Washington et al v. Bank of America, N.A.

Filing 26

Memorandum Opinion and Order....Plaintiff's motion for leave to file and amended and supplemental complaint is denied; deft's motion to dismiss granted and plaintiffs' claims are dismissed. (Ordered by Judge John McBryde on 5/1/2015) (wrb)

U.S. DISTRICT COURT
NORTHERN DISTRICT OF TEXAS .

.

FILED

IN THE UNITED STATES DISTRICT C URT
NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
ALIX WASHINGTON, ET AL.,

vs.
BANK OF AMERICA, N.A., F/K/A
BAC HOME LOANS SERVICING, LP
F/K/A COUNTRYWIDE HOME LOANS
SERVICING, LP. ,
Defendant.

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Plaintiffs,

MP.'f ... I 2015

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NO. 4:15-CV-001-A

MEMORANDUM OPINION AND ORDER
Came on for consideration the motion of defendant, Bank of
America, N.A., f/k/a BAC Home Loans Servicing, LP, f/k/a
Countrywide Home Loans Servicing, LP., to dismiss. The court,
having considered the motion, the response, the record, and
applicable authorities, finds that the motion should be granted.
I.

Plaintiffs' Claims
On February 20, 2003, plaintiffs, Alix Washington and Tina
Washington, executed a note in the principal amount of $182,566
for the purchase of a home in Fort Worth, Texas. Plaintiffs'
First Amended Complaint ("FAC"), , , 11-13. They also executed a
deed of trust to secure payment of the note. Id., ,15. Since at
least January 1, 2005, defendant has been the holder and loan
servicer of the note. Id., ,17. Plaintiffs fell behind on their
mortgage payments and, in or about March 2010, contacted

defendant about a loan modification. Id.,

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19. 20. Thereafter,

plaintiffs did not make any further mortgage payments. Id., ~ 47.
The property was sold at foreclosure sale for $130,432.40. Id. On
September 27, 2010, plaintiffs executed a "move out" agreement,
pursuant to which they agreed to vacate the property on or before
October 27, 2010 and release all claims against defendant,
whether known or unknown, in exchange for payment to plaintiffs
of $2,000. Id.,

~53

& Ex. I.

After plaintiffs moved out of the property, the substitute
trustee voluntarily rescinded the foreclosure sale and cancelled
the substitute trustee's deed. Id., ~ 61.
On September 8, 2014, plaintiffs filed this action in the
342nd District Court of Tarrant County, Texas, alleging causes of

action for wrongful foreclosure, breach of contract, fraud and
fraudulent inducement, negligent misrepresentation, and
violations of the Texas debt collection practices act and Texas
deceptive trade practices act. On January 2, 2015, defendant
filed its notice of removal, bringing the action before this
court. By order signed January 6, 2015, the court ordered
plaintiffs to replead in keeping with the requirements of the
federal court. On January 21, plaintiffs filed their first
amended complaint, continuing to assert wrongful foreclosure,

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breach of contract, fraud' and fraudulent inducement, negligent
misrepresentation, and violation of the Texas deceptive trade
practices act, but omitting violation of the debt collection
practices act. Curiously, plaintiffs include as counts "agency
and respondeat superior" and equitable estoppel, which are not
causes of action.
II.

Defendant's Motion to Dismiss
On March 6, 2015, having obtained an extension of time in
which to do so, defendant filed its motion to dismiss plaintiffs'
first amended complaint. The court granted plaintiffs three
extensions of time in which to respond to the motion. And, when
the response finally filed did not meet the applicable filing
rules and directives of the court, the court granted plaintiffs
another day in which to respond, which they have now done.
Defendant contends that the court must dismiss plaintiffs'
first amended complaint for failure to state any cognizable claim
for relief. Although defendant urges a number of different
grounds, the court need only consider the first,

that plaintiffs

have released all claims they now seek to pursue.

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Although plaintiffs have only asserted a claim for common law fraud, their response to the
motion to dismiss includes a section regarding statutory fraud. Resp. at 13. Statutory fraud, governed by
Tex. Bus. & Comm. Code§ 27.01, does not apply to transactions regarding the mere loaning of money
for real estate. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 343 (5'" Cir. 2008); Burleson State Bank
v. Plunkett, 27 S.W.3d 605, 611 (Tex. App.-Waco 2000, pet. denied).
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III.

Standard of Review
Rule B(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,"
Fed. R. Civ. P. B(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
quotation marks and ellipsis omitted) .

(2007)

(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.

Twombly, 550 U.S. 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.
556 U.S. 662, 679 (2009)

See Ashcroft v. Igbal,

("While legal conclusions can provide

the framework of a complaint, they must be supported by factual
allegations.") .
"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

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sense." Iqbal, 556 u.s. at 678. 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.

