Walton et al v. Wells Fargo Bank, N.A. et al
Filing
27
MEMORANDUM OPNION AND ORDER Granting 14 MOTION for Summary Judgment, Granting in Part and Denying in Part 21 MOTION for Leave to File Summary Judgment Response and Request for Oral Argument, Denying as Moot 15 MOTION for Entry of Order re: Granting Summary Judgment, Denying 19 MOTION to Strike 17 Response to Motion for Summary Judgment.(Signed by Judge Sim Lake) Parties notified.(jewilliams, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ROLAN W. WALTON and
SUZANNE L. WALTON,
§
§
§
Plaintiffs,
§
§
v.
§
§
WELLS FARGO BANK, N.A. and BANK §
OF AMERICA NATIONAL ASSOCIATION §
AS SUCCESSOR BY MERGER TO
§
LASALLE BANK NATIONAL
§
ASSOCIATION, AS TRUSTEE FOR THE §
HOLDERS OF PRIME MORTGAGE
§
TRUST, MORTGAGE PASS-THROUGH
§
CERTIFICATES, SERIES 2004–CL1, §
§
Defendants.
§
CIVIL ACTION NO. H-10-2875
MEMORANDUM OPINION AND ORDER
Rolan and Suzanne Walton bring this action against Wells Fargo
Bank, N.A. (“Wells Fargo”) and Bank of America National Association
as Successor by Merger to LaSalle Bank National Association, as
Trustee for the Holders of Prime Mortgage Trust, Mortgage PassThrough Certificates, Series 2004–CL1 (“Bank of America”) alleging
breach of contract, wrongful foreclosure, tortious interference
with contract, intentional infliction of emotional distress, and
seeking injunctive and declaratory relief.
Pending before the
court are Defendants’ Motion for Summary Judgment (Docket Entry
No. 14), defendants’ Motion Requesting Entry of Summary Judgment
(Docket Entry No. 15), Defendants’ Motion to Strike Plaintiffs’
Response to Defendants’ Motion for Summary Judgment (Docket Entry
No. 19), and Plaintiffs’ Motion for Leave to File Summary Judgment
Response and Request for Oral Argument (Docket Entry No. 21).
For
the reasons explained below, the defendants’ motion for summary
judgment will be granted; the defendants’ motions for entry of
summary judgment and to strike the plaintiffs’ response will be
denied; the plaintiff’s motion for leave to file summary judgment
response will be granted; and the plaintiff’s request for oral
argument will be denied.
I.
A.
Factual and Procedural Background
The Waltons’ Mortgage Loans
This
action
concerns
Wells
Fargo’s
allegedly
wrongful
servicing of a mortgage loan that was issued to Rolan and Suzanne
Walton for their home in Harris County, Texas.
The Waltons
purchased the property in 1992 and constructed their home on it in
1993.1
On April 4, 1994, the Waltons executed a promissory note
payable to Guardian Savings & Loan Association in consideration for
a renewal and extension of their mortgage loan.2
The note was
secured by a Deed of Trust on the Waltons’ property (the “1994 Deed
of Trust”).3
As permitted by the terms of the 1994 Deed of Trust,
1
Warranty Deed With Vendor’s Lien, Document 1–3 to Defendant’s
Notice of Removal, Docket Entry No. 1, p. 15; Mechanic’s Lien
Contract, Document 1–3 to id., p. 32.
2
Promissory Note, Document 1-3 to id., p. 39.
3
Deed of Trust, Apr. 4, 1994 (“1994 Deed of Trust”),
Document 1–4 to id., p. 23. The Waltons’ original mortgage-loan
documents were executed in 1992 and 1993.
-2-
the Waltons also executed an Escrow Waiver Agreement, which allowed
them to distribute their property-tax payments directly to the
Harris County Appraisal District (“HCAD”) instead of into an escrow
account
maintained
by
lender.4
the
Under
the
Escrow
Waiver
Agreement the Waltons were required to pay their property taxes on
time when they became due, and in the event of default the lender
was permitted to terminate the Escrow Waiver Agreement and create
an escrow account.5
In April of 1999 the Waltons borrowed money to refinance their
mortgage.
executed
In consideration for the refinancing loan the Waltons
a
promissory
note
for
$491,500
payable
to
Norwest
Mortgage, Inc., secured by a Deed of Trust on the property (the
“1999 Deed of Trust”).6
The Waltons continued to make their
property-tax payments directly to HCAD in accordance with the
Escrow Waiver Agreement, which was renewed with the execution of
the 1999 Deed of Trust.7
In terms similar to those of the Escrow
4
Escrow Waiver Agreement Addendum to the Deed of
(“Escrow Waiver Agreement”), Document 1-4 to id., p. 30.
