Fields et al v. JPMorgan Chase Bank, N.A. et al
Filing
68
Memorandum Opinion and Order...the motions for summary judgment of Chase and the Varrichios is granted and all claims brought by plaintiffs against defendants are dismissed w/prejudice. (Ordered by Judge John McBryde on 10/29/2014) (wrb)
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FT ED
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I THE UNI
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TED S
TATES DISTRIC COUR
NORTHERN DISTRICT OF TE
FORT WORTH DIVISION
ALFRED FIELDS
and LIS FI
A ELDS, 5
j
Plaintiffs,
VS .
JP MORGAN CHASE BANK , ET AL .,
Defendants .
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MEMORXNDUM OPINION
and
ORDER
Came on for consideration in the above-captioned action the
motion for summary judgment filed by defendant JP Morgan Chase
Bank (uChase' and the motion for summary judgment filed by
'),
defendants Michael and Jill Varrichio ('the Varichios' .
'
s
Plaintiffs, Alfred Fields and Lisa Fields, filed their responses
to :0th motions, and Chase filed a reply as to its motion.
Having now considered all of the parties' filings, the entire
summary judgment record, and the applicable legal authorities,
*he court concludes that b0th motions for summary judgment should
Plaintiffs' Claims
Plaintiffs initiated this action by filing their complaint
in the 352nd Judicial District Court of Tarrant County , Texas on
February 12, 2013 , after Chase sold their home in a foreclosure
,
#
-.- - j
5
5
5 NO . 4 :14 -CV -012-A
5
5
5
be granted .
1
l
sale held February 5, 2013 . Chase timely filed its notice of
removal on January 16, 2014, after plaintiffs filed an amended
petition on December
2013, which asserted claims under
federal law for the first time . Plaintiffs filed their second
amended complaint on August l3, 2014 , which asserted causes of
actions against Chase based on violation of the Texas Property
Code, breach of contract, anticipatory breach of contract, unjust
enrichment , negligence , violations of the Texas Debt Collection
Act I'TDCA' negligent misrepresentation, and violations of the
A
/I,
Truth-in-Lending-Act (A
'TILA'). Plaintiffs also requested a
'
declaratory judgment and an accounting. In their response to
Chase's motion for summary judgment, plaintiffs waived their
claims for violations of the Texas Property Code, antici/atory
breach of contract , negligence, and violations of TILA . They
also agreed that should the rest of their claims fail, they w ill
not be entitled to a declaratory j
udgment or an accounti
ng.
Plaintiffs ' sole cause of action asserted against the Varrichios
was a suit to qu iet title .
The second amended complaint also alleged the following
damages :
reasonable and necessary attorney 's fees and costs
in the proceedings before this court, and those fees required for
an appeal to the Court of Appeals , and thereafter to the Supreme
Court ;
the loss of creditworthiness and the stigma of
the
foreclosure; ( mental anguish and acute psychic trauma;
3)
loss of title to their home; ( the value of the time lost in
5)
:ttempting to correct Chases' errors; and
exemplary damages.
Comp l. at 17 .
II.
Uadisouted Facts Pertinent to thq Motion for Summarv Judqment
The following is an overview of evidence pertinent to the
motion for summary judgment that is undisputed in the summary
judgment record:
Plaintiffs purehased the property on August 31 , 2QQ1 , and
executed a note payable to Texas Residential Mortgage, Corp . On
that same day , plaintiffs executed a deed of trust to secure
payment of the note .
Texas Residential Mortgage , Corp . assigned the deed of trust
to Overland Mortgage , L .P . on August 31 , 2001 . Def .'s Mot . App .
Ex . E . Overland Mortgage , L .P . then assigned the deed of trust
to Washington Mutual Home Loans, Inc . on August 21, 2002 . Id .
Ex . F . Washington Mutual Home Loans , Inc . then merged w ith WMHLI
Transfer Interim LP effective March 1, 2002 .
Id . Ex .
That
limited partnership was cancelled on March 1, 2002. Id . Ex . C-2 .
Washington Mutual Bank went into receivership , and all loans and
loan commitments were transferred to JpMorgan Chase Bank National
A ssociation September 25 , 2008 . Id . Ex . H . The home was sold to
3
defendants Michael and Jill Varrichio on February
2013 at the
foreclosure sale .
111 .
Applicable Summary Judqment Principle s
-
Rule 56( of the Federal Rules of Civil Procedure provides
a)
that the court shall grant summary judgment on a claim or defense
if there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law. Fed.
Civ.