To allege a plausible right to

relief, the facts pleaded must suggest liability; allegations
that are merely consistent with unlawful conduct are
insufficient. Id. In other words, where the facts pleaded do no
more than permit the court to infer the possibility of
misconduct, the complaint has not shown that the pleader is
entitled to relief.

Id. at 679.
IV.
Law APplied to the Pleading

A.

The Move Out Agreement.
The first ground of the motion is that plaintiffs' claims

are barred by the release contained in the move out agreement.
The court agrees. Although the court ordinarily does not consider
evidence in ruling on a motion to dismiss, documents attached to
a plaintiff's complaint as well as documents referred to therein,
if central to the plaintiff's claims, are considered part of the
pleadings and may be considered on a motion to dismiss. Collins
v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99

(5th Cir.

2000); GFF Corp. v. Assoc. Wholesale Grocers,

130 F.3d

Inc.,

1381, 1384-85 (loth cir. 1997). Here, plaintiffs not only refer

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to the move out agreement in their first amended complaint, they
include a copy in the appendix to the complaint.
The move out agreement provides, among other things that
plaintiffs release and forever discharge defendant

(which

plaintiffs acknowledge to be the successor of BAC Home Loans
Servicing, LP)
from any and all claims, causes of action,
whether administrative or judicial, losses,
costs, expenses, liabilities, penalties,
fines, compensation, fees, loss of profits,
and damages, of any kind whatsoever, whether
known or unknown, fixed or contingent, joint
or several, or in law or equity that
[plaintiffs] may have had or may now have
arising out of or in any way related to a
loan serviced by BAC Home Loans Servicing,
LP, a subsidiary of Bank of America, N.A.,
the Property, any personal property that is
or was located at the Property, any
foreclosure sale or eviction action involving
the Property, and/or any transaction or
agreement between or among [plaintiffs] and
BAC Home Loans Servicing, LP, a subsidiary of
Bank of America, N.A. prior to the date of
this agreement.
Further, the move out agreement specifically provides:
[plaintiffs] may later discover facts
different from, or in addition to, those
which [either plaintiff] now knows or
believes to be true with respect to the
Claims released, and [each plaintiff] agrees
that this release shall remain valid
notwithstanding such different or additional
facts.
Pls. First Set of Exs. Submitted Jan. 21, 2015, at 55, ,

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B.

The move out agreement clearly reflects that plaintiffs
received consideration for its execution; that they freely and
voluntarily entered into the agreement; that they had not been
given and had not relied on any inducements or promises other
than as set out in the agreement; that they had had the
opportunity to consult with independent counsel; that they read
and understood the terms of the agreement; that they were
competent to execute the agreement; and that the agreement
contained the entire understanding of the parties. Id. at 54, ~2;
56,

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10-11. The agreement is written in plain language and

plaintiffs do not, and could not, contend that it is ambiguous in
any respect.
Each of the claims asserted by plaintiffs is a claim that
has been released by them in the move out agreement. They are now
alleging that they have learned other facts that would entitle
them to assert claims. However, that situation is just what the
move out agreement addressed. The move out agreement is clear and
unequivocal in its expression of the intent to disclaim reliance;
accordingly,

its terms are binding. See Forest Oil Corp. V.

McAllen, 268 S.W>3d 51 (Tex. 2008); Schlumberger Tech. Corp. v.
Swanson, 959 S.W.2d 171 (Tex. 1997). Plaintiffs are bound by
their release and for that reason alone their claims are not
plausible and must be dismissed.

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B.

Other Issues Raised by the Motion to Dismiss.
For the reasons discussed in the preceding section,

plaintiffs' claims must be dismissed. Nevertheless, the court is
addressing some of the other issues raised by defendant in its
motion that constitute alternate grounds for the dismissal.
1.

Agency and Respondeat Superior.

As defendant points out, agency and respondeat superior are
theories of liability and not causes of action. See Kenneally v.
Gulfside Supply, Inc,, No. A-10-CA-289-LY, 2010 WL 3220672, *2
(W.D. Tex. Aug. 13, 2010). To the extent plaintiffs have asserted
these as causes of action, they will be dismissed,
2.

Wrongful Foreclosure,

To state a claim for wrongful foreclosure, a plaintiff must
allege (1) a defect in the foreclosure sale proceedings;

(2) a

grossly inadequate selling price; and (3) a causal connection
between the defect and the grossly inadequate sales price. Miller
v. BAC Hom Loans Serv., L.P,, 726 F.3d 717, 726 (5th Cir. 2013),
Further, to be grossly inadequate, the sales price must be "so
little as to shock a correct mind, and thereby raise a
presumption that fraud attended the purchase." F,D.I.C. v.
Blanton, 918 F.2d 524, 531 (5th Cir. 1990), As the Fifth Circuit
has noted, the weight of Texas authority rejects a determination
of gross inadequacy where the property sells for more than sixty

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percent of the property's fair market value. Id. at 531-32. Here,
taking plaintiffs' allegation as to fair market value as true,
they have admitted that the property sold for much more than
sixty percent thereof. FAC, , 80. Accordingly, plaintiffs have
not stated a claim for wrongful foreclosure.
3.

