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Arias v. Wells Fargo Bank, N.A.

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

June 18, 2019

GUSTAVO ARIAS, Plaintiff,
v.
WELLS FARGO BANK, N.A., Defendant.

          MEMORANDUM OPINION AND ORDER

          Sam A. Lindsay United States District Judge.

         Before the court are Defendant's Motion for Summary Judgment (Doc. 10), filed October 22, 2018; Plaintiff's Response to Defendant's Motion for Summary Judgment (Docs. 15 and 16), filed November 27, 2018; and Defendant's Reply in Support of Its Motion for Summary Judgment (Doc. 18), filed December 10, 2018. After carefully considering the motion, briefs, record, and applicable law, the court grants Defendant's Motion for Summary Judgment (Doc. 10) to the extent herein set forth. The court orders that a supplement be filed to Defendant's Motion for Summary Judgment, as one of the grounds for relief asserted in Plaintiff's Original Petition (the “Petition”) was not addressed.

         I. Factual and Procedural Background

         On October 20, 2009, Gustavo Arias (“Plaintiff” or “Arias”) executed a Note (the “Note”) for a loan in the amount of $92, 297 to purchase property at 1737 Beauford Road, Dallas, Texas, 75253 (the “Property”).[1] Pl.'s Original Pet., Doc. 1-4 at 3; Def.'s App., Doc. 12 at 9-10. The Note designated NTFN, Inc. (“NTFN”) as the original lender, and Wells Fargo Bank, N.A. (“Defendant” or “Wells Fargo”) as the mortgage servicer of the loan. Def.'s App., Doc. 12 at 9-10. In connection with the Note, Arias executed a security instrument (the “Deed of Trust”) to secure repayment of the Note with the Property, which designated Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary and nominee for NTFN. Def.'s App., Doc. 12 at 86-96. The Deed of Trust provides that the lender may accelerate the debt in the event of payment defaults, and it sets forth procedures for foreclosure proceedings. Def.'s App, Doc. 12 at 90, 92-93 (Provisions 9(a) and 18 of the Deed of Trust). On September 19, 2011, MERS executed a corporate assignment of the Deed of Trust to Wells Fargo, assigning “the full benefit of all the powers and of all the covenants and provisio[n]s therein contained.” Def.'s App., Doc. 12 at 99.

         On September 15, 2017, Wells Fargo mailed Arias a letter (“Notice of Default”) informing him that he was delinquent on his loan in the amount of $1, 635.62 and, unless the payment was made by October 20, 2017, Wells Fargo would require immediate payment of the full loan amount pursuant to the Deed of Trust. Def.'s App., Doc. 12 at 58. The Notice of Default further informed Arias that, if acceleration were to occur, Wells Fargo might “take steps to terminate [his] ownership in the property by a foreclosure proceeding, which could result in Lender or another person acquiring ownership of the property.” Id. Arias received the Notice of Default. Def.'s App., Doc. 12 at 76 (Request for Admission Nos. 12-13, signed on July 30, 2018). As Arias admitted he received the Notice of Default and does not argue that he was unlawfully deprived of an opportunity to cure the default payments within the time period required by law, the date of receipt is of no moment.

         Arias failed to cure the default by the deadline and, as a result, Wells Fargo mailed him a Notice of Acceleration (“Notice of Acceleration”) on December 26, 2017, which Arias admitted he received. Def.'s App., Doc. 12 at 66; Def.'s App., Doc. 12 at 76 (Request for Admission Nos. 14-15, signed on July 30, 2018). The Notice of Acceleration informed Arias that Wells Fargo, as both the mortgage servicer for the Note and mortgagee for the Deed of Trust, would “initiate legal proceedings in connection with the foreclosure of a Deed of Trust associated with [Arias's] real estate loan, ” pursuant to § 51.0025 of the Texas Property Code, and notified Arias that the Property would be sold at the Dallas County Courthouse on February 6, 2018. Def.'s App., Doc. 12 at 66.

