Walker v. Willow Bend Mortgage Company, LLC et al
Filing
22
MEMORANDUM OPINION AND ORDER granting 9 MOTION for Summary Judgment filed by Wells Fargo Bank NA and sua sponte dismissing without prejudice plaintiff's action against defendant Willow Bend Mortgage Company, LLC based on improper joinder. (Ordered by Senior Judge Sidney A Fitzwater on 4/11/2019) (Senior Judge Sidney A Fitzwater)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
J’MEI R. WALKER,
Plaintiff,
VS.
WILLOW BEND MORTGAGE
COMPANY, LLC, et al.,
Defendants.
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§ Civil Action No. 3:18-CV-0666-D
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MEMORANDUM OPINION
AND ORDER
In this action challenging an attempted foreclosure, defendant Wells Fargo Bank, N.A.
(“Wells Fargo”) removed this case to this court based on diversity jurisdiction, contending
that defendant Willow Bend Mortgage Company, LLC (“Willow Bend”) was improperly
joined. Plaintiff J’Mei R. Walker (“Walker”) did not move to remand. Several months after
the case was removed, Wells Fargo moved for summary judgment, but the court ordered the
parties to brief the issue of improper joinder before it would consider the motion. The
parties’ jurisdictional briefing is now complete. For the reasons that follow, the court sua
sponte dismisses defendant Willow Bend on the ground that it was improperly joined, and
grants Wells Fargo’s motion for summary judgment.
I
In July 2013 plaintiff Walker took out a mortgage loan from defendant Willow Bend
in the amount of $269,706.00.1 The loan was secured by a deed of trust against Walker’s
property located on E. Oates Road in Garland, Texas. The deed of trust named Mortgage
Electronic Registration Systems, Inc. (“MERS”) as beneficiary. According to Wells Fargo’s
evidence, MERS assigned the note and deed of trust to Wells Fargo in June 2014. The
assignment appears to have been duly recorded in the official Dallas County land records.
Walker has since defaulted on the loan. Wells Fargo’s foreclosure counsel sent a
notice of default to Walker on August 8, 2016, informing him that the debt had been
accelerated and the full amount was due within 30 days. On January 11, 2018 Wells Fargo’s
foreclosure counsel sent an additional notice to Walker informing him that a foreclosure sale
would take place on March 6, 2018.
On March 5, 2018—the day before the scheduled foreclosure sale—Walker filed the
instant lawsuit in Texas county court. His original petition and application for temporary
restraining order alleges that the Dallas County land records do not reflect any assignment
of his mortgage from Willow Bend to Wells Fargo; that his note does not bear an
indorsement or allonge; that Wells Fargo did not send him the pre-foreclosure notices
1
In deciding Wells Fargo’s motion for summary judgment, the court views the
evidence in the light most favorable to Walker as the summary judgment nonmovant and
draws all reasonable inferences in his favor. See, e.g., Owens v. Mercedes-Benz USA, LLC,
541 F.Supp.2d 869, 870 n.1 (N.D. Tex. 2008) (Fitzwater, C.J.) (citing U.S. Bank Nat’l Ass’n
v. Safeguard Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006) (Fitzwater, J.)).
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required by Texas law; that Wells Fargo failed to credit him for payments he made through
some unspecified date in 2017;2 and that Wells Fargo failed to respond to a request for a loan
modification. Walker asserts that Wells Fargo violated the Texas Debt Collection Practices
Act (“TDCPA”), Tex. Fin. Code Ann. §§ 392.001-404 (West 2016); that it failed to comply
with Tex. Prop. Code Ann. § 51.002 (West 2014); and that it breached the contractual terms
of the note and deed of trust. Walker also asserts that Willow Bend breached its fiduciary
duty to him when it assigned his loan to Wells Fargo, because it knew about Wells Fargo’s
“pattern and practice of . . . disregard of applicable law in the servicing of mortgage loans.”
Pet. ¶ 8. He seeks injunctive and declaratory relief, compensatory and exemplary damages,
and attorney’s fees and costs.