Economic Loss Rule.

Defendant alternatively points out that plaintiffs' tort
claims are barred by the economic loss doctrine. Plaintiffs have
clearly pleaded that their claims arise out of the contracts they
executed-the note, deed of trust, and negotiation agreement. See
Southwestern Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494

(Tex.

1991) . Under Texas law, the economic loss doctrine "generally
precludes recovery in tort for economic losses resulting from the
failure of a party to perform under a contract.• Lamar Homes,
Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 12

(Tex. 2007).

Therefore, claims for these tort claims require injury to the
plaintiff independent of the alleged breach of contract. See
Pennington v., HSBC Bank U.S.A., N.A., No. A-10-CA-785 LY, 2011
WL 6739609, *8

(W.D. Tex. Dec. 22, 2011) (applying economic loss

rule to negligent misrepresentation); Casey v. Fed. Home Loan
Mortgage Ass'n, No. H-11-3830, 2012 WL 1425138, *3-4 (S.D. Tex.
Apr. 23, 2012) (applying economic loss rule to fraud claim).

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Here, plaintiffs clearly had a contractual relationship with
defendant based on the note and deed of trust. Their alleged
discussions concerned modification of the loan and foreclosure
proceedings. Defendant could not have made any representations
concerning modification had there not been an agreement between
the parties. Further, defendant's alleged representations about
delaying foreclosure proceedings related to rights provided under
the note and deed of trust if plaintiffs failed to perform their
obligations thereunder. Thus, the basis of plaintiffs' claims
flows solely from the note and deed of trust and their tort
claims are barred by the economic loss rule. Casey, 2012 WL
1425138, at *4.
4.

Deceptive Trade Practices.

The elements of a claim under the DTPA are:
plaintiff is a consumer;

(1) the

(2) the defendant engaged in false,

misleading or deceptive acts; and (3) these acts constituted a
producing cause of plaintiff's damages. Doe v. Boys Clubs of
Greater Dallas, Inc., 907 S.W.2d 472, 478

(Tex. 1995). A consumer

is one who has seeks or acquires goods or services by purchase or
lease. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539
(Tex. 1981); Tex. Bus. & Com. Code

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17.45(4). As defendant

correctly points out, the extension of credit is not a good or
service for which a claim may be stated under the Texas Deceptive

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Trade Practices-Consumer Protection Act. LaSara Grain Co. v.
First Nat'l Bank, 673 S.W.2d 558, 566-67 (Tex. 1984); Riverside
Nat'l Bank v. Lewis, 603 S.W.2d 169, 174

(Tex. 1980). Subsequent

actions related to mortgage accounts, such as extensions of
further credit or loan modification, do not satisfy the "goods or
services" requirement of the DTPA. Montalvo v. Bank of Am. Corp.,
864 F. SUpp. 2d 567, 579 (W.D. Tex. 2012); Broyles v. Chase Home
Fin., No. 3:10-CV-2256-G, 2011 WL 1428904, *4 (N.D. Tex. Apr. 13,
2011) .' Thus, plaintiffs do not have a claim under the DTPA.
c.

Motion for Leave to Amend.
In response to the motion to dismiss, plaintiffs have filed

a motion for leave to supplement and amend their complaint. For
the reasons discussed herein, plaintiffs' claims are foreclosed
by the terms of the move out agreement they signed. Their waiver
applies to all claims; thus, amending the complaint to add new
claims would serve no purpose. In addition, it appears that the
primary motivation for amending the complaint is to address
defendant's limitations arguments. As the court is not relying on
limitations as a basis for its ruling, there is no need for the
amendment.

'Likewise, discussions regarding loan modification do not concern collection of a debt and do not
fall under the debt collection statutes. Thompson v. Bank of Am., N.A., No. 14-10560, 2015 WL
1810738, *2 (5'h Cir. Apr. 21, 2015); Thomas v. EMC Mortgage Corp., 499 F. App'x 337,343 (5'h Cir.
20 12).

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V.
Order
For the reasons discussed herein,
The court ORDERS that plaintiffs' motion for leave to file
amended and supplemental complaint be, and is hereby, denied.
The court ORDERS that defendant's motion to dismiss be, and
is hereby, granted, and that plaintiffs' claims be, and are
hereby, dismissed.
SIGNED May 1, 2015.

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