Bell v. Bank of America

Filing 13

Memorandum Opinion and Order granting 8 Motion to Dismiss filed by Bank of America. re: 8 MOTION to Dismiss. The court ORDERS that defendant's motion to dismiss be, and is hereby, granted, and that all claims and causes of action asserted in the above-captioned action by plaintiff, Gerald Bell, against defendant, Bank of America, N.A., be, and are hereby, dismissed with prejudice. (Ordered by Judge John McBryde on 4/24/2014) (mem)

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FILED
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXA . "
FORT WORTH DIVISION

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CLERK, U.S. DISTRICT COURT

GERALD BELL,

BY----~--------Depury

§
§

Plaintiff,

§
§

vs.

§

NO. 4:14-CV-107-A

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BANK OF AMERICA, N.A.,

§
§

Defendant.

§

MEMORANDUM OPINION
and
ORDER
Before the court for decision is the motion to dismiss
pursuant to Rule 12(b) (6) of the Federal Rules of Civil
Procedure, filed in the above action by defendant, Bank of
America, N.A.

Plaintiff, Gerald Bell, filed a response, and

defendant filed a reply.

Having now considered all of the

parties' filings, plaintiff's first amended complaint, and the
applicable legal authorities, the court concludes that the motion
should be granted.
I.

Background and Plaintiff's Pleaded Claims
Plaintiff initiated this action by filing his original
petition and application for temporary restraining order in the
District Court of Tarrant County, Texas, 342nd Judicial District.
1

Following removal, the court ordered plaintiff to file an amended
complaint that complied with the requirements of the Federal
Rules of Civil Procedure, as interpreted by the United States
Supreme Court in Ashcroft v. Iqbal, 556
Atlantic Corp. v. Twombly, 550

u.s.

u.s.

662 (2009), and Bell

544 (2007).

Plaintiff then

filed his first amended complaint, in which he alleged the
following:
On or about May 23, 2008, plaintiff signed a promissory
note, secured by a deed of trust, in the amount of $144,637.00,
for the purchase of property in Fort Worth, Tarrant County,
Texas.

Prior to the date plaintiff initiated this action,

plaintiff sought assistance from defendant in obtaining a loan
modification to reduce his payments.

"Defendant agreed that it

would review the loan for a modification under one of their
numerous programs available and instructed Plaintiff to submit an
application and financial information."
at 3-4.

Pl.'s First Am. Compl.

However, at the time plaintiff initiated this action,

defendant had neither approved nor denied the modification, nor
had it provided any written explanation to plaintiff as to why no
approval or denial was forthcoming.

Because defendant failed to

inform plaintiff of the approval or denial, plaintiff was
deprived of his right to appeal defendant's decision, and he did
not realize he "needed to make other plans regarding his loan and
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residence."

Id. at 4.

Although the deed of trust affords

plaintiff an opportunity to reinstate his loan, defendant denied
plaintiff this right by not informing him that the loan
modification had been denied.
Defendant has informed plaintiff of its intent to foreclose
on his home.

However, the public records of Tarrant County show

no assignment or conveyance from the original lender, Summit
Funding, Inc. d/b/a Southwest Mortgage Lending, Inc., to
defendant.

Accordingly, plaintiff in the complaint questioned

whether defendant had authority to initiate foreclosure
proceedings.
Plaintiff in the first amended complaint challenged
defendant's authority to foreclose, and alleged claims for common
law fraud and breach of contract, including violation of the duty
of good faith and fair dealing.

Plaintiff also sought injunctive

relief to bar any transfer of his property.
II.
Standards Applicable to Motion to Dismiss
Rule 8(a) (2) of the Federal Rules of Civil Procedure
provides, in a general way, the applicable standard of pleading.
It requires that a complaint contain "a short and plain statement
of the claim showing that the pleader is entitled to relief,"

3

Fed. R. Civ. P. 8(a) (2), "in order to give the defendant fair
notice of what the claim is and the grounds upon which it rests."
Bell Atl. Corp. v. Twombly.

550 U.S. 544, 555 (2007)

quotation marks and ellipsis omitted) .

(internal

Although a complaint need

not contain detailed factual allegations, the "showing"
contemplated by Rule 8 requires the plaintiff to do more than
simply allege legal conclusions or recite the elements of a cause
of action.

Id. at 555 & n.3.

