Turner v. Wells Fargo Bank, NA

Filing 28

MEMORANDUM AND ORDER GRANTING 25 MOTION for Summary Judgment (Signed by Judge Ewing Werlein, Jr) Parties notified.(gkelner, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
TONI J. TURNER r

§
§
§

Plaintiff r

§

v.

CIVIL ACTION NO. H-13-808

§
§
§
§
§

WELLS FARGO BANK r NA r
Defendant.

MEMORANDUM AND ORDER
Pending is Defendant Wells Fargo Bank r NArs Motion for Final
Summary

Judgment

(Document

No.

Plaintiff

25).

has

filed

no

response r and the motion is therefore deemed unopposed pursuant to
Local Rule 7.4.
I.

Background

In July 2002 r Plaintiff Toni J. Turner ("Plaintiff") executed
a Note in the amount of $256 r OOO in favor of Homeline Mortgage
Corporation secured by a Deed of Trust on her home located at 14519
Timbergreen Driver Magnolia r Texas 77355

("the Property").l

The

Note and Deed of Trust required Plaintiff to make monthly payments
of principal and interest in the amount of $l r 618.10 r 2

and to make

monthly payments for escrow items r including property taxes and

1

Document No. 25 r ex. 2 (Note)

2

Id. r ex. 2

~

3; id. r ex. 3

~

i

1.

id. r ex. 3 (Deed of Trust).

insurance, unless the lender waived the escrow requirement. 3

At

the time of origination, the escrow requirement was waived. 4
February

In

("Defendant"),

Defendant

2010,

Wells

Fargo

Bank,

NA

the current servicer and mortgagee of record for

Plaintiff's mortgage,5 determined that Plaintiff had failed to pay
her 2009 property taxes for Montgomery County.6

On February 19,

Defendant sent to Plaintiff a notice that if she did not provide
proof of payment by March 31, 2010, Defendant would pay the overdue
taxes and establish an escrow account
payments. 7

Plaintiff

deadline. 8

did

not

pay her

for past and future
taxes

by

the

March

tax
31

Defendant subsequently established an escrow account on

Plaintiff/s mortgage. 9

On April 21

Defendant notified Plaintiff

that it had done so, and that Plaintiff's monthly payments would
increase. 1o

On April

8

1

Defendant sent to Plaintiff an Escrow

Disclosure Statement and Notice of New Mortgage Payment,

listing

two alternative higher monthly payments based on whether or not she

3

Id. , ex. 3 ~~ 1, 3.

4

Id. , ex. 1 ~ 6

i

id. , ex. 15 at 12:13-17.

5 Document No. 25 at 3'
id'
1

6

Id. , ex. 1 ~ 6.

7

Id. , ex. 5 .

8

Id'

ex. 1 ~ 2.

l

9

10

l

ex. 15 at 24:23-25.

Id. , ex. 1 ~ 7.
Id. , ex. 6.
2

paid her escrow shortage in full, and advising Plaintiff that her
new payment amount would be effective on June I, 2010. 11

Plaintiff

paid only the principal and interest due on June I, and did not pay
the amounts due for the escrow and escrow shortage. 12
Plaintiff alleges that she contacted Defendant after receiving
notice

that her monthly payment had increased,

and

"was given

specific instruction by the Wells Fargo agent to continue to send
in the regular monthly payment of $1,618.10 until the matter could
be straightened out."U

Plaintiff contends that she complied with

this instruction,14 and that she continued to contact Defendant,
"speaking with a different person every time."15
11 Id.,
ex. 7.
If Plaintiff paid off her escrow shortage of
$4,653.69 in full, her new monthly payment would be $1,847.12.
Otherwise, Defendant would spread payment of the escrow shortage
over 12 months, and Plaintiff would be required to make payments
totaling $2,234.93 per month.
Id.

12 Document No. 25, ex. 1

~

8.

Document No. I, ex. B.7 ~~ 4, 7 (1st Am. Pet.).
Plaintiff
alleges that she was originally told that Defendant had imposed an
escrow account due to a problem with her homeowners insurance
policy, but was later informed that it was "because Wells Fargo had
mistakenly paid the ad valorem taxes with Montgomery County
Appraisal District even though Plaintiff had already paid it."
Id., ex. B. 7 ~~ 4-6.
The summary judgment evidence is that
Plaintiff's insurance carrier, Allstate, notified Defendant on
March 4, 2010, that Plaintiff's policy would be cancelled on March
24 if her premium was not received.
Document No. 25, ex. 8.
Allstate provided to the lender proof of coverage beginning on
March 30, and Defendant charged Plaintiff for lender-placed
insurance during the gap from March 24 to March 30.
Id., ex. 1
13

~ 1l.

