Cyrilien v. Wells Fargo Bank, N.A.
Filing
27
OPINION AND ORDER granting 14 Defendant's Motion for Summary Judgment.(Signed by Judge Melinda Harmon) Parties notified.(htippen, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PAMELA CYRILIEN,
§
§
§
§
§
§
§
§
§
Plaintiff,
VS.
WELLS FARGO BANK, N.A.,
Defendant.
CIVIL ACTION H-10-5018
OPINION AND ORDER
Pending before the Court in the above referenced action,
removed
wrongful
from
state
court
foreclosure,
on
diversity
violations
of
the
jurisdiction,
Fair
Debt
alleging
Collection
Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq., and breach of
contract and seeking to enjoin foreclosure, is Defendant Wells
Fargo Bank, N.A.‘s (“Wells Fargo’s”) motion for summary judgment
(instrument #14).
After reviewing the record and the applicable law, the Court
concludes that because Wells Fargo shows that as a matter of law
Plaintiff currently does not have a live claim against Wells Fargo
for wrongful foreclosure and violations of the FDCPA and because
Plaintiff fails to meet her burden of proof on her breach of
contract claim, Wells Fargo’s motion for summary judgment should be
granted.
Standard of Review
-1-
Summary judgment is proper when “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). The movant has the burden to demonstrate that no genuine
issue of material fact exists and that it is entitled to judgment
as a matter of law.
Celotex Corp. v. Catrett, 317, 323 (1986).
The substantive law governing the claims identifies the essential
elements and thus indicates which facts are material.
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Where the non-movant bears the burden of proof at trial, the
movant need only point to the absence of evidence to support an
essential element of the non-movant’s case; the movant does not
have to support its motion with evidence negating the non-movant’s
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
case.
1994).
If the movant succeeds, the non-movant must come forward with
evidence such that a reasonable jury could return a verdict for the
nonmoving party.”
248.
Anderson v. Liberty Lobby, Inc., 477 U.S. at
The non-movant “must come forward with ‘specific facts
showing there is a genuine issue for trial.’” Matsushita Elec. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
“A factual
dispute is deemed ‘genuine’ if a reasonable juror could return a
verdict for the nonmovant, and a fact is considered ‘material’ if
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it might affect the outcome of the litigation under the governing
substantive law.”
Cross v. Cummins Engine Co., 993 F.2d 112, 114
(5th Cir. 1993).
Summary judgment is proper if the non-movant
“fails to make a showing sufficient to establish the existence of
an element essential to that party’s case.”
Celotex Corp., 477
U.S. at 322-23; Piazza’s Seafood World, LLC v. Odom, 448 F.3d 744,
752 (5th Cir. 2006).
Although the court draws all reasonable
inferences in favor of the non-movant, the non-movant “cannot
defeat
summary
conclusory,
unsubstantiated
assertions, or ‘only a scintilla of evidence.’”
Turner v. Baylor
Richardson
Med.
judgment
Center,
with
476
F.3d
337,
343
(5th
Cir.
2007).
Conjecture, conclusory allegations, unsubstantiated assertions and
speculation are not adequate to satisfy the nonmovant’s burden.
Little v. Liquid Air Corp., 37 F.3d 1069, 1079 (5th Cir. 1994);
Ramsey v. Henderson, 286 F.3d 264, 269 (5th Cir. 2002).
“‘[A]
subjective belief of discrimination, however genuine, [may not] be
the basis of judicial relief.’” Lawrence v. Univ. of Texas Medical
Branch, 163 F.3d 309, 313 (5th Cir. 1999), quoting Elliott v. Group
Med. & Surgical Serv., 714 F.2d 556, 567 (5th Cir. 1983).
pleadings competent summary judgment evidence.
Nor are
Little, 37 F.3d at
1075; Wallace v. Texas Tech. U., 80 F.3d 1042, 1045 (5th Cir. 1996);
Adams Family Trust v. John Hancock Life Ins. Co., 424 Fed. Appx.
377, 81 & n.11 (5th Cir. May 11, 2011).
While a failure to state a claim is usually challenged by a
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motion for dismissal under Rule 12(b)(6), it may also constitute
the basis for a summary judgment under Rule 56 because “the failure
to state a claim is the ‘functional equivalent’ of the failure to
raise a genuine issue of material fact.”