Thus, while a court must accept

all of the factual allegations in the complaint as true, it need
not credit bare legal conclusions that are unsupported by any
factual underpinnings.
(2009)

See Ashcroft v. Iqbal, 556 U.S. 662, 679

("While legal conclusions can provide the framework of a

complaint, they must be supported by factual allegations.")
Moreover, to survive a motion to dismiss for failure to
state a claim under Rule 12(b) (6), the facts pleaded must allow
the court to infer that the plaintiff's right to relief is
plausible.

Id. at 678.

To allege a plausible right to relief,

the facts pleaded must suggest liability; allegations that are
merely consistent with unlawful conduct are insufficient.
Twombly, 550 u.s. at 566-69.

"Determining whether a complaint

states a plausible claim for relief . . . [is] a context-specific
task that requires the reviewing court to draw on its judicial
experience and common sense."

Iqbal, 556 U.S. at 679.

4

In

adjudicating a motion to dismiss, the court may consider the
complaint, its attachments, and documents that are referred to in
the complaint and central to the plaintiff's claims.

Collins v.

Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000).
III.
Application of Law to Facts
A.

Authority to Foreclose and Fraud Claims
In the response, plaintiff stated that he had no access to

an assignment of record showing any transfer of the property to
defendant, but indicated that upon receipt of such assignment, he
would amend his complaint to dismiss this cause of action against
defendant.

Defendant included a copy of the assignment in the

appendix to its motion to dismiss, a copy of which was served on
plaintiff.

Inasmuch as plaintiff has now received a copy of the

assignment via his copy of defendant's appendix, the court is
considering that plaintiff has abandoned this claim.
Similarly, plaintiff indicated that he would also dismiss
his fraud claim in any amended complaint.

Accordingly, plaintiff

has abandoned this claim as well.
B.

Plaintiff's Breach of Contract Claims are Dismissed
The basis of plaintiff's breach of contract claims appears

to be that defendant offered, and plaintiff accepted, a "loan
modification review."

Pl.'s First Am. Compl. at 8.
5

Plaintiff

contended that he

~tendered

performance and relied on Defendant's

representations and promises, to his detriment," id., which
constituted a unilateral contract.

Defendant allegedly breached

the unilateral contract because it has placed plaintiff in a
situation where he is unable to catch up on his payments and may
lose his home.
Defendant advanced a number of arguments for dismissal of
plaintiff's breach of contract claim.

However, the court finds

defendant's statute of frauds argument to be dispositive.
Under Texas law, a loan agreement involving an amount in
excess of $50,000.00 is unenforceable unless the agreement is in
writing and signed by the party to be bound.
Code Ann.

§

26.02(b).

Tex Bus. & Com.

A promise pertaining to the sale of real

estate must also be in writing.

Id. at 26.01(b) (4).

Hence, any

agreement regarding modification of a loan to purchase real
property must be in writing.

Martins v. BAC Home Loans

Servicing, L.P., 722 F.3d 249, 256 (5th Cir. 2013); Williams v.
Wells Fargo Bank, N.A.,

F. App'x ____ , No. 13-10233, 2014 WL

1044304 at *4 (5th Cir. Mar. 19, 2014)

(per curiam) . 1

Here, plaintiff pleaded that his original loan, pertaining
to the purchase of real estate, was in the amount of $144,637.00.

1

The court recognizes that this unpublished case is not binding precedent, but finds its holding
instructive in this action.

6

Because the contract purportedly breached by defendant pertained
to modification of this loan, it was subject to the statute of
frauds, and was required to be in writing.

Martins, 722 F.3d at

256 (holding agreement to modify mortgage note was subject to
statute of frauds and unenforceable unless in writing); Williams,
2014 WL 1044304 at *4 (same).

Plaintiff alleged only that

defendant agreed to review his loan for a modification.

The

complaint did not allege that any agreement to modify the loan
was ever made, much less put in writing.

Hence, plaintiff's

breach of contract claim fails.
In his response, plaintiff argues that promissory estoppel
may avoid the statute of frauds "when the alleged promise is to
sign an existing document that satisfies the statue of frauds."
Pl.'s Resp. and Br. In Opp'n to Def.'s Mot. to Dismiss Pl.'s
Compl.

("Pl.'s Resp.") at 5-6 (emphasis in original).

Plaintiff's argument aims at, but misses, the mark.

