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Conner v. Lakeview Loan Servicing, LLC

United States District Court, W.D. Texas, San Antonio Division

June 6, 2019




         On this date, the Court considered Defendants' Motion to Dismiss (docket no. 5), Plaintiff's response (docket no. 7), and Defendants' reply (docket no. 8). After careful consideration, Defendants' motion is GRANTED WITH LEAVE TO AMEND.


         On April 30, 2015, Plaintiff Katherine M. Conner purchased the property at 115 Sky Hawk Lane, Floresville, Texas, 78114. Docket no. 1-3 at 94. She alleges she entered into a mortgage financing agreement with Directions Equity, LLC, which required repayment of a $247, 296.00 loan. Id. Defendant Lakeview Loan Servicing, LLC, is the noteholder and Defendant Loancare, LLC, is the mortgage servicer. Id. Defendants allegedly noticed a foreclosure for December 4, 2018. This Notice of Acceleration and Notice of Non-Judicial Foreclosure Sale was sent on October 15, 2018, and returned to sender on November 15, 2018. Id. The foreclosure sale was completed, and Plaintiff alleges she did not receive notice until she was served with an eviction citation. Id. at 94-95.

         On February 26, 2019, Plaintiff filed her petition in the District Court of Wilson County, Texas. Docket no. 1-3. Defendants removed to this Court on April 5. Docket no. 1. Plaintiff originally named Directions Equity as a defendant, which would have destroyed diversity of citizenship. Defendants argued Directions Equity was improperly joined, and the Court ordered Plaintiff to show cause why Directions Equity should not be dismissed. Docket no. 15. In response, Plaintiff voluntarily dismissed Directions Equity on June 4. Thus, this Court has jurisdiction, as the parties are completely diverse (Plaintiff is a Texas citizen, Lakeview is a citizen of Delaware and Florida, and Loancare is a citizen of Delaware, Florida, Wisconsin, Massachusetts, New Hampshire, and New York) and the amount in controversy requirement is met. On April 12, 2019, Defendants filed the Motion to Dismiss now before the Court. Docket no. 5.


         I. Legal Standard

         To survive a 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim for relief must contain: (1) “a short and plain statement of the grounds for the court's jurisdiction”; (2) “a short and plain statement of the claim showing that the pleader is entitled to the relief”; and (3) “a demand for the relief sought.” Fed.R.Civ.P. 8(a). In considering a motion to dismiss under Rule 12(b)(6), all factual allegations from the complaint should be taken as true, and the facts are to be construed favorably to the plaintiff. Fernandez-Montez v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993). To survive a 12(b)(6) motion, a complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.

         II. Application

         Plaintiff brings claims for breach of contract, negligent misrepresentation, statutory fraud/fraud in real estate, wrongful foreclosure, tortious interference with a contract, and violation of the Texas Deceptive Trade Practices Act. Docket no. 1-3.

         a. Breach of Contract

         Under Texas law, a breach-of-contract claim requires: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) that the defendant breached the contract; 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).

         Plaintiff claims Defendants breached the Deed of Trust in three ways. First, Plaintiff claims Defendants breached by not informing her of the Deed of Trust's assignment. Docket no. 1-3 at 100. However, “a claim for breach of a note and deed of trust must identify the specific provision in the contract that was breached, ” Williams v. Wells Fargo Bank, N.A., 560 Fed.Appx. 233, 238 (5th Cir. 2014), and once that specific provision is identified, plaintiff must state how it was breached by alleging enough facts to state a plausible breach-of-contract claim, Guajardo v. JP Morgan Chase Bank, N.A., 605 Fed.Appx. 240, 244 (5th Cir. 2015). Here, no provision in the Deed of Trust requires that Defendants inform Plaintiff that the Deed of Trust was assigned.

         Second, Plaintiff claims Defendants breached Paragraph 18 of the Deed of Trust, which requires that the Lender, if intending to foreclose, “shall give notice of the time, place and terms of sale by posting and recording the notice at least 21 days prior to sale as provided by applicable law” and “shall mail a copy of the notice of sale to Borrower in the manner prescribed by applicable law.” Docket no. 1-3 at 112. Section 51.002 of the Texas property code, which governs real property sales under deeds of trust, is the “applicable law.” Under this section, notice of a foreclosure sale “must be given at least 21 days before the date of the sale by . . . . serving written notice of the sale by certified mail on each debtor, ” Tex. Prop. Code. § 51.002(b), but “service of a notice under this section by certified mail is complete when the notice is deposited in the United States mail, postage prepaid and addressed to the debtor at the debtor's last known address, ” Id. § 51.002(e). Thus, under Texas law, actual receipt of a foreclosure notice is not required. See Santiago v. Bank of New ...

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