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Williams v. Wells Fargo

Williams v. Wells Fargo

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Published by richdebt

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Published by: richdebt on Apr 13, 2011
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08/11/2012

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323789v1
IN THE UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAMIAMI-DADE DIVISION
RAY WILLIAMS;LUIS JUAREZ; and MIGDALIAH JUAREZ;on behalf of themselves and all otherssimilarly situated;
CLASS ACTION
Plaintiffs,
JURY DEMAND
v.WELLS FARGO FINANCIAL INC;WELLS FARGO FINANCIAL AGENCY COMPANY.;WELLS FARGO FINANCIAL AMERICA INC.;WELLS FARGO FINANCIAL FLORIDA INC.;WELLS FARGO SERVICING SOLUTIONS, LLC;WELLS FARGO FINANCIAL LEASING INC.;WELLS FARGO FINANCIAL SYSTEM FLORIDA INC.;WELLS FARGO INSURANCE;QBE INSURANCE CORPORATION; andSTERLING NATIONAL INSURANCEAGENCYDefendants.________________________________________/ 
CLASS ACTION COMPLAINT
Plaintiffs, RAY WILLIAMS, LUIS JUAREZ, and MIGDALIAH JUAREZ(“Plaintiffs”), on behalf of themselves and all others similarly situated, file this classaction complaint against QBE INSURANCE CORP., STERLING NATIONALINSURANCE AGENCY, WELLS FARGO FINANCIAL INC, WELLS FARGOFINANCIAL AGENCY CO., WELLS FARGO FINANCIAL AMERICA INC., WELLSFARGO FINANCIAL FLORIDA INC., WELLS FARGO FINANCIAL LEASING INC.,WELLS FARGO SERVICING SOLUTIONS, LLC, WELLS FARGO FINANCIALSYSTEM FLORIDA INC., and WELLS FARGO INSURANCE, (collectively
Case 1:11-cv-21233-CMA Document 1 Entered on FLSD Docket 04/07/2011 Page 1 of 37
 
323789v1
2“Defendants”) and allege as follows:
I. INTRODUCTION
1. This is a class action lawsuit filed to redress injuries that Plaintiffs, and anationwide class of consumers, have suffered and will continue to suffer as a result of thepractices of Defendants relating to force-placed insurance policies.2. Defendants are force-placed insurance providers, managing generalagents/surplus lines insurance agents, captive insurance agents, and mortgage loanservicers who have engaged in a pattern of unlawful, deceptive, unfair, andunconscionable profiteering and self-dealing in regards to force-placed insurance policiesprocured in connection with Plaintiffs’ and the proposed Class’s residential mortgageloans.3. Defendants’ unlawful actions include,
inter alia
, purchasingunconscionably high-priced insurance policies, having pre-arranged agreements topurchase force-placed insurance from a single company without seeking competitive bidson the open market to maximize their own profits, backdating the force-placed policies tocharge for retroactive coverage, and giving and receiving “commissions” or “kickbacks”for the procurement of the force-placed policies. These actions constitute a pattern of exploitative profiteering and self-dealing against the interest of the named Plaintiffs andthe Class members.4. As detailed more fully below, the unlawful scheme usually begins when ahomeowner’s insurance policy has lapsed often because the homeowner is alreadystruggling to pay on a costly mortgage (often substantially greater than the value of thehome) or sometimes due to no fault of the homeowner, for example, when an insurance
Case 1:11-cv-21233-CMA Document 1 Entered on FLSD Docket 04/07/2011 Page 2 of 37
 
323789v1
3company declines to continue insuring homes on the Florida coastline and thehomeowner does not receive notice of the cancellation or a clerical error at the insurancecompany mistakenly shows that a policy has expired.5. Once an insurance policy has lapsed, the mortgage servicer can purchaseinsurance for the home, “force-place” it, and then charge the borrower the full cost of thepremium.6. Instead of seeking to maintain the borrower’s delinquent existing policy orseeking bids for the force-placed insurance on the open market, the mortgage servicershave entered into exclusive relationships with certain force-placed insurance providersand continually purchase the force-placed insurance policies from these same providers.7. Accordingly, no arms-length transactions are taking place. Indeed, themortgage servicers and the force-placed insurance providers can often be found workingout of the same offices.8. Moreover, when borrowers have had just temporary lapses in their policy,the mortgage service providers have retroactively “placed” the force-placed insurancepolicy on the property for that period of time. In these situations, the borrowers arecharged an unreasonable premium for the retroactive force-placed insurance despite thefact that the time has lapsed, the homeowner has since secured his or her own standardinsurance, and no claims were made during the lapsed period.9. This retroactive force-placed insurance is especially egregious given thefact that the National Association of Insurance Commissioners has already stated thatinsurance is “prospective in nature” and that policies should not be backdated.10. Homeowners’ mortgage payments often include an amount to be placed in
Case 1:11-cv-21233-CMA Document 1 Entered on FLSD Docket 04/07/2011 Page 3 of 37

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