1956 chapter 13.1 of
title 6 (DTPA) was invalid because a mortgage loan, which is neither a “good” nor “service”, is
not subject to the DPTA, and Wells Fargo, as a federally regulated entity, was not subject to the
DPTA; (3) Wells Fargo’s alleged violation of the “mortgage-related provisions of the Omnibus
Appropriations Act of 2009” (OAA) was invalid because the OAA was issued as a directive,
and, thus, did not create a private right of action; and (4) a mortgage loan did not constitute a
“good” in accordance with the alleged unfair business practice in violation of the Uniform
Commercial Code, G.L. 1956 chapter 2 of title 6A.
                                                 -5-
sufficient evidence that Gibbons was an employee of Wells Fargo, the Superior Court justice was

not satisfied that any promises to rescind the foreclosure were made, upon which Miller could

have relied to her detriment. Thus, he concluded that Miller failed to establish a claim under any

theory of liability set forth in her complaint regarding the mortgage loan modification plan.

Final judgment entered on September 1, 2015, and Miller timely appealed.

       Before this Court, Miller argues that the Superior Court justice erred in finding for Wells

Fargo because defendant: (1) violated Treasury Directive 09-01 in noticing and conducting the

foreclosure sale; (2) breached the implied covenant of good faith and fair dealing; and (3) was

“estopped from conducting [the] foreclosure sale due to [Miller’s] submission of over one

hundred pages of financial documentation in accordance with the HAMP program and

communications between the parties relating thereto.”

                                       Standard of Review

       “Our review of a trial justice’s decision on a motion for judgment as a matter of law is de

novo.” McGarry v. Pielech, 47 A.3d 271, 279 (R.I. 2012) (quoting Medeiros v. Sitrin, 984 A.2d

620, 625 (R.I. 2009)). “This Court, like the trial justice, will examine ‘the evidence in the light

most favorable to the nonmoving party, without weighing the evidence or evaluating the

credibility of witnesses, and draw from the record all reasonable inferences that support the

position of the nonmoving party.’” Id. (quoting Oliveira v. Jacobson, 846 A.2d 822, 829 (R.I.

2004)). “Judgment as a matter of law is appropriate ‘if, after viewing the evidence in the light

most favorable to the nonmoving party, [the trial justice] determines that the nonmoving party

has not presented legally sufficient evidence to allow the trier of fact to arrive at a verdict in his

favor.’” Id. at 280 (quoting Gianquitti v. Atwood Medical Associates, Ltd., 973 A.2d 580, 590

(R.I. 2009)).



                                                -6-
                                              Analysis

         We note at the outset that the numerous and unfortunate miscommunications and

misunderstandings between the parties to this controversy have not escaped our review. As

explained by the Superior Court justice, Wells Fargo is a large institution, with multiple

locations, and Miller, unfortunately, was caught in the midst of the communications from the

various branches. The record demonstrates that this case does not represent Wells Fargo’s finest

hour.8

         On appeal, Miller contends that the Superior Court justice erred as a matter of law in

issuing his decision and entering judgment for Wells Fargo. First, Miller argues that Wells

Fargo breached federal regulations during the loan modification review process and improperly

foreclosed on her home while her loan modification request was pending. Miller asserts that

Treasury Directive 09-01 prohibited Wells Fargo from noticing and conducting the foreclosure

sale, arguing that servicers must not conduct foreclosure sales on loans that have been referred to

foreclosure during the thirty-day period within which a borrower has submitted documents as

verification of eligibility for a loan modification plan.9 However, absent from Miller’s original

or amended complaint is any suggestion of a claim related to Treasury Directive 09-01.



8
    The Superior Court justice found:

                 “[Wells Fargo] was [not] intentionally trying to deceive the
                 borrower, but that [Wells Fargo] is an enormous corporation, and
                 the staff given the responsibility of communicating with borrowers
                 about loan modification and loan default was so decentralized that
                 no one office was aware of the status of the review process for any
                 individual borrower.”

We share the concerns expressed by the Superior Court justice.
9
 Miller highlights the Superior Court justice’s finding that, prior to October 29, 2009, Wells
Fargo had received sufficient financial documentation to have evaluated her eligibility.
                                                -7-
Accordingly, the argument that Miller now raises on appeal was not raised in the complaint nor

was it addressed at trial. In accordance with this Court’s longstanding “raise-or-waive” rule, if

an issue was not properly asserted, and thereby preserved, in the lower tribunals, this Court will

not consider the issue on appeal. See State v. Gomez, 848 A.2d 221, 237 (R.I. 2004). We

therefore deem this contention waived.