Wells Fargo removed this case to this court based on diversity of citizenship, arguing
that defendant Willow Bend, the only non-diverse defendant, was improperly joined. Wells
Fargo now moves for summary judgment on all claims against it. Walker opposes the
motion. At the court’s request, the parties have also briefed the question whether the court
has subject matter jurisdiction.
2
More precisely, Walker’s petition—which appears to be based on a template—alleges
that “Defendant has failed to properly account for and acknowledge payments made through
at least _____________ 2017.” Pet. ¶ 5(b)(1) (blank in original).
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II
Wells Fargo contends that Willow Bend is improperly joined, and that the court
therefore may exercise diversity jurisdiction over this case. The court agrees.
A
For a case to be removed based on diversity jurisdiction, “all persons on one side of
the controversy [must] be citizens of different states than all persons on the other side.”
Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (quoting McLaughlin
v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004)). “The jurisdictional facts that support
removal must be judged at the time of the removal.” Gebbia v. Wal-Mart Stores, Inc., 233
F.3d 880, 883 (5th Cir. 2000) (citations omitted). Moreover, under 28 U.S.C. § 1441(b), a
case cannot be removed based on diversity jurisdiction if any properly joined defendant is
a citizen of the state in which the action is brought (here, Texas).
The doctrine of improper joinder is a narrow exception to the rule of complete
diversity, and it “entitle[s] a defendant to remove to a federal forum unless an in-state
defendant has been ‘properly joined.’” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573
(5th Cir. 2004) (en banc); see also Meritt Buffalo Events Ctr. LLC v. Cent. Mut. Ins. Co.,
2016 WL 931217, at *2 (N.D. Tex. Mar. 11, 2016) (Fitzwater, J.). The doctrine allows
federal courts to defend against attempts to manipulate their jurisdiction, such as by joining
nondiverse parties solely to deprive federal courts of diversity jurisdiction. See Smallwood,
385 F.3d at 576. Because “the effect of removal is to deprive the state court of an action
properly before it, removal raises significant federalism concerns.” Gasch v. Hartford
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Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (quoting Carpenter v. Wichita
Falls Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir. 1995)). Therefore, the removal statute
is strictly construed, with “any doubt about the propriety of removal [being] resolved in favor
of remand.” Id. at 281-82. In determining whether a party was improperly joined, the court
“resolve[s] all contested factual issues and ambiguities of state law in favor of the plaintiff.”
Id. at 281. The party seeking removal bears a heavy burden to prove improper joinder.
Smallwood, 385 F.3d at 574.
Improper joinder is established by showing that there was either actual fraud in the
pleading of jurisdictional facts or that the plaintiff is unable to establish a cause of action
against the nondiverse defendant in state court. Parsons v. Baylor Health Care Sys., 2012
WL 5844188, at *2 (N.D. Tex. Nov. 19, 2012) (Fitzwater, C.J.) (citing Smallwood, 385 F.3d
at 573). Under the second alternative—the one at issue in this case—the test for improper
joinder is “whether the defendant has demonstrated that there is no possibility of recovery
by the plaintiff against an in-state defendant, which stated differently means that there is no
reasonable basis for the district court to predict that the plaintiff might be able to recover
against an in-state defendant.” Smallwood, 385 F.3d at 573; see also Travis v. Irby, 326 F.3d
644, 648 (5th Cir. 2003) (explaining that terms “no possibility” of recovery and “reasonable
basis” for recovery have essentially identical meaning, and holding that pleadings must show
more than “any mere theoretical possibility of recovery”). To assess “whether a plaintiff has
a reasonable basis of recovery under state law,”
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[t]he court may conduct a [Fed. R. Civ. P.] 12(b)(6)-type
analysis, looking initially at the allegations of the complaint to
determine whether the complaint states a claim under state law
against the in-state defendant. Ordinarily, if a plaintiff can
survive a Rule 12(b)(6) challenge, there is no improper joinder.
