Stallings et al v. CitiMortgage, Inc. et al

Filing 61

MEMORANDUM OPINION, ORDER AND REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE re 29 MOTION for Summary Judgment and Brief in Support filed by CitiMortgage, Inc., Federal Home Loan Mortgage Corp., 44 Opposed MOTION to Strike 39 Response in Opposition to Motion, and Objections to Plaintiffs' Summary Judgment Evidence filed by CitiMortgage, Inc., Federal Home Loan Mortgage Corp. Signed by Magistrate Judge Don D. Bush on 2/7/2014. (baf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
JACKSON STALLINGS and
SHEILA STALLINGS,
Plaintiffs,
VS.
CITIMORTGAGE, INC., FEDERAL HOME
LOAN MORTGAGE CORP., and
UNKNOWN PARTIES,
Defendants.

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Case No. 4:12-cv-00632

MEMORANDUM OPINION, ORDER AND REPORT AND RECOMMENDATION OF
UNITED STATES MAGISTRATE JUDGE
Now before the Court are Defendants’ Motion for Summary Judgment (Dkt. 29) and
Defendants’ Objections to and Motion to Strike Plaintiffs’ Summary Judgment Evidence (Dkt. 44).
As set forth below, the Court finds that the motion to strike should be DENIED and the motion for
summary judgment should be GRANTED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case involves Plaintiffs Jackson and Sheila Stallings’s June 2000 purchase of a home
located at 2453 Breanna Way in Little Elm, Texas (“the Property”). On or about March 8, 2002,
Plaintiffs refinanced their mortgage loan and signed a Promissory Note (“Note”) payable to Principal
Residential Mortgage, Inc. secured by a Deed of Trust. According to Plaintiffs, in August 2011,
Mortgage Electronic Registration System, Inc. (“MERS”), as nominee for Principal Residential
Mortgage, Inc, then assigned the Note and Deed of Trust to Defendant CitiMortgage, Inc. Plaintiffs

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claim that, due to economic difficulties, they were unable to stay current on their mortgage payments.
After some delinquent payments were rejected and returned, Plaintiffs applied for a loan
modification. Plaintiffs claim that, from October 2011 until August 2012, they contacted Defendants
about a repayment plan but were not successful. The Property was ultimately foreclosed upon on
August 7, 2012.
After Plaintiffs filed suit and the case was removed to this Court, the Court dismissed with
prejudice many of Plaintiffs’ claims, including Plaintiffs’ claims of RESPA violations, Plaintiffs’
claims of breach of contract and anticipatory breach of contract, Plaintiffs’ unreasonable collection
efforts claims, Plaintiffs’ claims of violations of the Deceptive Trade Practices Act and Texas Debt
Collection Practices Act Sections 392.301(a)(8) and 392.303(a)(2), and Plaintiffs’ suit to quiet title
and trespass to try title claims. See Dkts. 28 & 36.
The Court declined to dismiss Plaintiffs’ TDCPA claims against Defendants CitiMortgage
and Freddie Mac under Sections 392.304(a)(8) and (a)(19) of the Texas Finance Code, Plaintiffs’
claims of negligent misrepresentation against Defendants CitiMortgage and Freddie Mac, and
Plaintiffs’ claims for declaratory judgment, an accounting of all transactions on their mortgage loan,
and attorneys’ fees against Defendants CitiMortgage and Freddie Mac. The Court now determines
whether there exist genuine issues of material fact as to any of the remaining claims.
MOTION FOR SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when, viewing the evidence and all justifiable inferences
in the light most favorable to the non-moving party, there is no genuine issue of material fact and

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the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Hunt v. Cromartie,
526 U.S. 541, 549, 119 S. Ct. 1545, 143 L. Ed.2d 731 (1999). The appropriate inquiry is “whether
the evidence presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52, 106 S. Ct. 2505, 91 L. Ed.2d 202 (1986).
The party moving for summary judgment has the initial burden to prove there are no genuine
issues of material fact for trial. Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 991 (5th
Cir. 2001). In sustaining this burden, the movant must identify those portions of pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,
which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2553, 91 L. Ed.2d 265 (1986). The moving party,
however, “need not negate the elements of the nonmovant’s case.” Little v. Liquid Air Corp., 37
F.3d 1069, 1075 (5th Cir. 1994) (en banc). The movant’s burden is only to point out the absence of
evidence supporting the nonmoving party’s case. Stults v. Conoco, Inc., 76 F.3d 651, 655 (5th Cir.
1996).
In response, the nonmovant “may not rest upon mere allegations contained in the pleadings,
but must set forth and support by summary judgment evidence specific facts showing the existence
of a genuine issue for trial.” Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.
1998) (citing Anderson, 477 U.S. at 255-57, 106 S. Ct. at 2513-14). Once the moving party makes
a properly supported motion for summary judgment, the nonmoving party must look beyond the

