Campbell v. DLJ Mortgage Capital, Inc.

Filing 13

MEMORANDUM OPINION AND ORDER granting 5 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

GEORGE W. CAMPBELL,

§
§
§
§
§
§
§
§
§
§
§
§

Plaintiff,
v.
BRAVO CREDIT, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., and DLJ
MORTGAGE CAPITAL, INC.,
Defendants.

CIVIL ACTION NO. H-14-2794

MEMORANDUM OPINION AND ORDER

Plaintiff
brought

George

W.

Campbell

("Campbell"

or

"Plaintiff")

this action against Defendants Bravo Credit

Mortgage Electronic Registration Systems,
Mortgage Capital,
Harris County,

Inc.

Texas. 1

("DLJ")

Inc.

("Bravo"),

("MERS"),

and DLJ

in the 2 95th Judicial District of

DLJ timely removed. 2

MERS

is a

named

defendant and consented to removal,3 but Plaintiff has not pleaded
any causes of action against MERS.

According to DLJ,

"Bravo is

lCause No. 2014-45560.
2See Notice of Removal, Docket Entry No.1.
3Consent
to
Removal
by Defendant
Mortgage
Registration Systems, Inc., Docket Entry No.4.

Electronic

defunct."4

As of the date of this opinion, Plaintiff has not filed

proof of service as to either MERS or Bravo. s
Pending before the court is Defendant DLJ Mortgage Capital,
Inc.'s Motion to Dismiss

(Docket Entry No.5).

For the reasons

stated below, DLJ's Motion to Dismiss will be granted.
Background

I .

On October 12,
Note

(the

"Note" )

2007,
in

Campbell executed a Texas Home Equity

favor

Campbell and his wife,

of

Bravo

Julia A.

Equity Security Instrument

Credit. 6

Browder,

That

same

day

executed a Texas Home

(the "Deed of Trust"). 7

The Deed of

Trust identified Bravo Credit as the Lender and MERS as a nominee
for Bravo and as the beneficiary under the security instrument. s
Campbell alleges that, at some point, he fell ill and "contacted
Lender and requested a modification or some type of an arrangement
so

as

to

reduce

his

payments, "

at

which

4Notice of Removal, Docket Entry No.1, p. 2

time

"Lender's

~7.

SSee also Joint Discovery/Case Management Plan, Docket Entry
No. 11, p. 2 ~5 (stating that as of January 27, 2015, "service is
not complete on Mortgage Electronic Registration Systems, Inc. or
Bravo Credit") .
6Texas Home Equity Note, Exhibit A-1 to Original Petition &
Application for Temporary Restraining Order ("Original Petition") ,
Exhibit B to Notice of Removal, Docket Entry No. 1-1, p. 18.
7Texas Home Equity Security Instrument, Exhibit A-2 to
Original Petition, Exhibit B to Notice of Removal, Docket Entry No.
1-1, p. 23.
SId. at 24.
-2-

representatives told Plaintiff to just stop making payments," which
Campbell did. 9
MERS, as nominee for Bravo Credit, assigned the Deed of Trust
to DLJ in an assignment

filed with the Harris County Clerk on

July 5, 2012, (the "Assignment") 10

On February 27, 2013, DLJ filed

a home equity foreclosure action in Harris County District Court
under Texas Rule of Civil Procedure 736. 11
On or about September 3, 2013, a trustee's sale was held at
which DLJ purchased the

Property for

$300,000. 12

On or about

June 27, 2014, a writ of possession was issued in favor of DLJ.l3
On

August

8,

2014,

Campbell

filed

an

Original

Petition

&

Application for Temporary Restraining Order in the 152nd Judicial
District

of

Harris

County. 14

90 r iginal Petition,
Entry No. 1-1, p. 4 ~10.

The

court

entered

a

temporary

Exhibit B to Notice of Removal,

Docket

10Assignment of Deed of Trust, Exhibit C to Original Petition,
Exhibit B to Notice of Removal, Docket Entry No. 1-1, pp. 43-45.
110r iginal Petition, Exhibit B to Notice of Removal, Docket
Entry No. 1-1, p. 4 ~13i Defendant DLJ Mortgage Capital, Inc.'s
Motion to Dismiss ("Motion to Dismiss"), Docket Entry No.5, p. 2
~4.

l2See Foreclosure Sale Deed, Exhibit 1 to Motion to Dismiss,
Docket Entry No. 5-1.
l3See 24 Hour Courtesy Notice to Vacate, Exhibit D to Original
Petition, Exhibit B to Notice of Removal, Docket Entry No. 1-1,
p. 46.
140riginal Petition,
Entry No. 1-1, p. 2.

