Holm v. Wells Fargo Home Mortgage, Inc.

David and Crystal Holm (collectively, Holm) (plaintiffs) purchased a property secured by a promissory note held by Federal National Mortgage Company (Freddie Mac) (defendant). Wells Fargo Home Mortgage, Incorporated (Wells Fargo) (defendant) serviced the note on behalf of Freddie Mac. Holm was behind on payments to Wells Fargo but had a payment plan in place. During a storm, Holm’s property suffered damage. Wells Fargo accelerated Holm’s loan because a Wells Fargo agent mistakenly believed that Holm was abandoning their property. Subsequently, Wells Fargo’s attorneys from Kozeny and McCubbin, LC (Kozeny) informed Holm that their note had been accelerated and that they had to pay about $7,000 to reinstate the note. Holm disputed the acceleration and stated they were on a payment plan. Kozeny replied that Holm was required to pay the entire loan amount, fees, and costs to reinstate the note. Holm again disputed the amount owed. Regardless, Kozeny scheduled a foreclosure sale. Holm made repeated attempts to resolve the dispute over the amount owed. Eventually, Holm reached an agreement with a Wells Fargo representative on the eve of the sale. Holm agreed to pay about $10,000 to reinstate the note in order to postpone the sale. The representative told Holm to arrange for payment with Kozeny and that they did not have to deliver payment before the sale. Holm contacted Kozeny the following morning and confirmed the arrangements. Kozeny told Holm the sale would be postponed. However, Freddie Mac had purchased the house at the foreclosure sale. Kozeny returned the cashier’s check to Holm because it had not been received before the sale. Later, Wells Fargo offered Holm another reinstatement amount, but when Holm sent a cashier’s check, Wells Fargo refused to reinstate the loan. Holm sued Wells Fargo and Freddie Mac for money damages for wrongful foreclosure. The trial court entered judgment in favor of Holm, awarding money damages including about $3 million in punitive damages against Wells Fargo. Wells Fargo appealed.