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pleadings and designate specific facts in the record to show that there is a genuine issue for trial.
Stults, 76 F.3d at 655. The citations to evidence must be specific, as the district court is not required
to “scour the record” to determine whether the evidence raises a genuine issue of material fact. E.D.
TEX. LOCAL R. CV-56(d). Neither “conclusory allegations” nor “unsubstantiated assertions” will
satisfy the nonmovant’s burden. Stults, 76 F.3d at 655.
ANALYSIS
In support of their motion, Defendants have submitted the following summary judgment
evidence: (A) Declaration of Daniel J. Alvarez; (A1) copy of the Note dated March 8, 2002; (A2)
copy of the Deed of Trust dated March 8, 2002; (A3) copy of the Notice of Transfer of Servicing
dated December 23, 2004; (A4) copy of the Certificate of Merger between Principal Residential
Mortgage, Inc. and CitiMortgage, Inc.; (A5) copy of the Assignment of Deed of Trust dated August
5, 2011; (A6) copies of notices of default sent by CitiMortgage to Plaintiffs in 2010; (A7) copies of
notices of default sent by CitiMortgage to Plaintiffs in 2011; (A8) copy of a letter from Brittney
Conley dated October 14, 2011; (A9) copy of a HAMP loan modification letter from CitiMortgage
to Plaintiffs dated July 17, 2012; (A10) copy of a loss mitigation letter sent by CitiMortgage to
Plaintiffs, dated July 20, 2012; (A11) copy of August 2, 2012 letter CitiMortgage sent to Plaintiffs
requesting documents for a loan modification review; (A12) copy of the Substitute Trustee’s Deed;
(B) Declaration of Janice Vesella; (B1) copies of the 2011 foreclosure notices sent by HWA to
Plaintiffs; (B2) copies of the letters sent by HWA to Plaintiffs, dated December 14, 2011, regarding
loss mitigation options; (B3) copies of Notice of Sale sent by HWA to Plaintiffs, dated July 16,

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2012; (C) copies of excerpts of the deposition of Jackson Stallings, along with exhibits from the
deposition; (C1) copies of notices of default that CitiMortgage sent to Plaintiffs in 2011; (C2) copies
of the letters that HWA sent to Plaintiffs, dated September 30, 2011 regarding loan’s payoff amount;
(C3) copy of a letter CitiMortgage sent to Plaintiffs on October 6, 2011 returning a $1,500.00
payment; (C4) copies of letters describing loss mitigation options that CitiMortgage sent to Plaintiffs
on July 18, 2011 and October 13, 2011; (C5) copy of a letter dated February 9, 2012 in which
CitiMortgage informed Plaintiffs that their loan modification application was denied; (C6) copies
of loss mitigation letters from CitiMortgage to Plaintiffs dated April 5, 2012, May 3, 2012, June 22,
2012, and July 11, 2012; (C7) copies of the Notice of Sale that HWA sent to Plaintiffs, dated July
16, 2012; (C8) copy of loan modification denial letter, dated August 8, 2012, that CitiMortgage sent
to Plaintiffs; (C9) copy of letter CitiMortgage sent to Plaintiffs, dated August 10, 2012, that informed
Plaintiffs their loan modification had been denied; (D) copies of excerpts of the deposition of Sheila
Stallings, along with exhibits from the deposition; (D1) copy of loan modification denial letter, dated
August 9, 2012, that CitiMortgage sent to Plaintiffs. See Dkts. 29-1 – 29-8.
In response, Plaintiffs have submitted the following evidence: (1) Affidavit of Jackson
Stallings; (1A) Deed of Trust; (1B) Assignment of Deed of Trust; (1C) Substitute Trustee’s Deed;
(1D) Notice of Substitute Trustee’s Sale on August 7, 2012; (1E) email exchange with Brittney
Conley; (1F) August 2, 2012 letter from Citimortgage; (1G) August 8, 2012 letter from
Citimortgage; (1H) August 10, 2012 letter from Citimortgage; (2) excerpts from the Deposition of
Jackson Stallings; and (3) excerpts from the Deposition of Sheila Stallings. See Dkts. 39-1 – 39-3.