       Next, Miller contends that Wells Fargo breached the covenant of good faith and fair

dealing in the promissory note, mortgage, and HAMP modification process. However, the

Superior Court justice concluded, “[T]here were no contract terms which afford [Miller] any

right or impose upon [Wells Fargo] any obligation to modify a mortgage loan or to consider such

modification.” Rather, as the Superior Court justice explained, “the mortgage contain[ed] clear

and unambiguous language that [Wells Fargo] may foreclose for a payment default, without first

considering loan modification.”

       When reviewing a trial justice’s decision on a motion for judgment as a matter of law,

“[t]his Court, like the trial justice, will examine ‘the evidence in the light most favorable to the

nonmoving party, without weighing the evidence or evaluating the credibility of witnesses, and

draw from the record all reasonable inferences that support the position of the nonmoving

party.’” McGarry, 47 A.3d at 279 (quoting Oliveira, 846 A.2d at 829). Because we perceive no

error with the Superior Court justice’s factual findings, we agree with the decision that, in the

absence of a contractual obligation on behalf of the lender to either modify the mortgage loan or

exercise discretion in evaluating a potential modification, this claim for breach of contract must

fail. As such, it cannot be held that Wells Fargo arbitrarily or inconsistently employed its

contractual obligations in violation of the covenant of good faith and fair dealing. See McNulty

v. Chip, 116 A.3d 173, 185 (R.I. 2015) (applying Massachusetts law and holding that “a claim



                                               -8-
for breach of the implied covenant of good faith and fair dealing does not create an independent

cause of action separate and apart from a claim for breach of contract”); see also Young v. Wells

Fargo Bank, N.A., 717 F.3d 224, 238 (1st Cir. 2013) (“[T]he implied covenant cannot ‘create

rights and duties not otherwise provided for in the existing contractual relationship.’” (quoting

Ayash v. Dana-Farber Cancer Institute, 822 N.E.2d 667, 684 (Mass. 2005))). Turning to the

HAMP modification process specifically, the First Circuit in MacKenzie v. Flagstar Bank, FSB,

738 F.3d 486, 491 (1st Cir. 2013), held that “borrowers are not third-party beneficiaries of

agreements between mortgage lenders and the government.” See also Cathay Cathay, Inc. v.

Vindalu, LLC, 962 A.2d 740, 745-46 (R.I. 2009) (holding that, in order “[t]o prevail on a third-

party beneficiary theory,” the claimant must prove that he or she is an intended beneficiary of the

contract). Accordingly, we are of the opinion that the Superior Court justice did not err in

determining that Wells Fargo did not breach the covenant of good faith and fair dealing.

       Lastly, Miller contends that Wells Fargo was estopped from conducting the foreclosure

sale based on the HAMP guidelines. Before the Superior Court, Miller argued that Wells Fargo

was estopped from conducting the foreclosure sale because she detrimentally relied on promises

that Gibbons allegedly made—that the foreclosure would be rescinded. However, the Superior

Court justice concluded that Miller’s estoppel assertion was not credible because there was

insufficient evidence to support this assertion. Before this Court, Miller asserts, for the first

time, that Wells Fargo was estopped from conducting the foreclosure sale due to her submission

of over one hundred pages of financial documentation in accordance with the HAMP program

and communications between the parties relating thereto. Miller contends that she relied, to her

detriment, on Wells Fargo’s good-faith review of her application and adherence to Treasury

Directive 09-01 and thus failed to pursue other legal remedies. Although Miller’s frustration



                                               -9-
with Wells Fargo’s conduct is real and understandable, her allegations regarding Treasury

Directive 09-01 were not raised in the Superior Court. We therefore conclude that the Superior

Court justice did not err in finding that Miller failed to meet the burden of proof on her

promissory estoppel claim.

                                          Conclusion

       Accordingly, for the reasons set forth in this opinion, we affirm the judgment of the

Superior Court. The papers in this case shall be remanded to the Superior Court.




                                             - 10 -
STATE OF RHODE ISLAND AND                                    PROVIDENCE PLANTATIONS



                         SUPREME COURT – CLERK’S OFFICE

                                 OPINION COVER SHEET

Title of Case                        Joanne C. Miller v. Wells Fargo Bank, N.A. et al.
                                     No. 2016-71-Appeal.
Case Number
                                     (KC 11-60)
Date Opinion Filed                   May 25, 2017
                                     Suttell, C.J., Goldberg, Flaherty, Robinson, and
Justices
                                     Indeglia, JJ.
Written By                           Associate Justice Maureen McKenna Goldberg

Source of Appeal                     Kent County Superior Court

Judicial Officer From Lower Court    Associate Justice Allen P. Rubine
                                     For Plaintiff:

                                     Corey J. Allard, Esq.

                                     For Defendant:
Attorney(s) on Appeal
                                     David M. Bizar, Pro Hac Vice
                                     Michael E. Jusczyk, Esq.
                                     Randall L. Souza, Esq.
                                     Lauren J. O’Connor, Esq.




SU-CMS-02A (revised June 2016)
