Dubberley et al v. Chase Home Finance, LLC et al
REPORT AND RECOMMENDATIONS re 5 MOTION to Dismiss for Failure to State a Claim, or in the Alternative, Motion for More Definite Statement, and Brief in Support of Same filed by Chase Home Finance, LLC. Within fourteen (14) days after service of the magistrate judges report, any party may serve and file written objections to the findings and recommendations of the magistrate judge. 28 U.S.C.A. § 636(b)(1)(C). Signed by Magistrate Judge Don D. Bush on 5/19/11. (cm, ) (Main Document 15 replaced on 5/19/2011) (cm, ).
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
LISA DUBBERLEY, Individually,
and DARRAN BRUCE DUBBERLEY,
CHASE HOME FINANCE, LLC,
GREG BERTRAND, KEITH SMILEY,
and TERRY ROSS
Case No. 4:11cv25
REPORT AND RECOMMENDATION OF UNITED STATES
Now before the Court is Defendant’s Motion to Dismiss for Failure to State a Claim, or in
the Alternative, Motion for More Definite Statement (Dkt. 5). As set forth below, the Court finds
that the motion should be GRANTED.
On January 3, 2011, Plaintiffs Lisa and Darran Bruce Dubberley filed their Original Petition
and Application for Temporary Restraining Order in the Denton County Probate Court. Plaintiffs’
petition asserted claims under the Texas Deceptive Trade Practices Act and sought the issuance of
a temporary restraining order. On January 17, 2011, Defendant Chase Home Finance LLC removed
the case to this Court under a theory of diversity jurisdiction. On January 24, 2011, Defendant filed
its motion to dismiss, arguing that Plaintiffs had failed to state a claim. When Plaintiffs failed to
timely file a response to the motion, the Court issued an order directing them to do so on or before
March 9, 2011. On March 9, 2011, Plaintiffs filed their four-page response.
STANDARD FOR MOTION TO DISMISS
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a party may move for
dismissal of an action for failure to state a claim upon which relief can be granted. FED. R. CIV. P.
12(b)(6). The Court must accept as true all well-pleaded facts contained in the plaintiff’s complaint
and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th
Cir. 1996). A claim will survive an attack under Rule 12(b)(6) if it “may be supported by showing
any set of facts consistent with the allegations in the complaint.” Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 563, 127 S. Ct. 1955, 1969, 167 L. Ed.2d 929 (2007). In other words, a claim may
not be dismissed based solely on a court’s supposition that the pleader is unlikely “to find evidentiary
support for his allegations or prove his claim to the satisfaction of the factfinder.” Id. at 563 n.8.
Although detailed factual allegations are not required, a plaintiff must provide the grounds
of his entitlement to relief beyond mere “labels and conclusions,” and “a formulaic recitation of the
elements of a cause of action will not do.” Id. at 555. The complaint must be factually suggestive,
so as to “raise a right to relief above the speculative level” and into the “realm of plausible liability.”
Id. at 555, 557 n.5. “To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
__ U.S. __, 129 S. Ct. 1937, 1949, 173 L. Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127
S. Ct. 1955)). For a claim to have facial plausibility, a plaintiff must plead facts that allow the court
to draw the reasonable inference that the defendant is liable for the alleged misconduct. Gonzalez
v. Kay, 577 F.3d 600, 603 (5th Cir. 2009).
In its motion, Defendant has argued that Plaintiffs’ DTPA claim should be dismissed because
Plaintiffs have not alleged facts which are actionable under the DTPA. Specifically, Defendant
argues that Plaintiffs have not stated facts to show they are consumers under the DTPA.
The DTPA grants consumers a cause of action for a defendant’s false, misleading, or
deceptive acts or practices. TEX . BUS. & COM . CODE § 17.50(a)(1). The elements of a DTPA claim
are as follows: “(1) the plaintiff is a consumer, (2) the defendant engaged in false, misleading, or
deceptive acts, and (3) these acts constitute a producing cause of the consumer’s damages.” Doe v.
Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995); see also TEX . BUS. & COM .
CODE § 17.50(a)(1). To establish consumer status under the DTPA, a plaintiff must be “an
individual ... who seeks or acquires by purchase or lease, any goods or services ....” TEX . BUS. &
COM . CODE § 17.45(4). The DTPA defines “goods” as “tangible chattels or real property purchased
or leased for use.” TEX . BUS. & COM . CODE § 17.45(1). The DTPA defines “services” as “work,
labor, or service purchased or leased for use, including services furnished in connection with the sale
or repair of goods.” TEX . BUS. & COM . CODE § 17.45(2). In Texas, money is not a “good” or a
“service” under the DTPA, and a party who “seeks only money in a transaction is not a consumer”
under the DTPA. Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 174-76 (Tex. 1980); see also
Maginn v. Norwest, 919 S.W.2d 164, 167 (Tex. App. - Austin 1996, no writ) (holding that party was
not a consumer where purpose of transaction was to obtain only a mortgage loan). To state a claim
under the DTPA, “the goods or services purchased or leased must form the basis of the complaint.”
Sherman Simon Enters., Inc. v. Lorac Serv. Corp., 724 S.W.2d 13, 15 (Tex. 1987). The question
of whether a party is a consumer is a question of law. Marketic v. U .S. Bank Nat’l Ass’n., 436 F.
Supp.2d 842, 854 (N.D. Tex. 2006).