That said, there are cases, hopefully few in number, in which a
plaintiff has stated a claim, but has misstated or omitted discrete
facts that would determine the propriety of joinder. In such
cases, the district court may, in its discretion, pierce the
pleadings and conduct a summary inquiry.
Smallwood, 385 F.3d at 573 (footnotes omitted).
The analysis does not end with the conclusion that there is no possibility of recovery
against the non-diverse defendant. “When the only proffered justification for improper
joinder is that there is no reasonable basis for predicting recovery against the in-state
defendant, and that showing is equally dispositive of all defendants rather than to the in-state
defendants alone,” the removing party has failed to show improper joinder. Id. at 575. This
principle is sometimes called the “common defense rule.” See 14C Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure § 3723.1, at 362-63 (4th ed. 2018). Under
the common defense rule, the court must remand the case “[i]f, but only if, the showing
which forecloses [plaintiff’s] claims against the non-diverse defendants necessarily and
equally compels foreclosure of all their claims against all the diverse defendants.” Boone v.
Citigroup, Inc., 416 F.3d 382, 391 (5th Cir. 2005).
When deciding whether a defendant has been improperly joined, a federal district
court must apply the federal pleading standard. See Int’l Energy Ventures Mgmt., L.L.C. v.
United Energy Grp. Ltd., 818 F.3d 193, 207-08 (5th Cir. 2016) (on rehearing). This standard
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requires the plaintiff to plead enough facts “to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it
asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also
Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief
above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint has alleged—but it has not
‘shown’—‘that the pleader is entitled to relief.’” Iqbal, 566 U.S. at 679 (alteration omitted)
(quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.” Although “the
pleading standard Rule 8 announces does not require ‘detailed factual allegations,’” it
demands more than “labels and conclusions.” Iqbal, 566 U.S. at 678 (quoting Twombly, 550
U.S. at 555). And “a formulaic recitation of the elements of a cause of action will not do.”
Id. (quoting Twombly, 550 U.S. at 555).
B
Applying the controlling standard, Wells Fargo has met its heavy burden of proving
that Willow Bend has been improperly joined. The only claim that Walker brings against
Willow Bend is for breach of fiduciary duty. Walker’s petition appears, however, to
contradict itself as to the nature of the relationship between Walker and Willow Bend. At
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some points, the petition seems to allege that Willow Bend was itself a mortgagee. See, e.g.,
Pet. ¶ 4 (“Plaintiff executed a Note . . . and a Deed of Trust . . . for the benefit of Willow
Bend covering the Property.”). At others, the petition suggests that Willow Bend was a
mortgage broker, whose task was to secure financing on Walker’s behalf. See, e.g., id. ¶ 8
(“As an entity steering the financing of its newly constructed homes to a mortgage banker,
Willow Bend had a fiduciary duty to bring a mortgage banker in to finance the transaction
. . . on the best possible price and terms[.]”). Walker cites authority suggesting that a
mortgage broker owes a fiduciary duty to its client. See Kelly v. Gaines, 181 S.W.3d 394,
413-15 (Tex. App. 2005), rev’d on other grounds, 235 S.W.3d 179 (Tex. 2007). But this
authority is inapposite.
A limited, summary assessment of the evidence submitted by the parties in relation
to Wells Fargo’s motion for summary judgment reveals that Willow Bend was a mortgage
lender, not a mortgage broker. See Smallwood, 385 F.3d at 573-74 (recognizing district
court’s discretion to pierce the pleadings where plaintiff has omitted or misstated discrete
facts that would determine propriety of joinder). Wells Fargo has submitted a note and deed
of trust executed by Walker in favor of Willow Bend, as lender and mortgagee. The note
and deed of trust are admissible evidence that the court may consider. See infra § IV. This
evidence makes it clear that Willow Bend was not Walker’s mortgage broker, but rather his
lender.
