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Salek v. Suntrust Mortgage, Inc.

United States District Court, S.D. Texas, Houston Division

July 17, 2019

LINA SALEK, Plaintiff,
v.
SUNTRUST MORTGAGE, INC., Defendant.

          MEMORANDUM AND ORDER

          NANCY F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE

         Before the Court in this breach of contract lawsuit is Defendant's Motion for Summary Judgment (“Motion”) [Doc. # 35]. Plaintiff filed a response, [1] and Defendant replied.[2] The Motion is ripe for decision. Based on the parties' briefing, pertinent matters of record, and relevant legal authority, the Court grants Defendant's Motion and dismisses Plaintiff's claims with prejudice.

         I. BACKGROUND

         This is a dispute between Plaintiff Lina Salek and her mortgagee, Defendant SunTrust Mortgage, Inc., (“SunTrust”), over SunTrust's allegedly delayed disbursement of insurance proceeds for damage Salek's house sustained during Hurricane Harvey. Plaintiff Salek and Ata Tom Salek, Plaintiff Salek's husband and a non-party to this lawsuit, purchased a house located in Houston, Texas, in September 2010. To fund their purchase, Salek and her husband executed a Promissory Note and Deed of Trust with Defendant SunTrust.[3]

         Under the Deed of Trust, Salek was required to maintain hazard and flood insurance for the house and use any insurance proceeds to restore or repair the property.[4] Paragraph 5 of the Deed of Trust provides in relevant part:

During such repair and restoration period, Lender shall have the right to hold such insurance proceeds until Lender has had an opportunity to inspect such Property to ensure the work has been completed to Lender's satisfaction, provided that such inspection shall be undertaken promptly. Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as the work is completed.[5]

         Paragraph 7 provides in relevant part:

If insurance or condemnation proceeds are paid in connection with damage to, or the taking of, the Property, Borrower shall be responsible for repairing or restoring the Property only if Lender has released proceeds for such purposes. Lender may disburse proceeds for the repairs and restoration in a single payment or in a series of progress payments as the work is completed.[6]

         After Salek's house was damaged by Hurricane Harvey, Salek made a claim with her flood insurer.[7] Salek received a $90, 667.65 flood insurance payment on November 1, 2017, which she endorsed and sent to SunTrust.[8] In total, the Saleks received and forwarded to SunTrust $129, 122.47 in insurance payments.[9]

         On November 3, 2017, SunTrust sent Salek an “Insurance Claims Package, ” listing the steps required for SunTrust to disburse the insurance proceeds.[10]SunTrust requested Salek provide the insurance company adjuster's worksheet, a signed contract or proposal with a contractor, a contractor's waiver of lien, the contractor's W-9, and a copy of the contractor's license.[11] SunTrust further stated that after receipt of these documents, if Salek's loan was current, her “initial check amount will be up to the greater of $40, 000 or 10% of the unpaid principal balance.”[12] Upon demonstrating that at least 50% of the repairs were completed, the Package states the “second check will equal 50% of the remaining claim funds.”[13] In order to receive the remaining proceeds, the Package states that Salek must send all outstanding documentation and SunTrust would conduct an inspection to confirm “all repairs” were complete.[14]

         On November 28, 2017, SunTrust released $15, 400.00 of the received insurance proceeds to Salek.[15] On March 2, 2018, SunTrust conducted its initial inspection of Salek's house, which indicated that 50% of the necessary repairs were completed.[16] On March 15, 2018, SunTrust disbursed an additional $56, 861.24 to Salek..[17] This $56, 861.24 constituted 50% of the undisbursed $113, 722.47 in proceeds.[18]

         A second and third inspection on March 14 and 27, 2018, respectively revealed that 92% and 95% of the repairs were completed.[19] SunTrust did not release additional funds to Salek after either of these inspections. On May 18, 2018, SunTrust concluded the repairs were 100% complete.[20]

         On May 22, 2018, Salek filed this lawsuit, alleging had SunTrust had failed to timely disburse her insurance proceeds, and asserting claims for breach of the Deed of Trust, breach of fiduciary duty, violations of the Texas Deceptive Trade Practices Act (“DTPA”), and unjust enrichment.[21] On May 25, 2018, Salek paid off her outstanding loan in full, using, in part, the remaining insurance funds held by SunTrust in Salek's restricted escrow account.[22]

         On August 8, 2018, the Court granted in part SunTrust's motion to dismiss Salek's claims, dismissing her fiduciary duty, DTPA, and unjust enrichment causes of action.[23] The Court also dismissed Salek's contract claims stemming from SunTrust's actions occurring before the first property inspection on March 2, 2018, and Salek's contract claim based on SunTrust's alleged failure to abide by oral commitments to release the funds after 90% of the repairs were completed.[24]

         On September 7, 2018, Salek filed an amended complaint, asserting claims for breach of the Deed of Trust and conversion.[25] Salek asserts that SunTrust breached the Deed of Trust and engaged in conversion of Salek's insurance proceeds by failing to disburse additional funds after the March 14 and 27, 2018, inspections respectively revealed that 92% and 95% of the repairs were completed.

         SunTrust moves for summary judgment on Salek's remaining claims.

         II. LEGAL STANDARD

         Under Federal Rule of Civil Procedure 56, “[a] party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought.” Fed.R.Civ.P. 56(a). Summary judgment on a claim or part of a claim is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Seacor Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675, 680 (5th Cir. 2011) (quoting Fed.R.Civ.P. 56(a)).

         For summary judgment, the initial burden falls on the movant to identify areas essential to the non-movant's claim in which there is an “absence of a genuine issue of material fact.” ACE Am. Ins. Co. v. Freeport Welding & Fabricating, Inc., 699 F.3d 832, 839 (5th Cir. 2012). The moving party, however, “need not negate the elements of the nonmovant's case.” Coastal Agric. Supply, Inc. v. JP Morgan Chase Bank, N.A., 759 F.3d 498, 505 (5th Cir. 2014) (quoting Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005)). The moving party may meet its burden by pointing out “the absence of evidence supporting the nonmoving party's case.” Malacara v. Garber, 353 F.3d 393, 404 (5th Cir. 2003) (citing Celotex, 477 U.S. at 323; Stults v. Conoco, Inc., 76 F.3d 651, 656 (5th Cir. 1996)).

         In deciding whether a genuine and material fact issue has been created, the court reviews the facts and inferences to be drawn from them in the light most favorable to the nonmoving party. Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., 336 F.3d 410, 412 (5th Cir. 2003). A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-movant. Tamez v. ...


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