Trust
5
Id. at 30–31.
6
Deed of Trust, Apr.
Document 1–5 to id., p. 3.
12,
1999
7
(“1999
Deed
of
Trust”),
The Waltons contend that the Escrow Waiver Agreement is
inapplicable to their breach-of-contract claim because it was not
renewed with the 1999 Deed of Trust.
Plaintiffs’ Supplemental
Response to Defendants’ Motion for Summary Judgment & Defendants’
Reply to Plaintiffs’ Response to Defendants’ Motion for Summary
Judgment, Docket Entry No. 24, ¶¶ 7–9. The record shows otherwise.
(continued...)
-3-
Waiver Agreement, the 1999 Deed of Trust provided that the Waltons
“shall pay all taxes . . . attributable to the Property which may
attain priority over [the 1999 Deed of Trust]” and that the Waltons
“shall pay them on time directly to the person owed payment.”8
In
addition, the 1999 Deed of Trust provided that
[The Waltons] shall promptly discharge any lien which has
priority over [the 1999 Deed of Trust] unless [the
Waltons]: (a) agree[] in writing to the payment of the
obligation secured by the lien in a manner acceptable to
Lender[.] . . .9
Paragraph Seven of the 1999 Deed of Trust further provided that
if [the Waltons] fail[] to perform the covenants and
agreements
contained
in
[the
1999
Deed
of
Trust] . . . then Lender may do and pay for whatever is
necessary to protect the value of the Property and
Lender’s rights in the Property. Lender’s actions may
include paying any sums secured by a lien which has
priority over [the 1999 Deed of Trust] . . . .
Any amounts disbursed by Lender under this paragraph 7
shall become additional debt of [the Waltons] secured by
[the 1999 Deed of Trust].
Unless [the Waltons] and
Lender agree to other terms of payment, these amounts
shall . . . be payable, with Interest, upon notice from
Lender to [the Waltons] requesting payment.10
7
(...continued)
Initially, the Escrow Waiver Agreement was “incorporated into” and
“amend[ed]” the 1994 Deed of Trust.
Escrow Waiver Agreement,
Document 1-4 to Defendant’s Notice of Removal, Docket Entry No. 1,
p. 30. When the 1999 Deed of Trust was executed, the 1994 Deed of
Trust (and thus the Escrow Waiver Agreement) was “renewed” and
“carried forward in full force and effect.” Renewal and Extension
Rider, Document 1–5 to id., pp. 12, 14.
8
1999 Deed of Trust, Document 1–5 to id., p. 4, ¶ 4.
9
Id.
10
Id. ¶ 7.
-4-
In 2008, through a series of assignments and acquisitions, Wells
Fargo became the servicer of the Waltons’ mortgage loan on behalf
of Bank of America.11
B.
The Waltons’ Deferral of Their Property-Tax Payments
Under section 33.06 of the Texas Tax Code, homeowners who are
either disabled or aged sixty-five and older may defer paying
property taxes on their home as long as they own the home or live
in the home.12
qualified
Tex. Tax Code § 33.06(a).
individual
must
file
an
To obtain a deferral a
affidavit
“with
the
chief
appraiser for the appraisal district in which the property is
located.”
Id. § 33.06(b).
Upon approval of the affidavit the
collection of taxes on the property is deferred, but during the
deferral period a tax lien remains on the property and interest
continues to accrue.
Id. § 33.06(d).
On August 9, 2006, the
Waltons submitted an affidavit with HCAD seeking such a deferral on
the basis that they were at least sixty-five years old,13 and HACD
approved the deferral.14
The Waltons allege that they informed
11
See Assignment of Deed of Trust, Oct. 27, 1999, Exhibit C to
Defendants’ Motion for Summary Judgment, Docket Entry No. 14, p. 1;
Assignment of Deed of Trust, Mar. 18, 2004, Exhibit D to id., p. 1.
12
Tax Deferral Affidavit, Document 1–6 to Defendant’s Notice
of Removal, Docket Entry No. 1, p. 14.
13
Id.
14
Tax Deferral for Account 1170310000017, Document 1–6 to id.,
p. 16.
