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Jackson v. Wells Fargo Home Mortgage

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

July 17, 2019

NIKISHA M. JACKSON, Plaintiff,
v.
WELLS FARGO HOME MORTGAGE, Defendant.

          FINDINGS, CONCLUSIONS, AND RECOMMENDATION

          IRMA CARRILLO RAMIREZ UNITED STATES MAGISTRATE JUDGE. [1]

         Before the Court for recommendation is Defendant's Motion to Dismiss and Brief in Support, filed September 21, 2018 (doc. 17). Based on the relevant filings and applicable law, the motion should be GRANTED in part, and the plaintiff's remaining claims should be dismissed sua sponte.

         I. BACKGROUND

         This case involves the attempted foreclosure of real property located at 2030 Chevella Drive, Dallas, Texas 75232 (the Property). (See doc. 1-4 at 4-5.)[2] On September 24, 2007, Nikisha M. Jackson (Plaintiff) executed a note (Note) in favor of Primary Capital Advisors LLC (Primary), for a loan in the principal amount of $239, 800.00. (doc. 18-1 at 2-6.) She also executed a deed of trust (Deed of Trust) that granted a security interest in the Property to the “Lender, ” identified as Primary or “any holder of the Note, ” to secure repayment under the Note. (Id. at 8-23.) The Deed of Trust named Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee for Lender and its successors and assigns and as the beneficiary of the Deed of Trust. (Id. at 8.) As Lender's nominee, MERS had the right to exercise any and all of the interests Plaintiff granted Lender, including foreclosing and selling the Property upon default, and releasing and canceling the Deed of Trust. (Id. at 10.) Under the terms of the Note and the Deed of Trust, Plaintiff would be in default if she failed to timely pay the full amount of each required monthly payment and subject to acceleration of the loan and foreclosure proceedings on the Property. (Id. at 3, 11.) Plaintiff alleges that Wells Fargo Home Mortgage (Defendant) is the mortgage servicer. (doc. 1-4 at 2, 83.)[3]

         On October 5, 2016, Plaintiff became unemployed. (doc. 1-4 at 2.) Defendant “authorized an Unemployment Loan Forbearance, ” which permitted her to make payments of $25.00 for six months, and she “could pay the forbearance payments monthly, or in one lump sum.” (Id. at 2-3.) Plaintiff made her first payment of $25.00 along with “a lump sum payment of $1, 800” to cover the payments for the remaining five months. (Id.) She alleges that “[u]ntil that time, [she] was current on her mortgage.” (Id. at 2.)

         On July 28, 2017, Plaintiff began a new payment plan under which she made monthly payments of $1, 290.00. (doc. 1-4 at 3.) She made those monthly payments “until Defendant notified her that she was ineligible because of an error that was made.” (Id.) She submitted applications for a loan modification “on several occasions, ” but they were denied. (Id. at 14.) On December 19, 2017, Plaintiff sent a letter to Defendant appealing its denial of her loan modification application, stating that Defendant's decision to deny her application was based on “inaccurate information.” (Id. at 14, 69-73.) It requested information about her loan including the payment history, account balance, loan documentation and other records. (Id. at 70-72.)

         On February 21, 2018, Defendant notified Plaintiff that “the total amount required to cure the default under the note and deed of trust through February 16, 2018 [was] $13, 553.38 and the total amount required to payoff the debt through February 16, 2018 [was] $247, 246.81.” (doc. 1-4 at 3, 86.) On January 6, 2018, Defendant sent Plaintiff a letter notifying her that it “had made an error in applying credits due as performance incentives under HAMP [Home Affordable Modification Program], ” but it “did not disclose how much and when the credits were applied.” (Id. at 3.) After receiving this letter, Plaintiff was provided “a different balance of $17, 574.00” “[w]ithout any explanation.” (Id.)

