United States District Court, W.D. Texas
REPORT AND RECOMMENDATION OF THE UNITED STATES
HIGHTOWER, UNITED STATES MAGISTRATE JUDGE
THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT
this Court are Defendant's Motion to Dismiss and Motion
for Sanctions, filed May 28, 2019 (Dkt. No. 4);
Plaintiff's Response in Opposition to Defendant's
Motion to Dismiss, filed June 20, 2019 (Dkt. No. 9); and
Defendant's Reply in Support of its Motion to Dismiss and
Motion for Sanctions, filed June 25, 2019 (Dkt. No. 10). On
October 4, 2019, the District Court referred the above motion
to the undersigned Magistrate Judge for Report and
Recommendation pursuant to 28 U.S.C. § 636(b)(1),
Federal Rule of Civil Procedure 72, and Rule 1 of Appendix C
of the Local Rules of the United States District Court for
the Western District of Texas (“Local Rules”).
Plaintiff Carol Cunningham Son's
(“Plaintiff”) second lawsuit to prevent
foreclosure of property located at 104 Cold Water Lane,
Lakeway, Texas 78734 (the “Property”).
12, 2011, Plaintiff entered into a home equity loan (the
“Loan”) with Defendant Wells Fargo Bank, N.A.
(“Wells Fargo”). In May 2017, after Plaintiff
fell behind on her mortgage payments, Plaintiff and Wells
Fargo entered into a loan modification agreement to help
Plaintiff avoid foreclosure. When Plaintiff again defaulted
on her payment obligations, Wells Fargo filed a proceeding
under Rule 736 of the Texas Rules of Civil Procedure seeking
an order authorizing foreclosure of the Property.
24, 2018, Plaintiff filed her first lawsuit to challenge the
foreclosure in the 98th Judicial District Court of Travis
County, Texas, alleging that Wells Fargo was negligent in its
servicing of the Loan. See Son v. Wells Fargo Bank,
N.A., Cause No. D-1-GN-18-002564 (98th Dist.
Ct., Travis County, Tex. May 42, 2018) (“Lawsuit
I”). After Wells Fargo removed the case to federal
court, Plaintiff filed an Amended Complaint which dropped the
negligence claim and added a breach of contract claim and a
claim under Regulation X of the Real Estate Settlement
Procedures Act (“RESPA”), 12 C.F.R. §
1024.41(g). On January 24, 2019, the District Court granted
Wells Fargo's Motion to Dismiss under Rule 12(b)(6) and
dismissed Lawsuit I with prejudice. See Son v. Wells
Fargo Bank, No. 1:18-cv-00488-RP, 2019 WL 317251 (W.D.
Tex. Jan. 24, 2019). Plaintiff did not file an appeal with
the Fifth Circuit.
Wells Fargo filed a second Rule 736 proceeding seeking an
order of foreclosure, Plaintiff filed the instant lawsuit in
state court alleging verbatim the same factual allegations as
alleged in Lawsuit I. See Son v. Wells Fargo Bank,
No. D-1-GN-19-002330 (261st Dist. Ct., Travis
County, Tex. April 4, 2019). Plaintiff again alleges that
Wells Fargo was negligent in its servicing of the Loan. The
only difference between the two lawsuits is that Plaintiff
has added new allegations that Wells Fargo failed to provide
clear notice of the foreclosure and misstated the amount owed
on the debt in violation of the Texas Debt Collection Act.
See Dkt. No. 1-1 at p. 3-4.
Wells Fargo removed the instant lawsuit to federal court, it
filed the instant Motion to Dismiss arguing that the suit is
barred by res judicata, and in the alternative that
Plaintiff's claims fail as a matter of law. Wells Fargo
also moves for sanctions under Texas Rule of Civil Procedure
13, Chapter 10 of the Texas Civil Practices & Remedies
Code, and 28 U.S.C. § 1927.
Rule of Civil Procedure 12(b)(6) allows a party to move to
dismiss an action for failure to state a claim on which
relief can be granted. In deciding a Rule 12(b)(6) motion to
dismiss for failure to state a claim, the court
“accepts all well-pleaded facts as true, viewing them
in the light most favorable to the [nonmovant].” In
re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th
Cir. 2007) (internal quotation marks omitted). The Supreme
Court has explained that a complaint must contain sufficient
factual matter “to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the [nonmovant] pleads factual
content that allows the court to draw the reasonable
inference that the [movant] is liable for the misconduct
alleged.” Ashcroft, 556 U.S. at 678.
“While a complaint attacked by a Rule 12(b)(6) motion
to dismiss does not need detailed factual allegations, a
plaintiff's obligation to provide the grounds of his
entitle[ment] to relief requires 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 (internal quotations and citations omitted).
“Factual allegations must be enough to raise a right to
relief above the speculative level.” Id. The
court's review is limited to the complaint, any documents
attached to the complaint, and any documents attached to the
motion to dismiss that are central to the claim and
referenced by the complaint. Lone Star Fund V (U.S.),
L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir.
judicata is not expressly listed as a defense that may be
raised in a Rule 12(b) motion; rather, Rule 8(c) includes it
as an affirmative defense. Fed.R.Civ.P. 8(c), 12(b);
Bradford v. Law Firm of Gauthier, Houghtaling &
Williams, L.L.P., 696 Fed.Appx. 691, 694 (5th Cir.
2017). Accordingly, exact compliance with the rules requires
pleading res judicata in the answer. However, “a
technical failure to strictly comply with Rule 8(c) does not
forfeit the affirmative defense of res judicata when it is
raised before the district court ‘in a manner that does
not result in unfair surprise.'” Bradford,
696 Fed.Appx. at 694 (quoting Lafreniere Park Found. v.
Broussard, 221 F.3d 804, 808 (5th Cir. 2000)) (affirming
the district court's judgment that a claim was barred by
res judicata when raised in a Rule 12(b)(6) motion); see
also 18 Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 4405 (3d ed. 2018)
(“In various circumstances, preclusion defenses have
been entertained on motions to dismiss.”). In
Bradford, where “the affirmative defense was
raised at a pragmatically sufficient time and Bradford was
not prejudiced in her ability to respond, the defense of res
judicata was not forfeited for any failure to strictly comply
with Rule 8(c).” 696 Fed.Appx. at 694 (internal
citation and punctuation marks omitted). Here, Plaintiff was
not prejudiced in her ability to respond and did, in fact,
respond to Defendant's Motion to Dismiss.