According to reports last week, Wells Fargo Bank NA is locked in a legal battle in Florida with an equally-matched opponent who will be almost impossible for it to defeat: itself.
The Consumer Warning Network website reported on July 2 that Wells Fargo had filed a complaint against itself in the process of trying to clear title to a home so it could foreclose. CWN was told by the homeowner's attorney that Wells Fargo holds the first mortgage on his client's condo, and had sued all other lienholders including the holder of the second mortgage, Wells Fargo.
Wells Fargo hired a Tampa law firm to file the lawsuit against itself, and also, in a very sensible move, hired a different law firm to defend it against itself. (Presumably, it hired separate counsel to defend itself against itself in order to avoid having the same firm on both sides of the case. Because that would be a conflict of interest, you see.) Wells Fargo promptly filed an answer to Wells Fargo's complaint, which read as follows: "Defendant admits that it is the owner and holder of a mortgage encumbering the subject real property. All other allegations of the complaint are denied." (That is, Wells Fargo denied most of the allegations it had made against itself.)
Why would it do this? According to a spokesman, it's required by law. "Due to state foreclosure laws," he said, "lenders are obligated to name and notify subordinate lien holders. . . . The primary reason is to clear title and ownership interest in a property to prepare it for sale. So it really is not Wells Fargo vs. Wells Fargo." That statement is undermined a bit, though, by the presence in the lawsuit of a plaintiff named "Wells Fargo" and a defendant named "Wells Fargo," which is the same entity.
The condo owner's attorney, Dan McKillop, suggested that this had to do mostly with paperwork. While a lender could avoid suing itself as a lienholder by just releasing the lien after the foreclosure, that apparently involves an extra step or steps, which end up making it easier and faster for the bank to sue itself. That may be — I don't pretend to understand this area of law — but generally it is against the rules to file a complaint that you know cannot succeed (for example, because you can't recover against yourself), even if it may come in handy for some reason. Maybe this is in fact a clever strategy, or maybe, as a professor quoted by FOX Business suggested, "[t]his is just folks cranking out paperwork without conscious thought."
McKillop said that he is aware of four or five other cases of this kind, including one in which SunTrust Bank is currently suing SunTrust Bank, so the tactic may be common at the moment. Nor is it the first example of people suing themselves. In 2005, Emert Wyss managed to sue himself in a very complicated scheme that, not coincidentally, also involved real estate. (There was an awkward moment at his deposition when he seems to have first realized he was suing a company he actually owned.) I'm not sure if it's better or worse that in his case, he may not have sued himself on purpose.