Exhibit B to Notice of Removal,
-3-

Docket

restraining order enjoining Defendants from pursuing a writ of
possession against Campbell's Property.15

Campbell and DLJ entered

into a Rule 11 Agreement on September 9, 2014, agreeing that DLJ
would not execute its writ of possession for 30 days.16

DLJ removed

the action to this court on October 1, 2014,17 and it filed a Motion
to Dismiss the same day.18 Campbell filed his response on December
10, 2014. 19
II.
A motion

to

dismiss

Procedure 12(b) (6)

Applicable Law
pursuant

to

Federal

Rule

of

Civil

for failure to state a claim for which relief

may be granted tests the formal sufficiency of the pleadings and is
"appropriate when a defendant attacks the complaint because it
fails

to

state

a

legally

cognizable

claim."

United States, 281 F.3d 158, 161 (5th Cir. 2001).

Ramming

v.

The court must

accept the factual allegations of the complaint as true, view them

15Temporary Restraining Order & Order Setting Hearing for
Preliminary Injunction, Exhibit C to Notice of Removal, Docket
Entry No. 1-1, pp. 53-54.
16Letter from Jonathan M. Williams to Jeffrey S. Kelly
(Sept. 9, 2014), Exhibi t F to Notice of Removal, Docket Entry
No. 1-1, p. 62.
17Notice of Removal, Docket Entry No.1.
18Motion to Dismiss, Docket Entry NO.5.
19P1aintiff's Response to Defendants Motion
("Plaintiff's Response"), Docket Entry No. 10.
-4-

to

Dismiss

in a light most favorable to the plaintiff, and draw all reasonable
inferences in the plaintiff's favor.

Id.

"When a federal court reviews the sufficiency of a
complaint, before the reception of any evidence either by
affidavit or admissions, its task is necessarily a
limited one. The issue is not whether a plaintiff will
ultimately prevail but whether the claimant is entitled
to offer evidence to support the claims."
Swierkiewicz v. Sorema N.A., 122 S. Ct. 992,

997

Scheuer

(1974)).

v.

Rhodes,

94

S.

Ct.

1683,

1686

(2002)

(quoting
To

avoid

dismissal a plaintiff must allege "enough facts to state a claim to
Bell Atlantic Corp. v.

relief that is plausible on its face."
Twombly, 127 S. Ct. 1955, 1974 (2007).

Plausibility requires "more

than an unadorned, the-defendant-unlawfully-harmed-me accusation."
Ashcroft v.

Iqbal,

129 S.

Ct.

1937,

1949

(2009).

"A claim has

facial plausibility when the plaintiff pleads factual content that
allows

the

court

to

draw

the

reasonable

inference

defendant is liable for the misconduct alleged."
complaint

pleads

defendant's

liability,

possibility and

The

allegations,

it

stops

court

will

merely
short

factual

Id.

of

the
to

the

"Where a

consistent

entitlement

"'not

line

with

a

between

relief."

Id.

(internal quotation marks

accept

as

true

inferences,

Ferrer v. Chevron Corp.,

(quoting Plotkin v.

(5th Cir. 2005)).

are

127 S. Ct. at 1966)

unwarranted

conclusions.'"
Cir. 2007)

that

plausibility of

(quoting Twombly,
omitted) .

facts

that

conclusory
or

484 F.3d 776,

IP Axess Inc.,

legal
780

407 F. 3d 690,

(5th
696

"[D] ismissal is proper if the complaint lacks an
-5-

allegation
relief."

regarding

a

required

element

necessary

to

obtain

Torch Liquidating Trust ex reI. Bridge Assocs. L.L.C. v.

Stockstill, 561 F.3d 377, 384 (5th Cir. 2009).
When considering a motion to dismiss courts are generally
"limited to the complaint, any documents attached to the complaint,
and any documents

attached

to

the motion

to dismiss

central to the claim and referenced by the complaint."

that

are

Lone Star

Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th
Cir. 2010)

(citing Collins v. Morgan Stanley Dean Witter, 224 F.3d

496, 498-99 (5th Cir. 2000)).

In addition, "it is clearly proper

in deciding a 12(b) (6) motion to take judicial notice of matters of
public record."
Cir. 2007)
Cir.1994))

Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th

(citing Cinel v. Connick, 15 F.3d 1338, 1343 n.6

(5th

When a party presents "matters outside the pleadings"

wi th a Rule 12 (b) (6)

motion tq dismiss,

the court has "complete

discretion" to either accept or exclude the evidence for purposes
of the motion to dismiss.

Isquith ex reI. Isquith v. Middle South

Utilities, Inc., 847 F.2d 186, 194 n.3

(5th Cir. 1988).

However,

"[i]f . . . matters outside the pleadings are presented to and not
excluded by the

court,

the motion must

be

treated as one

for

summary judgment under Rule 56" and "all parties must be given a
reasonable

opportunity

pertinent to the motion."

to

present

all

the

material

is

Fed. R. Civ. P. 12(d).