-5-
Wells Fargo about the tax deferral and received no objection.15 For
the next two years the Waltons made monthly payments on their
mortgage loan in the amount of $3,227.87, and monthly interest-only
payments on a separate home-equity loan in the amount of $957.97.16
C.
Wells Fargo’s Payment of the Waltons’ Deferred Property Taxes
Wells Fargo contends that in mid-2008 it received delinquent
tax notices from HCAD with respect to the Waltons’ property, and
that in response, “[t]o protect its lien interests,” Wells Fargo
paid HCAD $28,459.29 for the Waltons’ 2006 and 2007 delinquent
property taxes, plus $2,187.26 in accrued penalties,17 for a total
of $30,646.55.18
On July 9, 2008, Wells Fargo informed the Waltons
by letter that it had “disbursed” their 2006 and 2007 property
taxes to HCAD, as well as the applicable penalties, and that “[a]n
escrow
account
was
established
delinquent property taxes.”19
in
order
to
disburse
these
The Waltons were given the option of
15
Plaintiffs’ Original Petition & Request for Injunctive Relief
(“Plaintiffs’ Petition”), Document 1–2 to id., p. 31 ¶ 20.
16
See Wells Fargo Statement, May 20, 2010, Document 1-6 to id.,
p. 18; Plaintiffs’ Petition, Document 1–2 to id., p. 31 ¶ 21.
17
The defendants concede that the penalty payments were
unnecessary since the Waltons’ tax deferral satisfied the criteria
set out in section 33.06 of the Texas Tax Code.
Reply to
Plaintiff’s Response to Defendants’ Motion for Summary Judgment
Subject to Motion to Strike Plaintiffs’ Response, Docket Entry
No. 20, ¶ 14.
18
Defendants’ Motion for Summary Judgment, Docket Entry No. 14,
¶ 16.
19
July 9, 2008, Letter from Sheri Smith to Rolan Walton,
Document 1–6 to Defendant’s Notice of Removal, Docket Entry No. 1,
p. 20.
-6-
either paying a $41,460.08 “escrow shortage” in one lump sum or
spreading the payment out over twelve months, with new monthly
mortgage payments of $7,764.22.20
The Waltons allege that they
could not meet either option.21
The Waltons attempted to negotiate a resolution with Wells
Fargo, arguing that Wells Fargo’s payments to HCAD were unnecessary
because
the
payments.22
of
“the
Waltons
had
lawfully
deferred
their
property-tax
Wells Fargo refused to allow the tax deferral because
taxing
authority’s
requirement
to
subordinate
[Wells
Fargo’s mortgage lien] to the lien created by the property tax
deferral” and because “[a]ny default that might occur on the
property
tax
deferral
lien
could
jeopardize
[Wells
Fargo’s]
interest in the property.”23
In October of 2008 Wells Fargo proposed a modified payment
plan by which the Waltons would pay the escrow shortage over a span
of
forty-eight
$5,172.96.24
months,
with
monthly
mortgage
payments
of
Despite the reduction in the monthly payment amount,
the Waltons struggled to make their mortgage payments and by mid-
20
Id.
21
Plaintiffs’ Petition, Document 1–2 to id., p. 32 ¶ 22.
22
See Oct. 3, 2008, Letter from Sheri Smith to Rolan Walton,
Document 1–6 to id., p. 22.
23
Id.
24
Oct. 27, 2008, Letter from Sheri Smith to Rolan Walton,
Document 1–6 to id., p. 24.
-7-
2009 had listed their home for sale.25
In June of 2009 the Waltons
again attempted to convince Wells Fargo that its decision to pay
HCAD the 2006 and 2007 property taxes was unnecessary and was made
without consulting the Waltons, and that the tax deferral did not
jeopardize Wells Fargo’s mortgage lien because the Waltons had
built up enough equity to pay the taxes when the home was sold.26
Wells Fargo informed the Waltons that it paid the taxes because the
tax deferral placed its mortgage lien at risk.27
The Waltons eventually fell behind on their monthly payments,
and on March 21, 2010, Wells Fargo notified the Waltons that they
were in default of their loan and the 1999 Deed of Trust and owed
Wells Fargo $20,890.82 by April 20, 2010, to cure the default.28
On April 29, 2010, Wells Fargo informed the Waltons that because
they had not cured the default the entire balance of the loan was
due and payable.29
On June 25, 2010, a debt-collection firm
notified the Waltons that Wells Fargo was initiating a foreclosure
25
June 25, 2009, Letter from Rolan Walton to Pat Smith,
Document 1–6 to id., pp. 28, 29.
