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Adams v. U.S. Bank, N.A.

United States District Court, N.D. Texas, Dallas Division

April 18, 2018

BARBARA A. ADAMS, Plaintiff,
U.S. BANK, N.A. and GUILD MORTGAGE CO., Defendants.



         This case has been referred to the undersigned United States magistrate judge for pretrial management under 28 U.S.C. § 636(b) and a standing order of reference from United States District Judge Jane J. Boyle. See Dkt. No. 28.

         Defendant U.S. Bank National Association (“U.S. Bank”) has filed a Motion to Dismiss. See Dkt. No. 55. Plaintiff Barbara Adams filed a response, see Dkt. No. 58, and Defendant U.S. Bank filed a reply, see Dkt. No. 59.

         For the reasons and to the extent explained below, the Court should grant Defendant U.S. Bank's Motion to Dismiss [Dkt. No. 55].


         The undersigned discussed much of the relevant background in the Findings, Conclusions, and Recommendation dated December 4, 2017, which recommended granting U.S. Bank's previous motion to dismiss, see Dkt. No. 46, and will repeat only the pertinent facts here.

         On or about October 4, 2012, Ms. Adams purchased a home in Desoto, Texas (the “Property”). She signed a promissory note (the “Note”) to finance the purchase. And she secured the Note through a Deed of Trust pledging her interest in the Property as security (the “Deed of Trust”).

         Guild Mortgage Company (“Guild”) initially held the Note and Deed of Trust (collectively, the “Loan”). But Guild either assigned the Loan to U.S. Bank or selected U.S. Bank as the mortgage servicer.

         Ms. Adams filed this lawsuit against U.S. Bank and other defendants on August 1, 2016, claiming that U.S. Bank violated the Texas Property Code (the “Property Code”), violated the Texas Debt Collection Act (the “TDCA”), and breached the Deed of Trust contract.

         On August 3, 2017, U.S. Bank filed a motion to dismiss Ms. Adams's State Court Petition. See Dkt. No. 34. The undersigned recommended granting the motion, see Dkt. No. 46, and, on January 3, 2018, the Court dismissed Ms. Adams's Property Code claims with prejudice but allowed Ms. Adams twenty-one days in which to replead her TDCA and breach of contract claims and requests for equitable relief, see Dkt. No. 50.

         On January 24, 2018, Ms. Adams filed her Second Amended Complaint, which restates almost the exact claims against U.S. Bank under the TDCA and for breach of contract. See Dkt. No. 53.

         Ms. Adams contends in her Second Amended Complaint that U.S. Bank violated the TDCA when it (1) threatened to foreclose despite, having violated the Property Code, being prohibited from doing so; (2) used deceptive practices and made misrepresentations to Ms. Adams in servicing the Loan; (3) demanded payment from Ms. Adams over what the Loan permitted; and (4) wrongfully posted invalid notices of trustee sales.

         Second, Ms. Adams maintains that U.S. Bank's alleged statutory violations above constitute a breach of the Deed of Trust contract.

         On these bases - as well as the other allegations that she proffers against other defendants - Ms. Adams seeks injunctive relief to preclude the foreclosure sale of the Property, declaratory relief, monetary damages, and other forms of relief.

         On January 26, 2018, U.S. Bank filed the Motion to Dismiss Ms. Adams's Second Amended Complaint (the “Second MTD”) that is now before the Court. See Dkt. No. 55. In its Second MTD, U.S. Bank contends that all of Ms. Adams's claims against it should be dismissed for many of the same reasons advanced in U.S. Bank's previous motion to dismiss.

         As to Ms. Adams's TDCA claims, U.S. Bank contends that Ms. Adams's Second Amended Complaint states insufficient facts to properly plead her claims and that Ms. Adams has not suffered any actual damages as required to state a claim under the TDCA.

         U.S. Bank argues that Ms. Adams's breach of contract claim fails because Ms. Adams has not adequately pleaded that (1) Ms. Adams performed under the Deed of Trust; (2) U.S. Bank breached the Deed of Trust; and (3) Ms. Adams suffered damages caused by U.S. Bank's alleged breach.

         And U.S. Bank asserts that, because Ms. Adams's underlying TDCA and breach of contract claims fail, Ms. Adams cannot maintain her requests for declaratory and injunctive relief.

         Legal Standards

         In deciding a Federal Rule of Civil Procedure 12(b)(6) motion, the Court must “accept all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205-06 (5th Cir. 2007). To state a claim upon which relief may be granted, the plaintiff must plead “enough facts to state a claim to relief that is plausible on its face, ” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and must plead those facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555. “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). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “A claim for relief is implausible on its face when ‘the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct.'” Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011) (quoting Iqbal, 556 U.S. at 679).

         While, under Federal Rule of Civil Procedure 8(a)(2), a complaint need not contain detailed factual allegations, a plaintiff must allege more than labels and conclusions, and, while a court must accept all of the plaintiff's allegations as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). A threadbare or formulaic recitation of the elements of a cause of action, supported by mere conclusory statements, will not suffice. See id. But, “to survive a motion to dismiss” under Twombly and Iqbal, a plaintiff need only “plead facts sufficient to show” that the claims asserted have “substantive plausibility” by stating “simply, concisely, and directly events” that the plaintiff contends entitle him or her to relief. Johnson v. City of Shelby, Miss., 135 S.Ct. 346, 347 (2014) (per curiam) (citing Fed.R.Civ.P. 8(a)(2)-(3), (d)(1), (e)); accord N. Cypress Med. Ctr. Operating Co. v. Cigna Healthcare, 781 F.3d 182, 191 (5th Cir. 2015) (“To survive a Rule 12(b)(6) motion to dismiss, the complaint does not need detailed factual allegations, but it must provide the plaintiff's grounds for entitlement to relief - including factual allegations that, when assumed to be true, raise a right to relief above the speculative level.” (footnote and internal quotation marks omitted)).

