Jameel v. Flagstar Bank, FSB
Filing
10
OPINION AND ORDER.(Signed by Judge Melinda Harmon) Parties notified.(chorace)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
FIROZEBANU MOHAMMED JAMEEL,
Plaintiff,
VS.
FLAGSTAR BANK, FSB,
Defendant.
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§
§
CIVIL ACTION H-12-1510
OPINION AND ORDER
Pending before the Court in the above referenced cause,
removed from state court on both federal question and diversity
jurisdiction and seeking to preclude foreclosure upon Plaintiff
Firozenbanu Mohammed Jameel’s (“Jameel’s”) home at 4102 Hidden
Fort, Missouri City, Fort Bend County, Texas 77459 (“the property”)
and to obtain declaratory and injunctive relief as well as damages,
is Defendant Flagstar Bank, F.S.B.’s (“Flagstar’s”) motion to
dismiss for failure to state a claim (instrument #5).1
Jameel asserts, as causes of action, breach of contract,
conversion, and violations of the Deceptive Trade Practices Act
(“DTPA”), Texas Business & Commerce Code § 17.50(a)(1)-(4),2 and of
1
Jameel’s Original Petition identifies Jameel as a woman
(“Ms. Jameel” and “she, her”), while Defendant’s pleadings identify
Jameel as a man. The Court follows Plaintiff’s pleadings.
2
Section 17.50(a) states,
(a) A consumer may maintain an action where any of the
following constitute a producing cause of economic
damages or damages for mental anguish:
-1-
the Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(g).3
(1) the use or employment by any person of a
false, misleading, or deceptive act or
practice that is:
(A) specifically enumerated in a
subdivision of Subsection (b) of
Section 17.46 of this subchapter;
and
(B) relied on by a consumer to the
consumer’s detriment;
(2) breach of express or implied warranty;
(3) any unconscionable action or course of
action by any person; or
(4) the use or employment by any person of an
act or practice in violation of Chapter 541,
Insurance Code.
3
In 2009 the TILA was amended to add subsection (g) to §
1461, effective May 20, 2009. Helping Families Save Their Homes
Act, Pub. L. No. 111-22, § 404, 123 Stat. 1632, 1649 (2009).
Failure to comply with the notice requirement can result in civil
liability under § 1640(a). See Angelini v. Bank of America, Civ.
A. No. 11-3011-CL, 2011 WL 2433485, *5 (D. Or. Apr. 27, 2011).
Section 1641(g)(1) provides,
In addition to other disclosures required by this
subchapter, not later than 30 days after the date on
which a mortgage is sold or otherwise transferred or
assigned to a third party, the creditor that is the new
owner or assignee of the debt shall notify the borrower
in writing of such transfer, including-(A) the identity, address, telephone number of the new
creditor;
(B) the date of transfer;
(c) how to reach an agent or party having authority to
act on behalf of the new creditor;
(D) the location of the place where transfer of ownership
of the debt is recorded; and
(E) any other relevant information regarding the new
creditor.
-2-
Standard of Review
Federal Rule of Civil Procedure 8(a)(2) provides, “A pleading
that states a claim for relief must contain . . . a short and plain
statement of the claim showing that the pleader is entitled to
relief.”
pursuant
When a district court reviews a motion to dismiss
to
Fed.
R.
Civ.
P.
12(b)(6),
it
must
construe
the
complaint in favor of the plaintiff and take all well-pleaded facts
as true. Randall D. Wolcott, MD, PA v. Sebelius, 635 F.3d 757, 763
(5th Cir. 2011), citing Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.
2009).
“While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, . . . a
plaintiff’s
obligation
‘entitle[ment]
to
to
relief’
provide
the
‘grounds’
requires
more
than
of
his
labels
and
conclusions, and a formulaic recitation of the elements of a cause
of action will not do . . . .”
S.
Ct.
1955,
1964-65
Bell Atlantic Corp. v. Twombly, 127
(2007)(citations
omitted).