Because Willow Bend was Walker’s mortgage lender, Walker’s breach of fiduciary
duty claim fails as a matter of law. In Texas, there generally is no fiduciary relationship
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between a mortgagor and mortgagee. See Wakefield v. Bank of Am., N.A., 2018 WL 456721,
at *5 (Tex. App. 2018, no pet.) (citing Lovell v. W. Nat’l Life Ins. Co., 754 S.W.2d 298, 303
(Tex. App. 1988, writ denied)). Nor is there such a relationship between a loan servicer and
its client. Williams v. Fed. Nat’l Mortg. Ass’n, 2012 WL 443986, at *3 (N.D. Tex. Feb. 13,
2012) (Robinson, J.). Texas courts have found fiduciary relationships between borrowers
and lenders before, but only based on “extraneous facts and conduct, such as excessive lender
control or influence in the borrower’s business activities.” Wakefield, 2018 WL 456721, at
*5 (quoting Bank One, Tex., N.A. v. Stewart, 967 S.W.2d 419, 442 (Tex. App. 1998, pet.
denied)). Walker’s petition contains nothing that plausibly alleges that there are special
circumstances that gave rise to such a relationship. Wells Fargo has therefore met its heavy
burden of proving that Walker cannot recover from Willow Bend for a breach of fiduciary
duty.
This showing is dispositive of Walker’s claim against Willow Bend, but not of his
claims against Wells Fargo. Willow Bend is the only party named in the breach of fiduciary
duty portion of the petition. And Willow Bend is not subject to any other claims: all of
Walker’s other claims explicitly name Wells Fargo as the defendant. The common defense
rule therefore does not apply. See Smallwood, 385 F.3d at 575. The court concludes that
Willow Bend is improperly joined.
Because Willow Bend is improperly joined, it is within the court’s power to dismiss
it from the case. See Flagg v. Stryker Corp., 819 F.3d 132, 136 (5th Cir. 2016) (en banc)
(“[I]f the plaintiff improperly joins a non-diverse defendant, then the court may disregard the
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citizenship of that defendant, dismiss the non-diverse defendant from the case, and exercise
subject matter jurisdiction over the remaining diverse defendant.”); see also, e.g., Allen v.
Lowe’s Home Ctrs., Inc., 2012 WL 1190255, at *1 (W.D. La. Mar. 1, 2012) (recommending,
after sua sponte ordering jurisdictional briefing, that non-diverse defendant be dismissed as
improperly joined), rec. adopted, 2012 WL 1185025, at *1 (W.D. La. Apr. 9, 2012). The
court thus dismisses Walker’s sole claim against Willow Bend without prejudice.3
III
The court now turns to Wells Fargo’s motion for summary judgment.
When a party moves for summary judgment on claims on which the opposing party
will bear the burden of proof at trial, the moving party can meet its summary judgment
obligation by pointing the court to the absence of admissible evidence to support the
nonmovant’s claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the
moving party does so, the nonmovant must go beyond his pleadings and designate specific
facts showing there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37
F. 3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence
is such that a reasonable jury could return a verdict in the nonmovant’s favor. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The nonmovant’s failure to produce proof
as to any essential element of a claim renders all other facts immaterial. See TruGreen
Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.).
3
The dismissal must be without prejudice. Alviar v. Lillard, 854 F.3d 286, 291 (5th
Cir. 2017).
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Summary judgment is mandatory if the nonmovant fails to meet this burden. Little, 37 F.3d
at 1076.
IV
Wells Fargo submits the declaration of Brandon McNeal (“McNeal”), an employee
of Wells Fargo. Appended to McNeal’s declaration are two exhibits: Walker’s note and loan
payment records. Walker offers an argument that appears to go to the admissibility of the
note and loan payment records, although it is not framed as an objection:
The Declaration of Brandon McNeal . . . claims personal
knowledge obtained by examination of records, not from long
personal familiarity with the Loan . . . . Therefore, the statement
in paragraph 2 that entries in the Loan Records were made at the
time of the events may not be meaningful, since Mr. McNeal
cannot possibly testify as to the two-step or three-step chain of
events of assignment or abortive assignment of the Loan, since
his knowledge is only, at best, of practices of [Wells Fargo]
itself.