14 Document No. I, ex. B. 7
15 Id., ex. B. 7

~

~

7.

9.
3

----------------------------------------------------- -

Plaintiff alleges that, on September 30, 2010, she spoke with
a

representative

Plaintiff

in Defendant's escrow department,

"to send in the balance of

who advised

the deficiency in escrow

account totaling $1,877.55," and that doing so would close out the
escrow

account

and

original amount. 16

return

Plaintiff's

The next day,

monthly

payment

to

its

Defendant sent to Plaintiff a

letter outlining the requirements to delete the escrow account,
including: (1) that Plaintiff not have had any 30-day late payments
during the previous 12 months and be paid current with no past due
payments owed; (2) that her escrow account balance not be negative;
(3)

that she not have lender-placed insurance; and

(4)

that the

loan meet a

certain loan-to-value ratio as

appraisal. 17

Plaintiff paid the $1,877.55 payment as instructed,

but did not order an appraisal. 18

demonstrated by an

Because Plaintiff did not consent

to and pay for a current appraisal, Defendant did not delete the
escrow account. 19
Plaintiff

continued

to

make

payments

equal

only

to

the

principal and interest on her 10an,20 and Defendant sent to her

16

Id. , ex. B.7 ~ 13.

17

Document No. 25, ex. 12.

18

Document No. 25, ex. 1 ~ 9; id. , ex. 15 at 65:2-23.

19

Id. , ex. 1 ~ 9.

20 Id. , ex. 1
~ 10.
4

mul tiple

Notices

accelerated

the

of

Default. 21

loan, 22

and

On August
stopped

15,

2011,

accepting

Defendant

payments

from

Plaintiff.23
Plaintiff brought suit seeking injunctive relief to prevent
the foreclosure and a declaratory judgment that Plaintiff was not
in

default,24

and

asserting

claims

for

breach

of

contract,

negligence/negligence per se, fraud/intentional misrepresentation,
constructive fraud/negligent misrepresentation, and violations of
the Texas Debt Collection Act ("TDCA") and the federal Real Estate
Settlement Procedures Act
2014,

("RESPA") 25

By Order dated April 30,

after an evidentiary hearing the Court denied Plaintiff's

motion

for

a

temporary

inj unction. 26

Defendant

now moves

for

summary judgment. 27
II.
Rule 56 (a)

provides

Legal Standard
that

"[t] he court shall grant summary

judgment if the movant shows that there is no genuine dispute as to

21 Id. , ex. 1I.
22

Id. , ex. 13-A.

23 Id. , ex. 1
~ 10.
24 Document No. 1, ex. B.7.
25 Id. , ex. B.7.
26 Document No. 22.
27 Document No. 25.
5

any material fact and the movant

this

burden,

56 (a)

the

burden

shifts

Once the movant carries

to

FED. R . CIV. P.

matter of law."

is entitled to judgment as a

nonmovant

the

summary judgment should not be granted.

to

show

that

Morris v. Covan World Wide

Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).

A party opposing

a properly supported motion for summary judgment may not rest upon
mere allegations or denials

in a

pleading,

and unsubstantiated

assertions that a fact issue exists will not suffice.

Id.

"[T]he

nonmoving party must set forth specific facts showing the existence
of a

'genuine'

case."

issue concerning every essential component of its
"A party asserting that

a

fact

cannot be or is

genuinely disputed must support the assertion by:

(A)

citing to

., or (B) showing

particular parts of materials in the record .

that the materials cited do not establish the absence or presence
of a

genuine dispute,

or that an adverse party cannot produce

admissible evidence to support the fact."

FED. R. CIV. P. 56 (c) (1).

"The court need consider only the cited materials,
consider other materials in the record."

but

it may

Id. 56(c) (3)

In considering a motion for summary judgment,

the district

court must view the evidence "through the prism of the substantive
evidentiary burden."
2505, 2513 (1986).

Anderson v. Liberty Lobby, Inc., 106 S. Ct.

All justifiable inferences to be drawn from the

underlying facts must be viewed in the light most favorable to the
nonmoving party.

Matsushita Elec.

6

Indus.

Co.

v.

Zenith Radio

Corp.,

106 S. Ct. 1348,1356

(1986).

