Feliz, a Florida homeowner, is suing Wells Fargo for the exorbitant costs he has to pay for excess flood insurance. She argues that the fees are excessive and that the company was wrong to require coverage for the replacement value of her home, even though this is not an insurable interest. In the case of excess flood insurance, Feaz’s lawsuit would likely win.
Wells Fargo’s claims are preempted by the National Bank Act
The case involves the federal government’s preemption of state law claims for overdraft penalties. Wells Fargo argues that its claims are preempted by the National Bank Act. Wells Fargo argues that it violated the law by systematically manipulating its customer transactions to assess as many overdraft penalties as possible. The federal government disagrees, and the district court finds that Wells Fargo’s claims are preempted by the National Bank Act.
The National Bank Act prohibits banks from requiring their borrowers to obtain flood insurance over the amount required by the lender. Whether or not Wells Fargo is obligated to offer flood insurance beyond the amount of the loan is up to the court. The ABA has made it clear that it opposes this policy. Although the NSFH sets the level of flood insurance required by banks, it does not require banks to include it in mortgage loan documents.
Swain’s risk-profile theory fails to state an unjust enrichment claim
The court concludes that Swain’s risk-profile theory fails on its face to state an unjust enrichment claim in his Wells Fargo Excess Flood Insurance case. Swain maintains that he did not receive kickbacks for taking out the loan, but instead was subjected to an unjust enrichment because the lender demanded that he increase the flood insurance coverage on his loan.
The ABA contends that Swain’s risk-profile theory fails in this case because the insurance premium increase was not an ‘increase in the value of the mortgage loan’. It also points out that the FDPA does not cover force-placed insurance, where a bank adds an extra amount to the mortgage loan payment because of its risk-profile theory.
The District Court also found that Swain’s risk-profile theory fails in the Wells Fargo Excess Flood Insurance case. Swain argued that the language of Paragraph 4 is “ambiguous” in the sense that it does not say how the insurance company can demand a lower amount of flood insurance than it is legally required to cover.
An unjust enrichment claim should be dismissed
A well-known precedent holds that an unjust enrichment claim in a consumer lawsuit should be dismissed. This rule applies where a plaintiff fails to show that he benefited from the defendant’s failure to perform. In this case, the plaintiff alleges that the defendant received an SFHD that is incomplete, misleading, or unreliable and subsequently charged him unlawful fees.
The plaintiffs’ RESPA claim is sufficiently pled, and they have established that the defendants’ breach of contract was caused by a violation of RESPA. Furthermore, the plaintiffs’ use of common-law contract principles to establish liability is not barred by the doctrine of preemption. However, the plaintiffs’ claim of an independent violation of the covenant of good faith based on its inflated fee is premised on the defendant’s self-enrichment. Consequently, it is a fair argument that all aspects of the breach of contract claim survive any legal challenges presented by W. F. Insurance.
The plaintiffs’ claim under RESPA and TILA is not merited by the NFIA. In addition, it is unclear how the plaintiffs’ breach of contract claim would be successful given that the SFHD and TILA do not apply to the Wells Fargo Excess Flood Insurance lawsuit. This means that the plaintiffs are unable to show that W. F. Insurance knowingly violated the SFHA and the NFIA.