United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND RECOMMENDATION
FRANCES H. STACY, UNITED STATES MAGISTRATE JUDGE.
the Magistrate Judge, upon referral from the District Judge,
is Wilmington Trust, N.A.'s ("Defendant")
Motion for Summary Judgment (Document No. 21). Plaintiff has
responded to the motion (Document No. 22), and Defendant has
replied to Plaintiffs Response. (Document No. 23). Having
considered the Motion, and the applicable law, the Magistrate
Judge RECOMMENDS, for the reasons set forth below, that
Defendant's Motion for Summary Judgment be GRANTED.
Background and Allegations in Second Amended Complaint
January 26, 2018, Plaintiff, Joseph Johnson
("Johnson"), filed his Original Complaint in the
55th Judicial District Court of Harris County, Texas, Cause
No. 2018-05439 ("the "State Court Action").
(Document No. 1 -1, Exhibit A). Plaintiff s State Court
Action relates to a foreclosure sale scheduled for February
6, 2018, of property located at 11606 Lakewood Crossing,
Tomball, Texas 77377 ("Property."). (Document No.
1-1, Exhibit 3, p. 32). On February 16, 2018, the state court
judge entered a Temporary Restraining Order, which prohibited
the scheduled Trustee's sale of the Property from going
forward. (Document No. 1-3, p. 1-2). On February 16, 2018,
Defendant timely removed the case to this Court on the basis
of diversity jurisdiction. (Document No. 1). On February 23,
2018, Defendant filed a Motion to Dismiss. (Document No. 4).
In response, Plaintiff filed his First Amended Complaint and
Affidavit in Support. (Document Nos. 7, 8). Again, Defendant
moved to dismiss Plaintiffs First Amended Complaint.
(Document No. 9). Plaintiff responded to the motion to
dismiss and simultaneously filed a Second Amended Complaint.
(Document Nos. 10, 11). Defendant timely replied to
Plaintiffs Response and moved to strike Plaintiffs Second
Amended Complaint. (Document No. 15). The Court denied
without prejudice Defendant's Motion to Dismiss and
Defendant's Motion to Strike the Second Amended
Complaint. (Document No. 10). Defendant filed its Answer to
Plaintiffs Second Amended Complaint on October 5, 2018.
(Document No. 18). Thereafter, a Scheduling Order was entered
setting a discovery deadline of January 30, 2019. Defendant
has moved for summary judgment on Plaintiffs Second Amended
Second Amended Complaint, Plaintiff alleges that, on or about
September 2, 2005, Plaintiff and his wife, Margaret Johnson,
executed an Adjustable Rate Note ("Note"), in the
amount of $224, 950, as well as a Deed of Trust
("Deed"), which lists First Franklin as the Lender.
Plaintiff further alleges that the Note and Deed were
transferred to Defendant and that Nationstar Mortgage LLC
("Nationstar") is the loan servicer. Second Amended
Complaint (Document No. 10, ¶ 5-6). Plaintiff states
that he experienced financial difficulties in 2014 due to
health-related issues, and "realizing that he may
soon" default on his mortgage payments, he contacted
Nationstar to discuss "loss mitigation options."
Second Amended Complaint (Document No. 10, ¶ 7).
Plaintiff alleges that he was offered a loan modification in
November 2017. With respect to the loan-modification-review
process, Plaintiff alleges, in pertinent part:
8. Johnson was offered a loan modification by Nationstar in
November 2017. A Nationstar representative assured Johnson
that if he gathered and submitted all of the required
documents along with a loan modification application within
30-60 days, Wilmington would not foreclose on his property
until his application had been accepted or denied and he had
been provided the opportunity to appeal that decision if
needed. Johnson immediately completed and submitted the loan
modification application along with the requested
documentation on November 27, 2017-this was Johnson's
first complete loan modification. Johnson called Nationstar
on December 28, 2017 to obtain a status update on his loan
modification application and to ensure his home was safe. The
Nationstar representative Johnson spoke with confirmed that
his loan modification was received, complete, and under
review. Additionally, the Nationstar representative
reaffirmed what the previous Nationstar representative had
told Johnson-that Nationstar would provide a full and fair
loan modification review (including an appeal if needed)
prior to Wilmington taking any action to foreclose on his
Property. Further, the Nationstar representative stated that
she was memorializing the conversation in her notes and that
the agreement to deter any foreclosure proceedings pending
loan modification review would be signed by her supervisor
and mailed to Johnson-Johnson continues to await that
9. Accordingly, Johnson believed all was well and that
approval of his loan modification application was imminent
until he received a Notice of Acceleration and Notice of
Trustee's Sale on January 4, 2018 informing him that his
Property was posted for foreclosure sale on February 6, 2018.