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Defendants’ Motion to Strike
Defendants have objected to portions of the Affidavit of Jackson and portions of the
deposition of Jackson Stallings attached to Plaintiffs’ summary judgment response. The Court has
considered all of the evidence offered by both sides, and there is no fact issue present. Because the
Court finds that Plaintiffs have failed to demonstrate a genuine issue of material fact — even
assuming all of their statements were admissible — there is no need for the Court to address each of
Defendants’ evidentiary objections. Therefore, as to the summary judgment analysis, Defendants’
Objections to and Motion to Strike Plaintiffs’ Summary Judgment Evidence (Dkt. 44) is DENIED
without prejudice to Defendants later reurging any evidentiary objections as is appropriate and
necessary.
The Court now turns to Plaintiffs’ remaining claims in this suit.
Violations of the Texas Debt Collection Practices Act
The Court previously found that Plaintiffs’ amended complaint sufficiently stated violations
of Sections 392.304(a)(8) and 392.304(a)(19) of the Texas Debt Collections Practices Act.
Section 392.304(a)(8) of the Texas Finance Code prohibits misrepresenting the character,
extent or amount of consumer debt, and Section 392.304(a)(19) prohibits the use of false
representations or deceptive means to collect a debt or obtain information concerning a consumer.
The Fifth Circuit has recently made clear that, “[t]o constitute a misrepresentation under this
provision, the defendant must have made a false or misleading assertion.” Massey v. EMC Mortg.
Corp., 2013 WL 5913753, 3 (5th Cir. 2013) (internal quotation omitted). More importantly, in

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order to constitute a TDCA violation – under either (a)(8) or under (a)(19) – there must be an
“affirmative statement” that was false or misleading. Verdin v. Federal Nat. Mortg. Ass’n, 2013
WL 4126785, 3 (5th Cir. 2013) (lender’s statement “not to worry about the foreclosure,” was not an
affirmative statement that it would forgo foreclosure and therefore did not constitute a violation of
TDCA).
The Court has reviewed the summary judgment record in its entirety. The only summary
judgment evidence in the record that would create a fact issue as to an affirmative statement that is
false or misleading is an August 2, 2013 “Urgent Notice” from CitiMortgage giving Plaintiffs until
September 4, 2012 – a deadline after the August 7, 2012 foreclosure – to submit additional
documents in the loan modification process. See Dkt. 39-1. Such a statement is affirmatively
misleading as to the loan modification process since the home was foreclosed on just days after the
date of the letter and before the extended deadline to submit materials had passed. It is not, however,
a misrepresentation as to the character, extent, amount or status of the debt owed by Plaintiffs under
the Note. The Fifth Circuit has construed the TDCA very narrowly, and promises regarding loan
modifications and delayed foreclosure are not enough to constitute a violation of Section
392.304(a)(8). Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 723 (5th Cir. 2013).
Given the clear directive from the Fifth Circuit, and because there is no summary judgment evidence
to show that Plaintiffs were not aware that they had a debt, the amount they owed on the debt, or that
they had defaulted on their loan, their claim under Section 392.304(a)(8) fails. See id. (“... the
Millers always were aware (i) that they had a mortgage debt; (ii) of the specific amount that they

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owed; (iii) and that they had defaulted. Nothing in the Millers’ allegations suggests the BAC led
them to think differently with respect to the character, extent, amount, or status of their debt—only
that BAC promised to send them a loan modification application and to delay foreclosure.”).
Similarly, as to the allegation that Defendants violated Section 392.304(a)(19) of the TDCA,
there is no evidence in the record that Defendants used the August 2, 2012 “Urgent Notice” to collect
or obtain any information about Plaintiffs. Indeed, as it is alleged by Plaintiffs, what makes the
“Urgent Notice” troubling is that Defendants did not obtain the information requested before
proceeding with foreclosure. As to the other course of correspondence between Plaintiffs and
CitiMortgage representative Brittney Conley – of which the summary judgment record does contain
evidence – there has been no showing that any of the requests by Conley on behalf of CitiMortgage
were false representations regarding the contents of Plaintiffs’ loan file or false representations
regarding the information required for the loan modification program. Notably, CitiMortgage’s
requests and Plaintiffs’ submissions occurred over a period of months. There is nothing in the
summary judgment record that creates a fact issue as to Defendants’ contention that, because of the
time that had passed, certain loan modification documents expired or had to be made current. See
Dkt. 39-1. Requiring Plaintiffs to submit their financial information multiple times causing a delay
in the loan application process is not enough to create a fact issue as to a TDCA violation. Bracken
v. Wells Fargo Bank, N.A., __ F. Supp. 2d. __ 2014 WL 31778, 7 (E.D. Tex. 2014) (Schell, J.). The
summary judgment record simply creates no fact issues regarding any false representations or use
of deceptive means by Defendants to collect a debt or obtain information from Plaintiffs. Summary