56(
a); Anderson v . Liberty Lobbv, Inc ., 477 U.S. 242, 247
(
1986)
The movant bears the initial burden of pointing out to
the court that there is no genu ine dispute as to any material
fact . Celotex Corp . v . Catrett,
317, 323 (
1986). The
mov ant can discharge this burden by pointing out the absence of
evidence supportiné one or more essential elements of the
nonmov ing party 's claim , usince a complete failure of proof
concerning an essential element of the nonmoving party ' case
s
necessarily renders al1 other facts immaterial .' Id . at 323 .
'
Once the movant has carried its burden under Rule 56 (
a), the
nonmoving party must identify evidence in the record that creates
a genuine dispute as to each of the challenged elements of its
case . Id . at 324; see also Fed. R . Civ . P. S6 (
c) ( party
uA
asserting that a fact
the assertion by
. is genuinely disputed must support
citing to particular parts of materials in
the record
. . .'
'). uThis burden is not satisfied with '
some
metaphysical doubt as to the material facts, by '
conclusory
allegationsz' by '
unsubstantiated assertions ,' or by only a
'scintilla' of evidence. Little v. Licuid Air Corp ., 37 F.
3d
1069, 1075 (
5th Cir . 1994) (
citations omitted)
'Where the
'
record taken as a whole could not lead a rational trier of fact
to find for the non -moving party , there is no '
genuine issue for
trialr' and summary judgment is appropriate. Matsushita Elec.
'
Indus. Co. v . Zenith Radio Corp w 475 U.S. 574, 587 (
1986)
(
citation omitted)
IV .
Analysis
A.
New lv Asserted Claims
In their response to Chase's motion for summary judgment,
plaintiffs asserted the following allegations which were not
included in their second amended complaint :
( Chase refused to
1)
accept pam ents and misapplied them in breach of the deed of
trust ; ( ) Chase charged excessive fees; ( Chase failed to
2
3)
comply with the deed of trust ; ( ) plaintiffs were promised a
4
loan modification; and ( Chase refused to give requested
5)
in formation on the app lication .
U claim which is not raised in
A
the complaint but , rather, is raised only in response to a motion
for summary judgment is not properly before the court.' Cutrera
'
5
v .-
5d. of Sup r of Louisiana State Univx, 429 F. 108, l13 (
rs
3d
5th
2005). Therefore, any allegations raised by plaintiffs for
the first time in their response to the motion for summary
judgment are not properly before the court, and will not be
considered .
ù.
Breach of Contract
As discussed above, the allegations made by plaintiffs in
support of their breach of contract claim differ between their
complaint and their response to Chase's motion for summary
judgment. Plaintiffs' complaint alleges that Chase breached the
deed of trust by failing to prov ide plaintiffs with notices of
acceleration and the right to reinstate . They also argue that
Chase waived its right to foreclose . Plaintiffs ' response ,
however , alleges Chase breached the deed of trust by improperly
applying payments , not accepting partial payments, and charging
grossly excessive fees .
Regardless of the grounds relied upon , because plaintiffs
have failed to make mortgage payments for several years and are
therefore in default, they cannot bring a breach of contract
claim .
uIn Texas , the essential elements of a breach of contract
àction are :
the existence of a valid contract; ( )
2
performance or tendered performance by the plaintiff ; ( breach
3)
6
of the contract by the defendant; and ( damages sustained by
4)
the plaintiff as a result of the breach .' Smith Intern ., Inc . v .
'
Eqle Group , LLC, 490 F. 380, 387 (
3d
5th Cir. 2007). ' A) party to
'E
a contract who is himself in default cannot maintain a suit for
its breach o' Golden v . Wells Fargo Bank , N , , 557 F . App 'x 323,
'
A
327-328 (
5th Cir . 2014) (
holding that mortgagors who did not
allege that they had performed under the contract, could not sue
lender for breach of contract)
Because plaintiffs breached the
contract by nonpayment prior to the foreclosure , plaintiffs
cannot bring a breach of contract action .
As a defense, plaintkffs pleaded waiver in their second
amended complaint, though they did not address such in their
response . Nevertheless , Texas law is clear that Chase did not
waive its right to foreclose under the facts pleaded . Plaintiffs
argue waiver can be found from the fact that Chase instructed
them not to make payments in order to qualify for loan
modification , and Chase informed plaintiffs that the foreclosure
sale would be postponed . Texas law holds that the elements of
waiver 'include :
'
( an existing right, benefit, or advantage;
1)
knowledge, actual or constructive, of its existence; and (
3)
l
The court recognizes that unpublished opinions of the Fifth
Circuit are not precedential . Where cited herein , they are
considered instructional .
an actual intent to relinquish the right (
which can be inferred
from conductl.' G . Bass & Co . v . Dalsan Properties'
H.