Plaintiff has attached copies of the Note,
Assignment,

that

and other documents to his Original
-6-

Deed of Trust,
Petition.

"A

written document that is attached to a complaint as an exhibit is
considered

part

of

the

complaint

12 (b) (6) dismissal proceeding./I
at

Accordingly,

780.

the

and

may

be

considered

in

a

Ferrer v. Chevron Corp., 484 F.3d

court

may

consider

these

documents

without converting the motion to dismiss to a motion for summary
judgment.
III.
A.

Analysis

Claims based on invalidity of assignment and lack of
standing to foreclose.
Campbell argues that DLJ lacked standing to foreclose because

its security interest was void and DLJ was in violation of the
terms of the Deed of Trust. 2o

He therefore seeks declaratory and

injunctive relief,21 and he has asserted claims for trespass to try
title and to remove cloud and quiet title. 22

Campbell also makes

some reference to lack of standing to foreclose in support of his
claims

for

breach

of

contract, 23

tortious

interference

with

contract,24 fraud, 25 and violations of the Texas Debt Collection

20 See Original Petition, Exhibit B to Notice of Removal, p. 8
~24.

22See id. at 9-10

~26

23See Plaintiff's Response, Docket Entry No. 10, p. 10

~24.

24See Original Petition, Exhibit B to Notice of Removal, Docket
Entry No. 1-1, p. 11 ~30.
25See id. at 11 ~31, 13 ~32i Plaintiff's Response, Docket Entry
No. 10, pp. 10 ~24, 14 ~29.
-7-

Practices Act
("DTPA") . 27

("TDCPA") 26 and Texas Deceptive Trade Practices Act
To the extent that Campbell's claims are based on

DLJ's alleged lack of standing to foreclose, they fail as a matter
of law and will be dismissed.
As Campbell states in his Response, "[t] he crux of Plaintiffs'
claim is that none of the defendants can show a proper chain of
title to establish a right to foreclose under the Texas Property
Code as mortgagee or mortgage servicer. ,,28

Campbell has not pleaded

facts sufficient to support this claim, and the documents attached
to his Original Petition support the opposite conclusion: at the
time of foreclosure, DLJ was the current mortgagee and, as such,
had standing to foreclose under the Texas Property Code.
Campbell signed a Note in favor of Bravo Credit. 29
was secured by a Deed of Trust that identified the
Bravo

Credit

and MERS

as

"a nominee

for

Lender"

The Note

"Lender" as
and

as

"the

26See Original Petition, Exhibit B to Notice of Removal, Docket
Entry No. 1-1, p. 14 ~34.
27See id. at 15 ~39i see also Plaintiff's Response, Docket
Entry No. 10, p. 10 ~24 ("Defendant, fully knowing they lacked said
right but ignoring same, tortuously [sic] interfered with a
contract, breached contract, and committed fraud by moving forward
with an attempted non-judicial foreclosure.")
28Plaintiff's Response, Docket Entry No. 10, p. 6

~17.

290riginal Petition, Exhibit B to Notice of Removal, Docket
Entry No. 1-1, p. 3 ~9i Texas Home Equity Note, Exhibit A-1 to
Original Petition, Exhibit B to Notice of Removal, Docket Entry No.
1-1, pp. 18, 21.
-8-

beneficiary under this Security Instrument. ,,30 MERS, as nominee for
Bravo Credit,

assigned the Deed of Trust

to defendant DLJ and

recorded the assignment with the Harris County Clerk. 31 As the last
party of record to whom the security interest was assigned, DLJ was
a

"mortgagee"

and had

authority

Property Code.

See Tex.

Mortg.,

737

L.L.C.,

Prop.

F.3d 338,

to
Code

342

foreclose
§

under

51.0001i

(5th Cir.

the

Farkas v.

2013).

Texas
GMAC

DLJ also

appears to have been in possession of the Note, indorsed in blank. 32

30Texas Home Equity Security Instrument, Exhibit A-2 to
Original Petition, Exhibit B to Notice of Removal, Docket Entry
No. 1-1, pp. 23, 24.
3lOriginal Petition, Exhibit A-2 to Notice of Removal, p. 4
Assignment of Deed of Trust, Exhibit C to Original Petition,
Exhibit A-2 to Notice of Removal, Docket Entry No. 1-1, pp. 43-44.
Campell appears to argue in his Response that the assignment should
be disregarded because it was not recorded.
See Plaintiff's
Response, Docket Entry No. 10, p. 9 ~22. This is directly refuted
by the recorded assignment Campbell attached to his Original
Petition and Campbell's assertion in the Original Petition that
MERS "filed" the assignment. See Original Petition, Exhibit A-2 to
Notice of Removal, Docket Entry No. 1-1, p. 4 ~11.
~lli