         On March 20, 2018, Plaintiff notified Defendant “of the inaccuracy in their accounting” and requested that it “provide a loan payment history for the life of the loan.” (doc. 1-4 at 3.) In its response dated March 21, 2018, Defendant acknowledged her claim that the “payoff quote and reinstatement quote were $10, 400.00 higher than [her] calculations, ” but noted that “the account was handled appropriately.” (Id. at 88.) It stated that “once the payment history is provided, ” she could still provide additional documentation for any payment made that had not been applied to the loan, but that Defendant was unable to fulfill her request to postpone the foreclosure sale “because research on the payment history will complete in time to reinstate or payoff the loan prior to the scheduled sale date.” (Id. at 88-89.) Plaintiff alleges that on March 26, 2018, she was verbally informed by an employee of Defendant that it “did not have the financial data available for ascertaining the correct balance, ” but it “would not stop the foreclosure.” (Id. at 2.) The Property was “posted for foreclosure in a Sheriff's Sale set for April 3, 2018.” (Id. at 3.)

         On March 28, 2018, Plaintiff filed this pro se suit against Defendant in the 192nd District Court of Dallas County, Texas. (See doc. 1-4 at 2-13.) In her verified state court complaint, she alleges that Defendant is “performing as a debt collector” and is “duty bound to collect the debt accurately per Chapter 392 of the Texas Finance Code.” (Id. at 3.) She contends that despite all her attempts to bring billing errors to Defendant's attention, it continues to bill for amounts not actually due. (Id.) She alleges that Defendant decided to foreclose on the Property after obtaining an inflated valuation that made it appear to be “no longer under water.” (Id.). She contends that the only payments she “missed were during the approved forbearance period.” (Id.) Defendant “contacted [her] to convey that the only option for her was to apply for a Short Sale.” (Id. at 3-4.) Though Plaintiff offered to remit the payments she missed during the period of forbearance, “minus the overpayments made during the [f]orbearance, ” Defendant refused her offer, informing “her that the payment would have been short . . . .” (Id.) Nevertheless, she alleges that Defendant “will not provide an accurate accounting so that [she] can ascertain a true balance to remit.” (Id. at 4.)

         Plaintiff asserts claims for breach of contract and anticipatory breach of contract, as well as claims for violations of the Texas Property Code and the Texas Finance Code. (doc. 1-4 at 6-8.) She seeks statutory damages, actual damages, exemplary damages, pre-judgment and post-judgment interest, costs, and attorney's fees. (Id. at 12.) She also seeks a declaratory judgment ordering mediation and declaring that any attempt to foreclose is prohibited during the process of litigation and mediation, injunctive relief “to bar any transfer of any interest of her Property, ” and a temporary restraining order to prevent Defendant from selling or taking possession of the Property. (Id. at 8-11.) On March 28, 2018, the state court issued a Temporary Restraining Order (TRO) enjoining the sale of the Property, and the foreclosure sale was cancelled. (See doc. 1-6.)

         On April 13, 2018, Defendant removed this action to federal court on the basis of diversity jurisdiction under 28 U.S.C. § 1332. (doc. 1 at 1.) Plaintiff moved to remand the case to state court for lack of subject matter jurisdiction, but the request was denied. (See doc. 16.) On September 21, 2018, Defendant moved to dismiss Plaintiffs' original complaint, (doc. 27), but Plaintiff did not respond. This motion is now ripe for recommendation.

         II. DEFENDANT'S MOTION TO DISMISS

         Defendant moves to dismiss Plaintiffs' amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. (doc. 17.)

         A. Legal Standard

         Rule 12(b)(6) allows motions to dismiss for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Under the 12(b)(6) standard, a court cannot look beyond the face of the pleadings. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996); see also Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000).

         Pleadings must show specific, well-pleaded facts, not mere conclusory allegations to avoid dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992). The court must accept those well-pleaded facts as true and view them in the light most favorable to the plaintiff. Baker, 75 F.3d at 196. “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the alleged] facts is improbable, and ‘that a recovery is very remote and unlikely.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citation omitted). Nevertheless, a plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action's elements will not do.” Id. at 555; accord Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (emphasizing that “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions”). The alleged facts must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In short, a complaint fails to state a claim upon which relief may be granted when it fails to plead “enough facts to state a claim to relief that is plausible on its face.” Id. at 570.