26
Id. at 28–29.
27
July 11, 2009, Letter from Pat Smith to Rolan and Suzanne
Walton, Document 1–6 to id., p. 31.
28
Mar. 21, 2010, Letter from Wells Fargo to Rolan Walton,
Document 1–7 to id., p. 9.
29
Apr. 29, 2010, Letter from Wells Fargo to Rolan Walton,
Document 1–7 to id., p. 18.
-8-
on their property pursuant to the 1999 Deed of Trust, and that the
foreclosure sale would take place on August 3, 2010.30
D.
The Waltons’ Lawsuit
On July 29, 2010, the Waltons filed suit in Texas state court
alleging that Wells Fargo’s payment of the deferred property taxes
and
subsequent
increase
of
the
Waltons’
mortgage
payments
constituted breach of contract, wrongful foreclosure, tortious
interference with contract, and intentional infliction of emotional
distress, and seeking injunctive and declaratory relief.31
Wells
Fargo subsequently postponed the scheduled foreclosure, and on
August 12, 2010, it removed the action on the basis of diversity
jurisdiction (Docket Entry No. 1).32
Meanwhile, on October 29,
2010, the Waltons sold their home for $875,000, and with the
proceeds paid Wells Fargo the full amounts due and owing under
their mortgage and home-equity loans.33
The parties failed to
settle the dispute, however, and on April 27, 2011, Wells Fargo and
30
June 25, 2010, Letter from Wells Fargo’s attorneys to Rolan
Walton, Document 1–7 to id., p. 25. Wells Fargo initially set the
foreclosure sale for June 1, 2010, but agreed to a postponement.
Plaintiffs’ Petition, Document 1–3 to id., p. 2 ¶ 31.
31
Plaintiffs’ Petition, Document 1–3 to id., pp. 2–6;
Plaintiffs’
Application
for
Temporary
Restraining
Order,
Document 1–2 to id., p. 7.
32
The parties do not dispute that the parties are completely
diverse and that the amount in controversy exceeds the
jurisdictional threshold. 28 U.S.C. § 1332(a).
33
Settlement Statement (HUD–1), Exhibit J to Defendants’ Motion
for Summary Judgment, Docket Entry No. 14, p. 1.
-9-
Bank of America moved for summary judgment with respect to all of
the Waltons’ claims.
The defendants argue that the Waltons’ breach-of-contract
claim fails because the tax deferral placed the Waltons in default
of the 1999 Deed of Trust and the Escrow Waiver Agreement and,
thus, authorized Wells Fargo to pay the delinquent taxes and demand
reimbursement from the Waltons.34
The defendants argue that the
Waltons’ claim for intentional infliction of emotional distress
fails because as a matter of law defendants’ conduct was not
extreme and outrageous, and that the Waltons’ remaining claims are
The Waltons responded on July 18, 2011,35 arguing that their
moot.
breach-of-contract claim should survive summary judgment because
the evidence shows that the property-tax deferral was not a breach
of the loan documents.36
34
Defendants’ Motion for Summary Judgment, Docket Entry No. 14,
pp. 11–13.
35
The defendants move to strike the Waltons’ response because
it was filed past the due date stipulated in the court’s local
rules (Docket Entry No. 19). The Waltons move for leave to file
their response, asserting that they were unaware of the local rule
requiring a response within 21 days of the filing of the initial
motion (Docket Entry No. 21).
The defendants object to the
Waltons’ motion (Docket Entry No. 23). The Waltons should not be
penalized merely because their attorney was not familiar with the
court’s local rules.
Accordingly, the court will deny the
defendants’ motions and grant the Waltons’ motion for leave to file
a response.
36
Plaintiffs’ Response to Defendants’ Motion for Summary
Judgment (“Plaintiffs’ Response”), Docket Entry No. 17, pp. 6–9.
The court has also considered the defendants’ reply (Docket Entry
No. 20), the Waltons’ supplemental response (Docket Entry No. 24),
and the defendants’ surreply (Docket Entry No. 26).
-10-
II.
Summary-Judgment Standard
Summary judgment is authorized if the movant establishes that
there is no genuine dispute about any material fact and the law
entitles it to judgment.
Fed. R. Civ. P. 56(a).