F.2d 1087, 1098 (5th Cir. 1992).
Whalen v. Carter, 954
In such circumstances, the motion
for summary judgment challenging the sufficiency of the complaint
will be “evaluated much the same as a 12(b)(6) motion to dismiss.”
Ashe v. Corley, 992 F.2d 540, 544 (5th Cir. 1993).
Wells Fargo’s Motion For Summary Judgment
First Wells Fargo argues correctly that since Plaintiff is in
possession of the property in dispute and admits that fact, as a
matter of law she does not have a wrongful foreclosure claim.1
1
The
Plaintiff’s Memorandum Response states the “the attempted
foreclosure was wrongful because Defendant did not abide by the
rules of the Plaintiff’s loan modification as required by
R.E.S.P.A.” #26 at p.5 [emphasis added by the Court]. An
attempted foreclosure will not support a wrongful foreclosure
claim.
Moreover Plaintiff had filed an earlier suit against Wells
Fargo in state court on January 4, 2010, Cause No. 2010-00135,
which was removed to federal court, H-10-0111. Plaintiff filed
an unopposed motion to dismiss (#6 in H-10-0111) on the grounds
that the parties had settled their dispute and the Honorable
Nancy Atlas granted that motion without prejudice (#8). In
Plaintiff’s Petition in the instant second suit “to enjoin and
restrain a foreclosure proceeding scheduled by Defendant, WELLS
FARGO BANK, NA for Tuesday, December 7, 2010 between 10:00 a.m.4:00 p.m. at Harris County Courthouse, Houston Texas, Plaintiff
states that “[a]s a result of this litigation [the earlier suit,
Cause No. 2010-00135], “the foreclosure was abated . . . .” #1-3
¶ 5.
This Court observes that “Texas courts have yet to
recognize a claim for ‘attempted wrongful foreclosure.’” Biggers
v. BAC Home Loans Servicing, LP, 767 F. Supp. 2d 725, 729 (N.D.
Tex. 2011). See also, e.g., Anderson v. Baxter, Schwartz &
-4-
Court
agrees.
“‘[T]here
can
be
no
recovery
for
wrongful
foreclosure if the mortgagor does not lose possession of the
property.’”
Strange v. Flagstar Bank, FSB, Civ. A. No. 3:11-CV-
2642-B, 2012 WL 987584, *4 (N.D. Tex. Mar. 22, 2012), citing
Marquez v. Fed. Mortg. Ass’n, No. 3:10-CV-2040, 2011 WL 3714623, *6
(N.D. Tex. Aug. 23, 2011).
Thus Plaintiff’s wrongful foreclosure
claim, not to mention her prayer for injunctive relief based on
that claim, is premature.
Texas v. United States, 523 U.S. 296,
300 (1998)(“A claim is not ripe for adjudication if it rests upon
contingent future events that may not occur as anticipated, or
indeed may not occur at all.”).
Second, Wells Fargo correctly contends that it is not a debt
collector under the FDCPA as a matter of law and thus Plaintiff has
no claim against it under the statute.
Title 15 U.S.C. section
1692a(6)(F) states that the term “debt collector” does not include
“any person collecting or attempting to collect any debt owed or
due or asserted to be owed or due another to the extent such
activity (i) is incidental to a bona fide fiduciary obligation or
a bona fide escrow arrangement; (ii) concerns a debt which was
Shapiro, LLP, No. 14-11-00021-CV, 2012 WL 50622, *4 (Tex. App.Houston [14th Dist.] Jan 10, 2012)(affirming district court’s
conclusion that attempted wrongful foreclosure is not a
recognized cause of action in Texas), citing Port City State Bank
v. Leyco Constr. Co., 561 S.W. 2d 546, 547 (Tex. Civ. App.Beaumont 1977, no writ); Owens v. BAC Home Loans Servicing, L.P.,
Civ. A. No. H-11-2742, 2012 WL 1494231, *3 (S.D. Tex. Apr. 27,
2012)(dismissing claim for wrongful attempted foreclosure because
it is not cognizable under Texas law).