"If the record, viewed in

this light, could not lead a rational trier of fact to find" for
the nonmovant, then summary judgment is proper.

Kelley v. Price-

Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir. 1993).

On the other

hand, if "the factfinder could reasonably find in [the nonmovant' s]
favor,

then summary judgment

is

standards of Rule 56 are met,

improper.

Even if

II

the

a court has discretion to deny a

motion for summary judgment if it believes that "the better course
would be to proceed to a full trial."

Anderson,

106 S. Ct. at

2513.
III.

Analysis

Plaintiff seeks a declaratory judgment that she was not in
default under the terms of the Note and Deed of Trust. 28

She

also asserts claims for breach of contract, negligence/negligence
per se,

fraud/intentional misrepresentation,

negligent

misrepresentation,

and violations

constructive fraud/
of

the

Texas

Debt

Collection Act and the federal Real Estate Settlement Procedures
Act ("RES PAil). 29
A.

Declaratory Judgment Claim
Section 3 of the Deed of Trust provides:

28

Document No.1, ex. B. 7 .

29

Id., ex. B. 7 .
7

If Borrower is obligated to pay Escrow Items directly,
pursuant to a waiver
and Borrower fails to pay the
amount due for an Escrow Item, Lender may exercise its
rights under Section 9 and pay such amount and Borrower
shall then be obligated under Section 9 to repay to
Lender any such amount. Lender may revoke the waiver as
to any or all Escrow Items at any time by a notice given
in accordance with Section 15 and, upon such revocation,
Borrower shall pay to Lender all Funds, and in such
amounts, that are then required under this Section 3. 30
1

The summary judgment evidence is that Plaintiff failed timely
to pay her
~Escrow

2009

property taxes,31

that

property taxes

were an

Item" in the Deed of Trust,32 that Defendant notified her

in writing, in accordance with the Deed of Trust, of its intention
to impose an escrow account if she did not pay the taxes by March
31,
that

2010,33 that she did not pay the taxes by the deadline,34 and
Defendant

then

imposed

the

escrow

account. 35

Plaintiff

subsequently failed to make payments that included the full amounts
owed for escrow items. 36

Accordingly, Plaintiff was in default.

30 Document No. 25, ex. 3 ~ 3. Section 15 requires notices to
be in writing, and deems them to have been given to Borrower when
mailed by first class mail or when actually delivered to Borrower's
notice address.
Id., ex. 3 ~ 15.
31 Id. , ex. 1
~ 6

i

id. , ex. 15 at 22:25-23:2.

32 Id. , ex. 3
~ 3.
33 Id. , ex.
ex. 5 .

1 ~ 6

(notice sent via first class mail)

i

id. ,

34 Id. , ex. 15 at 24:23-25.
35 Id.

1

ex. 1

~

7 i id., ex. 6.

36 Id., ex. 1 ~ 10. See also Document No.1, ex. B. 7 ~ 7. In
September 2010, Plaintiff attempted to close the escrow account by
8

B.

Breach of Contract
Under Texas law, the elements of a breach of contract action

are:

(1) a valid contract;

by plaintiff;

(3)

(2) performance or tendered performance

breach of the contract by the defendant;

(4) damages sustained by the plaintiff due to the breach.
Intern.,
2007).

Inc.

v.

Egle Group,

LLC,

490 F.3d 380,

387

and

Smith

(5th Cir.

The summary judgment evidence is that Plaintiff did not
Furthermore,

perform her obligations under the Deed of Trust.
Plaintiff

has

Accordingly,

not

demonstrated

any

default

by

Defendant.

there is no genuine issue of material fact on her

breach of contract claim.
C.

Negligence
Plaintiff claims that Defendant was negligent in failing to

provide appropriate notice under Texas Property Code
before foreclosing on the Property.3?

§

51.002(d)

Section 51.002(d) provides:

making a payment of $1,877.55, as she was allegedly instructed to
do by Defendant's representative.
Id. ~ 13.
However, Plaintiff
did not follow the written instructions sent to her by Defendant,
which also required her to order an appraisal on the property.
Document No. 25, ex. 1 ~ 9; id., ex. 12; id., ex. 15 at 65:21-23.
In any event, Plaintiff was already in default at this time, and
Defendant was under no obligation under the terms of the Deed of
Trust to delete the escrow account.
See id., ex. 3 ~ 3 ("Lender
may revoke the waiver as to any or all Escrow Items at any time
• /I) •

3? See Document No. 1-2, ex. B.7 at 42 of 73.
9

Notwithstanding any agreement to the contrary, the
mortgage servicer of the debt shall serve a debtor in
default under a deed of trust or other contract lien on
real property used as the debtor's residence with written
notice by certified mail stating that the debtor is in
default under the deed of trust or other contract lien
and giving the debtor at least 20 days to cure the
default before notice of sale can be given under
Subsection (b).
The entire calendar day on which the
notice required by this subsection is given, regardless
of the time of day at which the notice is given, is
included in computing the 20-day notice period required
by this subsection, and the entire calendar day on which
notice of sale is given under Subsection (b) is excluded
in computing the 20-day notice period.