P. Resp. 1-2 (citations omitted). This argument appears to challenge whether the exhibits
appended to McNeal’s declaration fall within the business records exception to the rule
against hearsay. The material that a party cites in support of summary judgment must be, in
some form, admissible in evidence. See Rule 56(c)(2). Hearsay is inadmissible unless an
exception applies. See Fed. R. Evid. 802. In order to take advantage of the business records
exception to the hearsay rule, the proponent of an exhibit must show, inter alia, that the
exhibit was made at or near the time of the event that it records. Fed. R. Evid. 803(6)(A).
Moreover, an affidavit is only competent summary judgment evidence to the extent it is
based on personal knowledge. See Cormier Expl. & Prod. Co., 969 F.2d 1559, 1561 (5th
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Cir. 1992) (per curiam). Walker’s argument seems to be that McNeal cannot establish that
the note and loan records fall within the business records exception because he has no
personal knowledge of whether the documents satisfy Rule 803(6)(A).
The court understands Walker to be advancing two different arguments for why
McNeal lacks personal knowledge. First, Walker contends that McNeal obtained his
knowledge about when Wells Fargo’s records were created from an “examination of records,
not from long personal familiarity with the Loan,” and therefore did not truly have personal
knowledge of this fact. P. Resp. 1. “But ‘[t]here is no requirement that the witness who lays
the foundation be the author of the record or be able to personally attest to its accuracy.’”
United States v. Armstrong, 619 F.3d 380, 384-85 (5th Cir. 2010) (alteration in original)
(quoting United States v. Brown, 553 F.3d 768, 792 (5th Cir. 2008)). For the purposes of the
business records exception, a “qualified witness is one who can explain the record keeping
system of the organization and vouch that the requirements of Rule 803(6) are met.” Id. at
385 (quoting Brown, 553 F.3d at 792). Whether a witness is qualified can be inferred from
his position within an organization. See DIRECTV, Inc. v. Budden, 420 F.3d 521, 530 (5th
Cir. 2005). McNeal avers that he is a “Vice President [of] Loan Documentation for Wells
Fargo” and has knowledge of how Wells Fargo’s records are maintained. D. App. 000002.
This is sufficient.
Second, Walker’s argument can be read as an objection to Wells Fargo’s exhibits to
the extent they were created before Wells Fargo took ownership of the loan. The idea would
be that a declarant like McNeal—who is only familiar with Wells Fargo’s business
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practices—has no knowledge of whether any pre-Wells Fargo records meet the business
records exception. This formulation of the argument also fails. “[T]here is no requirement
that [business] records be created by the business having custody of them.” Cline v.
Deutsche Bank Nat’l Tr. Co., 2015 WL 4041791, at *3 (N.D. Tex. July 2, 2015) (Fitzwater,
J.) (quoting United States v. Duncan, 919 F.2d 981, 986 (5th Cir. 1990)).
Rule 803(6) allows business records to be admitted if witnesses
testify that the records are integrated into a company’s records
and relied upon in its day to day operations. Even if the
document is originally created by another entity, its creator need
not testify when the document has been incorporated into the
business records of the testifying entity.
Id. (quoting Air Land Forwarders, Inc. v. United States, 172 F.3d 1338, 1343 (Fed. Cir.
1999)). It is sufficient that the records in question are now part of Wells Fargo’s business
records. Walker’s objections therefore lack merit.
V
Walker alleges that Wells Fargo violated Tex. Prop. Code Ann. § 51.002(b) and (d)
and breached the contractual terms of the note and deed of trust. Pet. ¶¶ 6-7. Wells Fargo
is entitled to summary judgment on these claims because Walker has failed to show that he
complied with his obligations under the note and deed of trust, as required to prove a breach
of contract claim, and because the Texas Property Code confers no private right of action.
