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Proske v. Barrett Daffin Frappier Truner & Engel, LLP

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

November 6, 2019




         In 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.

         I. Background

         In 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 49).

         In 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).

         Wells 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[1] as of January 1, 2019. (Id. at 104).

         After 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).

         II. The Legal Standard for Summary Judgment

         “Summary 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, 323 (1986).

         “Where 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)).

         “When 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 plaintiff[s].” Id.

         III. Analysis[2]

         A. The Breach of Contract and Unconscionability Claims

         The 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 quotation omitted).

         The 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.

         The 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 ...

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