“Factual
allegations must be enough to raise a right to relief above the
speculative level.”
Federal
Practice
Id. at 1965, citing 5 C. Wright & A. Miller,
and
Procedure
§
1216,
pp.
235-236
(3d
ed.
2004)(“[T]he pleading must contain something more . . . than . . .
a statement of facts that merely creates a suspicion [of] a legally
cognizable right of action”).
“Twombly jettisoned the minimum
notice pleading requirement of Conley v. Gibson, 355 U.S. 41 . . .
-3-
(1957)[“a complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to
relief”], and instead required that a complaint allege enough facts
to state a claim that is plausible on its face.”
St. Germain v.
Howard,556 F.3d 261, 263 n.2 (5th Cir. 2009), citing In re Katrina
Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)(“To survive
a Rule 12(b)(6) motion to dismiss, the plaintiff must plead ‘enough
facts to state a claim to relief that is plausible on its face.’”),
citing Twombly, 127 S. Ct. at 1974).
“‘A claim has facial
plausibility when the pleaded factual content allows the court to
draw the reasonable inference that the defendant is liable for the
misconduct alleged.’”
Montoya v. FedEx Ground Package System,
Inc., 614 F.3d 145, 148 (5th Cir. 2010), quoting Ashcroft v. Iqbal,
129 S. Ct. 1937, 1940 (2009).
Dismissal is appropriate when the
plaintiff fails to allege “‘enough facts to state a claim to relief
that is plausible on its face’” and therefore fails to “‘raise a
right to relief above the speculative level.’”
Montoya, 614 F.3d
at 148, quoting Twombly, 550 U.S. at 555, 570.
“[T]hreadbare
recitals of the elements of a cause of action, supported by mere
conclusory statements do not suffice” under Rule 12(b). Iqbal, 129
S. Ct. at 1949.
Rule 8 ”does not unlock the doors of discovery for
a plaintiff armed with nothing more than conclusions.”
plaintiff
must
plead
specific
-4-
facts,
not
merely
Id.
The
conclusory
allegations, to avoid dismissal.
Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498 (5th Cir. 2000).
As noted, on a Rule 12(b)(6) review, although generally the
court may not look beyond the pleadings, the Court may examine the
complaint, documents attached to the complaint, and documents
attached to the motion to dismiss to which the complaint refers and
which are central to the plaintiff’s claim(s), as well as matters
of public record.
Lone Star Fund V (U.S.), L.P. v. Barclays Bank
PLC, 594 F.3d 383, 387 (5th Cir. 2010), citing Collins, 224 F.3d at
498-99; Cinel v. Connick, 15 F.3d 1338, 1341, 1343 n.6 (5th Cir.
1994).
See also United States ex rel. Willard v. Humana Health
Plan of Tex., Inc., 336 F.3d 375, 379 (5th Cir. 2003)(“the court may
consider . . . matters of which judicial notice may be taken”).
Taking judicial notice of public records directly relevant to the
issue in dispute is proper on a Rule 12(b)(6) review and does not
transform the motion into one for summary judgment.
Stryker Corp., 631 F.3d 777, 780 (5th Cir. 2011).
Funk v.
“A judicially
noticed fact must be one not subject to reasonable dispute in that
it
is
either
(1)
generally
known
within
the
territorial
jurisdiction of the trial court or (2) capable of accurate and
ready determination by resort to sources whose accuracy cannot
reasonably be questioned.”
Fed. R. Evid. 201(b).
Allegations of Plaintiff’s Original Petition (#1-4)
Jameel
purchased
the
property
-5-
and
on
February
25,
2008
executed an promissory note (Ex. A) and deed of trust (Ex. B) in
favor of Secure Mortgage Company.4
Flagstar claims to be the
current holder of the note and deed of trust with authority to
receive payments and to foreclose.
Sale.
Ex. C, Notice of Foreclosure
On or about November 22, 2011 Jameel and Flagstar entered
into a Home Affordable Modification Program (“HAMP”) trial mortgage
modification requiring monthly payments of $1,628.88 beginning
November 2011.