32See Texas Home Equity Note, Exhibit ,A-1 to Original Petition,
Exhibit B to Notice of Removal, Docket Entry No. 1-1, p. 22.
A
footnote in Campbell's Response suggests that DLJ was not entitled
to enforce the note because it was indorsed in blank, and "[t]his
amounts to a Judicial Admission that [] Defendant DLJ did not have
standing to conduct the foreclosure."
Docket Entry No. 10, p. 1
n.1. Notwithstanding Campbell's novel interpretation of the Texas
Business and Commerce Code, see Whittier v. Ocwen Loan Servicing,
L.L.C., No. 13-20639, 2014 WL 6791382, at *2 (5th Cir. Dec. 3,
2014) ("Under Texas law, a bank in possession of a note indorsed in
blank is entitled to collect on it."), whether or not DLJ was
entitled to enforce the note is irrelevant, see Martins V. BAC Home
Loans Servicing, L.P., 722 F.3d 249, 255
(5th Cir. 2013).
Campbell's argument is without merit.
-9-

In his Original Petition, Campbell alleges that the Assignment
to DLJ by MERS is "bogus and ineffective" because in the Deed of
Trust

"MERS

nominee. "33

is

not

listed nor defined

as

the

Lender

nor

its

This is directly controverted by the copy of the Deed

of Trust attached to Campbell's Original Petition. 34
states that

Campbell also

"the assignment was prepared and filed by Brown

&

Associates a foreclosure mill."35

This is not factual content that

allows

reasonable

the

court

to

draw

the

inference

that

the

assignment is somehow ineffective or void.
In his Response, Campbell argues that "Defendant MERS does not
have power or authority to be a holder and/or owner of Plaintiffs'
mortgage,
it. "36

let alone have the authority to assign an interest in

Campbell cites a District Court case from New York,37 but

ignores controlling authority to the contrary.

The Fifth Circuit

has held that assignments of mortgages through MERS are valid and
enforceable under Texas law. Singha v. BAC Home Loans Servicing,

330 r iginal Petition, Exhibit A-2 to Notice of Removal, Docket
Entry No. 1-1, p. 4 ~12.

34That the Deed of Trust does not create a def ined term
"Nominee" does not negate its specifications that MERS is acting
"as a nominee for Lender" and that "MERS is the beneficiary under
this Security Instrument."
See Texas Home Equity Security
Instrument, Exhibit A-2 to Original Petition, Exhibit B to Notice
of Removal, Docket Entry No. 1-1, p. 24.
35Id.
36Plaintiff's Response, Docket Entry No. 10, p. 7
37See id. at 7 n.1l.
-10-

~18.

L.P., 564 Fed. App'x 65, 68 (5th Cir. 2014)

(citing Martins v. BAC

Home Loans Servicing, L.P.,

253

722 F.3d 249,

(5th Cir.

2013)).

Furthermore, Campbell lacks standing to challenge the validity of
the

Assignment

because

he

has

pleaded no

facts

supporting

an

inference that he was an intended third-party beneficiary of the
Assignment.
Co.,

735

See id.

F.3d

(citing Reinagel v. Deutsche Bank Nat'l Trust

220,

228

(5th

Cir.

As

2013)).

such,

all

of

Campbell's claims based on the invalidity of the Assignment and
DLJ's lack of standing to foreclose fail as a matter of law.
B.

Wrongful Foreclosure

Campbell's Original Petition states that Campbell is pursuing
a cause of action for wrongful foreclosure, but it does not recite
the elements of such a claim or connect them to facts alleged in
the Petition. 38
are

"(i)

a

The elements of a claim for wrongful foreclosure

defect

in the foreclosure

grossly inadequate selling price; and
between the

defect

sale proceedings;
(iii)

(ii)

a

a causal connection

and the grossly inadequate

selling price."

Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th
Cir. 2013)

(internal quotation marks and citation omitted).

neither party has
Campbell

makes

addressed

some

these

reference

to

38See Original Petition, Exhibit
Entry No. I-I, p. 6 ~19a; see also
Entry No. 10, p. 6 n.10 ("Plaintiff
throughout its petition as wrongful
-11-

elements

While

in their briefing,

defective

notice

prior

to

B to Notice of Removal, Docket
Plaintiff's Response, Docket
has properly pled said claims
foreclosure.
.") .

foreclosure in his Original Petition. 39
alleged

a

grossly

inadequate

selling

supporting an inference of causation.

However,
price

he has neither

nor

pleaded

facts

Campbell has therefore not

pleaded a plausible claim for wrongful foreclosure under Texas law.
C.