.. Johnson was shocked because the Nationstar representative
he spoke with 6 days earlier assured him that Nationstar
would not foreclose on his Property while in loan
modification status. Apparently, Nationstar initiated
foreclosure proceedings despite their assurances to Johnson,
without formally accepting or denying the loan modification
application, and without sending the appropriate notice of
default, opportunity to cure the default, and notice of
intent to accelerate the debt as required by the Texas
Property Code thereby violating Johnson's due process
rights as well the Deed of Trust.
Amended Complaint (Document No. 10, ¶ 8-9). Plaintiff
alleges claims of violation of Texas Property Code §
5.065, breach of contract, fraud, promissory estoppel,
violation of the Real Estate Settlement Procedures Act
("RESPA"), violation of Texas Property Code §
51.002, violations of the Texas Debt Collection Act, and
breach of duty of cooperation. Second Amended Complaint
(Document No. 10, at 4-12). Plaintiff seeks actual, nominal,
and exemplary damages as well as attorneys' fees. Second
Amended Complaint (Document No. 10, at 12). Defendant has
filed a motion for summary judgment, arguing that Plaintiff
is not entitled to relief on any of his claims as a matter of
law. (Document No. 21).
Plaintiff purchased the Property on January 23, 2003, from
Perry Homes. Plaintiff obtained financing for the purchase of
the Property for $195, 284.00 from New Century Mortgage
Corporation. (Document No. 21 -2, Exhibit 1 Warranty Deed
with Vendor's Lien recorded February 4, 2003
"Purchase Money Loan"). Thereafter, in September
2005, Plaintiff obtained a renewal and extension of the
Purchase Money Loan from First Franklin, a Division of Nat.
City Bank of IN in the amount of $224, 950.00. (Document No.
21-3, Exhibit 2, Adjustable Rate Note dated September 2, 2005
"Renewal and Extension Loan" and Document No. 21-4,
Exhibit 3, Deed of Trust recorded September 13, 2005
"Deed of Trust"). The Plaintiff failed to make his
September 1, 2012, mortgage payment and has made no further
payments. (Document No. 21-1, Exhibit A-Affidavit of April
Hawkins, ¶ 6). On April 4, 2016, Nationstar sent, by
certified mail, postage prepaid, a notice of Plaintiffs
default, along with an intent to accelerate the amounts due
under the Note to Plaintiff at 11606 Lakewood Crossing Drive,
Tomball, Texas 77377. (Document No. 21-5, Exhibit 4
"Notice of Default"). On December 28, 2017,
Plaintiff was sent by certified mail a Notice of Acceleration
and Posting and of the Trustee's Sale scheduled for
February 6, 2018. (Document No. 21-6, Affidavit of Service of
Notice of Acceleration and Posting, Exhibit B, and Document
No. 21-7, Exhibit 5).
Standard of Review
56(a) provides that "[t]he court shall grant summary
judgment if the movant shows that there is no genuine issue
as to any material fact and that the movant is entitled to
judgment as a matter of law." Fed.R.Civ.P. 56(a). The
moving party bears the burden of demonstrating that there
exists no genuine issue of material fact. Brandon v. Sage
Corp., 808 F.3d 266, 269-70 (5th Cir. 2015)
(citing Celotex Corp. v. Catrett, 106 S.Ct. 2548,
2553 (1986)). Once the moving party meets its burden, the
burden shifts to the nonmovant, "who must, by submitting
or referring to evidence, set out specific facts showing that
a genuine issue exists" and that summary judgment should
not be granted. Norwegian Bulk Transp. A/S v. Int'l
Marine Terminals P'ship, 520 F.3d 409, 412
(5th Cir. 2008); see also Morris v. Covan
World Wide Moving, Inc., 144 F.3d 377, 380
(5th Cir. 1998). A party opposing a properly
supported motion for summary judgment may not rest upon mere
allegations or denials in a pleading, and unsubstantiated
assertions that a fact issue exists will not suffice.