         The United States “Supreme Court has made clear that a Rule 12(b)(6) motion turns on the sufficiency of the ‘factual allegations' in the complaint.” Smith v. Bank of Am., N.A., 615 Fed.Appx. 830, 833 (5th Cir. 2015) (quoting Johnson, 135 S.Ct. at 347), and the Federal Rules of Civil Procedure “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted, ” Johnson, 135 S.Ct. at 346.

         A court cannot look beyond the pleadings in deciding a Rule 12(b)(6) motion. Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). Pleadings in the Rule 12(b)(6) context include attachments to the complaint. In re Katrina Canal Breaches Litig., 495 F.3d at 205. Documents “attache[d] to a motion to dismiss are considered to be part of the pleadings, if they are referred to in the plaintiff's complaint and are central to her claim.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). “Although the [United States Court of Appeals for the] Fifth Circuit has not articulated a test for determining when a document is central to a plaintiff's claims, the case law suggests that documents are central when they are necessary to establish an element of one of the plaintiff's claims. Thus, when a plaintiff's claim is based on the terms of a contract, the documents constituting the contract are central to the plaintiff's claim.” Kaye v. Lone Star Fund V (U.S.), L.P., 453 B.R. 645, 662 (N.D. Tex. 2011). But, “if a document referenced in the plaintiff's complaint is merely evidence of an element of the plaintiff's claim, then the court may not incorporate it into the complaint.” Id.

         In addition, “it is clearly proper in deciding a 12(b)(6) motion to take judicial notice of matters of public record.” Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007); accord Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2008) (directing courts to “consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice”). And “[t]here is nothing improper about the district court considering the content of briefing that supports or opposes a motion under Rule 12(b)(6) when deciding such a motion” - although “[w]hen matters outside the pleadings are presented to the court in connection with a motion under Rule 12(b)(6), the motion must be treated as a Rule 56 motion for summary judgment and appropriate notice given to the parties.” Turnage v. McConnell Techns., Inc., 671 Fed.Appx. 307, 309 (5th Cir. Dec. 12, 2016). The Fifth Circuit has held “that briefs and oral arguments in connection with the motion ... are not considered matters outside the pleadings for purposes of conversion.” Id. (internal quotation marks and citations omitted).


         U.S. Bank argues that all of Ms. Adams's claims against it should be dismissed. For the reasons explained below, the undersigned concludes that Ms. Adams has failed to state a claim under the TDCA, for breach of contract, and for declaratory and injunctive relief and that Ms. Adams's claims against U.S. Bank should be dismissed. The undersigned will address U.S. Bank's arguments in turn and, in doing so, because U.S. Bank attached the Deed of Trust to its Second MTD and the Deed of Trust is central to Ms. Adams's claims, will consider the Deed of Trust as part of the pleadings. See Dkt. No. 56-1.

         I. Ms. Adams's breach of contract claim should be dismissed.

         Ms. Adams does not adequately plead the damages element of her breach of contract claim.

         In her Second Amended Complaint, Ms. Adams alleges that U.S. Bank breached the Deed of Trust because, by allegedly failing to give proper foreclosure notice under the Property Code, U.S. Bank breached the express terms of the Deed of Trust contract. The undersigned previously considered Ms. Adams's nearly identical breach of contract claim pleaded in her State Court Petition, see Dkt. No. 46, and repeats the pertinent analysis here.

         To succeed on a breach of contract claim under Texas law, a plaintiff must show “(1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.” Sport Supply Grp., Inc. v. Columbia Cas. Co., 335 F.3d 453, 465 (5th Cir. 2003); accord Richardson v. Wells Fargo Bank, N.A., 873 F.Supp.2d 800, 809 (N.D. Tex. 2012). U.S. Bank maintains that Ms. Adams has not pleaded facts to satisfy the performance, breach, and damages elements of her breach of contract claim.

         First, U.S. Bank argues that, because Ms. Adams defaulted on the Loan, she cannot establish the performance element of her breach of contract claim. But, in the time that has passed since the undersigned considered U.S. Bank's previous motion to dismiss in which U.S. Bank made an identical argument, the Fifth Circuit has held that a borrower's obligation to make monthly payments is independent of a lender's obligations in the event of default. See Williams v. Wells Fargo Bank, N.A., 884 F.3d 239, 245 (5th Cir. 2018) (reasoning that “[i]f performance of the terms of a deed of trust governing the parties' rights and obligations in the event of default can always be excused by pointing to the debtor's default under the terms of the note, the notice terms have no meaning”). And, because, here, Ms. Adams alleges that U.S. Bank violated the Deed of Trust by failing to uphold its post-default notice obligations under the Deed of Trust, see Dkt. No. 53 at 9-10 of 17, Ms. Adams's defaulting on the Loan, alone, does not preclude her breach of contract claim.

         Second, U.S. Bank argues that Ms. Adams cannot establish the breach element of her claim because neither the Deed of Trust nor Texas law requires Ms. Adams to receive any notices for such notices to be effective.

         According to Ms. Adams's Second Amended Complaint, “Defendant [U.S. Bank], by violating the Texas Property Code, breached the express terms of the Deed of Trust contract, which contract requires compliance with all applicable law.” Dkt. No. 53 at ¶ 31; see also Dkt. No. 56-1 at ¶ 18 (“Lender ...

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