Abilene,
$8s s. .
w 2d
(
Tex. App. oallas 19n4). plaintiffs' only
-
evidence of waiver comes from Mr . Fields ' affidavit, which
s
states generally that 1 i)n February 2010, (
'(
he) was told by a
representative of Chase not to make any mortgage payments' and
'
that every time he called, he was told that 'the bank was working
'
on E
their! modification and that the foreclosure sale would be
postponed .z Pls .' Resp . App . Ex . A . His general and
'
unsubstantiated assertions are insufficient to meet plaintiffs '
burden .
Furthermore , uTexas courts have also made clear that a
lienholder does not waive the right to foreclose merely by
delaying foreclosure, entering into modification negotiations, or
otherwise exercising forbearance w ithout additional conduct
inconsistent w ith the right to foreclose .' Watson v .
'
CitiMortgage, Iùc ., 530 F. App ' 322, 326 (
x
Sth Cir 2013). Even
if plaihtiffs could show that Chase made the above-mentioned
statements, those actions alone are insufficient to infer an
intent to relinquish Chase 's right to foreclose .
Chase's motion for summary judgment should be granted as to
plaintiffs' breach of contract claim .
8
B.
Unjust Enrichme
nt
Chase has moved for summary judgment on plaintiffs' unjust
enrichment claim, on the basis that a claim for unjust enrichment
is improper, because there exists a valid contract between Chase
and plaintiffs. In turn, plaintiffs argue that they are entitled
to bring their unjust enrichment claim as an alternative theory
to their breach of contract claim .
A claim of unjust enrichment 'is based upon the equitable
'
principle that a person receiving benefits which were unjust for
him to retain ought to make restitution .' Bransom v . Standard
'
Hardware, Incw 874 S. .2d 919, 927 ( . App . Fort Worth 1994)
W
Tex
-
Typically, n
when a valid express contract covers the subject
matter of the parties' dispute, there can be no recovery under a
quasi-contract theory
Fortune Prod . Co . v . Conoco ,
Incw 52 S. .3d 671, 684 (
W
Tex. 2000)
In Fortune Prod. Co., the
court found unjust enrichment inapplicable where there Were
written contracts . Id . at 685 . Plaintiffs are correct that
breach of contract and uùjust enrichment may be pleaded as
alternative theories . Jnfow ise Solutions , Inc . v . Microstrateqy ,
Incw No. 3:
04-CV-0553- , 2005 WL 2445436, at
N
( . . Tex 2005).
N D
However , w ithout a show ing that the express, written agreement of
the parties is invalid, a claim of unjust enrichment cannot be
9
maintained . Id . None of plaintiffs ' causes of action challenge
the validity of the written contract . Therefore, plaintiffs'
unjust enrichment cause of action is barred, and summary judgment
should be granted as to that claim .
C.
Texas Debt Collection Act
Plaintiffs have also alleged that Chase violated four
prov isions of the TDCA .
1.
Section 392 .
30l( 8)
a)(
Section 392 .
301( 8) states
a)(
( In debt collection, a debt collector may not use
a)
threats, coercion , or attempts to coerce that emp loy
any of the following practices :
( threatening to take an action prohibited by law .
8)
Tex . Fin. Code 5 392 .
301( 8). However, Section 392.301 ( 3)
a)( 2
b)(
states
( Subsection ( does not prevent a debt collector
b)
a)
from :
( exercising or threatening to exercise a statutory
3)
or contractual right of seizure , repossession , or sale
that does not require court proceedings .
Tex . Fin . Code 5 392.301( (
b) 3).
Therefore, where the defendant
nis a proper mortgagee , threatening foreclosure is expressly
2
The TDCA is codified in sections 392, et sec . of the Texas
Finance Code .
10
permitted by the TDCA .' Sinqha v . BAC Home Loans Servicinq ,
'
L .P ., No . 13-40061, 2014 WL 1492301 , at *70 (
5th Cir. 2014).
Plaintiffs argue that the foreclosure was prohib ited by law ,
because Chase did not follow the procedures outlined in the deed
of trust. Plaintiffs offer the conclusory affidavit of Alfred
Fields in support of their contention that summary judgment is
inappropriate, because there remains a genuine issue of material
fact . In the affidavit, Mr . Fields alleged that he was told the
foreclosure sale would be postponed , though he offers no specific
facts to support his claim . This evidence is not sufficient to
create a genuine issue of material fact .