Disputes about
material facts are “genuine” if under the evidence a reasonable
jury could return a verdict for the nonmoving party.
Anderson v.
Liberty Lobby, Inc., 106 S. Ct. 2505, 2511 (1986).
The Supreme
Court has interpreted the plain language of Rule 56(c) to mandate
the entry of summary judgment “after adequate time for discovery
and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden of
proof at trial.”
Celotex Corp. v. Catrett, 106 S. Ct. 2548,
2552 (1986).
A party moving for summary judgment “must ‘demonstrate the
absence of a genuine issue of material fact,’ but need not negate
the elements of the nonmovant’s case.” Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (quoting Celotex, 106
S. Ct. at 2553–54).
If the moving party meets this burden,
Rule 56(c) requires the nonmovant to show that specific facts exist
over which there is a genuine issue for trial.
Celotex, 106 S. Ct. at 2553–54).
Id. (citing
A party asserting that a fact is
genuinely disputed must support the assertion by either (1) citing
to
particular
depositions,
parts
of
documents,
materials
in
electronically
-11-
the
record,
stored
including
information,
affidavits or declarations, admissions, and interrogatory answers,
or (2) showing that the materials cited do not establish the
absence
or
presence
of
a
genuine
dispute.
Fed.
R.
Civ.
P. 56(c)(1)(A)–(B). In reviewing the evidence “the court must draw
all reasonable inferences in favor of the nonmoving party, and it
may not make credibility determinations or weigh the evidence.”
Reeves v. Sanderson Plumbing Prods., Inc., 120 S. Ct. 2097,
2110 (2000).
III.
A.
Analysis
The Waltons’ Claim for Breach of Contract
In Texas “the essential elements of a breach of contract claim
are:
(1) the existence of a valid contract; (2) performance or
tendered performance by the plaintiff; (3) breach of the contract
by the defendant; and (4) damages sustained by the plaintiff as a
result of the breach.” Mullins v. TestAmerica, Inc., 564 F.3d 386,
418 (5th Cir. 2009) (citing Aguiar v. Segal, 167 S.W.3d 443, 450
(Tex. App.—Houston [14th Dist.] 2005, pet. denied)).
The Waltons
allege that the loan documents relating to their property and,
“more particularly, the 1999 [Deed of Trust], are valid contracts,”
and that the Waltons “fully performed their obligations under the
agreements.”37
The Waltons allege that the defendants breached the
agreements by (1) paying the 2006 and 2007 property taxes and
37
Plaintiffs’ Petition, Document 1–3 to Defendant’s Notice of
Removal, Docket Entry No. 1, p. 4 ¶ 35.
-12-
(2) declaring the plaintiffs in default of the 1999 Deed of Trust
and demanding payment of the full property-tax amount even though
the property taxes were not due.38
The Waltons further allege that
the defendants’ breach interfered with the Waltons’ ability to
perform under the terms of the loan documents, causing them
financial harm.39
The
judgment
defendants
because
argue
Wells
that
Fargo
they
was
are
entitled
authorized
under
to
summary
the
loan
agreements to pay the property taxes and to demand reimbursement of
the tax payments when it discovered that the Waltons had deferred
their tax payments.40 Under the Escrow Waiver Agreement the Waltons
were permitted to avoid monthly escrow payments if they made “ontime and complete payments” to HCAD “as they [became] due and
owing.”41
Similarly, under the 1999 Deed of Trust the Waltons were
required to “pay all taxes . . . attributable to the Property which
may attain priority over [the 1999 Deed of Trust],” and to pay the
taxes “on time directly to [HCAD].”42
The Waltons argue that the deferral of their property tax
payments was not in violation of these provisions because under the
38
Id. at 4 ¶ 36.
39
Id. at 5 ¶ 36.
40
Defendants’ Motion for Summary Judgment, Docket Entry No. 14,
¶ 25.
41
Escrow Waiver Agreement, Document 1-4 to Defendant’s Notice
of Removal, Docket Entry No. 1, p. 30.
42
1999 Deed of Trust, Document 1–5 to id., p. 4 ¶ 4.
-13-
tax-deferral statute their property taxes were not “due and owing”
until the 181st day after they either sold or moved out of their
home, Tex. Tax Code § 33.06(b), and thus there was no basis for
Wells Fargo to conclude that the payments were not “on time.”43
Under the plain terms of the Escrow Waiver Agreement, however, a
“default” occurred if “any payment made or to be made by [the
Waltons] . . . include[d] any accrual of . . . interest[.]”44
Section 33.06 of the Tax Code states that “interest continues to
accrue
during
the
period
Tex. Tax Code § 33.06(d).
collection
of
taxes
is
deferred.”