Breach of Contract
Campbell's

Original

Petition

provides

only

a

formulaic

recitation of the elements of a breach of contract claim and is
therefore

insufficient

to

state a

claim for

relief. 40

In his

Response, Campbell states: "If Plaintiff had a valid contract with
Defendant DLJ then it was breached by Defendant DLJ when they moved
to wrongfully foreclose on the Plaintiff and violated paragraphs 21
and 18 of [the Deed of Trust], the valid contract Plaintiff signed
with Defendant Bravo. 1141

As discussed above, Campbell's arguments

based on DLJ's standing to foreclose

fail

as a matter of law.

Campbell's Response does not illuminate how facts pleaded in the
Original
contract.

Petition

otherwise

make

out

a

claim

for

breach

of

Campbell has not pleaded a plausible claim for breach of

contract.

39See Original Petition, Exhibit B to Notice of Removal, Docket
Entry No. I-I, p. 4 ~~13-14.
40See id. at 9

~27.

41Plaintiff's Response, Docket Entry No. 10, pp. 10-11
-12-

~25.

D.

Claims based on alleged statements about loan modification.
Campbell's Original Petition states that "Plaintiff contacted

Lender and requested a modification or some sort of an arrangement
so

as

to

"Lender's
payments,"

reduce

his

payments

representatives
which

Campbell

told

during

his

Plaintiff

did. 42

In

illness, "
to

his

just

and

stop

Response,

that

making

Campbell

characterizes this exchange as "a representation that the Plaintiff
would qualify for a loan modification," and that "Plaintiff would
not be required to make payments while he was undergoing cancer
treatments.

1143

Based on these factual allegations, Campbell asserts

causes of action for negligent misrepresentation, fraud, promissory
estoppel, and violation of the DTPA.
As a threshold issue, it is not clear who Campbell is accusing
of making misrepresentations about modifying his loan.

Campbell's

Original Petition defines "Lender" in the above factual allegations
as Bravo, not DLJ. 44

The Original Petition also seems to suggest

that the Deed of Trust was assigned to DLJ after Campbell stopped
making payments,

though this is not clear. 45

However, Campbell's

claims for negligent misrepresentation, fraud, promissory estoppel,

420riginal Petition, Exhibit B to Notice of Removal,
Entry No. I-I, p. 4 ~ 10.
43Plaintiff's Response, Docket Entry No. la, p. 15

Docket

~31.

44See Original Petition, Exhibit B to Notice of Removal, Docket
Entry No. I-I, p. 3 ~9.
45See id. at 4

~~10-11.

-13-

and

violation

"Defendants. ,,46

of

the

DTPA

refer

generally

In its Motion to Dismiss,

to

"Defendant"

or

DLJ has treated these

factual allegations as though they pertained to representations by
DLJ. 47

Campbell's Response also attributes these representations

to DLJ, 48 even though the "Facts" section of the Response attributes
the representations to "Lender," defined as "Bravo Credit.,,49
For purposes of ruling on DLJ's Motion to Dismiss, the court
will assume that these allegations pertain to DLJ.

Even if Bravo

were properly joined as a defendant, the court would have applied
the same analysis and reached the same conclusion: Campbell has
failed

to

plead plausible

claims

for

relief

based on alleged

misrepresentations about modifying his loan.50
1.

Negligent Misrepresentation

Campbell's claim for negligent misrepresentation fails because
"' [aJ promise to act or not in the future cannot form the basis of
a negligent misrepresentation claim.'" Bancroft Life & Cas.

ICC,

Ltd. v. GRBR Ventures, L.P., No. H-12-2252, 2014 WL 1322984 (S.D.

46See id. at 10 ,29, 12 ,31, 13 ,33, 15 ,39.
47See Motion to Dismiss, Docket Entry No.5, pp.

14 ,33,

16

48See Plaintiff's Response, Docket Entry No. 10, pp. 13 ,27,
15 '31

50To the extent that claims for relief addressed in this
section are premised on DLJ's alleged lack of standing to
foreclose, those claims fail for the reasons discussed in Section
III.B above.
-14-

Tex.

Mar.

31,

2014)

{quoting Roof Sys ..

Inc.

v.

Johns Manville

Corp., 130 S.W.3d 430,439 (Tex. App.-Houston [14th Dist.] 2004, no
pet.))

see also James v. Wells Fargo Bank. N.A., 533 Fed. App'x

i

444, 448 (5th Cir. 2013).

"The false information complained of in

a negligent-misrepresentation claim 'must be a misstatement of an
existing

fact

rather

than

a

promise

of

future

conduct.'"

DeFranceschi v. Wells Fargo Bank. N.A., 837 F. Supp. 2d 616, 625
(N.D. Tex. 2011)

{quoting Scherer v. Angell, 253 S.W.3d 777,781

(Tex. App.-Amarillo 2007, no pet.)), aff'd, 477 Fed. Appx. 200 (5th
Cir. 2012).
in

the

"[A] promise to modify [a] note and delay foreclosure

future

is

not

a

statement

of

existing

fact."

