Bellaish et al v. Chase Home Finance, LLC

Filing 14

MEMORANDUM AND ORDER granting Motion for Summary Judgment 9 as to TDCA claim and denying as to breach of contract claim.(Signed by Judge Nancy F. Atlas) Parties notified.(TDR)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SHIMON BELLAISH, et al.,
Plaintiffs,
v.
CHASE HOME FINANCE, LLC,
Defendant.

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CIVIL ACTION NO. H-10-2791

MEMORANDUM AND ORDER
This case is before the Court on the Motion for Summary Judgment (“Motion”)
[Doc. # 9] filed by Defendant Chase Home Finance, LLC (“Chase”), to which
Plaintiffs Shimon and Rachel Bellaish filed a Response [Doc. # 11], Chase filed a
Reply [Doc. # 12], and Plaintiffs filed a Sur-Reply [Doc. # 13].1 Having carefully
reviewed the full record and applicable legal authorities, the Court grants Defendant’s
Motion as to the Texas Debt Collection Act (“TDCA”) claim and denies it as to the
breach of contract claim.
I.

FACTUAL BACKGROUND
In June 2005, Plaintiff Rachel Bellaish executed an Adjustable Rate Note

(“Note”) in the original amount of $285,928.00. See Note, Exh. 2 to Plaintiffs’

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Although Plaintiffs neither requested nor obtained leave to file the Sur-Reply, the
Court has considered it in reaching its decision in this case.

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Response. Both Shimon and Rachel Bellaish executed a Deed of Trust for their
residence, which is located in Harris County, Texas. See Deed of Trust, Exh. 3 to
Plaintiffs’ Response. After the Note went into default, Plaintiffs applied for a loan
modification and entered into a Home Affordable Modification Trial Period Plan
(“Trial Plan”). See Exh. 1 to Plaintiffs’ Original Petition, Exh. A-2 to Notice of
Removal [Doc. # 1].
Plaintiffs filed this lawsuit in Texas state court, and Chase filed a timely Notice
of Removal. In their lawsuit, Plaintiffs allege that Chase violated the TDCA by
sending letters in May and June 2010 that contained different outstanding loan
balances. See Original Petition, ¶ 12. Plaintiffs also allege that Chase breached its
contract with Plaintiffs to allow a loan modification. See id., ¶ 14.
Following an adequate opportunity to complete discovery, Chase filed its
Motion for Summary Judgment. The Motion has been fully briefed and is now ripe
for decision.2

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Plaintiffs object to the affidavit of Thomas Reardon because Reardon was not
identified in Defendant’s disclosures. The Court has not considered the Reardon
Affidavit and, instead, bases its ruling on the evidence attached by Plaintiffs to their
Original Petition and to their Response. As a result, the objection is overruled as
moot.

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II.

STANDARD FOR SUMMARY JUDGMENT
Rule 56 of the Federal Rules of Civil Procedure provides for the entry of

summary judgment, after adequate time for discovery and upon motion, against a
party who fails to make a sufficient showing of the existence of an element essential
to the party’s case, and on which that party will bear the burden at trial. Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994) (en banc); see also Baton Rouge Oil and Chem. Workers Union v.
ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir. 2002). Summary judgment “should
be rendered if the pleadings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c); Celotex
Corp., 477 U.S. at 322–23; Weaver v. CCA Indus., Inc., 529 F.3d 335, 339 (5th Cir.
2008).
For summary judgment, the initial burden falls on the movant to identify areas
essential to the non-movant’s claim in which there is an “absence of a genuine issue
of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir. 2005).
The moving party may meet its burden by pointing out “‘the absence of evidence
supporting the nonmoving party’s case.’” Duffy v. Leading Edge Products, Inc., 44

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F.3d 308, 312 (5th Cir. 1995) (quoting Skotak v. Tenneco Resins, Inc., 953 F.2d 909,
913 (5th Cir. 1992)).
If the moving party meets its initial burden, the non-movant must go beyond the
pleadings and designate specific facts showing that there is a genuine issue of material
fact for trial. Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001)
(internal citation omitted). In deciding whether a genuine and material fact issue has
been created, the facts and inferences to be drawn from them must be reviewed in the
light most favorable to the nonmoving party. Reaves Brokerage Co. v. Sunbelt Fruit
& Vegetable Co., 336 F.3d 410, 412 (5th Cir. 2003). However, factual controversies
are resolved in favor of the non-movant “only ‘when both parties have submitted
evidence of contradictory facts.’” Alexander v. Eeds, 392 F.3d 138, 142 (5th Cir.
2004) (quoting Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir.
1999)).
The non-movant’s burden is not met by mere reliance on the allegations in the
non-movant’s pleadings. See Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d
531, 545 n.13 (5th Cir. 2002). In the absence of any proof, the court will not assume
that the non-movant could or would prove the necessary facts. Little, 37 F.3d at 1075
(citing Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990)).

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III.

ANALYSIS
A.