A
Wells Fargo has produced evidence, in the form of Walker’s loan records, indicating
that Walker has not performed his contractual obligations by remaining current on his
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mortgage payments until the alleged breach. Walker has failed to identify evidence to the
contrary. Walker therefore lacks evidence for an essential element of his breach of contract
claim. See Metcalf v. Deutsche Bank Nat’l Tr. Co., 2012 WL 2399369, at *10 (N.D. Tex.
June 26, 2012) (Fitzwater, C.J.) (citing Obuekwe v. Bank of Am., N.A., 2012 WL 1388017,
at *5 (N.D. Tex. Apr. 19, 2012) (Means, J.) (holding that plaintiff “cannot state a claim for
breach of the deed of trust because [plaintiff] admits that she defaulted on the loan,” and
therefore cannot demonstrate that she performed her duties under the contract); Owens v.
Bank of Am., NA, 2012 WL 912721, at *4 (S.D. Tex. Mar. 16, 2012) (dismissing breach of
contract claim because “plaintiffs have undisputedly not performed their contractual
obligations because they have not stayed current on their mortgage payments”)). This is
alone a sufficient basis on which to grant summary judgment on the claim. See Lewis v.
Bank of Am., N.A., 343 F.3d 540, 544-45 (5th Cir. 2003) (requiring proof of all four elements
of breach of contract claim).
B
Walker alleges that Wells Fargo violated Tex. Prop. Code Ann. § 51.002(b) and (d),
either by failing to provide the statutorily-required foreclosure notices, or by wrongfully
providing such notices when it lacked capacity to foreclose.4 Pet. ¶ 6. This claim, asserted
4
Walker clarifies in his response brief that he “does not assert a private right of action
under Texas Property Code Chapter 51,” but instead alleges that Wells Fargo’s violations of
the Property Code underlie his TDCPA and breach of contract claims. P. Resp. Br. 6. For
the sake of thoroughness, however, the court will address Walker’s Property Code allegations
as if they were a separate cause of action.
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directly under the Property Code, fails as a matter of law because “[§] 51.002 . . . does not
provide a private right of action.” Solis v. U.S. Bank, N.A., 2017 WL 4479957, at *2 (S.D.
Tex. June 23, 2017) (citing Tex. Ashton v. BAC Home Loan Servicing, L.P., 2013 WL
3807756, at *4 (S.D. Tex. July 19, 2013)), aff’d on other grounds, 726 Fed. Appx. 221, 222
(5th Cir. 2018) (per curiam); see also Rucker v. Bank of Am., N.A., 806 F.3d 828, 830 n.2
(5th Cir. 2015) (“Although the Texas Supreme Court has not decided this issue, the federal
district courts that have addressed it seem to conclude that Section 51.002(d) does not intend
an independent private cause of action.”).5 The court therefore grants Wells Fargo’s motion
for summary judgment on this claim.
VI
A
The court now turns to Walker’s capacity- and notice-related TDCPA claims. Walker
alleges that, due to defects in the chain of assignments, Wells Fargo lacks authority to
foreclose, and therefore acted wrongfully when it sent him notice of its intent to foreclose on
his property. Walker also asserts that Wells Fargo lacked capacity to send him the preforeclosure notices required by Tex. Prop. Code Ann. § 51.002 because of these same defects
in the chain of title. Finally, Walker alleges that Wells Fargo did not actually send him the
5
Courts sometimes construe claims under the Texas Property Code as common-law
wrongful foreclosure claims. See, e.g., Solis, 2017 WL 4479957, at *3. But where, as here,
no foreclosure actually occurred, the plaintiff cannot recover damages for an “attempted
wrongful foreclosure.” See De La Garza v. Bank of N.Y. Mellon, 2018 WL 5725250, at *4
& n.8 (Tex. App. Nov. 1, 2018, no pet.) (collecting cases).
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required notices. Walker asserts that all of these actions and omissions violated Tex. Fin.
Code Ann. § 392.301(a)(8). See Pet. ¶ 5(a). To prevail on this claim at trial, Walker would
have to establish either (1) that Wells Fargo lacked capacity to foreclose, or (2) that Wells
Fargo did not send sufficient notice to Walker before the scheduled foreclosure sale.