Id.

Campbell's negligent misrepresentation claim therefore fails as a
matter of law.
2.

Fraud

Campbell titles his fraud claim "Statutory Fraud/Fraud in Real
Estate," but he both refers to statutory fraud under Tex. Bus. &
Com.

Code.

§

27.01{a) (2)

and recites the elements of common law

fraud as articulated by the Texas Supreme Court. 51

Campbell's

Response seems to suggest that the statutory fraud claim pertains
to alleged statements about loan modification, while the common law
fraud claim pertains to DLJ's lack of standing to foreclose.

52

To

the extent that any of Campbell's claims are based on his lack-of51 See Original Petition, Exhibit B to Notice of Removal, Docket
Entry No. 1-1, pp. 11-12 ~~31-32.

52

See Plaintiff's Response,

Docket Entry No.

~~28-29.

-15-

10, pp.

13-14

standing allegations addressed above, they fail as a matter of law.
To the extent that Campbell's fraud claims are based on alleged
promises

or misrepresentations

surrounding modification of

his

loan, Campbell fails to make out a plausible claim for relief under
the

heightened

pleading

standards

of

Federal

Rule

of

Civil

Procedure 9(b).
Under Rule 9(b)
circumstances

a complaint must "state with particularity"

alleged

to

constitute

"This

fraud.

Circuit's

precedent interprets Rule 9(b) strictly, requiring the plaintiff to
specify the statements contended to be fraudulent,

identify the

speaker, state when and where the statements were made, and explain
why the statements were fraudulent."

Flaherty

&

Crumrine Preferred

Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009)
(internal quotation marks and citation omitted).

"At a minimum,

Rule 9(b) requires that a plaintiff set forth the 'who, what, when,
where, and how'

of the alleged fraud."

Chern. Co., 343 F.3d 325, 328

U.s. ex rel. Doe v. Dow

(5th Cir. 2003)

(internal quotation

marks and citation omitted) .
The
§

elements

27.01(a)(2)

promise

is

fraud

under

Tex.

Bus.

& Com. Code

are a "false promise to do an act, when the false

(A)

fulfilling it;

of

material;
(C)

(B)

made

with

the

intention

of

not

made to a person for the purpose of inducing

that person to enter into a contract; and
person in entering into that contract."

-16-

(D)

relied on by that

The

elements

of

common

law

fraud

in

Texas

are

"( 1)

the

defendant made a material misrepresentation; (2) the defendant knew
the representation was false or made the representation recklessly
wi thout any knowledge of its truth;

(3)

the defendant made the

representation with the intent that the other party would act on
that representation or intended to induce the party's reliance on
the representation; and

(4)

the plaintiff suffered an injury by

actively and justifiably relying on that representation."

Exxon

Corp. v. Emerald Oil & Gas Co., L.C.,

(Tex.

348 S.W.3d 194,

217

2011) .
Campbell alleges that "Lender's representatives told Plaintiff
to just stop making payments," which Campbell did. 53

Since it is

unclear which defendant is even being accused of fraud,

Campbell

has failed to set forth the who, what, when, where, and how of his
claim.

Furthermore, Campbell fails to either identify an alleged

promise that was meant to induce him into entering a contract or to
specify

why

the

alleged

statement

was

a

misrepresentation.

Campbell alleges, more generally, that Defendants "made numerous
material false promises with the intention not to fulfill and made
with purpose
thereby

to

lulling

induce

the

Plaintiff

plaintiff
into

to

default

stop making payments
so

Defendants

530riginal Petition, Exhibit B to Notice of Removal,
Entry No.1-I, p. 4 ~ 10.
-17-

could

Docket

foreclose to Plaintiff's detriment."54

These allegations fall far

short of meeting the heightened pleading requirements of Rule 9(b),
and Campbell has

failed to plead a plausible claim for either

statutory or common law fraud.
3.

Promissory Estoppel

While primarily a defensive theory,

promissory estoppel is

also a cause of action available to a promisee who has acted to his
detriment in reliance on an otherwise unenforceable promise. Deuley
v.

Chase Home Fin.

(S.D.

Tex.

Palacios,
pet.) .

Apr.

LLC,

26,

No.

2006)

44 S.W.3d 121,

H-05-04253,

2006 WL 1155230,

(citing Ford v.

140

Campbell alleges that

at *4

City State Bank of

(Tex. App.-Corpus Christi 2001,

no

"Defendant representative made a

promise to allow Plaintiff to stop making payments during his
illness," that it was foreseeable that Campbell would rely on this
promise, and that Campbell did rely, to his detriment. 55
Nevertheless, under Texas law, an agreement to modify a loan
of more than $50,000 is subject to the statute of frauds and must
be in writing to be valid.
Com.

