United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND OPINION
ROSENTHAL CHIEF UNITED STATES DISTRICT JUDGE
March 2019, Richard Proske and Emily Proske, representing
themselves, sued Wells Fargo Bank, N.A. and Barrett Daffin
Frappier Turner & Engel, LLP, alleging wrongful
foreclosure of their home in Cypress, Texas. (Docket Entry
No. 1). Wells Fargo and Barrett Daffin moved for summary
judgment, but the Proskes failed to respond, even after the
court extended the response deadline. (Docket Entry Nos. 25,
26, 31, 35, 36). Based on a careful review of the complaint,
the answers, the motions, the record, and the applicable law,
the court grants Wells Fargo's and Barrett Daffin's
summary judgment motions and enters final judgment by
separate order. The reasons are explained in detail below.
February 2019, the Proskes obtained a $137, 244 loan from
Advisors Mortgage Group, LLC, secured by their home in
Cypress. (Docket Entry No. 25 at 44, 50). The Proskes
executed a Promissory Note requiring them to pay $779.26 on
the first day of each month for 30 years, (Id. at
44), and a Deed of Trust giving the lender the right to sell
the property if the Proskes defaulted. (Id. at 52).
Mortgage Electronic Registration Systems, Inc. was the
original beneficiary of the Deed of Trust. (Id. at
January 2012, MERS assigned the Deed of Trust to Wells Fargo.
(Id. at 65). In August 2012, Wells Fargo granted the
Proskes a loan modification, allowing them to pay $715.98
monthly. (Id. at 67-68). The Proskes then applied to
Wells Fargo for loan assistance. (Id. at 3). Wells
Fargo denied their application for lack of necessary
documentation. (Id. at 71). The Proskes defaulted.
(Id. at 78, 80).
Fargo appointed Barrett Daffin as substitute trustee to
enforce the Deed of Trust. (Id. at 74). In November
2018, Barrett Daffin sent the Proskes a Notice of
Acceleration and a Notice of Substitute Trustee Sale on Wells
Fargo's behalf. (Id. at 78, 80). The Notice of
Acceleration stated that because the Proskes had defaulted on
the loan payments, Wells Fargo had accelerated the entire
debt and scheduled a foreclosure sale of the property for
February 5, 2019. (Id.). Wells Fargo sold the
property on that date for $172, 000. (Id. at 92).
The Harris County Appraisal District valued the property at
$220, 543 as of January 1, 2019. (Id. at
the foreclosure sale, the Proskes sued Wells Fargo and
Barrett Daffin, asserting Texas-law claims for breach of
contract, fraud, slander-of-title, detrimental reliance, and
violations of the Texas Business and Commerce Code, as well
as federal claims under the Fair Debt Collection Practice
Act, the Racketeer Influenced and Corrupt Organizations Act,
and 42 U.S.C. § 1981. (Docket Entry No. 1). Wells Fargo
and Barrett Daffin moved for summary judgment. (Docket Entry
Nos. 25, 26).
The Legal Standard for Summary Judgment
judgment is appropriate only when ‘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.'” Shepherd on Behalf of Estate of Shepherd
v. City of Shreveport, 920 F.3d 278, 282-83 (5th Cir.
2019) (quoting Fed.R.Civ.P. 56(a)). “A material fact is
one that might affect the outcome of the suit under governing
law, ” and “a fact issue is genuine if the
evidence is such that a reasonable jury could return a
verdict for the non-moving party.” Renwick v. PNK
Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018)
(quotations and citations omitted). The moving party
“always bears the initial responsibility of informing
the district court of the basis for its motion, ” and
identifying the record evidence “which it believes
demonstrate[s] the absence of a genuine issue of material
fact.” Celotex Corp. v. Catrett, 477 U.S. 317,
the non-movant bears the burden of proof at trial, ‘the
movant may merely point to the absence of evidence and
thereby shift to the non-movant the burden of demonstrating
that there is an issue of material fact warranting
trial.'” Kim v. Hospira, Inc., 709
Fed.Appx. 287, 288 (5th Cir. 2018) (alteration omitted)
(quoting Nola Spice Designs, L.L.C. v. Haydel Enters.,
Inc., 783 F.3d 527, 536 (5th Cir. 2015)). The moving
party must demonstrate the absence of a genuine issue of
material fact, but it need not negate the elements of the
nonmovant's case. Austin v. Kroger Tex., L.P.,
864 F.3d 326, 335 (5th Cir. 2017). “If the moving party
fails to meet [its] initial burden, the motion must be
denied, regardless of the nonmovant's response.”
Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767
F.3d 503, 511 (5th Cir. 2014) (quoting Kee v. City of
Rowlett, 247 F.3d 206, 210 (5th Cir. 2001)).
the moving party has met its Rule 56(c) burden, the nonmoving
party cannot survive a summary judgment motion by resting on
the mere allegations of its pleadings.” Duffie v.
United States, 600 F.3d 362, 371 (5th Cir. 2010). The
nonmovant must identify specific evidence in the record and
articulate “the precise manner in which” that
evidence supports that party's claim. Willis v. Cleco
Corp., 749 F.3d 314, 317 (5th Cir. 2014) (quoting
Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.
1994)). “A party cannot defeat summary judgment with
conclusory allegations, unsubstantiated assertions, or only a
scintilla of evidence.” Lamb v. Ashford Place
Apartments L.L.C., 914 F.3d 940, 946 (5th Cir. 2019)
(quotation omitted). “A failure on the part of the
nonmoving party to offer proof concerning an essential
element of its case necessarily renders all other facts
immaterial and mandates a finding that no genuine issue of
fact exists.” Adams v. Travelers Indem. Co. of
Conn., 465 F.3d 156, 164 (5th Cir. 2006). Because the
Proskes failed to respond to Wells Fargo's and Barrett
Daffin's motions, the issue is “whether the facts
presented by [Wells Fargo and Barrett Daffin] create an
appropriate basis to enter summary judgment against the
The Breach of Contract and Unconscionability Claims
Proskes appear to allege that Wells Fargo breached the
Promissory Note and the Deed of Trust by foreclosing. (Docket
Entry No. 1 at 3). Under Texas law, the essential elements of
a breach of contract action are: “(1) the existence of
a valid contract; (2) performance or tendered performance by
the plaintiff; (3) breach of the contract by the defendant;
and (4) damages sustained by the plaintiff as a result of the
breach.” Smith Int'l, Inc. v. Egle Grp.,
LLC, 490 F.3d 380, 387 (5th Cir. 2007) (alteration and
undisputed record evidence shows that the Proskes signed the
Promissory Note and the Deed of Trust; they defaulted on the
Note; and Wells Fargo sent a Notice of Acceleration and a
Notice of Foreclosure Sale and then foreclosed. (Docket Entry
No. 25, Ex. 1-A; 1-B; 1-E). Because the Proskes defaulted on
their mortgage payments before the foreclosure sale, they
cannot recover on a breach of contract claim because of their
own failure to perform under the contract. See Villarreal
v. Wells Fargo Bank, N.A., 814 F.3d 763, 767 (5th Cir.
2016); see also Farshchi v. Wells Fargo Bank, N.A.,
2016 WL 2858903, at *4 (S.D. Tex. May 13, 2016) (citing
Kaechler v. Bank of America, N.A., Civ. Action No.
H-12-423, 2013 WL 127555, at *3 (S.D. Tex. Jan. 9, 2013)).
The Proskes' allegations do not raise a factual dispute
material to determining that Wells Fargo, as a matter of law,
did not breach the contract.
Proskes also allege that the “contract should be
rescinded because the defendant did not provide full
disclosure and because the contract was extremely deceptive
and unconscionable.” (Docket Entry No. 1 at 4).
“Texas recognizes both substantive and procedural
unconscionability.” Mattar v. BBVA Compass Bank,
N.A., No. 13-16-496-cv, 2018 WL 2440382, at *5 (Tex.
App.- Corpus Christi-Edinburg 2018, no pet.).
“Substantive unconscionability refers to the fairness
of the agreement itself, whereas procedural unconscionability
refers to the circumstances surrounding adoption of the
agreement.” Id. “The party raising an
unconscionability defense must plead and prove both
procedural and substantive unconscionability.”
Belanger v. BAC Home Loans Servicing, L.P., 839
F.Supp.2d 873, 880 (W.D. Tex. 2011) (citing Ski River
Dev., Inc. v. McCalla, 167 S.W.3d 121, 136 (Tex.
App.-Waco 2005, pet. denied)). Although the Proskes allege
that the Promissory Note was unfair because the lender did