The court is therefore not persuaded by
the Waltons’ argument that its deferral was in accordance with the
timing provisions of the loan agreements.
Even assuming, however, that the Waltons’ interpretation is
correct, it fails to account for the provision in Paragraph Four of
the 1999 Deed of Trust that required the Waltons to “promptly
discharge any lien which ha[d] priority over [the 1999 Deed of
Trust] unless [the Waltons] . . . agree[d] in writing to the
payment
of
the
obligation
secured
by
the
lien
in
a
manner
acceptable to [the] Lender,” or satisfied other listed exceptions
not relevant to these facts.45
43
Section 33.06 of the Tax Code
Plaintiffs’ Response, Docket Entry No. 17, ¶¶ 11–12.
44
Escrow Waiver Agreement, Document 1-4 to Defendant’s Notice
of Removal, Docket Entry No. 1, p. 30 ¶ III.
45
Id. The loan agreements do not support the Waltons’ argument
in their Response, Docket Entry No. 17, ¶ 2, that the 1999 Deed of
Trust conditioned this provision on a finding by the lender that
its inferior lien was in jeopardy.
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provides that a property-tax deferral creates a tax lien that
remains on the property and accrues interest during the deferral
period.
Tex. Tax Code § 33.06(d).
Thus, the Waltons’ 2006 tax
deferral created a tax lien on their property.
Moreover, the tax
lien that was created by the deferral took priority over Wells
Fargo’s mortgage lien.
See id. § 32.05(b)(2).
Accordingly, the
Waltons were obligated to discharge the tax lien unless their
deferral was acceptable to their lender, and other than the
Waltons’ bare assertions there is no evidence in the record that
demonstrates
that
the
Waltons
notified
their
lender
of
the
deferral, much less ensured that their lender approved of the
deferral.46
The Waltons’ tax deferral did not excuse them of their
prior obligation under the 1999 Deed of Trust.
See Lyles v.
Deutsche Bank Nat’l Trust Co., 2011 WL 96591, at
*3 (S.D. Tex.
Jan. 11, 2011) (unreported).
The 1999 Deed of Trust further provides that if the Waltons
“fail[ed] to perform the covenants and agreements contained in [the
1999 Deed of Trust], . . . then Lender may do and pay for whatever
is necessary to protect the value of the Property and Lender’s
rights in the Property,” including “paying any sums secured by a
lien which has priority over [the 1999 Deed of Trust.]”47
Because
46
See, e.g., Plaintiffs’ Petition, Document 1–2 to Defendant’s
Notice of Removal, Docket Entry No. 1, p. 31 ¶ 20.
47
1999 Deed of Trust, Document 1–5 to id., p. 5 ¶ 7. Although
under Paragraph Four of the 1999 Deed of Trust the lender had the
(continued...)
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the Waltons created a tax lien on the property that took priority
over Wells Fargo’s lien, Wells Fargo was authorized to pay the
delinquent taxes to discharge the lien.
Under the 1999 Deed of
Trust those amounts became “additional debt of [the Waltons]
secured by [the 1999 Deed of Trust]” and became “payable, with
interest, upon notice from Lender to [the Waltons] requesting
payment.”48
Wells Fargo was also entitled to create an escrow account for
the tax payments because under the Escrow Waiver Agreement a
default
occurred
when
the
Waltons
allowed
their
property-tax
payments to accrue interest.49
In the event of default Wells Fargo
was
the
permitted
to
terminate
Escrow
Waiver
Agreement
and
“immediately upon termination require [the Waltons] to establish
and maintain funds for [the property-tax payments] in an Escrow
Account with Lender.”50
The defendants have met their burden to show that there is not
a genuine factual dispute with respect to whether Wells Fargo was
contractually authorized to pay the Waltons’ delinquent taxes and
47
(...continued)
option of providing the Waltons with a notice identifying the lien,
the lender was not required to do so. Id. at 4 ¶ 4. Furthermore,
since the Waltons voluntarily created the tax lien they can hardly
contend that they were unaware of its existence.
48
1999 Deed of Trust, Document 1-5 to Defendant’s Notice of
Removal, Docket Entry No. 1, p. 5 ¶ 7.