TEX. PROP. CODE

§

51.002(d).

The summary judgment evidence is that

Defendant provided Plaintiff with multiple Notices of Default, each
providing Plaintiff with more than 20 days to cure,38 and that these
Notices were sent by certified mail. 39

Thus, no genuine issue of

material fact remains on Plaintiff's negligence claims.
D.

Fraud and Negligent Misrepresentation
Plaintiff alleges that Defendant committed fraud and negligent

misrepresentation by misrepresenting and/or failing to disclose
that Defendant was
accepting

"holding Plaintiff

Plaintiff's

payments. 1140

'in default'

The

despite not

uncontroverted

summary

judgment evidence is that Plaintiff was in default before Defendant

38 Document No. 25, ex. 11 at 2 of 11 to 3 of 11.
39 Document No. 25, ex. 1
40

~

12.

Document No.1, ex. B.7 at 43 of 73 and 45 of 73.
10

stopped accepting her payments, 41 and thus,

there is no genuine

issue of material fact that Defendant committed fraud or negligent
misrepresentation on this basis.
Plaintiff further alleges that Defendant misrepresented/failed
to disclose that (1) Defendant would remedy the "escrow situation"
within

a

specified

amount

intention of doing so;
Property;

and

(3)

(2)

of

time,

though

Defendant

had

no

Defendant would not foreclose on the

Defendant

had

fixed

the

escrow

problem. 42

Defendant's alleged oral representations that it would and did
remove the escrow account and that it would not foreclose are
Under Texas law, an

unenforceable due to the Statute of Frauds.

agreement to loan over $50,000 must be in writing and must be
signed by the party to be bound.
Because

Plaintiff's

Defendant's
enforceable.

alleged
See

mortgage

was

promises

to

TEX. Bus.
for

an

modify

&

COM. CODE

amount
the

§

over

agreement

Milton v. U.S. Bank Nat'l Ass'n,

26.02 (b) .
$50,000,
are

not

508 F. App'x

41 See Document No.
25, ex. 1 ~ 10 ("From June 2010 to August
2011, Plaintiff sent in payments that were only in the amount of
principal and interest and did not include funds owed for escrow
items and the escrow shortage.
As such, these were not full
payments and these payments were placed in suspense until such time
as the suspense account had sufficient funds to make a full monthly
payment.
In doing this, Plaintiff began to fall further and
further behind on her Loan.
Around August 15, 2011, Wells Fargo
accelerated the balance of the Loan. Wells Fargo has not accepted
any payments from Plaintiff after August 15, 2011 . . . . Plaintiff
has failed to remit the installment payment due for April 2011 and
the installments that have become due after that date under the
terms of the Loan.").

42

Document No.1, ex. B.7 at 43 of 73 and 45 of 73.
11

326, 328-29 (5th Cir. 2013)

(agreement to delay foreclosure must be

in writing to be enforceable)
Civ. A. No. H-10-4755,
2013)

(Atlas, J.)

i

O'Dea v. Wells Fargo Home Mortg.,

2013 WL 441461,

at *6

(S.D.

Tex.

Feb.

5,

(oral promise to make financial accommodation in

connection with escrow requirements barred by Statute of Frauds).
A plaintiff may not recover in tort for claims arising out of an
unenforceable contract under the Statute of Frauds, unless he seeks
out-of-pocket damages

incurred by relying upon the defendant's

misrepresentations that are not part of the benefit of the bargain.
Hugh Symons Grp. v. Motorola,
2002)

Inc.,

292 F.3d 466,

470

(5th Cir.

(citing Haase v. Glazner, 62 S.W. 3d 795, 799 (Tex. 2002)).

Plaintiff presents no evidence that she has suffered such damages,
and thus, her claims for fraud and negligent misrepresentation are
barred by the Statute of Frauds.
Plaintiff's fraud claims separately fail because Plaintiff has
produced no evidence that the alleged fraudulent statements were
made knowingly or with reckless disregard for their falsity as
required to demonstrate that they were fraudulent.

