Bridges et al v. The Bank of New York Mellon

Filing 21

MEMORANDUM OPINION AND ORDER granting 18 MOTION to Dismiss Plaintiffs' First Amended Complaint or, Alternatively Motion for Summary Judgment. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

United States District Court
Southern District of Texas

ENTERED

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JAMES BRIDGES and JANET
BURTZLAFF - TRUSTEE,

§
§
§
§
§
§

Plaintiffs,

v.

February 12, 2018
David J. Bradley, Clerk

CIVIL ACTION NO. H-17-1429

§
§
§
§

THE BANK OF NEW YORK MELLON,
Defendant.

MEMORANDUM OPINION AND ORDER

Plaintiffs, James Bridges and Janet Burtzlaff (collectively,
"Plaintiffs"), sued defendant, The Bank of New York Mellon ("BONY"
or

"Defendant"),

Harris
court. 2

County,

in

the

Texas. 1

189th

Judicial

District

Defendant BONY timely

Court

removed

to

of
this

Pending before the court is Defendant's Defendant's Motion

to Dismiss Plaintiffs' First Amended Complaint or, alternatively,
Motion

for

Summary

Judgment

(Docket Entry No. 18).

("Defendant's

Motion

to

Dismiss")

For the reasons stated below, Defendant's

Motion to Dismiss will be granted.
I.

Factual Allegations and Procedural Backqround3

On August
Denise

Bridges

24,

2004,

purchased

Plaintiff James Bridges and his wife
a

property

located

at

17007

Country

1

See Plaintiffs' Original Petition, Application for Injunctive
Relief, and Request for Disclosures, Exhibit 1 to Notice of
Removal, Docket Entry No. 1-2.
2

3

See Notice of Removal, Docket Entry No. 1.

See Plaintiffs' First Amended Complaint ("Plaintiffs' Amended
Complaint"), Docket Entry No. 9, pp. 1-8.

Bridge, Houston, TX 77095 ("the Property").

In connection with the

purchase, Bridges executed a note in the amount of $146,650 and a
deed of trust

(collectively,

the "Loan Documents").

Plaintiffs

allege that JPMorgan Chase Bank, N.A., was listed as the original
lender. 4

The Loan Documents were subsequently transferred to The

Bank of New York Mellon, for which Specialized Loan Servicing, Inc.
("SLS") acted as the loan servicer.

In 2015 Bridges experienced

financial distress, and he began negotiating with SLS to modify the
terms of his loan.

Bridges was offered a loan modification, but

the terms of the agreement were never finalized because Bridges was
transferred to a new SLS representative.

Over a period of two

years, Bridges' file was transferred to a new SLS representative
multiple times.

Each transfer restarted the

loan modification

process and required Bridges to resubmit financial documents and a
loan modification application.

Around October of

2016

an SLS

representative assured Bridges that BONY would take no action to
foreclose on his Property while he was in loan modification status.
The SLS representative stated that she would draft an agreement
containing that assurance, but Bridges never received one.
On February 15, 2017, Bridges conveyed the Property to Janet
Burtzlaff by Special Warranty Deed subject to BONY's mortgage. 5
4

Because the parties did not attach a copy of the deed of
trust to any of their filings, the court reviewed it on the
Harris County Clerk's website as a public record.
In fact, First
Franklin Financial Corp., subsidiary of National City Bank of
Indiana Corporation, was listed as the original lender, but this
has no effect on the merits of the case.
5

See Special Warranty Deed, Exhibit 1 to Plaintiffs' Amended
Complaint, Docket Entry No. 9-1, pp. 2-4.
-2-

BONY sent Bridges a

Notice of

Foreclosure Sale

indicating the

foreclosure sale would take place on March 7, 2017.
contains

a

time

stamp

indicating

that

Harris County Clerk on January 13,

it

2017.

was

6

The document

filed

with

the

Bridges called SLS to

request that BONY cancel the foreclosure sale in accordance with
its promises, but BONY did not cancel the foreclosure.
court

issued

a

temporary

foreclosure until March 29,

restraining
2017.

7

order

to

The state
enjoin

the

Plaintiffs allege that BONY

intended to wrongfully sell their Property at a foreclosure sale in
violation of the agreements between the parties, the Texas Property
Code, and Federal Regulations.
for breach of contract,
violation

of

( "RESPA") /Regulation

common law fraud,

Real

the

X,

Plaintiffs bring causes of action

Settlement

Estate

and

for

promissory estoppel,

failure

to

Procedures

provide

notice

Act
of

default and notice of acceleration.
Defendant argues that all of Burtzlaff' s

claims should be

dismissed for lack of standing because she was not a party to the
original loan.