Ex. D.
Jameel made all required payments.
After
the third month, Jameel inquired from Defendant about the status of
her permanent loan modification5 and was told that “they were still
working on it and for her to keep paying the same amount.”
She
continued to make the monthly payments and called the bank every
month about her permanent loan modification.
Jameel states that she has not received in writing any notice
of the substitute trustee, as required by ¶ 24 of the deed of
trust.
Ex. B.
She argues that while the right to substitute the
trustee is granted to the lender, Flagstar was not and is not the
lender and has not produced any evidence that it is the owner
4
In its response, Flagstar states that Jameel borrowed
$247,458.00 from Secure Mortgage Company for the purchase price and
signed the promissory note, secured by the contemporaneously
executed deed of trust.
5
In a footnote, Jameel states that the HAMP modification
program is a government sponsored plan whereby mortgage borrowers
are pre-approved for a permanent mortgage modification conditional
upon making three “good faith” payments and submitting personal
financials. #1-4 at p. 3 n.1.
-6-
and/or holder of either the note or the deed of trust, and thus is
not authorized to conduct a foreclosure sale. Nor, Jameel insists,
was she sent a notice of acceleration of the amount due under the
note, as required by the deed of trust for Flagstar to have the
power to foreclose.
Yet Flagstar and parties acting on its behalf
have collected payments from Jameel, threatened foreclosure, and
disparaged her credit.
Regarding her breach of contract (deed of trust) claim, by
attempting to foreclose upon the property, Jameel argues that
Flagstar did not meet the following requirements to enforce the
“power of sale” clause in the deed of trust, thus had no right to
foreclose on the property, and therefore breached the contract by
attempting to foreclose on her homestead: (1) Flagstar must be the
current assignee of the deed of trust; (2) the trustee conducting
the foreclosure sale must be appointed according to the terms of
the deed of trust; (3) Jameel must have been given proper notice of
the foreclosure sale; (4) notice of the foreclosure sale must be
preceded by notice that the underlying note was being accelerated;
(5) notice of acceleration must be preceded by notice that the note
was in default and that Plaintiff be given an opportunity to cure
that default; and (6) that the default necessarily implies that
Defendant actually is the holder of the note. Jameel concedes that
she was given notice that she was in default, but contends that she
paid as agreed and was not in default.
-7-
She claims she was not
given proper notice that the note was being accelerated, another
breach of contract by Flagstar.
She questions Flagstar’s right to
foreclose because it must be a lender under the deed of trust and
Section 22 of the deed of trust defines “lender” to include “any
holder of the note who is entitled to receive payments under the
Note.”
Under the DTPA a plaintiff must be a consumer to sue under the
statute and § 17.45(4) defines a consumer as “an individual . . .
who seeks or acquires by purchase or lease any goods or services .
. . .”
Jameel maintains she is a “consumer” because she is an
individual who acquired mortgage servicing by purchase.
Jameel
asserts that Flagstar is liable to her under § 1746(b)(12)6 of the
DTPA because it represented to her that it has the right to
foreclose on her property but did not prove it met the conditions
precedent to having the power of sale under the deed of trust.
Jameel alleges that Flagstar violated the TILA by failing to
giver her proper notice of its new ownership as a new creditor as
required by 15 U.S.C. § 1641(g).
Flagstar’s Motion to Dismiss (#5)
Flagstar points out that the elements of a claim for breach of
6
Section 17.46(b)(12) provides, “(b) Except as provided in
Subsection (d) of this subsection, the term ‘false, misleading, or
deceptive acts or practices’ includes, but is not limited to . . .
(12) representing that an agreement confers or involves rights,
remedies or obligations which it does not have or involve, or which
are prohibited by law. . . .”
-8-
contract are (1) the existence of a valid contract; (2) performance
of tendered performance by the plaintiff; (3) breach of 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
(5th Cir. 2009), citing Aquiar v. Segal, 167 S.W. 3d 443, 450 (Tex.
