Romero v. Bank of America, N.A.

Filing 12

OPINION AND ORDER granting 4 MOTION to Dismiss. Case terminated on February 20, 2014(Signed by Judge Melinda Harmon) Parties notified.(rvazquez)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
CARLOS ROMERO,
Plaintiff,
VS.
BANK OF AMERICA, N.A.,
Defendant.

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CIVIL ACTION NO. 4:13-CV-515

OPINION AND ORDER
Pending before the Court in the above referenced cause, removed from state court on
diversity jurisdiction, is Defendant Bank of America, N.A.’s (“Bank of America”) Motion to
Dismiss Plaintiff Carlos Romero’s (“Romero”) original state court petition pursuant to Federal
Rules of Civil Procedure 9 and 12(b)(6). Doc. 4. Romero has not filed a response to Bank of
America’s motion, therefore, pursuant to Local Rule 7.4, the motion is deemed unopposed.
Having considered Defendant’s motion, the facts in the records, and the applicable law, the
Court concludes that the motion should be granted and Plaintiff’s case dismissed.
I.

Background
As alleged in his original petition, Romero financed the purchase of a house located at

5915 Ranch Riata Court, Katy, Texas 77449 (the “Property”) by executing a Note in favor of
Bank of America. Pl.’s Original Pet. ¶ 6 (Doc. 1-1). Sometime thereafter, Romero defaulted on
his mortgage due to a number of unidentified financial situations. Doc. 1-1 ¶ 7. He contacted
Bank of America to request a loan modification. Doc. 1-1 ¶ 7. Romero contends that Bank of
America promised that he could receive a loan modification with lower payments, but failed to
complete the process of determining if Romero was eligible for a modification. Doc. 1-1 ¶¶ 7–8.
Romero claims that he was in continual communication with a Bank of America representative
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and that it was his understanding that a foreclosure would not take place while he was still in the
process of applying for a modification. Doc. 1-1 ¶ 9. He states that he relied on Bank of
America’s representation that he would be considered for a loan modification in discontinuing
payments to Bank of America pending the completion of his modification. Doc. 1-1 ¶ 9. On
June 7, 2011, Bank of America foreclosed on the property. Doc. 1-1 ¶ 11.
On February 14, 2013, Romero filed his original petition in state court. The case was
timely removed to this Court, and Bank of America subsequently filed its motion to dismiss. In
its motion, Bank of America maintains that Romero fails to sufficiently plead his causes of
action either because necessary elements are omitted or he does not plead sufficient facts to
support each claim. Doc. 4 ¶ 1. In addition, Bank of America argues that Romero’s fraud claim
does not meet the heightened pleading standard under Fed. R. Civ. Pro. 9. Doc. 4 at 4. Romero
did not file a response.
II.

Legal Standard
In order to survive a Rule 12(b)(6) motion to dismiss, a complaint, viewed in the light

most favorable to the plaintiff, must be “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal quotation
marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. Determining the reasonableness of such an inference is “a context-specific task
that requires the … court to draw on its judicial experience and common sense.” Id. at 679.
While a court must accept all of Plaintiff’s allegations as true, it is not bound to accept as true “a
legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555 (quoting Papasan
v. Allain, 478 U.S. 265, 286 (1986)).
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Fraud claims must satisfy the heightened pleading standard set out in Federal Rule of
Civil Procedure 9(b): that “a party must state with particularity the circumstances constituting
fraud.” The Fifth Circuit interprets Rule 9(b) to require “specificity as to the statements (or
omissions) considered to be fraudulent, the speaker, when and why the statements were made,
and an explanation of why they were fraudulent.” Plotkin v. IP Axess, Inc., 407 F.3d 690, 696
(5th Cir. 2005).
On a Rule 12(b)(6) review, the court may consider “documents attached to or
incorporated in the complaint and matters of which judicial notice may be taken.” U.S. ex rel.
Willard v. Humana Health Plan of Texas Inc., 336 F.3d 375, 379 (5th Cir. 2003) (citing Lovelace
v. Software Spectrum Inc., 78 F.3d 1015, 1017–18 (5th Cir. 1996)). Matters of public record that
appear in the record of the case may also be considered. See Funk v. Stryker Corp., 631 F.3d
777, 780 (5th Cir. 2011). “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). Taking judicial notice of public records
directly relevant to the issue in dispute is proper in a Rule 12(b)(6) review and does not
transform the motion into one for summary judgment. Funk, 631 F.3d at 780.
III.