         On February 5, 2018, Arias filed the Petition and Application for Temporary Restraining Order (Doc. 1-4) in County Court at Law Number One of Dallas County, Texas, alleging that Wells Fargo had violated the Texas Debt Collection Act (the “TDCA”) and the Texas Property Code, and asserting a claim for breach of contract.[2] The Petition asserts that Wells Fargo lacked the authority to initiate foreclosure proceedings against Arias; failed to provide him with certain notices required by law prior to initiating foreclosure proceedings; made fraudulent representations about the amount of debt owed by him; and breached the express terms of the Deed of Trust. On February 6, 2018, the presiding state judge granted the restraining order, which temporarily enjoined Wells Fargo from threatening or initiating a foreclosure action for the Property. Doc. 1-7. On February 19, 2018, Wells Fargo removed the action to federal court on the basis of diversity jurisdiction. Arias continues to retain possession of the Property and has not made a mortgage payment since July 2017. Def.'s App., Doc. 12 at 77 (Request for Production 17-18).

         On October 22, 2018, Defendant moved for summary judgment on all claims asserted by Plaintiff in the Petition. Docs. 10-11. Defendant first argues that it has authority to foreclose based on its statuses as both the “mortgagee” to the Deed of Trust and “mortgage servicer” of the Note. Second, Defendant argues that it did not violate the TDCA because the evidence shows that it provided Arias with the notices required under the Texas Property Code, and Arias has failed to set forth any evidence that Defendant made fraudulent representations about the amount of debt owed by him, or that Defendant improperly collected certain interest or fees. Third, Defendant argues that, as a matter of law, Plaintiff may not assert a private right of action under the Texas Property Code and, even if he could, the evidence shows that Defendant complied with the relevant provisions under that statute. Finally, Defendant argues that it is entitled to judgment as a matter of law on Arias's breach of contract claim because he failed to allege a breach or specify a contractual provision in the Deed of Trust that was breached.

         II. Summary Judgment Standard

         Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all facts and inferences in the light most favorable to the nonmoving party and resolve all disputed facts in favor of the nonmoving party. Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005). Further, a court “may not make credibility determinations or weigh the evidence” in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.

         Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine dispute of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). On the other hand, “if the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original). “[When] the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine [dispute] for trial.'” Matsushita, 475 U.S. at 587. (citation omitted). Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994).

         The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his or her claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to “sift through the record in search of evidence” to support the nonmovant's opposition to the motion for summary judgment. Id.; see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 & n.7 (5th Cir. 1992). “Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248. Disputed fact issues that are “irrelevant and unnecessary” will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

         III. Analysis

         A. Texas Debt Collection Act Claims

         1. Threatening to Take an Action Prohibited by Law

         Plaintiff asserts that Defendant violated § 392.301(a)(8) of the TDCA, which prohibits a debt collector from “threatening to take an action prohibited by law.” Tex. Fin. Code Ann. § 392.301(a)(8) (West 2016). Arias asserts that Defendant threatened to take an action prohibited by law in violation of the TDCA because: (1) Defendant failed to give notice before giving the notice of acceleration and the notice of sale in compliance with Texas Property Code § 51.002(b) (requirements for a notice of sale) and § 51.002(d) (requirements for a notice of default); and (2) alternatively, to the extent it gave such notice, Defendant lacked the capacity as “mortgagee” to issue such notices stating that it intended to effect a foreclosure sale of the property. Pl.'s Original Pet., Doc. 1-4 at 4-5.

         With respect to whether Wells Fargo provided a notice of sale that conformed with the requirements of § 51.002(b), this issue is moot, as Arias maintains possession of the Property, and the record does not show that Wells Fargo has taken further steps to foreclose the Property aside from sending the Notice of Acceleration indicating an intent to sell the Property on February 6, 2018, which did not transpire due to the filing of this lawsuit. With respect to whether Wells Fargo gave Arias notice pursuant to § 51.002(d), the court determines that the Notice of Default sent by Wells Fargo on September 15, 2017-which Arias concedes he received-satisfied the statutory ...


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