Celotex, 106 S.Ct. at 2548. Instead, the non-movant
"must go beyond the pleadings and come forward with
specific facts indicating a genuine issue for trial to avoid
summary judgment." Brandon, 808 F.3d at 270
(quoting Piazza's Seafood World, LLC v. Odom,
448 F.3d 744, 752 (5th Cir. 2006)).
considering a motion for summary judgment, all reasonable
inferences to be drawn from both the evidence and undisputed
facts are to be viewed in the light most favorable to the
nonmoving party. Darden v. City of Fort Worth, 880
F.3d 722, 727 (5th Cir. 2018). "If the
record, viewed in the light most favorable to non-movant,
could not lead a rational trier of fact to decide in
non-movant's favor, summary judgment is
appropriate." Allen v. Radio One of Texas II,
LLC, 515 Fed.Appx. 295, 299 (5th Cir. 2013)
(citing Kelley v. Price-Macemon, Inc., 992 F.2d
1408, 1413 (5th Cir. 1993). On the other hand, if
"the factfinder could reasonably find in [the
nonmovant's] favor, then summary judgment is
improper." Kelley, 992 F.2d at 1413. Even if
the standards of Rule 56 are met, a court has discretion to
deny a motion for summary judgment if it believes that
"the better course would be to proceed to a full
trial." Anderson v. Liberty Lobby, Inc., 106
S.Ct. 2505, 2513 (1986).
Magistrate Judge has considered the documents attached to
Defendants' Motion (Document No. 21, Exhibits 21-1-21-7)
and the exhibits attached to Plaintiffs Response to the
Motion for Summary Judgment (Document No. 22-1 to 22-4).
Plaintiffs Claim for Violation of Texas Property Code §
alleges that Defendant violated Texas Property Code §
5.065 by failing to provide "proper and timely notice of
default, the opportunity to cure the default, and notice of
intent to accelerate the debt which are required in order for
Wilmington to foreclose on the Property." Second Amended
Complaint (Document No. 10, ¶ 14). Defendant argues that
undisputed summary judgment evidence shows that the
provisions of subchapter D of § 5.065, including the
notice and time to cure requirements, do not apply because
Plaintiff purchased the Property in 2003 from Perry Homes in
a traditional real estate transaction, i. e, he
obtained a deed to the property subject to a lien securing
repayment of the purchase money. See Document Nos.
21-2, 21-3, 21-4. The Magistrate Judge agrees.
5.065 is a part of chapter 5, subchapter D of the Texas
property code, which governs "executory contracts for
conveyance." See TEX. PROP. CODE ANN. § 5.061-85
(West 2014 & Supp. 2017); see also Graces v.
Hernandez, No. 13-13-00242-CV, 2016 WL 2970686, at *4
(Tex. App.-Corpus Christi May 19, 2016, no pet.)(mem.op).
"Subchapter D was enacted to protect purchasers who
execute a "contract for deed." Weaks v.
White,479 S.W.3d 432, 439 (Tex. App.-Tyler 2015, pet.
denied)(citing Flores v. Millennium Interests, LTD.,185 S.W.3d 427, 435 (Tex. 2005)). "A contract for deed,
unlike a typical secured transaction involving a deed of
trust, is a financing arrangement that allows the seller to
maintain title to the property until the buyer has paid for
the property in full." Morton v. Nguyen, 412
S.W.3d 506, 509-510 (Tex. 2013). Because Defendant did not
retain title to the property until after Plaintiff made all
required payments on the underlying loan, there was no
executory contract for the sale of the property and the
provisions of subchapter D of the ...