Discussion
In his original petition, Romero asserts the following claims: (1) fraud; (2) wrongful

foreclosure; (3) promissory estoppel; (4) unreasonable collection; and (5) injunctive relief and
accounting. Doc. 1-1 at 3–5. For the reasons stated below, Plaintiffs’ claims against Bank of
America are subject to dismissal for failure to state a claim.

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A.

Common Law Fraud

To state a claim for fraud under Texas law, a plaintiff must allege (1) that the defendant
made a representation to the plaintiff; (2) that the representation was material; (3) that the
representation was false; (4) that when the misrepresentation was made the defendant knew it
was false or made it recklessly and without knowledge of its truth; (5) that the defendant made it
with the intent that the plaintiff act on it; (6) that the plaintiff relied on the representation; and (7)
that the representation caused injury to the plaintiff. Shandong Yinquang Chem., Indus. Jt. Stock
Co. v. Potter, 607 F.3d 1029, 1032–33 (5th Cir. 2010). A false representation is material if a
reasonable person would attach importance to, and be induced to act on, the information. Id. at
1033.
In support of his fraud claim, Romero merely references his prior factual summary of
Bank of America’s conduct in dealing with his foreclosure, the entirety of which is as follows:
“Defendant promised that he could receive a loan modification with lower
payments, however Defendant failed to complete the process of determining if
Plaintiff was eligible for a modification.
Plaintiff was in continual
communication with the Defendant’s representative and to the best of his
understanding, the bank was working with him to complete the modification.
However, without further notice the Defendant proceeded forward with the
foreclosure sale. In reliance on Defendant’s representations, Plaintiff understood
that the June 7, 2011 foreclosure would not occur since he was still in the process
of applying for a modification. In reliance on this representation and
understanding, Plaintiff did not pay more money to Defendant, nor did he retain a
bankruptcy attorney to file a chapter 13 bankruptcy prior to June 7, 2011. Had
Plaintiff known that Defendant’s representations were false and misleading,
Plaintiff would have made a larger payment to defendant or would have filed for
bankruptcy protection prior to the foreclosure date.” Doc. 1-1 ¶¶ 7–9.
No other facts or details are provided.
These vague fraud allegations fail to satisfy the particularity required by Rule 9(b). Even
construing these facts in a light most favorable to Romero, he does not allege with the necessary
specificity that the Defendant knew the alleged misrepresentation was false or made it recklessly
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without knowledge of its truth. Nor does Romero make anything more than a conclusory
allegation as to Bank of America’s intent that he act upon their misrepresentation. Romero
alleges that he acted upon his own understanding of unspecified statements made by Bank of
America’s representative. Without more, the Court finds that Romero has failed to satisfy the
heightened pleading requirements of Rule 9(b). Therefore, the Court dismisses Romero’s fraud
claim for failure to state a claim under Rule 12(b)(6) and 9(b).
B.

Wrongful Foreclosure Due to Fraud and Failure to Properly Notice

A plaintiff asserting wrongful foreclosure must show “(1) a defect in the foreclosure sale
proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the
defect and the grossly inadequate selling price.” Sauceda v. GMAC Mortg. Corp., 268 S.W.3d
135, 139 (Tex. App.—Corpus Christi 2008, no pet.). Additionally, there must be evidence of an
irregularity that “caused or contributed to cause the property to be sold for a grossly inadequate
price.” In re Keener, 268 B.R. 912, 921 (N.D. Tex. 2001). “Under Texas law a grossly
inadequate price would have to be ‘consideration so far short of the real value of the property as
to shock a correct mind, and thereby raise a presumption that fraud attended the purchase.’ ”
Richardson v. Wells Fargo Bank, N.A., No. 4:11-CV-359-A, 2012 WL 2511169, at *9 (N.D.
Tex. June 29, 2012) (citing FDIC v. Blanton, 918 F.2d 524, 531-32 (5th Cir. 1990)).
Romero alleges wrongful foreclosure due to fraud and wrongful foreclosure for failure to
properly give notice of foreclosure sale. The wrongful foreclosure due to fraud claim is based on
Plaintiff’s allegations that Defendant’s representations “were false, material, and were made …
with the intention that Plaintiff rely on those false and material representations.” Doc. 1-1 at 3–
4. In support of his claim for wrongful foreclosure for failure to properly give notice, Romero