The Fifth

Circuit has held that promissory estoppel can overcome the
statute of frauds, where there is "a promise to sign a written
contract which had been prepared and which would satisfy the
requirements of the statute of frauds."
256-57 (citation omitted).

Martins, 722 F.3d at

However, plaintiff alleged only that

defendant orally agreed to offer plaintiff a loan modification
review.

Nowhere did plaintiff allege that defendant promised to
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sign any modification document which had been prepared and which
would satisfy the statute of frauds.

Accordingly, plaintiff's

breach of contract claim fails.
Plaintiff's claim for breach of an implied duty of good
faith and fair dealing likewise fails.

Relying on sections

1.201(20) and 9.102(c) of the Texas Business and Commerce Code,
plaintiff contends that under the Texas Uniform Commercial Code
("UCC"), a duty "of good faith and fair dealing is included in
the performance of every contract." 2
8.

Pl.'s First Am. Compl. at

Plaintiff alleged that his "mortgage note is a negotiable

instrument governed by the Uniform Commercial Code," and that the
"Uniform Commercial Code provides that every contract or duty
imposes an obligation of good faith in its performance and
enforcement."

Id.

(quoting section 1.304 of the Texas UCC).

Plaintiff's reliance on the UCC is misplaced.

Section

1.201(20) of the UCC defines "good faith" as "honesty in fact and
the observance of reasonable commercial standards of fair
dealing."

Section 9.102(c) merely states that "[c]hapter 1

contains general definitions and principles of construction
throughout this chapter."

Neither of these sections imposes any

2

Plaintiff cited to the case of Belyea v. Litton Loan Servicing. LLP, Civil Action No.
10-1 0931-DJC, 2011 WL 2884964 (D. Mass. July 15, 2011 ), to support this proposition. Plaintiff did
not, however, attempt to explain how a case from the district court of Massachusetts, interpreting
Massachusetts law, supports his claim for violation of a duty he contends is imposed by Texas law.

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duty on, nor supports a cause of action against, defendant.

And,

section 9.109(d) (11) provides that chapter nine of the UCC does
not apply to "the creation or transfer of an interest in or lien
on real property."
Plaintiff also relies on section 1.304 of the UCC, which
imposes an obligation of good faith on "[e]very contract or duty
within this title."
added).

Tex. Bus.

Com. Code Ann.

&

§

1.304 (emphasis

However, contrary to plaintiff's assertions, a mortgage

note is not "within" the UCC: "[b]ecause the Deed of Trust places
a lien on real property, it is not governed by the UCC."

Vogel

v. Travelers Indem. Co., 966 S.W.2d 748, 753 (Tex. App.--San
Antonio 1998, no pet.)

(emphasis in original).

The comments to

section three of the UCC, concerning negotiable instruments, also
could not be more clear:
contracts for

"Article 3 is not meant to apply to

. the sale or lease of real property or similar

writings that may contain a promise to pay money."
Com. Code

§

Tex. Bus. &

3.104, Cmt. 2. 3

Additionally, as argued in defendant's motion, Texas courts
generally do not impose a duty of good faith and fair dealing in
the mortgagor/mortgagee relationship.
3

See,

~'

FDIC v.

"The UCC official commentary is an authoritative interpretation of the Code." Jones v. Wells
Fargo Bank, N.A., 666 F.3d 955, 960 n.5 (5th Cir. 2012). Texas courts consider the comments as
providing valuable guidance pertaining to the meaning and purpose of the Texas UCC. Id. "Barring a
contrary interpretation from the Texas courts," the court is guided by the official commentary. Id.

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Coleman, 795 S.W.2d 706, 709 (Tex. 1990).
Although plaintiff in his response argues that authority
exists for his claim of breach of the duty of good faith and fair
dealing, none is cited in his brief.
The sum of the foregoing is that the first amended complaint
fails to state a claim against defendant for breach of the duty
of good faith and fair dealing.
C.

Breach of the Deed of Trust
Plaintiff alleged that the deed of trust gave him an

opportunity to reinstate his loan.

However, defendant removed

this right from plaintiff by failing to inform him that it had
denied his loan modification.
Two grounds for dismissal are raised in the motion:

(1)

plaintiff failed to allege his own performance under the note and
deed of trust, and has in effect admitted his own default, which
precludes him from bringing a breach of contract claim; and,

(2)

defendant provided plaintiff a notice of default that afforded
him an opportunity to reinstate the loan.