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw reasonable inference that the defendant is liable for the misconduct alleged. 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. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'”

Iqbal, 556 U.S. at 678 (citations omitted). When plaintiffs “have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Twombly, 550 U.S. at 570; accord Iqbal, 556 U.S. at 683.

         As noted, a court cannot look beyond the pleadings in deciding a Rule 12(b)(6) motion. Spivey, 197 F.3d at 774; Baker, 75 F.3d at 196. When a party presents “matters outside the pleadings, ” a court has “complete discretion” to either accept or exclude the evidence for purposes of determining the motion. Isquith ex rel. Isquith v. Middle S. Utils., Inc., 847 F.2d 186, 193 n.3 (5th Cir. 1988); accord Gen. Retail Servs., Inc. v. Wireless Toyz Franchise, LLC, 255 Fed.Appx. 775, 783 (5th Cir. 2007). However, “[i]f . . . matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56, ” and “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d).

         Nevertheless, “pleadings” for purposes of a motion to dismiss include attachments to the complaint. See In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (citation omitted). Similarly, documents “attache[d] to a motion to dismiss are considered part of the pleadings, if they are referred to in the plaintiff's complaint and are central to her claim[s].” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (citation omitted); accord Benchmark Elecs., Inc., 343 F.3d at 725. Accordingly, documents falling in these categories may be properly considered without converting the motion to dismiss into a motion for summary judgment.

         Plaintiff attached to her complaint copies of the Notice of Acceleration and Notice of Trustee's Sale and various correspondence between her and Defendant. (See doc. 1-4 at 24-96.) These documents are therefore considered part of the pleadings. See Katrina Canal Breaches Litig., 495 F.3d at 205.

         Defendant attached to its motion to dismiss copies of the Note and the Deed of Trust. (doc. 18.) Because these documents are either referenced in Plaintiffs' complaint or are central to her general theory of the case, they are considered part of the pleadings. See Collins, 224 F.3d at 498-99. These documents are also matters of public record that can be judicially noticed in considering a Rule 12(b)(6) motion. See Fed. R. Evid. 201(b)(2); Matter of Manges, 29 F.3d 1034, 1042 (5th Cir. 1994) (taking judicial notice of “unimpeached certified copies of . . . deeds and assignments”). Because the attached documents are either part of the pleadings or subject to judicial notice, they may be considered without conversion of Defendant's motion into a motion for summary judgment. See Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007).

         B. Breach of Contract

         Defendant argues that Plaintiff's breach of contract claim fails as a matter of law because “she admits that she admits that she was in default on her payment obligations.” (doc. 17 at 11-12.)

         The essential elements of a breach of contract claim in Texas are: (1) the existence of a valid contract; (2) breach of the contract by the defendant; (3) performance or tendered performance by the plaintiff; and (4) damages sustained by the plaintiff as a result of the defendant's breach. Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009) (citing Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.-Houston [14th Dist.] 2005, pet. denied)).[4]

         Plaintiff alleges that Defendant breached the Note because it “is purposely delaying and misleading Plaintiff to a point of foreclosure.” (doc. 1-4 at 5.) She contends that if Defendant “had kept accurate record keeping, [the parties] would have agreed on a factual balance that [she] would have remitted.” (Id. at 5-6.) She alleges that this was also a breach of the Deed of Trust. (Id. at 6.)