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states, “it is believed that Defendant failed to follow Texas requirements for acceleration of note
of foreclosure sale.” Doc. 1-1 at 4.
As previously discussed, Plaintiff’s fraud allegations, including his wrongful foreclosure
claim due to fraud, fail to satisfy the pleading-with-specificity requirement under Rule 9(b).
Doc. 4 at 7–8. In correlation, Plaintiff does not plead a defect in the foreclosure proceedings or
an inadequate sale price, nor a connection between the two—all essential elements of a wrongful
foreclosure claim. Doc. 4 at 7–8. Plaintiff simply offers conclusory allegations and unsupported
facts which are insufficient to state a claim. As for the wrongful foreclosure due to improper
notice, Romero fails to state what notice requirements were not met. Additionally, Romero
acknowledges that he knew the Property was set to be foreclosed upon and had knowledge of the
specific foreclosure date, indicating that he had received notice. Doc. 1-1 at ¶ 9. Accordingly,
the Court dismisses the wrongful foreclosure claims by Plaintiff under Rule 12(b)(6).
C.

Promissory Estoppel

Under Texas law, the statute of frauds applies to loan agreements for amounts exceeding
$50,000.00 and requires that they be in writing and signed by the party to be bound in order to be
enforceable. Tex. Bus. Code Ann. § 26.02(2)(a)–(b). As read in § 26.02(2) of the Business and
Commerce Code, the term “loan agreement” includes promises, promissory notes and deeds of
trust. Loan agreements like Romero’s, in which the amount involved exceeds $50,000, are not
enforceable “unless the agreement is in writing and signed by the party to be bound or by that
party’s authorized representative.” § 26.02(2)(b).
“‘Promissory estoppel is a narrow exception to the statute of frauds.’” Hurd v. BAC
Home Loans Servicing, LP, 2012 WL 1106932, at *10 (quoting Schuhart v. Chase Home Fin.,
LLC, Civ. A. No. C–05–385, 2006 WL 1897263, * 4 (S.D. Tex. July 10, 2006)). To state a claim
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for the defense of promissory estoppel, the plaintiff must allege facts showing (1) a promise; (2)
foreseeability of reliance on that promise by the promisor; and (3) substantial reliance on the
promise by the promisee to its detriment. Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686
n. 25 (Tex. 2002) (citing English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983)). Furthermore,
the plaintiff must allege facts showing that “the defendant promised to sign an agreement
satisfying the statute of frauds.” Cavil v. Trendmaker Homes, Inc., Civ. A. No. G–10–304, 2012
WL 170751, *7 (S.D. Tex. Jan.19, 2012) (citing “Moore” Burger, Inc. v. Phillips Pet. Co., 492
S.W.2d 934, 937 (Tex. 1972), appeal dism’d, No. 12–40195 (5th Cir. May 10, 2012)). An
alleged oral agreement not to foreclose while a loan modification application is pending would
alter the written loan agreement in the promissory note and the deed of trust and thus would be
unenforceable unless memorialized in writing. Enis v. Bank of America, N.A., Civ. A. No. 3:12–
CV–0295–D, 2012 WL 4741073, *3 (N.D. Tex. Oct. 3, 2012).
In support of his claim for promissory estoppel, Romero states, “Defendant through its
employees and agent entered into an oral contract for application and participation in the Making
Homes Affordable Program with Plaintiff, then breached the agreement.”

Doc. 1-1 at 4.

Romero’s original mortgage note was approximately $134,574.00, clearly bringing the
agreement within the statute of frauds. See Doc. 4, Ex. A. Therefore, to state a claim for
promissory estoppel, Romero would have to show that Bank of America promised to sign an
agreement regarding the modification that would satisfy the statute of frauds. Nowhere in
Romero’s original petition does he allege that Defendant promised to sign a written agreement
documenting his participation in this program. Therefore, Romero fails to state a valid claim for
promissory estoppel and his claim is dismissed.