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originated by such person; (iii) concerns a debt which was not in
default at the time it was obtained by such person; or (iv)
concerns a debt obtained by such person as a secured party in a
commercial credit transaction involving the creditor.” Wells Fargo
is not a debt collector under the statute because, as evidenced by
documents attached to its motion, its collection on the Promissory
Note at issue (1) is incidental to a bona fide fiduciary obligation
created by virtue of its position as a mortgage servicer; (2)
concerns a debt which was not in default at the time the Note was
assigned to Wells Fargo; and (3) concerns a debt obtained by Wells
Fargo as a secured party in a commercial credit transaction as
evidenced by the Deed of Trust.
Furthermore the Fifth Circuit has
interpreted the legislative history of § 1692a(6) to indicate
conclusively that the term “debt collector” does not include a
mortgage servicing company or an assignee of a debt, as long as the
debt was not in default at the time it was assigned.
Perry v.
Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir. 1985), modified on
other grounds, 761 F.2d 237 (5th Cir. 1985); Brock v. Federal Nat.
Mortg., No. 4:11-CV-211-A, 2012 WL 620550, *3 (N.D. Tex. Feb. 24,
2012)..2
“[F]oreclosing on the property pursuant to a deed of
2
Wells Fargo’s documentation demonstrates that Plaintiff, as
borrower, and Cornerstone Mortgage Company (“CMC”), as lender,
executed the Note and Deed of Trust, as security for the Note, on
May 30, 2008 (Exs. A and B). CMC sent Plaintiff a Note of
Transfer of Servicing Rights, Exhibit C, informing her that Wells
Fargo was the new mortgage servicer and that the July 2008 should
be sent to it. Plaintiff did not default on the Note until July
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trust is not the collection of a debt within the meaning of the
FDCPA.”
Rendon v. Countrywide Home Loans, Inc., 2009 WL 3126400,
*9 (E.D. Cal. Sept. 24. 2009), citing Hulse v. Ocwen Federal Bank,
FSB, 195 F. Supp. 2d 1188, 1204 (D. Or. 2002).
Plaintiff also suggests that Wells Fargo did not follow the
notice provisions of Texas Property Code § 51.002 relating to
posting of the foreclosure.
She fails to identify what provisions
and allege facts showing Wells Fargo’s failure to satisfy them.
furthermore, since the foreclosure sale never took place, this
claim is moot.
Third, Plaintiff’s Original Petition asserts a breach of
contract claim based on an alleged Second Forbearance Agreement
that she claims was entered into by Plaintiff and Wells Fargo to
settle her first suit against Wells Fargo.
To state a claim for breach of contract under Texas law
plaintiff must allege “(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.”
American General Life Ins.
Co. v. Kirsch, 378 Fed. App’x 379, 383 (5th Cir. 2010); see also
Valero Mktg. & Supply Co. v. Kalama Int’l, 51 S.W. 3d 345, 351
(Tex. App.--Houston [1st Dist.] 2001, no pet.).
2009, so the Note was not in default at the time Wells Fargo
became a mortgage servicer on the loan.
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Under Texas law, the statute of frauds usually bars the
enforcement of contracts, including loan agreements, that exceed
$50,000 in value “‘unless the agreement is in writing and signed by
the
party
to
be
representative..’”
bound
or
by
the
party’s
authorized
Grievous v. Flagstar Bank FSB, Civ. A. No. H-
11-246, 2012 WL 1900564, *5 (S.D. Tex. May 24, 2012), quoting Tex.
Bus.
&
Com.
Code
§
26.02(b).
That
written
loan
agreement
determines a party’s rights and obligations supersedes and merges
into the loan agreement all prior agreements between the parties.
Id., citing id. and § 26.02(c).
The statute of frauds bars and
makes unenforceable oral modifications to a loan agreement under §
26.02 unless they fall within an exception to the statute of frauds
or do not “‘materially alter the obligations imposed by the
original contract.’”
Corp.,
Id., quoting Montalvo v. Bank of America
F. Supp. 2d
, No. SA-10-CV-360-XR, 2012 WL 1078093,
at *13 (W.D. Tex. Mar. 30, 2012); see also Wiley v. U.S. Bank,
N.A., 2012 WL 1945614, *6 (N.D. Tex. May 30, 2012(“both Texas and
federal courts have concluded that, generally, both the original
loan and any alleged agreement to modify the original loan are
governed by section 26.02 and must be in writing.’”).
