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Roland v. Flagstar Bank, FSB

United States District Court, Fifth Circuit

January 8, 2014

RANDAL L. ROLAND, Plaintiff,


MARCIA A. CRONE, District Judge.

Pending before the court is Defendant Flagstar Bank, FSB's ("Flagstar") Motion to Dismiss (#5), wherein it contends that Plaintiff Randal L. Roland ("Roland") cannot prevail on his causes of action for breach of contract and negligent misrepresentation. Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that Flagstar's motion to dismiss should be granted in part and denied in part.

I. Background

This dispute concerns a home equity loan and an attempted foreclosure. Roland owns a residence (the "Property") in Beaumont, Texas. In 2006, Roland took out a home equity loan with Loan America, Inc., secured by the Property. Roland made payments on the note for several years, and, during that time, Loan America assigned the note to Flagstar.

In January 2013, Roland encountered financial difficulties and was no longer able to make his full monthly payments. Roland maintains that after notifying Flagstar of the issue, Flagstar agreed to a forbearance plan (the "Plan") that reduced his monthly payments for three months. Attached to Roland's original petition is a letter, dated April 19, 2013, from Flagstar memorializing the Plan. The letter states that Roland "ha[s] been approved for a Forbearance Plan" and specifies that he may make a monthly payment of $355.73 in lieu of his monthly mortgage payment for three months. The letter further explains how Roland would accept the offer:

To Suspend Foreclosure
You must contact us at (800) 393-4887 or in writing at the address provided below to indicate your intent to accept this offer. If you contact us by 05/03/2013 to indicate your intent to accept this offer, we will not refer your loan to foreclosure, or if your loan has been referred to foreclosure, we will suspend the next legal action in the foreclosure proceedings.
However, if you do not respond by 05/03/2013, foreclosure proceedings may continue and a foreclosure sale may occur, even if such sale is scheduled prior to 06/01/2013, the due date of your first temporary reduced payment and you failed to respond by 05/03/2013, this offer has been revoked.

(emphasis in original). Despite the confusing wording, these paragraphs suggest that Roland had to contact Flagstar by mail or telephone to accept the offer. Nevertheless, a second page of the letter, which Roland attached to his original petition, describes the method of accepting the offer differently:

To Accept This Offer
If you have notified us of your intent to accept the offer by 05/03/2013 or, if you have not notified us and a foreclosure sale has not occurred, you must send in your first temporarily reduced payment on or before 06/01/2013.
* * *
If you fail to make the first temporarily reduced payment by 06/01/2013, this offer has been [sic] revoked and foreclosure proceedings may continue and a foreclosure sale may occur.

(emphasis in original).

A transaction history report submitted with Roland's original petition shows that he made timely monthly payments of $711.46 through December 12, 2012, but he did not make any further payments until February 28, 2013. Thereafter, Roland did not pay on the note until May 29, 2013, when he began to tender monthly payments of $360.00. In total, Roland made three $360.00 payments, one each in the months of May, June, and July 2013.

Roland alleges that Flagstar told him that it was agreeing to the Plan in order to give each party time to craft a loan modification that would account for his financial strain. Roland maintains that although he was attempting to "work out" the modification and was making payments pursuant to the Plan, Flagstar's true intent was to foreclose on the Property without regard to the outcome of these negotiations. Indeed, Flagstar initiated foreclosure litigation against Roland on July 11, 2013, on the basis that Roland was delinquent on his loan payments.

On August 22, 2013, Roland filed his original petition alleging causes of action for breach of contract and misrepresentation against Flagstar. Roland asserts that Flagstar breached its agreement to the Plan as well as a separate oral agreement to modify the note at some future time. His misrepresentation claim is premised on Flagstar's engaging in "deceptive practices calculated to make [Roland] believe he was working through the modification with [Flagstar]...." In addition to actual and consequential damages as well as attorney's fees, Roland requests specific performance to compel Flagstar to modify the note.

Flagstar filed the instant motion on September 27, 2013, presenting multiple reasons for dismissing Roland's claims. Flagstar contends that the breach of written contract claim fails because: (1) Roland did not plead that he properly accepted the Plan; (2) the agreement embodied by the Plan does not comply with the statute of frauds; and (3) his failure to perform under the contract precludes a viable claim for breach of contract. Flagstar also maintains that the breach of oral contract claim concerning a possible loan modification should be dismissed for similar reasons. Lastly, Flagstar argues that Roland's negligent misrepresentation claim fails because it is premised on a suggestion of future conduct which is not actionable, its reliance element is pleaded in a conclusory fashion, and it is barred by the economic loss rule.[1] Roland responds to these arguments by stating that he has pleaded sufficient facts to sustain his causes of action.

II. Analysis

A. Rule 12(b)(6) Standard

A motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests only the formal sufficiency of the statement of a claim for relief and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert. denied, 536 U.S. 960 (2002). It is not a procedure for resolving contests about the facts or the merits of a case. See 5A CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d ยง 1356, at 294 (1990). In ruling on such a motion, the court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in favor of the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982); Leal v. McHugh, 731 F.3d 405, 410 (5th Cir. 2013); In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir. 2008), cert. denied, 556 U.S. 1152 (2009); Ramming, 281 F.3d at 161. Nevertheless, "the plaintiff's complaint [must] be stated with enough clarity to enable a court or an opposing party to determine whether a claim is sufficiently alleged." Ramming, 281 F.3d at 161 (citing Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir. 1989)). The "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); accord Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007); In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007), cert. denied, 552 U.S. 1182 (2008).

Generally, the court may not look beyond the four corners of the plaintiff's pleadings. See Indest v. Freeman Decorating, Inc., 164 F.3d 258, 261 (5th Cir. 1999); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). The court, may, however, consider "documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). Moreover, "Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law." Neitzke v. Williams, 490 U.S. 319, 327 (1989) (citing Hishon v. King & Spalding, 467 U.S. 69 (1984); Conley v. Gibson, 355 U.S. 41, 45-46 (1957), abrogated on other grounds by Twombly, 550 U.S. at 563)).

Furthermore, "a complaint that shows relief to be barred by an affirmative defense, such as the statute of limitations, may be dismissed for failure to state a cause of action." Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983); accord Jones v. Bock, 549 U.S. 199, 215 (2007); La Porte Constr. Co. v. Bayshore Nat'l Bank of La Porte, 805 F.2d 1254, 1255 (5th Cir. 1986). "Although defendants bear the burden of pleading and proving affirmative defenses, where facts alleged in plaintiff's pleadings make clear that a claim is barred, dismissal under Rule 12(b)(6) may be granted." In re Dynegy, Inc. Secs. Litig., 339 F.Supp.2d 804, 819 (S.D. Tex. 2004); see also Jones, 549 U.S. at 215; Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir. 2003), cert. denied, 540 U.S. 1161 (2004).

A Rule 12(b)(6) motion to dismiss must be read in conjunction with Rule 8(a) of the Federal Rules of Civil Procedure. Twombly, 550 U.S. at 555. Accordingly, a district court should not dismiss a complaint for failure to state a claim unless a plaintiff has failed to plead "enough facts to state a claim to relief that is plausible on its face." Id. at 570; accord Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S.662, 678 (2009) (citing Twombly, 550 U.S. at 556); Harold H. Huggins Realty, Inc., 634 F.3d at 796. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). "Nor does a complaint suffice if it tenders naked assertion[s]' devoid of further factual enhancement.'" Id. (quoting Twombly, 550 U.S. at 557). "While legal ...

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