Dixon v. Wells Fargo

Wells Fargo Bank, N.A. ("Wells Fargo") held the mortgage of the Dixon couple ("Dixon") in Massachusetts.

In 2009, Dixon agreed to a loan modification with Wells Fargo. In turn, Wells Fargo requested financial information. In addition, Wells Fargo advised Dixon to discontinue mortgage payments [too good to be true!] with the understanding that the unpaid mortgage total would be added onto the new mortgage as a result of the modification.

Dixon provided the financial info & stopped paying the existing mortgage even though the modification to the mortgage hadn't been complete.

All of the sudden, Dixon learns of the Wells Fargo foreclosure proceedings.

• the Dixons = plaintiffs
• Wells Fargo = defendant

Dixon sued Wells Fargo in Massachusetts state court. Dixon sought to stop the foreclosure based on the oral agreement in the course of the loan modification; Dixon also sought money damages.

Wells Fargo moved the suit from state to the United States District Court for the District of Massachusetts (federal).

May a negotiating party break a promise made during negotiations if the other party has detrimentally relied on that promise?

Wells Fargo denied having made any such promises to Dixon allowing him to skip mortgage payments without the consequence of foreclosure.

Moreover, Wells Fargo argued that the loan modification wasn't guaranteed.

No. The doctrine of promissory estoppel prevents a negotiating party from breaking a promise made during negotiations if the other party has detrimentally relied on it.