Furthermore , the procedural defects in the foreclosure
proceeding alleged by plaintiffs occurred after the sending of
letters threatening foreclosure . Therefore , even if the court
were to assume, arquendo, that this foreclosure became prohibited
by 1aw because of Chase 's later actions, such foreclosure was not
'
prohibited by law when threatened. Summary judgment should be
granted as to plaintiffs' claims under section 392.
301( 8).
a)(
11
2.
section 392.303 ( 2)
a)(
Section 392.303 ( 2) states
a)(
( In debt collection, a debt collector may not use
a)
unfair or unconscionable means that employ the
following practices :
( collecting or attempting to collect interest or
2)
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
Co n sum er
. . . .
Tex . Fin. Code 5 392 .
303 ( (
a) 2). Plaintiffs alleged that Chase
nimposed grossly excessive charges' on their account, and
'
stretched out the loan modification process to allow Chase to
charge excess fees .
P1s.' Resp . at 10 . They argue that Chase
'may be authorized, by the deed of trust and note, to charge
s
inspection fees or corporate advances as well as miscellaneous
fees, but Defendant is not authorized to subject Plaintiffs' loan
to unreasonable charges .' Id . at 11. Plaintiffé do not point to
'
a specific provision of the deed of trust or the note which would
forbid Chase from collecting n
unreasonable charges .' Because
'
plaintiffs admit that Chase is authorized to collect the fees
assessed and there is no ev idence of Chase delaying the loan
modification process, summary judgment must be granted as to
their claim under section 392.
303( 2).
a)(
12
3.
Section 392.
304 ( 8)
a)(
Section 392.
304 ( 8) states
a)(
( Except as otherwise provided by this section, in
a)
debt collection or obtaining information concerning a
consumer , a debt collector may not use a fraudulent,
deceptive , or misleading representation that employs
one of the following practices :
( misrepresenting the character, extent, or amount of
8)
a consumer debt , or misrepresenting the consumer debt's
status in a judicial or governmental proceeding . . . .
Tex . Fin. Code 5 392 .
304 ( (
a) 8). Plaintiffs alleged the following
misrepresentations:
( u
1) Defendant told Plaintiff E
sic) to stop
making payments in order to qualify for a loan modificationv; (
2)
Chase told plaintiffs they uwould not foreclose during the
modification process' ( uplaintiffs' loan was substantially,
'; 3)
unreasonably, and inappropriately overcharged' ( 'Defendant
'; 4) '
misrepresented the character and amount of Plaintiffs' debt' and
';
( 'JPMC agreed to provide Plaintiffs with a loan modification .
5) '
.
.
.
' P1s.' Resp . at 12 . nl
'
sltatements regarding loan
modifications do not concern the 'character, extent , or amount of
a consumer debt' under section 392.
304 ( (
a) 8).' Chavez v. Wells
'
Farqo Bank, N . ., No . 13-11325, 2014 WL 3938987, at *2 (
A
5th Cir.
2014) (
citation omitted). Therefore alleged representations (
1),
(
2), and ( cannot form the basis for a claim under this
5)
provision . Furthermore, alleged representation ( was not
5)
13
i
I
pleaded in plaintiffs ' second amended complaint . Regarding
alleged representation (
3), as discussed in a previous section,
there is no evidence that Chase was not permitted to charge the
fees it charged. Therefore, plaintiffs did owe those fees, and
their inclusion in the amount of the debt was not a
misrepresentation. Alleged representation ( is merely a
4)
conclusory statement. Therefore, summary judgment should be
granted as to plaintiffs' claim under section 392 .
304 4 8).
a)(
4.
Section 392.304 4 19)
a)4
Section 392.
304 ( (
a) 19) states
( Except as otherwise provided by this section, in
a)
debt collection or obtaining information concerning a
consumer , a debt collector may not use a fraudulent,
deceptive, or m isleading representation that employs
one of the following practices :
(
19) using any other false representation or deceptive
means to collect a debt or obtain information
concerning a consumer .'
'
Tex. Fin . Code 5 392.
304 ( 19). Plaintiffs alleged Chase
a)(
violated this provision by refusing to give plaintiffs
information about their loan modification , and falsely claiming
plaintiffs did not submit all of the necessary documentation.
Plaintiffs claim they have suffered damages in the form of
attorneys ' fees,
lost title , damage to their credit rating , such
that they were denied credit to purchase a vehicle and denied a
14
credit card, and Mr. Fields has suffered depression, elevated
blood pressure , and loss of sleep .
P1s .' Resp . at 12 .