See Milton, 508

F. App'x at 330 (plaintiff's fraud claims did not survive summary
judgment because the record was "devoid of any evidence, apart from
[plaintiff's]

unsupported

speculation,

that

the

purported

misrepresentations were made knowingly or with reckless disregard
for their falsity.")

(citing In re FirstMerit Bank, N.A., 52 S.W.

3d 749, 758 (Tex. 2001)).

12

Furthermore, Defendant's alleged promises that it would not
foreclose and that it would eliminate the escrow account cannot
support a negligent misrepresentation claim, as these were promises
See Thomas v.

of future action rather than existing fact.

Mortg. Corp., 499 F. App'x 337, 342 (5th Cir. 2012)

EMAC

(a promise to

do or refrain from doing something in the future is not actionable
as

negligent misrepresentation because

it does

not

concern an

existing fact).

Accordingly,

there is not so much as a genuine

issue

to

Plaintiff's

of

fact

support

fraud

and

negligent

misrepresentation claims.
E.

Texas Debt Collection Act
Plaintiff

392.304(a) (14)

alleges
of

the

that
Texas

Defendant
Finance

violated

Code,

which

Section
prohibits

"representing falsely the status or nature of the services rendered
by

the

debt

collector or

Section 392.304 (a) (19),

the

debt

collector's

which prohibits

business,

to collect a

information concerning a consumer./I

TEX. FIN. CODE

debt or obtain
§

392.304(a) (14,

Plaintiff does not allege the specific representations upon

which her TDCA claim is based,
claim.

and

"using any other false

representation or deceptive means

19) .

/I

and therefore fails

to state a

Even assuming that Plaintiff's TDCA claim is founded on the

same bases as her fraud and negligent misrepresentation claims, the
claims fail for the same reasons.

13

F.

Real Estate Settlement Practices Act
Section 2605(e) of RESPA requires a servicer who

qualified

written

request

from

the

borrower"

for

~receives

a

information

relating to the servicing of a loan to acknowledge receipt of such
correspondence within five days, and to take action with respect to
the

12 U.S.C.

inquiry within 30 days.

§

Plaintiff

2605 (e) .

alleges that she sent to Defendant a qualified written request in
August 2011, and that Defendant failed timely to respond.

The only

correspondence from Plaintiff in the summary judgment record is a
letter addressed to Barrett Daffin Frappier Turner & Engel,
("Barrett Daffin"),
foreclosure of

the

the

LLP

law firm representing Defendant in the

Property. 43

RESPA requires

that a

respond when it receives a qualified written request.

servicer

There is no

evidence of record that Defendant received Plaintiff's August 30,
2011

letter,

which was

to Defendant.
No.

3:05CV1502,

(plaintiff

See

addressed

Griffin v.

to

state

a

its

outside

counsel,

citifinancial Mortg.

2006 WL 266106,

failed

to

at *2

(M.D.

Pa.

Co.,

Feb.

claim under RESPA where

1,

not
Inc.,
2006)

alleged

qualified written request was sent to servicer's counsel because

Document No. 25, ex. 14 (August 30, 2011 letter from
Plaintiff to Barrett Daffin; id., ex. 13-A (August 15, 2011 letter
from Barrett Daffin to Plaintiff stating that the law firm
~represents WELLS FARGO BANK, N.A.,
the Mortgage Servicer, in its
mortgage banking activities in the State of Texas" and has been
authorized to initiate legal proceedings in connection with the
foreclosure of Plaintiff's Deed of Trust).
43

See

14

"RESPA includes no such provision allowing borrowers requesting
information from their servicer to send their qualified written
requests to their servicer's attorney.

Rather, the plain language

imposes a duty upon the servicer to respond only when it receives
a

request

from

the

borrower

or

the

borrower's

agent. If) •

Accordingly, Plaintiff's RESPA claim is dismissed.
IV.

Order

For the foregoing reasons, it is
ORDERED that Defendant Wells Fargo Bank, NA's Motion for Final
Summary Judgment (Document No. 25) is GRANTED.
The Clerk will enter this Order and provide a correct copy to

ZZ1

all parties.
SIGNED at Houston, Texas, on this

~ day of July,

2014.

~~-~~~1\\- ·
.. ~
UNITED STA

15

ERLEIN, JR.
'
S DISTRICT JUDGE