“An oral
agreement to modify the percentage of interest to be paid, the
amounts
of
installments,
security
rights,
the
terms
of
the
remaining balance of the loan, the amount of monthly payments, the
date of the first payment, and the amount to be paid monthly for
-8-
taxes
and
insurance
is
an
impermissible
oral
modification.”
Montalvo, 2012 WL 1078093 at *13, citing Horner v. Bourland, 724
F.2d 1142, 1148 (5th Cir. 1984).
“[W]here the plaintiffs allege
that they applied for a specific program altering their obligations
under the original loan and came to an oral agreement with the bank
regarding this program, this is a material alteration of the
underlying contract and thus subject to the statute of frauds.”
Id., citing Deuley v. Chase Home Finance, LLC, Civ. A. No. H-0504253, 2006 WL 1155230, *2 (S.D. Tex. Apr. 26, 2006).
Plaintiff contends that Wells Fargo “proffered” a Second
Special Forbearance Agreement to her, which stated that she was to
pay a monthly fee of $900 for six consecutive months and that as a
condition of her compliance was that Wells Fargo would “review her
present financial condition including revaluation of her loan
modification request.”
#1-3 at p.7.
She maintains these payments
are reflected in the Customer Account Activity Statement provided
by Defendant (Ex. A to Original Petition and Ex. F to #14), which
Wells Fargo’s motion for summary judgment has not addressed.
She
alleges that after completing the conditions of the Agreement, she
sent an additional mortgage payment constituting unpaid interest to
Wells Fargo on or about July 2010, but that Wells Fargo “failed to
acknowledge
her
compliance
to
finalize
a
loan
modification.”
Therefore she hired a lawyer to review Wells Fargo’s actions.
Id.
The attorney forwarded a “Qualified Written Request” under 12
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U.S.C. § 2605(e) of the Real Estate Settlement Procedures Act
(“RESPA”)3 to be able to review and evaluate her loan and payment
history and perform her obligations under the loan.
3
Id.
When she
RESPA mandates that a loan servicer must respond by set
deadlines to a QWR from a borrower. 12 U.S.C. § 2605(e). A QWR
is “a written correspondence, other than notice on a payment
coupon or other payment medium supplied by the servicer” that
identifies or provides information that makes identifiable by the
servicer the name and account at issue and “includes a statement
of the reasons for the belief of the borrower, to the extent
applicable, that the account is in error or provides sufficient
detail to the service regarding other information sought by the
borrower.” 12 U.S.C. § 2606(e)(1)(B). The QWR must relate to
the servicing of the loan. 12 U.S.C. § 2605(e)(1). “Servicing”
includes “any scheduled periodic payments from a borrower” or the
“making of . . . payments of principal and interest.” 12 U.S.C.
§ 2605(i). Within sixty days of receiving a QWR, the loan
servicer must (a) make appropriate corrections in the borrower’s
account; (b) provide the borrower with a written explanation of
why the account is correct and who the borrower may contact for
further assistance; or (c) provide the borrower with the
information requested, or a written explanation of why the
information is unavailable or cannot be obtained by the servicer
and whom the borrower may contact for further assistance.
12
U.S.C. § 2605(e)(2)(A)-(C). To recover for a claim under RESPA.
the borrower must show actual damages resulted from the violation
of the statute to pursue a private cause of action under it. 12
U.S.C. § 2605(f). Section 2605, in addition, requires that the
borrower be informed when a loan is transferred from one servicer
to another. 12 U.S.C. §2605(i). See, e.g., Akintunji v. Chase
Home Finance, LLC, Civ. A. No. H-11-389, 2011 WL 2470709, *2
(S.D. Tex. June 20, 2011); Gibson v. Federal Home Loan Mortg.
Corp., Civ. A. No. H-12-0662, 2011 WL 1898886, *2 (S.D. Tex. May
23, 2012); Oden v. JPMorgan Chase Bank, N.A., Civ. A. No. H-120861, 2012 WL 1610782, *2 (S.D. Tex, May 8, 2012); VanHauen v.