B
Wells Fargo is entitled to summary judgment on these TDCPA claims to the extent
they are premised on the allegation that Wells Fargo lacks authority to foreclose.
The petition asserts that there is no evidence in the Dallas County public records of
any assignment of Walker’s mortgage to Wells Fargo from Willow Bend. But Wells Fargo
has submitted, inter alia, an exhibit that appears to be an assignment of Walker’s note and
deed of trust from MERS, as nominee for Willow Bend, to Wells Fargo. The document is
stamped as recorded. This document shows the complete chain of assignments from Willow
Bend to Wells Fargo. Wells Fargo has therefore met its initial burden of pointing to the
absence of evidence of an essential element of Walker’s claims (in fact, it has produced
evidence that negates an essential element of Walker’s claims).
Walker argues that certain inconsistencies between the indorsements on the note, the
assignment documents, and the loan payment history create a genuine factual dispute that
forecloses summary judgment. But there are no such inconsistencies. The note bears three
indorsements: one undated indorsement from Willow Bend to Wells Fargo, one canceled
indorsement in blank by Wells Fargo (with the cancellation dated January 20, 2015), and one
undated, apparently-current indorsement in blank by Wells Fargo. These indorsements are
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fully consistent with the June 4, 2014 assignment of the mortgage from Willow Bend to
Wells Fargo. That assignment is also consistent with Walker’s loan payment history:
although the payment history contains entries dated between August 2013 and June 2014,
those entries clearly were carried forward from Willow Bend’s servicing of the loan. Indeed,
the date of the first payment in the loan payment history—August 29, 2013—is consistent
with the July 2013 origination of the loan and with the first-payment due date of September
1, 2013. Walker has thus identified no evidence that creates a genuine dispute as to whether
Wells Fargo owns the note and deed of trust.
Walker challenges Wells Fargo’s evidence on the ground that McNeal’s declaration
does not indicate whether McNeal examined the original note and deed of trust, or whether
he instead examined mere electronic copies of the original documents. This argument seems
to derive from the so-called “show-me-the-note” theory: the notion that if a bank or mortgage
servicer does not have the borrower’s original, wet-ink signature note, it cannot foreclose.
See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253 (5th Cir. 2013). But the
Fifth Circuit has unequivocally rejected this theory. See id. at 254. Thus even if there is a
genuine dispute as to whether McNeal examined the original, wet-ink loan documents, the
dispute is immaterial because it does not affect Wells Fargo’s authority to foreclose.
C
Wells Fargo is also entitled to summary judgment on these TDCPA claims to the
extent they are premised on the allegation that Wells Fargo never sent the required preforeclosure notices.
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Sections 51.002(b) and (d) of the Texas Property Code require that certain forms of
notice be given to borrowers before a foreclosure sale. Under § 51.002(d), the loan servicer
must send the borrower “written notice by certified mail stating that the debtor is in default
under the deed of trust or other contract lien and giving the debtor at least 20 days to cure the
default before notice of sale can be given under Subsection (b).” Then, at least 21 days
before the date of the sale, the borrower must be served with written notice of the sale
itself—also by certified mail. See Tex. Prop. Code Ann. § 51.002(b)(3).
Here, Wells Fargo has submitted evidence showing that it provided the requisite
notice to Walker, thereby negating an essential element of Walker’s claims. Wells Fargo,
through its foreclosure counsel, sent Walker a notice of default by certified mail on August
8, 2016 that gave Walker 30 days to cure. On January 11, 2018 Wells Fargo’s foreclosure
counsel sent a notice of acceleration and notice of sale to Walker by certified mail, informing
him of the scheduled foreclosure sale. These notices are sufficient to satisfy § 51.002.