App.-Houston [14th Dist.] 2005, pet. denied).
To be liable for
breaching a contract, Flagstar must be a party to the contract, but
Jameel fails to allege that it was a party to any contract with her
or any resulting damages.
Nor does Jameel allege that any foreclosure sale occurred or
that one is currently noticed.
If Jameel is asserting a claim for
wrongful foreclosure, it must fail because Texas does not recognize
a cause of action for wrongful attempted foreclosure.
Owen v. BAC
Home Loans Servicing, L.P., Civ. A. No. H-11-2742, 2012 WL 1494231,
*3 (S.D. Tex. Apr. 27, 2012) (and cases cited therein).
The Court
agrees that as a matter of Texas law currently she has no claim for
wrongful foreclosure.
Flagstar moves to dismiss Jameel’s DTPA claim on the grounds
that she is not a “consumer” and therefore lacks standing to sue
under the statute.
Whether a plaintiff is a consumer under the
DTPA is a question of law.
Holland Mortgage & Inv. Corp. v. Bone,
751 S.W. 2d 515, 517 (Tex. App.--Houston [1st Dist.] 1987, writ
ref’d n.r.e.).
In the lender/borrower context, a person who seeks
“only the extension of credit . . . and nothing more” is not a
-9-
consumer under the DTPA because the lending of money is not a good
or service.
Walker v. Fed. Deposit Ins. Corp., 970 F.2d 114, 123
(5th Cir. 1992); La Sara Grain Co. v. First Nat’l Bank of Mercedes,
673 S.W. 2d 558, 566 (Tex. 1984); Riverside Nat’l Bank v. Lewis,
603 S.W. 2d 169, 173, 175-76 (Tex. 1980).
This Court agrees.
Moreover this Court concludes that because Jameel is operating
under a HAMP agreement, she cannot assert a DTPA claim under it.
See Fix v. Flagstar Bank, FSB, 242 S.W. 3d 147, 160 (Tex. App.–Fort Worth 2007, pet. denied)(the refinance of a home equity loan
cannot qualify as a good or service under the DTPA); Marketic v.
U.S. Bank Nat’l Ass’n, 436 F. Supp. 2d 842, 855 (N.D. Tex. 2006)
(person who obtains a home equity loan does not obtain a “good” or
“service” to qualify as a consumer under the DTPA nor does an
extension of credit); Cuevas v. BAC Home Loans Servicing, LP, Civ.
A. No. 4:10-CV-31, 2012 WL 4339063, *4 (S.D. Tex. Sept. 19,
2012)(“Courts
have
held
that
‘subsequent
actions
related
to
mortgage accounts-–for example, extensions of further credit or
modifications of the original loan--do not satisfy the ‘good or
services’ element of the DTPA.”), citing v. Chase Home Fin., No.
3:10-CV-2256-G, 2011 WL 1428904, *4 (N.D. Tex. Apr. 13, 2011).
It
is notable that Plaintiff’s response to the motion to dismiss does
not even address her DTPA claim.
Thus the Court concludes that as
a matter of law it must be dismissed.
Flagstar contends that Jameel’s TILA claim for actual damages
-10-
fails because she does not allege facts demonstrating or supporting
the inference that she relied to her detriment on the lack of TILA
disclosures.
Conley v. The Bank of New York Mellon Corp., No. CV
11-0582 DAE-BMK, 2012 WL 406911, *4 (D. Hawaii Feb. 7, 2012).
Jameel has also failed to allege actual damages from Flagstar’s
failure to disclose an assignment of the mortgage to it.
Turner v.
AmericaHomeKey, Inc., Civ. A. No. 3:11-CV-0860-D, 2011 WL 3606688,
*5-6 (N.D. Tex. Aug. 16, 2011).
Furthermore, her TILA claim is
contrary to her other allegations because to succeed on it, she
would have to allege and prove that the mortgage in question was
sold or transferred to Flagstar.