Defendant argues that all of Bridges' claims should

be dismissed for lack of standing because Bridges had no interest
in

the

Property

once

he

sold

it

to

Burtzlaff,

and

therefore

suffered no injury related to the foreclosure of the Property. 8

6

See Notice of Foreclosure Sale, Exhibit
Amended Complaint, Docket Entry No. 9-2, p. 2.

2 to Plaintiffs'

7

0rder Granting Motion to Extend Temporary Restraining Order,
Exhibit 5 to Notice of Removal, Docket Entry No. 1-6, p. 2.
8

Defendant's Motion to Dismiss, Docket Entry No. 18, p. 19.
-3-

BONY also moves to dismiss for failure to state a claim for breach
of contract
Federal

common-law fraud 1 promissory estoppel/ and RESPA under

I

Rule

Plaintiffs/

of

Civil

Procedure

12(b) (6)

9
1

and

argues

that

cause of action for "no notice of default/notice of

acceleration" fails as a matter of law. 10

Plaintiffs respond that

none of the claims are subject to dismissal under Rule 12(b) (6)
but did not
Plaintiffs

1

respond to Defendant s
1

claims

for

lack of

arguments

for dismissal

standing under Rule

1

of

12 (b) ( 1) . 11

Although under Local Rule 7.4 the court may treat the arguments as
unopposed by Plaintiffs

12

the court will consider the merits of

1

the arguments because "mere failure to respond to a motion is not
sufficient

to

justify a

dismissal with prejudice.

United States ex rel. Lerma

285 F. App X 140
1

1

but see Black v. North Panola School Dist.
(5th Cir. 2006)

1

1

11

Watson v.

143 (5th Cir. 2008);

461 F.3d 584 1 588 n.1

(holding that the plaintiff/ s failure to defend a

claim in responses to motions to dismiss or to otherwise pursue it
beyond her complaint constituted abandonment of the claim) .

9

Id. at 20-30.

10

Id. at 30.

11

See Plaintiffs Response to Defendant Is Motion to Dismiss
Plaintiffs/ First Amended Complaint or Alternatively/ Motion for
Summary Judgment with Incorporated Memorandum of Law ("Plaintiffs/
Response")
Docket Entry No. 19 1 pp. 4-10.
I

1

1

12

See Local Rules of the United States District Court for the
Southern District of Texas/ Rule 7.4 ("Failure to respond will be
taken as a representation of no opposition.")
-4-

II.
Because
evidence,

Defendant

Standards of Review

did

not

submit

any

summary

judgment

the court will treat the motion as a Rule 12 motion

instead of a Rule 56 motion.
A.

Lack of Subject Matter Jurisdiction Under Rule 12(b} (1}

Federal Rule of Civil Procedure 12(b) (1) governs challenges to
a

court's

subject-matter

jurisdiction.

"A

case

is

properly

dismissed for lack of subject matter jurisdiction when the court
lacks

the

case."

statutory or constitutional

Home

Builders Ass' n

Madison, Mississippi,
court may make
" ( 1)

the

its

complaint

of

power

to adjudicate

Mississippi,

143 F.3d 1006,

1010

Inc.

(5th Cir.

subject -matter determination by
alone;

( 2)

the

complaint

undisputed facts evidenced in the record;

or

v.

the

City of

1998).

The

looking at

supplemented
(3)

by

the complaint

supplemented by undisputed facts plus the court's resolution of
disputed facts."
F.2d 214,

220

Barrett Computer Services, Inc. v. PDA, Inc., 884

(5th Cir.

1989)

(citing Williamson v.

Tucker,

645

F.2d 404, 413 (5th Cir.), cert. denied, 102 S. Ct. 396 (1981)).
"'No principle is more fundamental to the judiciary's proper
role in our system of government than the constitutional limitation
of federal-court jurisdiction to actual cases or controversies.'"
Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)
v.

Byrd,

117

S.

Ct.

2312,

2317

(1997)).

One

(citing Raines
element of

the

case-or-controversy requirement is that a plaintiff must establish,
-5-

on the basis of the complaint, standing to sue.
at 2317

Raines, 117 S. Ct.

(citing Lujan v. Defenders of Wildlife,

2136-2137

(1992)).

