Avila et al v. J.P. Morgan Chase Bank
Filing
8
MEMORANDUM OPINION AND ORDER granting 5 MOTION to Dismiss and Brief in Support. (Signed by Judge Sim Lake) Parties notified. (cfelchak, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JUAN M. AVILA and
ESBEIDE FLORES AVILA,
§
§
§
§
§
§
§
§
§
§
Plaintiffs,
v.
JPMORGAN CHASE BANK, N.A.,
Defendant.
CIVIL ACTION NO. H-14-3502
MEMORANDUM OPINION AND ORDER
Plaintiffs
Juan
M.
Avila
and
Esbeide
Flores
("Plaintiffs") sued Defendant JPMorgan Chase Bank, N.A.,
or "Defendant")
Texas,
Avila
("Chase"
in the 333rd District Court for Harris County,
under Cause No.
2014-69878. 1
Defendant timely removed. 2
Pending before the court is Defendant's Motion to Dismiss and Brief
in Support
reasons
("Motion to Dismiss")
stated
below,
(Docket Entry No.5) .
Defendant's
Motion
to
Dismiss
For the
will
be
granted, and this action will be dismissed with prejudice.
I .
Background
Plaintiffs purchased a house in 2006 and executed a note that
eventually was transferred to Defendant Chase. 3
In 2013 Plaintiffs
1See Plaintiff's Original Petition and Application for
Temporary Restraining and Injunctive Relief ("Original Petition"),
Exhibit A-3 to Defendant's Notice of Removal, Docket Entry No.1-I.
2See Defendant's Notice of
Docket Entry No.1.
Removal
("Notice of
Removal"),
30 r iginal Petition, Exhibit A-3 to Notice of Removal, Docket
Entry No.1-I, p. 13.
sought to modify their loan.4
In April of 2014 Chase sought to
foreclose on Plaintiffs' property, and Plaintiffs brought suit in
state court. 5
That state court suit was dismissed with prejudice
on motion of the Defendant on June 4, 2014. 6
Plaintiff Juan Avila
then filed a petition for Chapter 13 bankruptcy. 7
Plaintiff's
Bankruptcy case was dismissed for failure to file information on
September 18,
2014. 8
December 1, 2014. 9
Plaintiffs then filed the present case on
Defendant removed, and the case was assigned to
the undersigned judge. 1o
Plaintiffs assert two causes of action not
4Id.
5Id. at 14
~
5.9.
In their Original Petition in this case Plaintiffs
state, apparently incorrectly, that the original state court
matter, the cause number of which they do not specify, was
voluntarily dismissed because "there was an agreement between
Defendant Chase [and] counsel for Plaintiff to resume negotiations
between the parties concerning a loan modification.
See id. at 14
~ 5.10.
Defendant has provided publicly available records from a
prior lawsuit between the parties, filed by Plaintiffs on March 31,
2014, in the 80th District Court of Harris County, Texas, under
Cause No. 2014-17503. See Exhibit A to Motion to Dismiss, Docket
Entry No. 5-1. That case, in which Plaintiffs alleged violations
of the Texas Property Code, the Texas Finance Code, and the DTPA,
as well as Breach of Contract,
Wrongful Foreclosure,
and
Negligence, was dismissed with prejudice on motion of the
Defendant. See Order, Exhibit A to Motion to Dismiss, Docket Entry
No.5-I, p. 62.
6Id.
II
7See Docket Report, Case No. 14-34897, Exhibit B to Motion to
Dismiss, Docket Entry No. 5-2.
9See Harris County Docket Sheet,
Removal, Docket Entry No.1-I, p. 6.
Exhibit A-2
lOSee Notice of Removal, Docket Entry NO.1.
-2-
to Notice of
asserted
in
their
prior
misrepresentation for
state
failing
court
negligent
suit:
to identify all
possible workout
options and violation of the Real Estate Settlement Procedures Act
( "RESPA" )
for
plaintiffs. ll
failing
to
provide
sufficient
Chase has moved to dismiss
information
Plaintiffs'
to
Original
Petition for failure to state a plausible claim for relief.
II.
A.
Motions to Dismiss Under Rule 12(b) (6)
Standard of Review
A motion
to
dismiss
Procedure 12(b) (6)
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
legally
to
state
a
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
in a light most favorable to the plaintiff, and draw all reasonable
inferences in the plaintiff's favor.
rd.