Last,
Plaintiff’s
request
for
a
declaratory
judgment
specifying her and Flagstar’s rights and duties under the deed of
trust and a declaration that Flagstar does not have the power of
sale does not state a claim upon which relief can be granted.
Although originally brought under the Texas Declaratory Judgment
Act in state court, the removal converted it to one under the
federal Declaratory Judgment Act, 28 U.S.C. § 2201.
Bell v. Bank
of Am. Home Loan Servicing, LP, Civ. A. No. 4:11-cv-2085, 2012 WL
568755, *8 (S.D. Tex. Feb. 21, 2012).
“In a declaratory judgment
action, ‘based on the facts alleged, there must be a substantial
and continuing controversy between the two adverse parties.’” Id.,
citing Bauer v. Texas, 341 F.3d 352, 358 (5th Cir. 2003). Plaintiff
has alleged no facts that would lead to the conclusion that a
-11-
present controversy exists between Jameel and Flagstar.
not
alleged
that
any
foreclosure
sale
is
currently
She has
noticed.
Additionally and alternatively, Flagstar urges the Court in its
discretion to decline to entertain the request for declaratory
relief.
Flagstar insists that Jameel is not entitled to injunctive
relief because she has no valid cause of action as none of her
claims is cognizable.
Plaintiffs’ Response (#6)
Arguing that she has pleaded all necessary elements of a
breach of contract claim or that they can be reasonably inferred,
Jameel insists that she and Flagstar have a valid contract because
she has satisfied the essential elements of such a claim:
(1) an
offer, (2) an acceptance in strict compliance with the terms of the
offer, (3) a meeting of the minds, (4) each party’s consent to the
terms, and (5) execution and delivery of the contract with the
intent that it be mutual and binding.
Buxani v. Nussbaum, 940 S.W.
2d 350, 352 (Tex. App.--San Antonio 1997, no writ).
On November
22, 2011 Plaintiff received a HAMP offer (#1-4, Ex. D, Letter
stating that Jameel has been approved for HAMP plan and to accept
the offer, she need only make specified payments) from Defendant
that would be mutual and binding.
Plaintiff accepted the offer by
making the required payments (see id., attached affidavit by
Jameel) and supplying the required documentation, reflecting a
-12-
meeting of the minds and consent to the terms.
While Defendant argues that no foreclosure sale is currently
noticed and therefore Jameel has sustained no damages, Jameel
contends that Defendant sent Plaintiff a Notice of Foreclosure Sale
(#1-4, Ex. C) and that it can be reasonably inferred that Flagstar
will
attempt
to
do
it
again.
“Mere
voluntary
cessation
of
allegedly illegal conduct does not moot a case; if it did, the
courts would be compelled to leave ‘[t]he defendant . . . free to
return to his old ways.’”
United States v. Concentrated Phosphate
Export Ass’n, 393 U.S. 199, 203 (1968), citing United States v.
W.T. Grant Co., 345 U.S. 629, 632 (1953).
doctrine
of
anticipatory
repudiation,
Moreover under the
“when
one
party
to
an
agreement has repudiated it, the other party may then accept the
agreement as being terminated or consider the repudiation as a
breach of contract and bring suit for damages.”
Jameel highlights
the fact that damages in a suit alleging anticipatory repudiation
have not yet occurred, but that the suit is permitted.
Should
foreclosure take place, Jameel’s damages would be based on loss of
her homestead.
If the Court requires the pleading of damages that
have already been incurred, the Original Petition at ¶ 20 alleges
actual damages based on the collection of payments by Defendant
from Plaintiffs as well as Defendant’s disparaging of Plaintiff’s
credit.
Jameel also insists that she has pleaded sufficient facts
-13-
under TILA to reasonably infer actual damages from Defendant’s
failure to disclose.
The Original Petition asserts that the note
and deed of trust were not executed in favor of Flagstar, but
Flagstar now claims it is a beneficiary of the note and deed of
trust.