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judgment should be granted for Defendants as to Plaintiffs’ claim under Section 392.304(a)(19).
Neligent Misrepresentation
The Court next turns to Plaintiffs’ claim of negligent misrepresentation. Under Texas law,
a claimant alleging negligent misrepresentation must show the following: (1) the representation is
made by a defendant in the course of his business, or in a transaction in which the defendant has a
pecuniary interest; (2) the defendant supplies “false information” for the guidance of others in their
business; (3) the defendant did not exercise reasonable care or competence in obtaining or
communicating the information; and (4) the plaintiff suffers a pecuniary loss by justifiably relying
on the representation. Biggers v. BAC Home Loans Serv., LP, 767 F. Supp. 2d 725, 734 (N.D. Tex.
2011) (quoting Sloane, 825 S.W.2d at 442).
As noted above, the Court finds that, when read in conjunction with the other summary
judgment evidence, the August 2, 2012 “Urgent Notice” from Citimortgage could create a fact issue
as to certain representations made by Defendants and whether they were misleading or false. The
Court further finds that the summary judgment evidence record could create a fact issue as to
whether Defendants used reasonable care in handling the loan modification and foreclosure
processes.
Nonetheless, the Court need not address the purported misrepresentations in great detail
because, even assuming that Plaintiffs could demonstrate a genuine issue of material fact as to the
first three elements of their negligent misrepresentation claim, there is an insufficient fact issue as
to their damages. And, significantly, Plaintiffs cannot survive the application of the economic loss

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rule.
As the Court has previously noted in this case, the economic loss doctrine has been applied
consistently to bar claims for negligence and other tort claims when the parties’ relationship and its
attendant duties arise from a contract. See Southwestern Bell Tel. Co. v. Delanney 809 S.W.2d 493,
494-95 (Tex. 1991) (“if the defendant’s conduct . . . would give rise to liability only because it
breaches the parties’ agreement, the plaintiff’s claim ordinarily sounds only in contract,” and
affirming dismissal of negligence claims based on breach of contractual duty); see also Hugh Symons
Group v. Motorola, Inc., 292 F.3d 466, 470 (5th Cir. 2002) (citing Haase v. Glazner, 62 S.W.3d 795,
799 (Tex. 2002)) (a plaintiff generally “may not recover in tort for claims arising out of an
unenforceable contract under the statute of frauds.”). In Texas, a plaintiff must show an injury
independent from the subject matter of the contract to recover for negligent misrepresentation.
D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662, 663–64 (Tex. 1998) (per curiam); see
also Narvaez v. Wilshire Credit Corp., 757 F. Supp.2d 621, 634 (N.D. Tex. 2010).
Plaintiffs’ negligent misrepresentation claim survived Defendant’s motion to dismiss because
Plaintiffs’ pleadings alleged “actual damages, out-of-pocket damages, including but not limited to
damages for clouding the title/slander of title concerning said residence, harm to credit reputation,
credit worthiness, and credit history, mental anguish, emotional distress, anxiety, depression,
humiliation, and the value of time lost trying to remedy the problem, against Defendants.” Dkt. 8
at page 20. Plaintiffs, however, have failed to offer sufficient summary judgment evidence so as to
create a fact issue as to their damages.

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Notably, the Affidavit of Jackson Stallings is wholly silent as to damages. See Dkt. 39-1.
In support of their purported damages, Plaintiffs cite to Jackson Stallings’s deposition testimony in
which he testified that he had to take time off work (approximately two weeks) during the
foreclosure process because he thought he was going to have to vacate the home “right then” and that
he suffered “ [a] lot of mental, plus the stress” as a result of the foreclosure. See Dkt. 39-2 at
deposition pages 25, 26, 29 & 122. Plaintiff also testified that the stress caused him to have grey hair
and that he passed a kidney stone during the foreclosure process, but he conceded that he did not
seek medical treatment for it. See Dkt. 39-2 at deposition pages 122 & 124. Further, Plaintiff
Jackson Stallings testified that he did not apply for – and was not denied – credit during the
foreclosure process, that he has not incurred any expenses for mental health treatment as a result of
the foreclosure, and that he has been able to function day to day in a normal way. See Dkt. 39-2 at
deposition pages 122-124.
Similarly, the only evidence as to Plaintiff Sheila Stallings’s damages is less than two pages
of deposition testimony in which she states that she has lost money from having to purchase “things
to pack, move, attorneys,” – although she does not recall and is not able to quantify the amount of
money lost – and that she has lost sleep and suffered stress from “not eating, not sleeping, getting
sick, having to deal with upset children, not knowing where we were going to live, not knowing
what’s going to happen next.” Dkt. 39-3 at deposition 73-74. Plaintiff concedes that she has not
sought any psychiatric or medical help for these stressful conditions and has not applied for or been
denied credit since her foreclosure. This deposition testimony – which is general and uncorroborated