49
Escrow Waiver Agreement, Document 1-4 to id., p. 30 ¶ III.
50
Id. at 31 ¶ V.
-16-
to demand that the Waltons reimburse Wells Fargo for the tax
payments.
Because the Waltons have not presented evidence to
convince a reasonable jury that the defendants breached the loan
agreements, the court will grant the defendants’ motion for summary
judgment with respect to the Waltons’ breach-of-contract claim.
B.
The Waltons’ Claim for Intentional Infliction of Emotional
Distress
The
defendants
argue
that
they
are
entitled
to
summary
judgment with respect to Waltons’ claim for intentional infliction
of emotional distress because as a matter of law their conduct was
not extreme and outrageous.51
To recover damages for intentional
infliction of emotional distress the Waltons must prove that
(1) the defendants acted intentionally or recklessly; (2) the
defendants’ conduct was extreme and outrageous; (3) the defendants’
actions
caused
the
Waltons
emotional
distress;
and
(4)
the
resulting emotional distress was severe. Hoffmann-La Roche Inc. v.
Zeltwanger,
144
S.W.3d
438,
445
(Tex.
2004).
Extreme
and
outrageous conduct is conduct “so outrageous in character, and so
extreme in degree, as to go beyond all possible bounds of decency,
and to be regarded as atrocious, and utterly intolerable in a
civilized community.”
Twyman v. Twyman, 855 S.W.2d 619, 621
(Tex. 1993) (internal quotations omitted).
Whether conduct is
extreme and outrageous is a question for the court to decide in the
51
Defendants’ Motion for Summary Judgment, Docket Entry No. 14,
¶ 34.
-17-
first instance, but if reasonable minds may differ, it is a
question for the jury.
Zeltwanger, 144 S.W.3d at 445.
The Waltons allege that Wells Fargo’s payment of the deferred
property taxes and demand that the Waltons provide reimbursement
through
increased
monthly
outrageous conduct.52
mortgage
payments
was
extreme
and
The court concludes that because Wells
Fargo’s conduct was authorized by the loan agreements, which the
Waltons voluntarily entered into, a reasonable jury could not
determine that Wells Fargo’s conduct was extreme or outrageous.
The court will therefore grant the defendants’ motion for summary
judgment
with
respect
to
the
Waltons’
claim
for
intentional
infliction of emotional distress.
C.
The Waltons’ Remaining Claims
The defendants argue that the Waltons’ claims for wrongful
foreclosure, tortious interference with contract, and injunctive
and declaratory relief are moot.53
standing in a time frame.
“Mootness is ‘the doctrine of
The requisite personal interest that
must exist at the commencement of litigation (standing) must
continue
throughout
its
existence
(mootness).’”
Center
for
Individual Freedom v. Carmouche, 449 F.3d 655, 661 (5th Cir. 2006)
(quoting United States Parole Comm’n v. Geraghty, 100 S. Ct. 1202,
52
Plaintiffs’ Petition, Document 1–3 to Defendant’s Notice of
Removal, Docket Entry No. 1, p. 6 ¶ 45.
53
Defendants’ Motion for Summary Judgment, Docket Entry No. 14,
¶¶ 27–33.
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1209 (1980)). “Generally, any set of circumstances that eliminates
actual controversy after the commencement of a lawsuit renders that
action moot.”
1.
Id.
Wrongful Foreclosure
The fact that there was not a foreclosure renders the Waltons’
claim for wrongful foreclosure moot.
See Diversified, Inc. v.
Gibraltar Sav. Ass’n, 762 S.W.2d 620, 623 (Tex. App.—Houston [14th
Dist.] 1988, writ denied) (explaining that a mortgagor’s remedies
for wrongful foreclosure must follow a foreclosure).
2.
Tortious Interference with Contract
The defendants argue that the Waltons’ claim for tortious
interference with a contract is also moot and, alternatively, that
“the
undisputed
facts
establish
their
justification as a matter of law.54”
affirmative
defense
of
To recover under a claim for
tortious interference with a contract the Waltons must prove that
(1) a contract existed between the Waltons and a third party,
(2) the defendants willfully and intentionally interfered with that
contract, (3) the interference proximately caused the Waltons
damage, and (4) the Waltons suffered actual damage or loss.
Butnaru v. Ford Motor Co., 84 S.W.3d 198, 207 (Tex. 2002).
