Wells Fargo Once Sued Itself and Hired Two Law Firms to Do It

In 2009, in the depths of the financial crisis, a foreclosure case was filed in Hillsborough County, Florida, that perfectly captured the absurdity of the American banking system.

Wells Fargo Bank N.A. held both the first and second mortgage on a condominium. The homeowner had defaulted. Wells Fargo needed to foreclose using its first mortgage. Standard procedure.

Except Florida foreclosure law requires the first mortgage holder to name and serve all subordinate lien holders as defendants in the foreclosure action. This ensures every party with a financial interest in the property has a chance to respond in court.

The second lien holder on this particular condo was also Wells Fargo.

Two Law Firms, One Client

Wells Fargo hired the Florida Default Law Group to file the foreclosure complaint on behalf of Wells Fargo. Then it hired Kass, Shuler, Solomon, Spector, Foyle and Singer to file a defense on behalf of Wells Fargo.

The defense attorney filed an answer that read, in relevant part: "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."

Wells Fargo admitted it owed money to Wells Fargo, then denied everything else Wells Fargo claimed.

Not an Isolated Incident

A Wells Fargo spokesman named Kevin Waetke confirmed the case was real and explained that it was legally required: when a single bank holds both liens, it must still follow the standard foreclosure procedure, even if that means suing itself.

This was not unique to Wells Fargo. Similar cases emerged involving SunTrust and other major banks during the crisis. When institutions grow so large that their left hand doesn't know what their right hand is doing, you end up paying two law firms to argue against yourself in court.