Code

§

26.02.

Martins, 722 F.3d at 256; see Tex. Bus.

"Promissory

estoppel

may

overcome

the

statute-of-frauds requirement in Texas, but there must have been a
promise to sign a written contract which had been prepared and
which would satisfy the requirements of the statute of frauds."

54Id. at 12

~31.

55Id. at 13

~33.

-18-

Martins, 722 F.3d at 256
Thus,

omitted) .

(internal quotation marks and citation

"to succeed on a promissory estoppel claim,

a

plaintiff must introduce evidence demonstrating that a defendant
promised to reduce a modification to a writing that would comply
Whittier v. Ocwen Loan Servicing,

with the Statute of Frauds."
L.L.C.,

No.

2014) .
reduce

13-20639,

2014 WL 6791382,

at *4

(5th Cir.

Dec.

3,

Because Campbell has not alleged that DLJ promised to
to

writing

an

agreement

allowing

him

to

stop

making

payments, Campbell fails to plead a plausible claim for promissory
estoppel.
Campbell

argues

that

"[t]he

loan

modifications

DLJ

and

Plaintiff contemplated [were] non-material and not subject to the
statute

of

frauds

because

the

parties

merely

contemplated

an

extension of time for Plaintiff to make principal and interest
payments under the note. "56

It is true that "[a] n exception to the

requirement that oral modifications of certain contracts be in
writing may arise when the parties to a written contract
orally to extend the time of performance,

'agree

so long as the oral

agreement is made before the expiration of the written contract.'"
Deuley,

2006

Properties,

WL

1155230,

at

*2

(quoting

Ltd. v. Norwest Bank Texas, N.A.,

(Tex. App.-Corpus Christi 1999, pet. denied).

Triton

Commercial

1 S.W.3d 814,

818

However, the Texas

statute of frauds applies to agreements "to loan or delay repayment

56Plaintiff's Response, Docket Entry No. 10, p. 13
-19-

~27.

of money."

Tex. Bus. & Com. Code

§

26.02(a) (2)

(emphasis added).

Thus, forbearance agreements are subject to the statute of frauds.
Langlois v. Wells Fargo Bank Nat. Assln, 581 Fed. App'x 421, 425
(5th

Cir.

2014);

see

:::.J-'=o:.,:.h=n=s"-o=n'--_v:o....:,...._....;:C::.,:l:::..·t=i::....:M=o;...:r'-'t:::..g~a=.;.lg-=e'-',_-=I=n=c~. ,

a I so

No. 3:14-CV-1794-M-BH, 2015 WL 269970, at *4
2015)

(N.D. Tex. Jan. 21,

("Any oral agreement to delay foreclosure

is a material

al teration of the deed of trust because an agreement to delay
repayment falls under the statute of frauds.")

Campbell's argument

is without merit, and his promissory estoppel claim is subject to
the statute of frauds.
4.

DTPA

Campbell

alleges

that

"Defendants"

Deceptive Trade Practices Act

("DTPA")

violated

the

Texas

by making deliberate and

intentional misrepresentations and by violating the Texas Debt
Collection Practices Act ("TDCPA"), which is a tie-in statute for
the

DTPA.

However,

because

Campbell

is

not

a

"consumer"

as

required by the DTPA his claims fail as a matter of law.
"The elements of a DTPA claim are:
consumer,

(2)

the

defendant

engaged

'(1)

in

the plaintiff is a

false,

misleading,

or

deceptive acts, and (3) these acts constituted a producing cause of
the consumer's damages.'"
No. H-12-2847,

Felchak v. JP Morgan Chase Bank, N.A.,

2013 WL 1966972, at *3

(S.D.

Tex. May 10,2013)

(quoting Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472,
478

(Tex. 1995)).

"To be a

'consumer' under the DTPA, a person

-20-

'must seek or acquire goods or services by lease or purchase' and
'the goods or services sought or acquired must form the basis of
[that person's]

complaint.'"

Id.

(quoting Fix v. Flagstar Bank,

FSB, 242 S.W.3d 147, 159 (Tex. App.-Fort Worth 2007, pet. denied)).
"Usually a loan transaction cannot be challenged under the DTPA
because the plaintiff sought or acquired money, which is not a good
or a service."
3095,

Whittier v. Ocwen Loan Servicing, LLC, No. H-12-

2013 WL 5425294,

at *7

(S.D.

Tex.

Sept.

25,

2013)

No. 13-20639, 2014 WL 6791382 (5th Cir. Dec. 3, 2014)

aff'd,

"A mortgage

loan is not within the DTPA when the loan, rather than the property
sought to be purchased, is the basis of the plaintiff's complaint."
Id.