Here, Plaintiffs’ petition states: “Plaintiff Lisa Dubberly is a consumer under the Texas
Deceptive Trace Practices Act because plaintiff is an individual.” Dkt. 3 at ¶41. Curiously,
Plaintiffs’ petition is silent as to Plaintiff Darran Bruce Dubberley’s consumer status altogether.
Plaintiffs’ petition likewise does not state what goods or services form the basis of their complaint.
In reviewing their DTPA allegations, however, it appears that Plaintiffs’ claims pertain to alleged
misrepresentations made during the loan modification process. See Dkt. 3 at ¶43.
The Court agrees with Defendant that Plaintiffs’ pleading fails to state a DTPA claim.
Construing the pleading in a light most favorable to Plaintiffs, the loan for Plaintiffs’ home forms
the basis of their complaint here. Generally, loans of money or extensions of credit are not
considered “goods” or “services” that can form the basis of a DTPA claim. Gomez v. Wells Fargo
Bank, N.A., 2010 WL 2900351, 3(N.D. Tex. 2010) (where party was attempting to only borrow
money and not purchase a good or a service, it did not satisfy the requirements for consumer status
under the DTPA and therefore failed to state a claim pursuant to the Texas Deceptive Trade Practices
Act); Guardian Life Ins. Co. v. Kinder, 663 F. Supp.2d 544, 553 (S.D. Tex. 2009); La Sara Grain
Co. v. First Nat'l Bank, 673 S.W.2d 558, 567 (Tex. 1984); Riverside Nat'l Bank v. Lewis, 603
S.W.2d 169, 174 (Tex. 1980); Maginn v. Norwest Mortgage, Inc., 919 S.W.2d 164, 166-67 (Tex.
App.-Austin 1996, no writ).
However, a party who obtains a loan which is “inextricably
intertwined” in the purchase or lease of a good or service may qualify as a consumer. Knight v. Int.’l
Harvester Credit Corp., 627 S.W.2d 382, 389 (Tex. 1982) (finding that a bank customer qualified
as a consumer because he sought financing to purchase a dump truck); Flenniken v. Longview Bank
& Trust Co., 661 S.W.2d 705, 707 (Tex. 1983) (holding that party was a consumer when party’s
mortgage loan was intertwined with contractor’s agreement to build a house). The determining
factor is whether the purchase or lease of a good or service was “an objective of the transaction, not
merely incidental to it.” Fed. Deposit Ins. Corp. v. Munn, 804 F.2d 860, 865 (5th Cir. 1986). As
such, to hold a creditor liable under the DTPA, the creditor must be connected with either “the actual
sales transaction or with a deceptive act related to financing the transaction” of goods or services.
Home Sav. Ass’n v. Guerra, 733 S.W.2d 134, 136 (Tex. 1987).
Plaintiffs’ petition does not identify the goods and services at issue and does not state how
they are inextricably intertwined with the financing at issue. The fact – which would be implied here
at best– that Plaintiffs’ loan was related in some way to their home is not enough. Fix v. Flagstar
Bank, FSB, 242 S.W.3d 147, 160 (Tex. App. – Fort Worth 2007, pet. denied) (the refinance of home
equity loan cannot qualify as a good or a service under the DTPA); Marketic v. U.S. Bank Nat. Ass’n,
436 F. Supp.2d 842, 855 (N.D. Tex. 2006) (one who obtains a home equity loan does not obtain a
“good” or a “service” to qualify as a consumer under the DTPA). Plaintiffs are required to state facts
to show that they are consumers and specifically how their claims of misrepresentation are
inextricably intertwined with a good or service. Their complaint has not sufficiently done so here.
Plaintiffs’ assertion in the response to the motion to dismiss that Plaintiff Lisa Dubberley “has status
as a consumer under the DTPA because she obtained financing for the purchase of the property from
defendant” is clearly not enough under governing precedent to state a DTPA claim. Therefore, the
Court finds that the motion to dismiss their claims under the Texas DTPA should be GRANTED.
Because the DTPA claim fails to state a claim, Plaintiffs’ claim for injunctive relief also fails.
Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008) (must show a substantial likelihood
of success on the merits to be entitled to injunctive relief).
Defendant’s motion has been pending for almost four months. Plaintiffs have had ample
time to amend their pleadings to satisfy the pleading standards in this Court and to state a claim
under Texas law. They chose not to do so, and they only responded to the motion to dismiss once
prompted to do so by the Court. The Court denies their request to amend their complaint and
recommends that Defendant’s Motion to Dismiss for Failure to State a Claim, or in the Alternative,
Motion for More Definite Statement (Dkt. 5) be GRANTED and that all of Plaintiffs’ claims against
Defendant Chase Home Finance LLC be dismissed with prejudice. The claims against the other
named and served defendants remain at this time.
Within fourteen (14) days after service of the magistrate judge’s report, any party may serve
and file written objections to the findings and recommendations of the magistrate judge. 28
U.S.C.A. § 636(b)(1)(C).
Failure to file written objections to the proposed findings and recommendations contained
in this report within fourteen days after service shall bar an aggrieved party from de novo review by
the district court of the proposed findings and recommendations and from appellate review of factual
findings accepted or adopted by the district court except on grounds of plain error or manifest
injustice. Thomas v. Arn, 474 U.S. 140, 148 (1985); Rodriguez v. Bowen, 857 F.2d 275, 276-77 (5th
SIGNED this 19th day of May, 2011.
DON D. BUSH
UNITED STATES MAGISTRATE JUDGE
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