"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 v.
(1974)).
Rhodes,
94
S.
Ct.
llSee Original Petition,
Docket Entry No. 1-1.
1683,
1686
Exhibit A-3
-3-
(2002)
(quoting
To
avoid
to Notice of Removal,
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
facts
liability,
that
it
are
stops
possibility and plausibility of
(quoting Twombly,
omitted).
The
allegations,
Cir. 2007)
court
"'not
of
the
the
"Where a
with
line
between
relief."
to
a
Id.
(internal quotation marks
accept
factual
Id.
consistent
entitlement
as
true
inferences,
Ferrer v. Chevron Corp.,
(5th Cir. 2005)).
relief."
will
(quoting Plotkin v.
allegation
short
127 S. Ct. at 1966)
unwarranted
conclusions.'"
merely
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
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
-4-
Cir. 2010)
496,
(citing Collins v. Morgan Stanley Dean Witter, 224 F.3d
498-~9
(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)
Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th
(citing Cinel v. Connick, 15 F.3d 1338, 1343 n.6
(5th
Cir. 1994))
B.
Analysis
Plaintiffs allege that Chase negligently misrepresented the
available
workout
options
for
Plaintiffs'
loan and
that
Chase
violated RESPA by failing to provide accurate information regarding
loss mitigation options or the reasons for Chase's determinations
about Plaintiffs' request for loan modification.
Chase argues that
Plaintiffs have not pleaded facts sufficient to state a claim for
either
negligent
misrepresentation
or
violations
of
RESPA.
Plaintiffs filed a Response, but it is not directly responsive to
Defendant's motion, addresses claims not pleaded in this case, and
appears to be based,
in part,
on Plaintiffs'
action, which was dismissed with prejudice. 12
the court is persuaded that Plaintiffs'
prior state court
As discussed below,
complaint in this case
fails to state a plausible claim for relief.
12See Plaintiff's Response to Defendant's 12 (b) Motion to Dismiss
("Plaintiffs' Response"), Docket Entry No.6, pp. 7-13
(addressing
claims for violations of the Texas Property Code and breach of
contract); id. at 2 ~ 7 (stating that Plaintiffs filed their Original
Petition on March 31, 2014, the date the first state court action was
filed) .
Plaintiffs' Response addresses RESPA violations, but it
merely recites the claims from the Original Petition, quotes the
relevant statutory text, and addresses a statute of limitations
argument not raised by Defendant. See id. at 9-11.
-5-
1.
Negligent Misrepresentation 13
The elements of a claim for negligent misrepresentation under
Texas law are:
"(1) the representation is made by a defendant in
the course of his business, or in a transaction in which he has a
pecuniary interest;
(2) the defendant supplies 'false information'
for the guidance of others in their business; (3) the defendant did
not
exercise
communicating
reasonable
the
care
information;
or
competence
and
(4)
the
in
obtaining
plaintiff
suffers
pecuniary loss by justifiably relying on the representation."
Land Bank Assln of Tyler v.
1991).
Sloane,
825 S.W.2d 439,
or
442
Fed.
(Tex.
A claim for negligent misrepresentation is subject to the
economic loss rule:
Under Texas law, the economic loss rule generally
precludes recovery in tort for economic losses resulting
from the failure of a party to perform under a contract.
A contractual relationship between two parties may create
duties under both contract and tort law, and the acts of
a party may breach duties in tort or contract alone or
simultaneously in both. Tort obligations are in general
obligations that are imposed by law -- apart from and
independent of promises made and therefore apart from the
manifested intention of the parties -- to avoid injury to
others.
If the defendant IS conduct
such as
negligently burning down a house -- would give rise to
liability independent of the fact that a contract exists
13Plaintiffs' first cause of action is captioned "Plaintiffs'
Claim for Negligence," but it cites case law pertaining to, and
pleads the elements of, a claim for negligent misrepresentation.
Even if Plaintiffs' claim was for negligence, "there is little
guiding authority to enlighten [the] court as to whether there is
a recognized duty to conform to a certain standard of conduct that
might:
(a) be owed from a mortgage lender or servicer to its
borrower; and (b) give rise to a negligence claim." In re Thrash,
433 B.R. 585, 596 (Bankr. N.D. Tex. 2010). Nevertheless, "case law
in Texas clearly does not allow a claim for negligence to proceed
where there is only a claim of mere economic damages and/or mental
anguish." Id. at 600.