TDCA Claim

Under the Texas Finance Code, “a debt collector may not use a fraudulent,
deceptive, or misleading representation” that “misrepresent [s] the character, extent,
or amount of a consumer debt, or misrepresent[s] the consumer debt’s status in a
judicial or governmental proceeding.” TEX. FIN. CODE § 392.304(a)(8). For a
statement to constitute a misrepresentation under the TDCA, the debt collector must
have made an affirmative statement that was false or misleading. See Narvaez v.
Wilshire Credit Corp., 757 F. Supp. 2d 621, 632 (N.D. Tex. 2010). “A collection
notice or balance statement misstating the amount owed on a debt constitutes a
misleading assertion regarding the amount of that debt under the TDCA. Id.
In this case, Plaintiffs allege that Defendant misrepresented the amount owed
on the debt when it sent a letter in May 2010 stating that the debt was $272,254.31,
and sent a letter in June 2010 stating that the debt was $309,136.91. The evidence
submitted by Plaintiffs establishes, however, that the May 2010 letter related to the
“principal balance” based on the monthly payments due by July 1, 2010. See May
2010 Letter, Exh. 2 to Plaintiffs’ Original Petition. The June 2010 letter, on the other
hand, clearly reflected that the debt had been accelerated, resulting in an increased

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amount of debt as of the date of the letter. See June 2010 Letter, Exh. 4 to Plaintiffs’
Response.
Plaintiffs have failed to present evidence that the amount of the debt as reflected
in the May 2010 Letter or in the June 2010 Letter was incorrect as of the date of each
letter. Defendant has explained and presented evidence to show that the differing
amounts were the result of the debt being accelerated. Absent evidence that the
amount in either letter was incorrect, Defendant is entitled to summary judgment on
this claim.
In their Original Petition, Plaintiffs base their TDCA claim also on their
“impression” that Chase had all the information they needed. Plaintiffs allege that the
uncertainty regarding whether the loan modification had been approved constituted
a misrepresentation regarding the status of the debt. See Original Petition, ¶ 13.
Plaintiffs do not, however, maintain that allegation in their Response to Defendant’s
Motion for Summary Judgment on the TDCA claim. Instead, Plaintiffs argue that
Defendant violated the TDCA by attempting to collect a debt that it was not legally
entitled to collect because HSBC Bank USA is not the true holder of the Note and
Deed of Trust, and Chase is not the lawful servicer of the debt. See Plaintiffs’
Response, ¶ 19. Plaintiffs in their Original Petition did not base their TDCA claim on
the argument that HSBC Bank USA is not the lawful holder of the Note or that

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Defendant is not the legal servicer for the debt. Indeed, Plaintiffs specifically assert
in their Original Petition that the “current mortgagee of the indebtedness is HSBC
Bank USA” and that “Chase Home Finance, LLC is acting as the Mortgage Service
for HSBC Bank USA by virtue of a servicing agreement with the Mortgagee.” See
Original Petition, ¶ 7, n.1. Based on Plaintiffs’ assertions in the Original Petition and
the absence of evidence to the contrary, Defendant is entitled to summary judgment
on any TDCA claim based on Chase’s legal authority to service the debt at issue in
this case.
B.

Breach of Contract Claim

In order to prevail on a breach of contract claim, a plaintiff must establish the
existence of a contract, the performance or tender of performance by the plaintiff, a
breach by the defendant and damages as a result of that breach. Bridgmon v. Array
Sys. Corp., 325 F.3d 572, 577 (5th Cir. 2003) (citing Frost Nat’l Bank v. Burge, 29
S.W.3d 580, 593 (Tex. App.—Houston [14th Dist.] 2000, no pet.)). In this case,
Plaintiffs allege that Defendant breached its contract to provide a loan modification
if Plaintiffs’ satisfied certain requirements.
The Trial Plan provides that if Plaintiffs were in compliance with the
requirements of the Trial Plan and their representations in the Trial Plan continued to
be true, then the Lender “will provide [them] with a Home Affordable Modification

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Agreement . . ..” See Trial Plan, Exh. 1 to Original Petition. Plaintiffs allege that they
complied fully and that their representations remained correct, but Chase failed to
comply with their contract to provide a Home Affordable Modification Agreement.
Defendant argues that it is entitled to summary judgment on Plaintiffs’ breach
of contract claim because Plaintiffs failed to provide requested documentation and
failed to make a timely mortgage payment under the Trial Plan. Defendant has
submitted copies of letters it sent to Plaintiffs requesting additional documentation and
noting the missed payment in November 2009. Plaintiffs have submitted sworn
affidavits stating that they provided “any and all documentation requested from [them]
to complete the loan modification” and that they timely paid all monthly mortgage
payments between September 1, 2009, and June 2010. See Declaration of Shimon
Bellaish, Exh. 7 to Plaintiffs’ Response, ¶¶ 13-14; Declaration of Rachel Bellaish,
Exh. 8 to Plaintiffs’ Response, ¶¶ 13-14. Plaintiffs also submitted copies of cover
letters, fax cover sheets, and other indicia that they mailed the requested documents
to Defendant.
Plaintiffs have presented evidence that raises a genuine issue of material fact
regarding whether they complied fully with all requirements of the Trial Plan such that
Defendant was required to provide them with a Home Affordable Modification

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Agreement. Defendant’s Motion for Summary Judgment on the breach of contract
claim is denied.
IV.

CONCLUSION AND ORDER
Plaintiffs have failed to present evidence that raises a genuine issue of material

fact in support of their TDCA claim. Consequently, Defendant is entitled to summary
judgment on the TDCA claim.
Plaintiffs have presented evidence that raises a genuine issue of material fact
regarding whether they complied with the requirements for the Trial Plan such that
Chase was contractually obligated to provide a Home Affordable Modification
Agreement. As a result, summary judgment on the breach of contract claim is not
appropriate. It is hereby
ORDERED that Defendant’s Motion for Summary Judgment [Doc. # 9] is
GRANTED as to the TDCA claim and DENIED as to the breach of contract claim.
The parties are reminded that they are required to participate in mediation prior
to the November 23, 2011 docket call.
SIGNED at Houston, Texas this 14th day of October, 2011.

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