Jameel claims she detrimentally relied upon Flagstar’s
claim by making mortgage payments to Flagstar.
Flagstar failed to
make the required TILA disclosures, and Jameel states that she
believes that she paid the wrong party, suffering actual damages.
Finally, Plaintiff insists that she has pleaded sufficient
facts to establish the existence of a substantial and continuing
controversy, as evidenced by the Notice of Foreclosure Sale sent to
Jameel and the real possibility of a future sale being initiated at
any time.
She has also pleaded sufficiently causes of action for
breach of contract, TILA violations and declaratory relief, so her
request for injunctive relief should survive the motion to dismiss.
Should the Court find that Plaintiff failed to state a claim,
Jameel requests leave of court to amend.
Flagstar’s Reply (#7)
Flagstar states that Plaintiff now predicates her claims
primarily on an allegation that she was offered and accepted a
trial loan modification under HAMP, which was then orally extended
by Flagstar.
Flagstar correctly points out that there is no
private right of action under HAMP and no guarantee of a HAMP
modification. See, e.g., Cade v. BAC Home Loans Servicing, LP, No.
-14-
10-4224, 2011 WL 2470733, *2-3 (S.D. Tex. June 20, 2011); Adams v.
U.S. Bank, No. 10-10567, 2010 WL 2670702, *4 (E.D. Mich. July 1,
2010); Hoffman v. Bank of America, No. C-10-2171 SI, 2010 WL
2635773, *5 (N.D. Cal. June 30, 2010).
Because HAMP does not
afford a private right of action, all Plaintiff’s claims premised
on HAMP fail to state a claim upon which relief can be granted.
Furthermore, to the extent that a breach of contract claim can
be predicated on HAMP, Plaintiff fails to allege an enforceable
contract even though she alleges that she timely made all payments
under a trial HAMP agreement and at the end of the trial period was
told that “they were still working on it and for her to keep paying
the
same
amount.”
She
alleges
an
oral
promise
made
by
an
unspecified Flagstar agent that Jameel could continue to make a
reduced loan payment beyond even the trial period she references.
Such a claim is barred by the statute of frauds, Texas Bus. & Com.
code § 26.02(b), which generally bars 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 bound or by
the party’s authorized representative.”
Cyrilien v. Wells Fargo
Bank, N.A., No. Civ. A. H-10-5018, 2012 WL 2133551, *3 (S.D. Tex.
2012), citing Grievous v. Flagstar Bank, FSB, No. Civ. A. H-11-246,
2012 WL 1900564, *5 (S.D. Tex. May 24, 2012).
The statute of
frauds makes unenforceable oral modifications of a written loan
agreement unless they fall within a limited exception to the
-15-
statute of frauds or do not “materially alter the obligations
imposed by the original contract.”
Grievous, 2012 WL 1900564 at
*5, citing Montalvo v. Bank of America Corp., ___ F. Supp. 2d
,
No. SA-10-CV-360-XR, 2012 WL 1078093, *13 (W.D. Tex. Mar. 30,
2012), and Wiley v. U.S. Bank, Civ. A. No. 3:11-CV-1241-B, 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”).
“[T]he general rule is
that an oral modification may be enforceable if it does not
materially alter the obligations imposed by the original contract.
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
taxes
and
Montalvo,
insurance
is
an
impermissible
oral
modification.”
2012 WL 1078093, *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. H-05-4253, 2006
WL 1155230, *2 (S.D. Tex. Apr. 26, 2006).
-16-
Flagstar further points
out that the promissory note attached to her Original Petition
states,
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
#1-4, Ex. A, last ¶.
Plaintiff’s new contract claim is based on an
oral agreement by Flagstar to allow Plaintiff to maintain the
reduced monthly payments under the trial modification plan beyond
the time period contained in the written loan agreement.
Such
claims fail as a matter of law regardless of whether the claim is
couched as a HAMP claim, breach of contract claim, or otherwise.