-6-
between the parties, the plaintiff's claim may also sound
in tort. Conversely, if the defendant's conduct -- such
as failing to publish an advertisement -- would give rise
to liability only because it breaches the parties'
agreement, the plaintiff's claim ordinarily sounds only
in contract.
The nature of the injury most often
determines which duty or duties are breached. When the
injury is only the economic loss to the subject of a
contract itself, the action sounds in contract alone.
Owens
v.
BAC
WL 1345209,
marks,
Home
Loans
at *4
(S.D.
alterations,
Tex. Mar.
and
foreclosure context,
Servicing,
L.P.,
30,
citations
No.
2013)
H-11-2742,
(internal quotation
omitted).
"injuries
2013
In
the
mortgage
such as' loss of title and
damage to credit[] are barred by the economic loss rule because they
are the subject of the mortgage contract with the defendants."
Id.
Plaintiffs allege that "Defendant had a du[t]y to Plaintiffs
to provide all loss mitigation alternatives to foreclosure," but
"represented to Plaintiff that he could apply only for a
Home Affordable Modification Program
alternative,"
neither
and
identify
alternatives
"[t]he
the
to
representation
was
(HAMP)
information was
source
foreclosure
false.
of
a
nor
duty
as
loan workout
false.,,14
to
do
Plaintiffs
provide
explain
Plaintiffs
a
why
not
[M]aking
multiple
Defendant's
allege
facts
supporting an inference that Chase failed to exercise reasonable
care or competence in obtaining or communicating this information.
Plaintiffs
do
not
explain
how
they
relied
on
Defendant's
representation to their detriment.
Additionally, Plaintiffs fail
to overcome the economic loss rule.
Plaintiffs pleaded damages for
l40riginal Petition, Exhibit A-3 to Notice of Removal, Docket
Entry No. I-I, pp. 15-16.
-7-
"clouding the title/slander of title concerning said residence,
harm to credit reputation, credit worthiness, and credit history,
actual damages,
and the value of time lost trying to remedy the
problem against Defendant."15
Because Defendant's alleged duties
to Plaintiff arose out of the contractual relationship between
lender and borrower,16 Plaintiffs cannot recover in tort for the
damages claimed. 17
Plaintiffs have failed to state a plausible
claim for negligent misrepresentation.
2.
RESPA
Plaintiffs claim that Defendant violated RESPA,
§
of
12
u. S. C.
2601, et seq., by (1) failing to provide reasons for the denial
Plaintiffs'
loan
modification
and
(2)
failing
to
provide
accurate information to Plaintiffs for loss mitigation. 18
Section 6 of RESPA, codified at 12 U.S.C.
loan servicer to provide written responses
requests by borrowers.
§
2605 (e),
(k) (1) (C)
§
2605, requires a
to
certain written
A lender or loan
l5Id. at 16.
l6S ee id.
servicer.") .
("Defendant failed to perform its duties as mortgage
l7The same limitation would apply if Plaintiffs had pleaded a
negligence claim. See, e.g., Collier v. Wells Fargo, No. 7:04-CV086-K, 2006 WL 1464170, at *8 (N.D. Tex. May 26, 2006) ("[Because]
[a]ll of Plaintiffs claims . . . arise from the mortgage contracts
between the parties
the economic loss rule applies to bar
Plaintiffs'
claims
for
negligence
and negligent
misrepresentation.") .
l8S ee Original Petition,
Docket Entry No. 1-1, p. 7.
Exhibit A-3
-8-
to Notice of Removal,
servicer who fails to comply with
actual
§
damages
to
2605(f) (1) (A).
the
borrower
§
2605 may be liable for "any
as
a
result
of
the
failure."
Therefore, to survive a motion to dismiss under
Rule 12(b) (6) a plaintiff must allege actual damages resulting from
a violation of
§
2605.
WL 1452413, at *1-2
Ogden v.
PNC Bank,
No.
14-1355,
2015
(10th Cir. Apr. 1, 2015); Akintunji v. Chase
Home Finance, L.L.C., No. H-11-389, 2011 WL 2470709, at *2
(S.D.
