Phillip McFarland (plaintiff) refinanced his home in a very good housing market. After the housing market collapsed, McFarland’s refinanced loan was more than his house was worth. McFarland was unable to keep up with payments, and Wells Fargo Bank, N.A. (defendant) commenced foreclosure proceedings. McFarland sued Wells Fargo, alleging that the refinancing contract was void because it was unconscionable. McFarland claimed both that the contract itself was unconscionable and that the contract was unconscionably induced on account of an inflated appraisal of his home’s value. The district court found that a loan amount in excess of the home’s value was not, without more, substantively unconscionable and that claims of unconscionability and unconscionable inducement required substantive unconscionability. The court thus dismissed McFarland’s complaints. McFarland appealed.