         The complaint fails to allege that Plaintiff tendered full performance by making the required payments under the Note and the Deed of Trust; it states that she had been current on her mortgage until she became unemployed on October 5, 2016, and that “[t]he only payments she has ever [] missed were during the approved forbearance period.” (doc. 1-4 at 2-3); see Kiper v. BAC Home Loans Servicing, LP, 884 F.Supp.2d 561, 575 (S.D. Tex. 2012), aff'd by 534 Fed.Appx. 266 (5th Cir. 2013) (holding that plaintiff's wife (the actual borrower) had “defaulted on her obligation to repay the mortgage loan, which mean[t] [plaintiff] [could not] show the second element of a breach of contract claim, performance by plaintiff”). Because the complaint concedes that she failed to tender performance as required under the Note and the Deed of Trust, Plaintiff is unable to state a claim for breach of contract, and it should be dismissed. See Williams v. Wells Fargo Bank, N.A., 560 Fed.Appx. 233, 238 (5th Cir. 2014) (holding that when “plaintiffs fail to allege they were current on their payments under the deed of trust, dismissal of their breach of contract claim is proper”).

         C. Anticipatory Breach of Contract

         Defendant seeks to dismiss Plaintiff's claim for anticipatory breach of contract on the basis that she failed to provide any factual or legal support for the claim. (doc. 17 at 12.)

         The elements of an anticipatory breach of contract action in Texas are “(1) an absolute repudiation of the obligation; (2) a lack of just excuse for the repudiation; and (3) damage to the nonrepudiating party.” Swim v. Bank of America, N.A., No. 3:11-CV-1240-M, 2012 WL 170758, at *4 (N.D. Tex. Jan. 20, 2012) (citing Gonzalez v. Denning, 394 F.3d 388, 394 (5th Cir. 2004)). “The party's intent to abandon a contractual obligation may be based on either words or actions, but such declaration must be expressed in positive and unconditional terms.” Wiley v. U.S. Bank, N.A., No. 3:11-CV-1241-B, 2012 WL 1945614, at *3 (N.D. Tex. May 30, 2012) (citation omitted).

         Plaintiff alleges that in addition to breaching the contract, “Defendant may be close to violating that requirement [of good faith and fair dealing] to deliberately provoke acceleration of the note.” (doc. 1-4 at 6.) She alleges that Defendant provided her “an inaccurate and inflated BPO [Broker Price Opinion] for [her] property in an effort . . . to force her into a short sale of the property” and “is not motivated to work with her to retain her home.” (Id. at 5.) She fails to allege which contract Defendant prevented her from performing, or which obligations in the Note or the Deed of Trust Defendant allegedly repudiated, however.[5] There can be no breach or repudiation necessary to establish anticipatory breach without an obligation. See Sanghera v. Wells Fargo Bank, N.A., No. 3:10-CV-2414-B, 2012 WL 555155, at *5 (N.D. Tex. Feb. 21, 2012) (“With no obligation to act there is necessarily no breach of duty.”). Further, she fails to allege any facts showing that Defendant positively and unconditionally demonstrated, through either words or actions, an intent to abandon its obligations under the Note or the Deed of Trust. Her conclusory allegation that Defendant was “using fraudulent and nefarious means to justify an attempt at selling [her] property at a bogus price, ” is not sufficient to demonstrate an intent to abandon Defendant's obligations under the Note or Deed of Trust. (doc. 1-4 at 6); see Swim, 2012 WL 170758, *5 (finding allegations that defendants repudiated their contractual obligations under the deed of trust by attempting to foreclose and not approving a loan modification did not demonstrate an intent to abandon defendant's obligations and at worse, demonstrated that defendants gave conflicting messages to plaintiffs); Enis v. Bank of America, N.A., No. 3:12-cv-0295, 2013 WL 4741073 (N.D. Tex. Oct. 3, 2012) (finding allegation that the defendant sought foreclosure despite promising not to foreclose while loan modification was pending was not a contractual obligation in the deed of trust). Accordingly, Plaintiff's claim for breach of anticipatory contract fails, and Defendant's motion to dismiss it should be granted.

