## Facts

- Frank T. Dixon and Deana M. Dixon held a residential mortgage serviced by Wells Fargo Bank, N.A.
- After experiencing financial difficulty, the Dixons sought a loan modification.
- Wells Fargo allegedly made an oral promise to consider them for a modification if they complied with conditions, including submitting detailed financial information and stopping mortgage payments so arrearages could be added to a modified loan.
- Relying on those instructions, the Dixons stopped making payments and provided the requested documentation.
- Wells Fargo allegedly initiated foreclosure based on the resulting default rather than processing the modification request.
- The Dixons filed suit seeking to stop foreclosure, compel performance related to the modification process, and recover damages.
- The case was removed to federal court, where Wells Fargo moved to dismiss under Rule 12(b)(6) and argued that federal law (HOLA and OTS regulations) preempted the state-law theory; the Dixons moved to remand.

## Issues

1. Whether the complaint plausibly alleged a Massachusetts detrimental-reliance (promissory estoppel) claim based on an oral promise to consider a loan modification conditioned on the borrowers’ stopping payments and submitting financial information.
2. Whether the complaint sufficiently pleaded an enforceable contract claim seeking specific performance of an oral modification agreement.
3. Whether HOLA and implementing OTS regulations preempted the borrowers’ detrimental-reliance theory.

## Decision

- The court denied the motion to remand.
- The court granted the motion to dismiss as to the contract claim, holding it was insufficiently pleaded.
- The court denied the motion to dismiss as to detrimental reliance (promissory estoppel), holding the allegations plausibly stated a claim.
- The court rejected HOLA preemption as a basis to dismiss the detrimental-reliance claim.

## Legal Principles

- Under Massachusetts law, “detrimental reliance” functions like promissory estoppel: the plaintiff must establish contract-like elements except consideration, which may be supplied by detrimental reliance.
- A detrimental-reliance claim still requires a promise that is sufficiently definite and offer-like to justify the promisee’s reasonable belief that a commitment was made.
- A borrower may state a detrimental-reliance claim when the lender’s promise induces the borrower to take action that foreseeably makes the borrower worse off (including entering default) and the lender then acts inconsistently with the promise.
- HOLA preemption targets state rules that impose substantive requirements on lending operations; claims enforcing a lender’s voluntary, borrower-specific commitments may fall outside preemption when they do not regulate loan terms or servicing standards generally.
- A claim framed as breach of an oral modification contract may be dismissed at the pleading stage if the alleged agreement is not adequately pleaded as an enforceable contract.

## Conclusion

The court allowed the borrowers to proceed on a Massachusetts detrimental-reliance theory based on an alleged oral modification-related promise that induced them to stop payments, while dismissing an inadequately pleaded contract claim and holding that HOLA did not preempt the borrower-specific reliance claim.


Dixon v. Wells Fargo Bank, N.A., 798 F. Supp. 2d 336 (D. Mass. 2011)