'To
'
maintain a claim under section 392.304 ( (
a) 19), (
borrower) would
need to allege that E
lender) made an %affirmative statement' that
was false or misleading.' Chavez, 2014 WL 3938987, at *3
'
(
citation omitted). First, none of these claims were pleaded in
plaintiffs ' second amended complaint , and therefore should not be
considered by this court . Furthermore, the first representation
is not an affirmative statement , and plaintiffs can show no harm
from the second statement. Therefore, summary judgment should be
granted as to plaintiffs' claim under section 392.
304 ( 1).
a)(
D.
Neqliqent Misrepresentation
To support their negligent misrepresentation claim ,
plaintiffs alleged Chase made the following misrepresentations :
( foreclosure would be postponed during the loan modification
l)
frocess; ( they were qualified f loa modifi
2)
or
n
cation; ( C
3) hase
does not foreclose while a modification is under review; (
4)
Chase instructed plaintiffs to not make payments during the loan
modification process; ( Chase overstated the amount of
5)
plaintiffs' debt by including fees which they were
usubstantially , unreasonably , and inappropriately overcharged'
';
and ( Chase would provide plaintiffs with loan modification .
6)
15
Chase's motion for summary judgment argued that statements of
future conduct will not support a claim for negligent
pisrepresentation , the economic loss doctrine prevents this
claim, and the claim is barred by the statute of frauds. Because
Chase's first two grounds are sufficient to grant summary
judgment, we do not reach its statute of frauds argument.
Under Texas law , the elements of negligent misrepresentation
ar e
( the representation is made by a defendant in the
1)
course of his business, or in a transaction in which he
has a pecuniary interest; ( the defendant supplies
2)
'false information' for the guidance of others in their
business; ( the defendant did not exercise reasonable
3)
care or competence in obtaining or communicating the
information; and ( the plaintiff suffers pecuniary
4)
loss by justifiably relying on the representation.
Federal Land Bank Ass'n of Tyler v . Sloane , 825 S .W .2d 439, 442
(
Tex . 1991). A negligent misrepresentation claim must be based
on past or present facts, not future events, opinions, or
predictions . N unn , Yoest , Princirals & Assoc ., Inc . v . Union
-
-
Pac . Corp ., 69 F . App ' 658 (
x
5th Cir . 2003) (
citing to Bryant v .
Transcon . Gas Pipe Line Corp ., 821 S . . 187, 190 ( . App .
W 2d
TeX
Houston (
14th Disto 1991). Furthermore,
)
E nder the economic loss rule, a plaintiff may not
u)
bring a claim for negligent misrepresentation unless
the plaintiff can establish that he suffered an injury
that is distinct , separate , and independent from the
16
economic losses recoverab le under a breach of contract
Claim .
Smith M . JpMorqan Chase Bank, N . ., 519 F . APP' 861, 865 (
A
X
5th
Cir. 2013) (
citing to Sterlinq Chems., Inc. V . Texaco, Inc., 2S9
S. 3d 793, 797 (
W.
Tex . App . Houston (
1st Dist . 2007).
z
Plaintiffs have provided no competent summary judgment evidence
that there is a genuine issue of material fact as to any of these
alleged m isrepresentations . Furthermore , alleged
misrepresentations (
1), (
3), and ( are promises of future
6)
conduct. Alleged misrepresentation
is not a statement of
fact , but an instruction , and statement
previous section .
was dealt with in a
Also, all of the alleged injuries sustained
by plaintiffs stem from the foreclosure , and thus are barred by
the
economic loss doctrine. Therefore, summary judgment should
be granted as to plaintiffs' claims of negligent
misrepresentation .
E.
Deçlaratory Judqment and Accountinq
The parties agree that plaintiffs' requests for a
declarator judgment and an accounting are remedi
y
es, not causes
of action . Because summary judgment is granted as to al1 of
plaintiffs' causes of action , they are not entitled to either
remedy .
F.
suit to Qu iet Title
The sole claim plaintiffs bring against the Varrichios is a
suit to quiet title . Plaintiffs ' complaint states that 'the
'
Varrichiosz claim is invalid because of Chase 's wrongful actions
leading up to the foreclosure sale . ' Compl . at 16 . Because this
'
court is dismissing plaintiffs claims against Chase, the
Varrichio's motion for summary judgment should be granted.
V.
Order
Therefore ,
The court ORDERS that the motions for summary judgment of
Chase and the Varrichios be, and is hereby, granted, and that all
claims and causes of action brought by plaintiffs against
defendants, be , and are hereby ,
dismissed with prejudice.
SIGNED October 29, 2014 .
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