Walker offers no evidence to the contrary. Summary judgment in favor of Wells Fargo is
therefore appropriate insofar as Walker’s claims rely on the allegation that Walker never
received the statutorily-required notices.6
6
The evidence adduced by Wells Fargo also provides an additional ground to dismiss
Walker’s breach of contract and Property Code claims, which are based on the same
interrelated factual allegations. See Pet. ¶¶ 6-7.
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VII
Having disposed of Walker’s capacity- and notice-related claims, the court now turns
to the remainder of Walker’s TDCPA claims.
A
Walker alleges that Wells Fargo “failed to properly account for and acknowledge
payments,” and “demanded Plaintiff pay one or more sums above the amounts provided by
the Note and Deed of Trust and/or that were not owed to Defendant.” See Pet. ¶¶ 5(b)(1),
5(c)(1)-(2). In moving for summary judgment, Wells Fargo submits Walker’s loan payment
history, which negates these claims. Walker argues that the loan history actually supports
his claims, because it “shows, at first count, sixty-four instances where paid funds were
‘unapplied’ to the Plaintiff’s Loan account, yet Plaintiff was charged ‘fees assessed or
recovered’ . . . as alleged in Plaintiff’s various claims under the Texas Debt Collection Act.”
P. Resp. 2. But the loan payment history clearly indicates that every time Walker made a
payment that was initially “unapplied,” Wells Fargo later credited that payment to Walker’s
principal, interest, and escrow balances. And Wells Fargo provided an explanation every
time it assessed a fee: most often, the fee was a late charge. The note expressly authorizes
such charges. Moreover, after a series of “adjustments” by Wells Fargo, it appears that
Walker’s current fee balance is zero—so Wells Fargo is not actually demanding any fees
from Walker at this time, let alone any unauthorized fees. There is therefore no genuine
dispute of material fact that would preclude summary judgment on these claims.
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B
Walker alleges that Wells Fargo violated provisions of the TDCPA—specifically,
Tex. Fin. Code Ann. § 392.304(a)(8) and (19)—by failing to respond to a request for a loan
modification. Pet. ¶ 5(c)(3). This claim fails as a matter of law. “Communications in
connection with the renegotiation of a loan do not concern the collection of a debt but,
instead, relate to its modification and thus they do not state a claim under Section
392.304(a)(19).” Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022, 1026-27 (5th Cir.
2015). As to the § 392.304(a)(8) claim, Wells Fargo points to the absence of evidence in
support of an essential element of this claim: that Wells Fargo made affirmative statements
that were false or misleading. See id. at 1026. Walker has failed to designate any evidence
creating a genuine dispute of material fact on the matter. Wells Fargo is therefore entitled
to summary judgment on this claim.
C
Walker also alleges that Wells Fargo violated Tex. Fin. Code Ann. § 392.303(a)(2)
by “threaten[ing] to conduct one or more substitute trustee’s sales of the property.” Pet. ¶
5(b)(2). Section 392.303(a)(2) forbids “collecting or attempting to collect interest or a
charge, fee, or expense incidental to the obligation unless the interest or incidental charge,
fee, or expense is expressly authorized by the agreement creating the obligation or legally
chargeable to the consumer.” The court has not found, and Walker has not presented, any
authority for the proposition that a foreclosure qualifies as “interest or a charge, fee, or
expense incidental to” a mortgage loan. Wells Fargo is therefore entitled to summary
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judgment on Walker’s TDCPA claim in this respect.7
*
*
*
For the reasons stated, the court grants Wells Fargo’s motion for summary judgment
and sua sponte dismisses Walker’s action against Willow Bend without prejudice based on
improper joinder.
SO ORDERED.
April 11, 2019.
_________________________________
SIDNEY A. FITZWATER
SENIOR JUDGE
7
Walker seeks various forms of relief that are premised on the viability of the claims
discussed above. He requests, inter alia, injunctive relief, a declaratory judgment setting
aside any substitute trustee’s deed should a foreclosure sale take place, statutory damages,
actual damages, and attorney’s fees. Because Wells Fargo is entitled to summary judgment
on all of Walker’s substantive claims, Walker’s requests for relief are denied.
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