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D.

Unreasonable Debt Collection

Although not clearly defined in Texas law, a claim for the intentional tort of unreasonable
collection efforts has been defined as “efforts that amount to a course of harassment that was
willful, wanton, malicious and intended to inflict mental anguish and bodily harm.” EMC Mortg.
Corp. v. Jones, 252 S.W.3d 857, 868 (Tex. App.—Dallas 2008, no pet.). Generally, Texas
courts apply this cause of action based on actual collection efforts, for example telephone calls or
physically approaching the debtor that oversteps the bounds of routine collection methods
through excessive harassment. Id. at 8654–65 (lender sent a “large, very intimidating Man” who
was “yelling and screaming, demanded the keys to the house, and told [plaintiffs’] family to get
out”); Enis, 2012 WL 4741073, at *5. Failure to respond to a request for accounting, promising
loan modification, and promising not to foreclose are not debt collection efforts, and allegations
of such do not show an intent to harass and inflict mental anguish. Enis, 2012 WL 4741073, at
*5 n. 7, (citing Smallwood v. Bank of America, No. 3:11–CV–1283–D, 2012 WL 32654, *4
(N.D. Tex. Jan. 6, 2012)); Sanghera v. Wells Fargo Bank, N.A., Civ. A. No. 3:10–CV–2412–B,
2012 WL 555155, *7 (N.D. Tex. Feb. 12, 2012) (“[T]he Court is unaware ... how promising not
to foreclose on a property, can, without more, be considered willful, wanton, or malicious
harassment.”); and Swim v. Bank of America, N.A., Civ. A. No. 3:11–CV–1240–M, 2012 WL
170758, *7 (N.D. Tex. Jan. 20, 2012) (dismissing allegation that misleading plaintiff about loan
modification constituted unreasonable collection efforts).
Romero states a claim for unreasonable debt collection based on “Defendant’s conduct,
as cited above, including the wrongful foreclosure of its alleged interest in Plaintiff’s home.”
Doc. 1-1 at 5. Bank of America argues that Romero has not identified, and cannot identify, any
collection activities that would amount to an intentional “course of harassment.” Doc. 4 at 15.
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Further, Bank of America contends that the mere act of foreclosure when a borrower has
defaulted on his mortgage does not qualify as the type of “willful, wanton, [and] malicious
conduct that the tort of unreasonable collection efforts aims to prevent.” Doc. 4 at 14. The
Court agrees that Defendant Bank of America’s actions with regard to the foreclosure were not
in any way “unreasonable collection efforts.” Therefore, Romero’s claim is dismissed under
Rule 12(b)(6).
E.

Injunctive Relief and Accounting

Under Texas law, “[i]njunctive relief is simply a form of equitable remedy.” Cook v.
Wells Fargo Bank, N.A., 2010 WL 2772445, *4 (N.D. Tex. 2010) (citing Brown v. Ke-Ping Xie,
260 S.W.3d 118, 122 (Tex. App. 2008)). Likewise, an accounting is an equitable remedy and
not an independent cause of action.

Henry v. Citimortgage, Inc., No. 4:11-cv-82, 2011 WL

2261166, at *8 (E.D. Tex. May 10, 2011). To sustain a claim for injunctive relief or an
accounting, a plaintiff must first plead a viable underlying cause of action. Butnaru v. Ford
Motor Co., 84 S.W.3d 198, 204 (Tex. 2002).
Plaintiff requests injunctive relief, claiming that Defendant instituted proceedings to evict
him from his home based on an invalid Substitute Trustee’s Deed. Doc. 1-1 at 5. Plaintiff
requests an accounting claiming, “Defendants have never provided an accounting of funds
received prior to foreclosure and funds received at the foreclosure sale.” Doc. 1-1 at 5. Because
Plaintiff has failed to plead a single viable underlying claim for which relief may be granted, his
requests for injunctive relief and an accounting must also be dismissed.
IV.

Conclusion
For the foregoing reasons, it is hereby
ORDERED that the Motion to Dismiss (Doc. 4) filed by Defendant Bank of America is

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GRANTED, and Plaintiff Carlos Romero’s case is DISMISSED.
SIGNED at Houston, Texas, this 20th day of February, 2014.

___________________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE

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