Chris Lazarini | Contributing Legal Editor | Securities Litigation CommentatorBass, Berry & Sims attorney Chris Lazarini provided insight on a lawsuit involving a former broker of Wells Fargo who sued the firm in state court for fraud and personal injury when the company initiated a foreclosure action against him. After losing in state court and on appeal, the plaintiff criticized company employees online and was terminated. He then filed a federal court action claiming unlawful retaliation and discrimination. Those claims were directed to a FINRA arbitration which was later administratively dismissed. Plaintiff then tried to bring a host of claims in a federal court action. The Court dismissed the claims relating to the foreclosure action on res judicata grounds, citing the final decision on the merits in the prior litigation involving the same claims or causes of action between the same parties. The Court dismissed the other claims, citing Plaintiff’s arbitration agreement with Wells Fargo.

Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

Casares vs. Wells Fargo Bank, NA, No. 13-1633 (D. D.C., 8/7/17)

A lawsuit should be barred on res judicata grounds where there has been prior litigation involving the same claims or causes of action, between the same parties and there has been a final adjudication of the merits by a court of competent jurisdiction.

Plaintiff is a former broker at Wells Fargo Advisors, having transitioned from Prudential to Wachovia to Wells Fargo as the firms consolidated. During one transition, Plaintiff acted on a preferred rate mortgage offered by Wachovia and purchased a house. In 2011, Wells Fargo (which apparently assumed the mortgage loan) initiated a foreclosure action in a Florida state court. Plaintiff defended, alleging that he had become disabled due to a mold infestation and sued Wachovia for fraud and personal injury in Florida state court. Plaintiff lost the state court case, lost his appeal to the Florida appellate court, and his attempt to get before the Florida Supreme Court was dismissed for lack of jurisdiction.

In 2011, Plaintiff created a website on which he criticized Wells Fargo employees. After being terminated, Plaintiff filed this case, claiming unlawful retaliation for the statements on the website and disability and national origin discrimination. In 2014, the Court, without opposition from Plaintiff, granted Defendants’ motion to compel arbitration of the retaliation and discrimination claims, staying the court action as to non-arbitrable claims. The Court does not disclose what the non-arbitrable claims were, but they appear to have differed from the mortgage-related claims and were later dismissed, perhaps voluntarily. A FINRA arbitration ensued, but, in April 2017, FINRA “terminated” the arbitration. No Award was on FINRA’s website, so it appears that this was an administrative dismissal.

In May 2017, just after FINRA terminated the arbitration, Defendants moved to dismiss Plaintiff’s “amended complaint” which alleges treason, conspiracy, deprivation of civil rights, wire fraud and obstruction of justice in the mortgage and foreclosure action and unlawful retaliation and discrimination in violation of the Civil Rights Act and the Americans with Disabilities Act. The Court dismisses the mortgage-related claims on res judicata grounds, finding that they share the same factual nucleus as the allegations previously litigated in the Florida state court action, which involved the same parties as the present action and resulted in a judgment on the merits.

That leaves the causes of action for retaliation and discrimination, which arise from the termination of his employment at Wells Fargo. Noting that Plaintiff’s opposition to Defendants’ motion to dismiss does not address the arbitrability of his employment-related claims and pointing to the arbitration clause in Plaintiff’s employment agreement, the Court concludes that only an arbitration panel can resolve those claims and dismisses the action.

The Court criticized Plaintiff’s forty-eight page amended complaint and suggested dismissal for failure to file a short and plain statement of the claims would also have been appropriate under Fed. R. Civ. Pro. 8(a).