Tex. June 20, 2011); see Whittier v. Ocwen Loan Servicing, L.L.C.,
594 F. App' x 833, 836 (5th Cir. 2014)
("To recover, a claimant must
show
from
that
actual
damages
resulted
a
RESPA violation.").
Plaintiffs' Original Petition makes only the conclusory allegation
that
"Defendant
has
violated
several
Plaintiff to suffer actual damages." 19
RESPA procedures
causing
Plaintiffs have failed to
state a plausible claim for relief under RESPA. 2o
19Id. at 18.
Plaintiffs' claims that Defendant violated
12 C.F.R. §§ 1024.35, 1024.39, and 1024.41 appear to be subject to
the same requirement, since those provisions are enforceable, if at
all, under 12 U.S.C. § 2605.
See, e.g., 12 C.F.R. § 1023.41
("A borrower may enforce the provisions of this section pursuant to
section 6 (f) of RESPA.") i Servantes v. Caliber Home Loans, Inc.,
No. 14-CV-13324, 2014 WL 6986414, at *1 (E.D. Mich. Dec. 10, 2014)
(dismissing claims under 12 C.F.R. § 1024.39 because RESPA requires
proof of actual damages) i cf. Christenson v. Citimortgage, Inc.,
No. 12-CV-02600-CMA-KLM, 2014 WL 4637119, at *2-3 (D. Colo.
Sept. 16, 2014)
(concluding that regulatory requirements of
12 C.F.R. § 1024.35 derive from statutory requirements of 12 U.S.C.
§ 2605 (k) (1) (C)) .
At least one court has held that 12 C.F.R.
§ 1024.35, which incorporates violations of § 1024.39, does not
provide a private right of action for damages. See Miller v. HSBC
Bank U. S .A., N .A., No. 13 CIV. 7500, 2015 WL 585589, at *11
(S.D.N.Y. Feb. 11, 2015).
2°Even if Plaintiffs had sufficiently pleaded actual damages,
or if Plaintiffs are not required to under 12 C.F.R. §§ 1024.35,
(continued ... )
-9-
3.
Injunctive Relief
Plaintiffs' Original Petition sought a preliminary injunction
against
To
foreclosure.
the
extent
that
Plaintiffs
seek any
injunctive relief in this court, such relief will be denied.
request
for
injunctive
relief
supported by a viable claim./1
must
be
dismissed unless
"[A]
it
is
Denman v. Wells Fargo Bank, N.A.,
No. SA-13-CV-II-XR, 2013 WL 1866580, at *2 (W.D. Tex. May 2, 2013).
Because Plaintiffs have failed to state a plausible claim under
Rule
12(b) (6),
Rodriguez
v.
they
Bank
2013 WL 1773670,
are
of
not
entitled
America,
at *13
(W.D.
N.A.,
to
No.
injunctive
relief.
SA-12-CV-00905-DAE,
Tex. April 25,
2013),
aff'd,
577
F. App'x 381 (5th Cir. 2014).
III.
The court
concludes
Conclusions and Order
that
Plaintiffs have
failed
to plead
plausible claims for relief for either negligent misrepresentation
or violations of RESPA.
Therefore, Defendant's Motion to Dismiss
20 ( • • • continued)
1024.39, it is nearly impossible to discern what requests for
information Plaintiffs are alleged to have made, when those
requests were made, or what Chase's responses to those requests
were.
See, e.g., Original Petition, Exhibit A-3 to Notice of
Removal, Docket Entry No. I-I, p. 14 , 5.6 ("Thereafter, Plaintiff
began to experience a merry-go-round of exchanges between [Chase
Bank] over the next several months of duplicate requests and
dilatory tactics in attempt to get some resolution regarding their
loan modification requests./I) i id. , 5.9 ("Counsel for Plaintiff
continued to make inquir[i]es and have exchanges with Defendant
Chase's Retention Department which culminated with posting of
Plaintiff's homestead .
. /I) •
-10-
and Brief in Support (Docket Entry No.5) is GRANTED, and this case
will be dismissed with prejudice.
SIGNED at Houston, Texas, on this the 13th day of April, 2015.
SIM LAKE
UNITED STATES DISTRICT JUDGE
-11-
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