Dismissal is warranted

on either of these grounds.
To sustain a breach of contract action under Texas law
requires plaintiff to show:

(1) the existence of a valid

contract; (2) plaintiff performed or tendered performance under
the contract; (3) breach by defendant; and,
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(4) the breach

damaged plaintiff.

Mullins v. TestAmerica, Inc., 564 F.3d 386,

418 (5th Cir. 2009)

(citation omitted) .

It is well-settled that

"a party to a contract who is himself in default cannot maintain
a suit for its breach."

Dobbins v. Redden, 785 S.W.2d 377, 378

(Tex. 1990)

(citation omitted).

(per curiam)

Here, it appears that the first amended complaint alleged
only that plaintiff tendered performance by submitting documents
requested by defendant for a loan modification review.

As noted

in defendant's motion, plaintiff did not allege that he performed
under the note and deed of trust by making the required payments,
and plaintiff did not deny or even address this contention in his
response.

Additionally, plaintiff in the first amended complaint

admitted that his loan is in arrears. 4

Because plaintiff

breached the note and deed of trust, he cannot sustain a breach
of contract claim against defendant.

Id.; see also Williams,

2014 WL 1044304 at *3 ("[I]f, as here, plaintiffs fail to allege
they were current on their payments under the deed of trust,
dismissal of their breach of contract claim is proper.").
Although the court also finds persuasive defendant's

4

1n admitting this fact, plaintiff attempted to place blame on defendant by attributing the
arrearage to defendant's "run around games and stall tactics." Pl.'s First Am. Compl. at 8. Plaintiff did
not elaborate on what those "games" and "tactics" were or how they caused him to be in arrears on his
payments under the note. Plaintiff also did not allege that defendant promised to modify his loan, only
that defendant offered to review the loan for a possible modification, and he provided no facts to show
how defendant's review caused his loan to be in arrears.

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argument that it provided notice to plaintiff of his default and
how to cure and reinstate the loan, it need not reach that issue,
having disposed of plaintiff's claim for breach of the deed of
trust on other grounds. 5
D.

Injunctive Relief
Defendant argued for dismissal of plaintiff's request for

injunctive relief on the ground that, if the court dismisses all
of plaintiff's other claims and causes of action, nothing remains
to support such a request.

Because plaintiff has failed to show

a plausible right to relief on any of his claims, he is entitled
to no injunctive relief.
E.

Plaintiff's Request to Amend Complaint
In the conclusion of his response, plaintiff asks that he be

permitted to replead, should the court determine any of his
claims are deficient.

Rule LR lO.l(a) of the Local Civil Rules

of the United States District Court for the Northern District of
Texas requires that "each .

. motion, or other paper must:

(a)

contain on its face a title clearly identifying each included

5

Defendant in its appendix provided a copy of a notice of default sent to plaintiff on January 6,
2011, wherein defendant described the actions plaintiff needed to take to cure his default and reinstate
his loan. The notice is described in plaintiffs first amended complaint and is central to his claims, such
that the court may consider it without converting the motion to dismiss into a motion for summary
judgment.

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pleading, motion, or other paper; .

"

The response to the

motion to dismiss does not indicate on its face that it includes
a motion to amend.

Nor did plaintiff inform the court of the

additional facts he could plead to correct the deficiencies in
the first amended complaint, and he did not attach to the
response a proposed second amended complaint.

Under these

circumstances, the court is not permitting plaintiff to replead.
Sullivan v. Leor Energy, LLC, 600 F.3d 542, 551 (5th Cir. 2010).
Additionally, the first amended complaint represents
plaintiff's second pleading in this action.
original petition in the state court.

Plaintiff filed his

Upon removal, the court

entered an order that described the pleading standards required
by the Federal Rules of Civil Procedure, as interpreted by
Twombly and Igbal, and ordered plaintiff to file an amended
complaint consistent with those standards.
his first amended complaint.

Plaintiff then filed

Plaintiff has thus been provided

ample opportunity to correct any deficiencies in his pleadings,
and the court can see nothing to be gained by allowing another
amended complaint.

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IV.

Order
Therefore,
The court ORDERS that defendant's motion to dismiss be, and
is hereby, granted, and that all claims and causes of action
asserted in the above-captioned action by plaintiff, Gerald Bell,
against defendant, Bank of America, N.A., be, and are hereby,
dismissed with prejudice.
SIGNED April 24, 2014.

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