         D. Violation of the Texas Property Code (Wrongful Foreclosure)

         Defendant moves to dismiss Plaintiff's claim for violations of the Texas Property Code on the basis that it creates no private cause of action. (doc. 17 at 13.) It contends that dismissal is appropriate because she fails to identify “what requirements or provisions within the nine subsections of Section 51.002 of the Texas Property Code were allegedly violated.” (Id.) Defendant argues that, at best, she asserts a claim for wrongful foreclosure, but it fails as a matter of law because Plaintiff admits that no foreclosure sale has occurred and that she is in possession of the Property. (Id.)

         Plaintiff argues that Defendant has violated § 51.002 of the Texas Property Code. (doc. 1-4 at 6-7.) She contends that “Defendant failed to give proper notice because Plaintiff's request for proof that all transfers of the lien were recorded timely as required by Texas Law were not answered prior to the acceleration and collection action on the Note.” (Id. at 7.) She also contends that the mortgagee listed on the notice of foreclosure sale is not the current holder of the original note. (Id.) These contentions may be liberally construed as stating a claim for wrongful foreclosure for failure to send the requisite notices under Chapter 51 of the Texas Property Code rather than a stand-alone claim under the Texas Property Code.[6]

         The purpose of a wrongful foreclosure action is to protect mortgagors against mistake, fraud, and unfairness in foreclosure proceedings. See In re Keener, 268 B.R. 912, 921 (Bankr. N.D. Tex. 2001) (citing 30 Tex. Jur. 3d Deeds of Trusts and Mortgages § 177 (1998)). In Texas, “a debtor may recover for wrongful foreclosure when an irregularity in the foreclosure sale contributes to recovery of an inadequate price of the property.” Matthews v. JPMorgan Chase Bank, N.A., No. 3:11-CV-00972-M, 2011 WL 3347920, at *2 (N.D. Tex. Aug. 1, 2011). The plaintiff must prove: “(1) a defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the defect and the grossly inadequate selling price.” Hurd v. BAC Home Loans Servicing, LP, 880 F.Supp.2d 747, 766 (N.D. Tex. 2012) (citing Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.-Corpus Christi 2008, no pet.)). A procedural defect may occur when the foreclosing party either “fails to comply with statutory or contractual terms, ” or “complies with such terms, yet takes affirmative action that detrimentally affects the fairness of the foreclosure proceedings.” Matthews, 2011 WL 3347920, at *2. Nevertheless, recovery is not available merely by showing a defect in the foreclosure process; “it is also necessary that there be an inadequate selling price resulting from the defect.” Biggers v. BAC Home Loans Servicing, LP, 767 F.Supp.2d 725, 729 (N.D. Tex. 2011).

         Plaintiff admittedly remained in possession of the Property as of the date she filed suit, and her original complaint seeks injunctive relief to prevent Defendant from foreclosing on the Property. (See doc. 1-4.) She therefore cannot allege that the Property has been sold for a grossly inadequate price. See Garcia v. Bank of Am., N.A., No. 4:14-cv-2160, 2015 WL 12808271, at *4 (S.D. Tex. Mar. 23, 2015) (“[Plaintiff] has not alleged a violation of the Texas Property Code because no foreclosure has occurred.”); Ayers v. Aurora Loan Servs., LLC, 787 F.Supp.2d 451, 454 (E.D. Tex. 2011) (“Absent a sale, Plaintiff cannot state a claim under [§ 51.002] of the Property Code.”). Moreover, her statement that she remains in possession of the Property is fatal to any wrongful foreclosure action because recovery for wrongful foreclosure “is based on the mortgagor's [lost] possession.” See Everhart v. CitiMortgage, Inc., No. CIV.A. H-12-1338, 2013 WL 264436, at *7 (S.D. Tex. Jan. 22, 2013) (dismissing wrongful foreclosure claim where the plaintiff remained in possession of the property because “recovery under a wrongful foreclosure claim is based on the mortgagor's [lost] possession”) (citing Petersen v. Black, 980 S.W.2d 818, 823 (Tex. ...


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