(citing Miller, 726 F.3d 717, 725-26 (5th Cir. 2013).
Campbell argues that, as a home buyer, he is a "consumer" for

DTPA purchases because "Defendants, being a mortgage company and/or
lender,

are

home. ,,57

inextricably intertwined with

While·a home buyer may,

qualify as

a

purchase of a
[Defendant's]

consumer,
home

he

forms

"must

the basis of

alleged violations of
[Plaintiff]

Chase Home Fin. LLC,

4:11-CV-01250,

Tex.

Jan.

II,

2012)

(internal

of

demonstrate
his

[that]

complaint

his

and that

the DTPA arose out of

purchased the home."
2012 WL 112597,

quotation

marks

at *7

and

57Plaintiff's Response, Docket Entry No. 10, p. 14

the

Yetiv v.
(S.D.

citations

omitted) .

-21-

the

under certain circumstances,
still

transaction in which

the purchase

~30.

Here, Campbell's DTPA claim "is not premised on any deceptive
act related to the past original loan transaction."
Wells Fargo Bank, N.A., No.

6-11-CV-47,

See Davis v.

2013 WL 5488448,

at *13

(S.D. Tex. Sept. 30, 2013), on reconsideration, No. 6:11-CV-00047,
2014

WL

585403

"complain[s]

(S. D.

of

Tex.

'acts

Feb.

occurring

foreclosure

purchasing objective."

Instead,

years

after
loan

that

acti vi ties

2014).

subsequent

Defendants'

transaction'

14,

See id.

are

financing

servicing

incidental

to

the

and

original

(quoting Gatling v. CitiMortgage,

Inc., No. H-11-2879, 2012 WL 3756581, at *13
2012)).

the

Campbell

Such claims do not give

(S.D. Tex. Aug. 28,

rise to DTPA liabil ty.

Miller, 726 F.3d 717, 725 (5th Cir. 2013)

(holding that plaintiffs

were not consumers because their DTPA claim was "based entirely on
their attempted modification of [the] loan")
Am.,

N.A.,

No.

Oct. 16, 2013)
and

H-12-3422,

status

as

WL

5657822,

and not

at

*5

(S.D.

the property for which the

plaintiff has not created a
a

consumer. ")

("[Plaintiff's]
[Defendant's]

Hutchinson v. Bank of
Tex.

("Because the basis of plaintiff's claim is the loan

foreclosure,

acquired,

2013

i

DTPA

i

Gatling,

claim,

fact

2012

however,

loan was

question as to his
WL

is

3756581,
not

at

premised

*13
on

allegedly deceptive acts 'related to financing the

purchase of [Plaintiff's] house, but rather,

[Plaintiff] complains

the Bank wrongfully foreclosed on [Plaintiff's] property.'
The DTPA does not apply to such a claim. ").

-22-

Because the basis of

Campbell's
activities,

claim

is

subsequent

loan

servicing

rather than the goods or services

and

foreclosure

acquired in the

original loan transaction, he is not a consumer under the DTPA, and
his claim fails as a matter of law.
D.

TDCPA

In his Original Petition, Campbell alleges that "Defendant is
in violation of the Texas Debt Collection Practices Act (TDCPA) in
that they allowed and authorized a third party debt collector to
violate the TDCPA despite the fact that Defendant has no standing
or authority to collect the indebtedness evidence by the note or to
act on behalf of the holder and owner thereof.n58
to which defendant this allegation pertains.

It is not clear

Campbell concludes

this section of his Petition by stating "Defendant PlainsCapital
instructed and allowed a Debt Collector to violate the TDCPA. n59
PlainsCapital

is

not

a

defendant

in

this

action.

Equally

perplexing, Campbell devotes four full paragraphs to the argument
that

"Defendant

cannot

claim attorney

applying to their firm.n60
a law firm.

immunity

from

the

TDCPA

None of the defendants in this case is

Campbell has not pleaded any factual content that

allows for a reasonable inference that any defendant in this case

580riginal Petition, Exhibit B to Notice of Removal,
Entry No. I-I, p. 14 ~34.
59Id. at 15

~38.

60See id. at 14-15

~~35-38.

-23-

Docket

Perhaps recognizing this,

is liable for the misconduct alleged.
Campbell

has

not

addressed

the

TDCPA

claim

in

his

Response.

Campbell has not pleaded a plausible claim for relief under the
TDCPA.
III.

For

the

Campbell has
granted.

reasons

Conclusions and Order

stated

above,

failed to state a

Accordingly,

the

court

concludes

claim for which relief

Defendant

DLJ Mortgage

Motion to Dismiss (Docket Entry No.5)

Capital,

that

can be
Inc.' s

is GRANTED and Campbell's

claims against DLJ will be dismissed with prejudice.

SIGNED at Houston, Texas, this 5th day of February, 2015.

SIM LAKE
UNITED STATES DISTRICT JUDGE
:7

-24-