A
defendant may defeat liability, however, by proving the affirmative
defense that its conduct was privileged or justified, as long as
54
Defendants’ Motion for summary Judgment, Docket Entry No. 14,
p. 17.
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that conduct was not illegal or tortious.
Id.
The Waltons allege
that Wells Fargo intentionally interfered with their tax-deferral
agreement with HCAD when Wells Fargo unilaterally paid the Waltons’
property taxes.55
Regardless of the defendants’ mootness argument,
the court concludes that the summary-judgment evidence shows that
Wells Fargo’s conduct was justified.
The Waltons entered into the
loan agreements before they filed for a tax deferral, and under the
loan agreements Wells Fargo was entitled to make payments to
discharge a superior lien.
Accordingly, because there is no
genuine factual dispute that the Waltons’ conduct was justified,
the court will grant the defendants’ motion for summary judgment
with respect to the Waltons’ tortious-interference claim.
3.
Injunctive Relief
To obtain injunctive relief the Waltons must prove (1) a cause
of action against the defendant, (2) a probable right to the relief
sought, and (3) a probable, imminent, and irreparable injury in the
interim.
without
Butnaru, 84 S.W.3d at 204.
injunctive
relief
they
will
The Waltons allege that
experience
immediate
and
irreparable harm because the defendants “will foreclose on their
property and [the Waltons] will lose their property and all of the
money previously invested in it without having a fair opportunity
to protect that investment.”56
The court concludes that the
55
Plaintiffs’ Petition, Document 1–3 to Defendant’s Notice of
Removal, Docket Entry No. 1, p. 5 ¶ 42.
56
Id. at 7–8, ¶ 52.
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Waltons’ claim for injunctive relief is moot because after the
commencement of this action the Waltons avoided foreclosure, sold
their property, and paid off their mortgage loans in full.
4.
Declaratory Relief
The Waltons seek nineteen declarations concerning whether the
defendants’ property-tax payments, demands for reimbursement, and
notices
of
Property
foreclosure
Code,
documents.
the
violated
1999
Deed
section
of
Trust,
51.002
and
of
the
the
Texas
other
loan
The Waltons’ first three claims for declaratory relief
concern section 51.002 of the Texas Property Code, which governs
non-judicial foreclosure sales.
Because the Waltons’ home was not
foreclosed on, these claims are moot. The remaining sixteen claims
seek declarations as to whether the defendants’ conduct violated
the 1999 Deed of Trust or section 33.06 of the Texas Tax Code.
As
discussed above, under the terms of the 1999 Deed of Trust and
Escrow Waiver Agreement, Wells Fargo was authorized to pay the
Waltons’ delinquent taxes to HCAD with or without notice to the
Waltons, to demand reimbursement from the Waltons for the tax
payments, to create an escrow account for purposes of the tax
reimbursement, and to declare that the Waltons were in default of
the loan agreements when they could not satisfy their monthly
payments.
Furthermore, Wells Fargo’s conduct was not precluded by
section 33.06 of the Texas Tax Code.
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Because the Waltons have not
raised a genuine factual dispute as to any of their declaratoryjudgment claims, the court will grant the defendants’ motion for
summary judgment with respect to these claims.
D.
Conclusion
The court concludes that because the Waltons have failed to
raise a genuine factual dispute as to whether the defendants’
conduct constitutes breach of contract, tortious interference with
contract, or intentional infliction of emotional distress, or that
the Waltons are entitled to declaratory relief, and because the
Waltons’ remaining claims are moot, the defendants are entitled to
summary judgment with respect to all of the Waltons’ claims.
Because oral argument is unnecessary for the court to fully
understand the parties’ arguments, the court will deny the Waltons’
request for a hearing.
IV.
Order
For the reasons explained above, the Defendants’ Motion for
Summary Judgment (Docket Entry No. 14) is GRANTED.
Defendants’
Motion Requesting Entry of Summary Judgment (Docket Entry No. 15)
is DENIED as moot.
Defendants’ Motion to Strike Plaintiffs’
Response to Defendants’ Motion for Summary Judgment (Docket Entry
No. 19) is DENIED.
Plaintiffs’ Motion for Leave to File Summary
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Judgment Response and Request for Oral Argument (Docket Entry
No. 21) is GRANTED in part and DENIED in part.
SIGNED at Houston, Texas, on this 2nd day of September, 2011.
SIM LAKE
UNITED STATES DISTRICT JUDGE
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