This Court fully concurs.
As for Jameel’s TILA claim, Flagstar insists that Plaintiff is
wrong in maintaining that the inference can be drawn from the
Petition that Jameel relied to her detriment on the lack of the
required
Flagstar.
disclosure
about
the
assignment
of
the
mortgage
to
She now claims that the nondisclosure kept her from
knowing to which entity to make loan payments, in contradiction to
her earlier claim that she made all payments to Flagstar under the
alleged trial HAMP plan.
Detrimental reliance cannot be inferred
from the pleadings and has also been negated by Jameel’s own
allegations.
Furthermore, urges Flagstar, Jameel has not and
cannot truthfully allege actual damages for any alleged TILA
violation because she continues to reside in the homestead while
making no loan payments.
-17-
Court’s Decision
Jameel
addresses
provides
her
single
no
allegations
mention
in
the
in
support
Original
of,
nor
Petition
even
of
a
conversion cause of action, so the Court finds that she fails to
state such a claim under Rule 12(b)(6), Twombly, and Iqbal.
Jameel’s argument that Jameel did not receive a notice of
acceleration of the note is moot since there is currently no notice
of or pending foreclosure sale and she is living on the property.7
“‘[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).
As the Court has indicated, it agrees with Flagstar that as a
matter of law Jameel fails to and cannot state a viable claim under
the DTPA because she is not a consumer under the statute and fails
to and cannot state a claim for breach of contract based on an oral
7
“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 & 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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HAMP modification of the underlying written agreement because it is
barred by the statute of frauds.
Thus these claims must be
dismissed with prejudice.
TILA provides for a private right of action for civil
liability against any creditor that fails to comply with any
requirement imposed under TILA, including § 1641(g) for failure to
disclose the assignment of a mortgage.
15 U.S.C. § 1640(a).
The
Court would first point out that if Plaintiff is going to charge
Flagstar with failure to provide her with notice that the mortgage
was assigned to it and is therefore liable for her actual damages,
she must allege facts showing that Flagstar is the new owner or
assignee of that mortgage under § 1641(g), a situation which she is
thus far denying.
See, e.g., Ades v. Citi Mortg., Inc., No. 02-10-
cv-02104-GMN, 2011 WL 4402754, *5 (D. Nev. Sept. 2011)(for a
violation of § 1641(g), a plaintiff must plead adequately a
transaction that would give rise to defendant’s obligation to
notice and defendant’s failure to notify); Rivera v. Recontrust
Co., N.A., No. 2:11-CV-1695-KJD-PAL, 2012 WL 2190710, *4 (D. Nev.
June 12, 2012)(finding that “[p]laintiff’s complaint does not
contain facts sufficient for the court to reasonably infer an
obligation of Defendants’ to notify under TILA”); Cingolani v. BAC
Home Loans Servicing, LP, No. 11-15159, 2012 WL 3029829, *3-4 (E.D.
Mich. July 25, 2012); Harris v. Option Mortg. Corp., 261 F.R.D. 98,
105 (D.S.C. 2009)(“Plaintiffs have not stated sufficient factual
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allegations to seek relief against American Home Mortgage as an
assignee.”).
If she alleges facts showing that Flagstar is the new owner or
assignee and that it failed to meet the notification requirement as
required by § 1641(g), she may seek to recover “any actual damages
sustained by [her] as a result of the failure” to make the required
disclosures and as long as she shows detrimental reliance.
15
U.S.C. § 1640(a)(1). She may also recover statutory damages, which
in an individual action may be “twice the amount of any finance
charge in connection with the transaction” and which do not require
a showing of causation.
15 U.S.C. § 1640(a)(2).
See Perrone v.
General Motors Acceptance Corp., 232 F.3d 433, 435-36 (5th Cir.
2000), cert. denied, 532 U.S. 971 (2001).8
“A plaintiff must allege sufficient damages in order to state
a claim” under § 1640(a)(1).