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by any other summary judgment evidence in the record – is insufficient to create a fact issue as to
damages caused by Defendants’ alleged misrepresentations.
Plaintiffs are unable to articulate any damages to credit or the value of their lost time. And,
as to the allegation of anxiety, stress and worry, Plaintiffs have not offered any other evidence other
than conclusory statements regarding grey hair, upset children and loss of sleep. This is not enough
to create a fact issue that Defendants’ actions caused Plaintiffs’ specific non-economic damages.
Sanghera v. Wells Fargo Bank, N.A., 2012 WL 555155, 6 (N.D. Tex. 2012) (finding negligent
misrepresentation claim barred by economic loss rule where “other than Jagdeep’s self-serving
affidavit, Plaintiffs have pointed to no evidence that their credit ratings have been damaged” and
because “Plaintiffs’ alleged loss of title and creditworthiness are economic damages that arise
directly from the alleged breach of this contractual relationship.”). Nor is it enough to show how any
of their alleged “injuries are in no way independent of the subject matter of the deed of trust or note”
and the parties’ relationship thereunder. Narvaez v. Wilshire Credit Corp.,757 F. Supp.2d 621, 634
(N.D. Tex. 2010).
Plaintiffs were cautioned in this Court’s report and recommendation on the motion to dismiss
that failure to offer any evidence of damages outside of the contract in responding to a summary
judgment motion would result in a dismissal of their negligent misrepresentation claims. See Dkt.
28 at 15. There is not sufficient summary judgment evidence here to create a fact issue as to
damages. See Sanchez v. Dallas/Fort Worth Intern. Airport Bd., 2011 WL 3667435, 3 (5th Cir.
2011) (“a self-serving affidavit, without more evidence, will not defeat summary judgment.”) (citing

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DIRECTV, Inc. v. Budden, 420 F.3d 521, 531 & n. 49 (5th Cir. 2005)); BMG Music v. Martinez, 74
F.3d 87, 91 (5th Cir. 1996) (affirming summary judgment for plaintiffs where “the only evidence in
support of the defendants’ theory is a conclusory, self-serving statement by the defendant”); see also
United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001) (affirming summary judgment for
plaintiff where defendant’s only evidence consisted of “self-serving allegations,” which “are not the
type of significant probative evidence required to defeat summary judgment” (internal quotation
marks and citation omitted)). Summary judgment should be GRANTED for Defendants as to the
negligent misrepresentation claim.
Declaratory Judgment, Accounting and Attorney’s Fees
Because Plaintiffs have failed to demonstrate any fact issues as to their remaining TDCA and
negligent misrepresentation claims, Plaintiffs’ claims for declaratory judgment, accounting and
attorney’s fees also fail and Plaintiffs should take nothing by them.
RECOMMENDATION
In the end analysis, the Court finds that the summary judgment record evidences – without
significant contravention by Defendants – sloppy business practices and clumsy attempts at loan
modification after Plaintiffs’ initial default on their home loan. This is not enough, however, to
create a fact issue as to any claims Plaintiffs may have.
Defendants’ Objections to and Motion to Strike Plaintiffs’ Summary Judgment Evidence
(Dkt. 44) is DENIED, and the Court recommends that Defendants’ Motion for Summary Judgment
(Dkt. 29) be GRANTED for Defendants, that Plaintiffs take nothing by any of their remaining claims

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here, and that the matter be closed on the Court’s docket.
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 as to the
motion for summary judgment. 28 U.S.C.A. § 636(b)(1)(C).
A party is entitled to a de novo review by the district court of the findings and conclusions
contained in this report only if specific objections are made, and failure to timely file written
objections to any proposed findings, conclusions, and recommendations contained in this report shall
bar an aggrieved party from appellate review of those factual findings and legal conclusions accepted
by the district court, except on grounds of plain error, provided that the party has been served with
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notice that such consequences will result from a failure to object. Id.; Thomas v. Arn, 474 U.S. 140,
148 (1985); Douglass v. United Servs. Auto Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996) (en banc),
superseded by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections
from ten to fourteen days).
SIGNED this 7th day of February, 2014.
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DON D. BUSH
UNITED STATES MAGISTRATE JUDGE

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