American Home Mortgage Servicing, Inc., No. 4:11-CV-461, 2012 WL
874330, *7 (E.D. Tex. Feb. 17, 2012), report and recommendation
adopted, 2012 WL 874328 (E.D. Tex. Mar. 14, 2012).
Plaintiff does not appear to be asserting a separate claim
for violation of RESPA. She does not cite any specific
provisions nor identify an particular notice[s] she was
purportedly not sent, or pleaded actual damages she suffered as a
result.
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received
the
documentation,
“there
were
disputes
raised
by
Plaintiffs and further correspondence between them and [Wells
Fargo] in regards to a loan modification of the existing promissory
note.”
Id. at p.8.
She also claims she requested, but was not
provided with, documents evidencing the Agreement for the $900.00
monthly payments.4
In its motion for summary judgment Wells Fargo contends that
no such agreement was ever made.
Wells Fargo presents a copy of
the First Special Forbearance Agreement that Wells Fargo offered
and Plaintiff accepted in April 2009 after Plaintiff lost her job
in February 2009 (Ex. E). Under that agreement Plaintiff agreed to
pay $12,694.81 by October, 2009 but she defaulted under the note in
July 2009. After Plaintiff requested loan modification a number of
times (Exs. G, H, I, J, K), Wells Fargo offered Plaintiff by a
letter dated January 19, 2010 (Ex. L) a second special forbearance
agreement under which Plaintiff would have to pay $19,396.49 by May
19, 2012.
The letter does not say anything about monthly payments
of $900.
Id.
Moreover in response to an Interrogatory (#3, Ex.
M), Plaintiff admits that she did not make six consecutive payments
of $900.
Wells Fargo states that on July 9, 2010 it told Plaintiff that
her request for a loan modification had been approved and it
4
The Court notes that Plaintiff never filed a motion to
compel.
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offered her a Loan Modification Agreement (Ex. N to #13) that inter
alia lowered her monthly payments to $1225.95, with payments to
begin on September 1, 2010.
Nevertheless on July 16, 2010, in a
letter of that date (Ex. O), she rejected that agreement because
she could not afford that high a monthly payment.
In a letter
dated August 8, 3010, sent to Plaintiff by certified mail, Wells
Fargo notified Plaintiff that the Note was in default in the amount
of $24,553.76 and that if she did not pay that amount by September
7, 2010, the entire indebtedness would be accelerated and Wells
Fargo would initiate foreclosure proceedings.
Notice of Default
Letter, Ex. P. Plaintiff sent a couple of form letters reiterating
her financial hardship and continuing to request a different loan
modification.
On October 8, 2010, Wells Fargo informed her by
letter (Ex. S to #14) that it was unable to adjust the terms of
Plaintiff’s mortgage because it could not agree to a revised
payment that she could afford.
Plaintiff has admitted that Wells
Fargo has not foreclosed on the Property and that she remains in
possession of it.
Ex. T.
The last payment of any kind that she
sent to Wells Fargo was in June 2010.
Exs. M and F.
Plaintiff has failed to produce the writing for or any
evidence of the alleged Second Special Forbearance Agreement that
purportedly reduced her payments to $900.
Therefore the statue of
frauds precludes her breach of contract claim.
Wells Fargo does
submit a Notice of No Oral Agreements providing statutory notice to
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Plaintiff that the Note in disupure was subject to the statute of
frauds, which Plaintiff signed on May 30, 2008, in addition to the
Note and Deed of Trust. Ex. D. Wells Fargo’s documentary evidence
also shows that its initial efforts to accommodate Plaintiff
failed, that she defaulted on the Note, and that she was unable to
meet and/or rejected its further offers to reduce her payments,
interest rate, etc.
Because as a matter of law she fails to state
cognizable claims for wrongful foreclosure and breach of the FDCPA
and because Plaintiff has not met her burden of proof on her breach
of contract claim, Wells Fargo prevails on all Plaintiff’s causes
of actions and therefore her prayer for injunctive relief is moot.
Thus Wells Fargo is entitled to summary judgment on Plaintiff’s
breach of contract cause of action.
Accordingly, the Court
ORDERS that Wells Fargo’s motion for summary judgment is
GRANTED.
A final judgment will issue by separate document.
SIGNED at Houston, Texas, this
11th
day of June , 2012.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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