Graves v. Deutsche Bank Nat’l Trust
Co., No. 2:10-CV-0183-J, 2011 WL 2119189, *2 n.1 (N.D. Tex. 2011),
citing Beall v. Quality Loan Service Corp., No. 10-CV-1900-IEG
(WVG), 2011 WL 1044148, *6 (S.D. Cal. Mar. 21, 2011)(opining that
“[a] creditor that fails to comply with any requirement imposed
under § 1641(g) only faces liability for ‘any
8
actual damage
The Fifth Circuit has opined that “statutory and actual
damages perform different functions:
statutory damages are
reserved for cases in which the damages caused by a violation are
small or difficult to ascertain. Actual damages may be recovered
where they are probably caused by the violation.” Perrone, 232
F.3d at 436.
-20-
sustained by such person as a result of the failure.’
See 15
U.S.C. § 1640(a)(1)” and dismissing claim under § 1641(g) for
failure to allege any actual damages or finance charges related to
[defendant’s] failure to provide notice of the assignment.); Byrd
v. Guild
Mortg. Co., No. 11CV2204-WQH-WVG, 2011 WL 6736049, *5
(S.D. Cal. Dec. 20, 2011)(same).
See also Correa v. BAC Home Loans
Servicing LP, 2012 WL 1176701, *9 (M.D. Fla. Apr. 9, 2012)(finding
a failure to plead a plausible TILA claim where plaintiff “simply
sets forth verbatim the statutory language of 15 U.S.C. § 1641(g)
without further elaboration.
Such pleading, even under the most
liberal construction given to pro se litigants, is insufficient to
state a plausible claim for relief.”), citing Iqbal, 129 S. Ct. at
1949 (stating that “[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements do not
suffice”).
Jameel has failed to allege any facts demonstrating, or
supporting an inference, that she relied to her detriment on the
lack of TILA disclosures, nor has she alleged any actual damages or
finance charges related to Flagstar’s failure to disclose an
assignment of the mortgage loan.
Moreover because she is still
residing on the property, her payments appear to be her obligation
under the mortgage, not actual damages.
As noted by Flagstar, her
new claim that she paid the wrong creditor contradicts her earlier
allegation that she made all payments to Flagstar under the alleged
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trial HAMP plan.
The Court finds that plaintiff fails to plead a
plausible claim under 15 U.S.C. § 1641(g).
However, unlike her other claims, which fail as a matter of
law, this Court cannot say with certainty that Plaintiff cannot
plead a TILA claim, and she has requested leave to amend.
When a
plaintiff’s complaint fails to state a claim, the court should
generally give the plaintiff at least one chance to amend the
complaint under Rule 15(a) before dismissing the action with
prejudice.
Great Plains Trust Co v. Morgan Stanley Dean Witter &
Co., 313 F.3d 305, 329 (5th Cir. 2002)(“District courts often afford
plaintiffs at least one opportunity to cure pleading deficiencies
before dismissing a case, unless it is clear that the defects are
incurable
or
the
plaintiffs
unwilling
or
unable
to
advise
amend
in
the
a
court
manner
that
that
they
will
are
avoid
dismissal.”); United States ex rel. Adrian v. Regents of the Univ.
of Cal., 363 F.3d 398, 403 (5th Cir. 2004)(“Leave to amend should
be freely given, and outright refusal to grant leave to amend
without a justification . . . is considered an abuse of discretion.
[citations omitted]”).
Accordingly, for the reasons indicated above, the Court
ORDERS that Flagstaff’s motion to dismiss is GRANTED with
prejudice as to her DTPA claim and her breach of oral HAMP
modification of the underlying written mortgage agreement, and
without prejudice as to her TILA claim. Leave is granted to Jameel
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to file within twenty days an amended complaint based solely on her
TILA cause of action or to inform the Court that she no longer
wishes to pursue this suit.
Failure to comply will result in
dismissal of the case.
SIGNED at Houston, Texas, this
2nd
day of November , 2012.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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