To have standing,

(1) suffered an injury in fact,

"[a]

112 S. Ct. 2130,

plaintiff must have

(2) that is fairly traceable to the

challenged conduct of the defendant, and (3)

that is likely to be

redressed by a favorable judicial decision."

Spokeo, 136 S. Ct. at

1547 (citing Lujan, 112 S. Ct. at 2136)

"Where, as here, a case

is at the pleading stage, the plaintiff must 'clearly
facts demonstrating'

each element."

Spokeo,

13 6 S.

allege
Ct.

(citing Warth v. Seldin, 95 S. Ct. 2197, 2215 (1975))
fact is a constitutional requirement,

and

Congress

standing

cannot

erase

Article

III's

at 154 7

"Injury in

'[i]t is settled that
requirements

by

statutorily granting the right to sue to a plaintiff who would not
otherwise

have

standing.'"

(citations omitted)
must

show

protected

that

he

interest'

'actual or imminent,

Spokeo,

136

S.

Ct.

at

"To establish injury in fact,
or

she

that

suffered
is

'an

'concrete

invasion
and

1547-48

a plaintiff

of

a

legally

particularized'

not conjectural or hypothetical.'"

Id.

and
at

1548 (citing Lujan, 112 S. Ct. at 2130).
B.

Failure to State a Claim Under Rule 12(b) (6)

Under the Federal Rules of Civil Procedure a pleading must
contain "a short and plain statement of the claim showing that the
pleader is

entitled to relief."

Fed.

R.

Civ.

P.

8 (a) (2).

A

plaintiff's pleading must provide the grounds of his entitlement to
-6-

relief, and "a formulaic recitation of the elements of a cause of
action will not do.

s.

Ct .

19 55

II

19 6 5

I

( 2 0 0 7) .

Bell Atlantic Corp. v.
"' [N] aked

Twombly,

assertion [s] '

127

devoid of

'further factual enhancement'" or "[t]hreadbare recitals of the
elements

of

statements,

a

cause

of

action,

do not suffice."

1937, 1949 (2009).

supported

by

See Ashcroft v.

mere

Iqbal,

conclusory
129 S.

Ct.

"[C]onclusory allegations or legal conclusions

masquerading as factual conclusions will not suffice to prevent a
motion to dismiss."
F.2d 278,

284

Fernandez-Montes v. Allied Pilots Ass'n, 987

(5th Cir.

Instead,

1993).

" [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."
A Rule 12(b) (6)
pleadings

and

is

Iqbal, 129 S. Ct. at 1949.

motion tests the formal sufficiency of the

"appropriate

when

a

defendant

attacks

the

complaint because it fails to state a legally cognizable claim."
Ramming v. United States, 281 F. 3d 158, 161 (5th Cir. 2001), cert.
denied sub nom. Cloud v. United States, 122 S. Ct. 2665 (2002).

To

defeat a motion to dismiss, a plaintiff must plead "enough facts to
state a claim to relief that is plausible on its face."
127 S. Ct. at 1974.

Twombly,

The court does not "strain to find inferences

favorable to the plaintiffs" or "accept conclusory allegations,
unwarranted deductions, or legal conclusions."

Southland Securities

Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 361 (5th Cir.

-7-

2004)

(internal quotation marks and citations omitted).

"[C]ourts

are required to dismiss, pursuant to [Rule 12(b) (6)], claims based
on invalid legal theories, even though they may be otherwise wellpleaded."

Flynn v.

State Farm Fire and Casualty Insurance Co.

(Texas), 605 F. Supp. 2d 811, 820 (W.D. Tex. 2009)
v. Williams, 109

C.

s.

(citing Neitzke

Ct. 1827, 1832 (1989)).

Fraud Claims Under Rule 9(b)

Federal Rule of Civil Procedure
pleading standard on fraud claims.

9 (b)

heightened

See United States ex rel.

Williams v. Bell Helicopter Textron Inc.,
Cir. 2005).

imposes a

417 F.3d 450, 453

(5th

This means that a party must state with particularity

circumstances alleged to constitute fraud.

See Campbell v. Bravo

Credit, Civil Action No. H-14-2794, 2015 WL 502234, at *5-*6 (S.D.
Tex. Feb. 5, 2015).
strictly,

"This Circuit's precedent interprets Rule 9(b)

requiring

the

plaintiff

contended to be fraudulent,

to

specify

identify the speaker,

the

statements

state when and

where the statements were made, and explain why the statements were
fraudulent."
TXU Corp.,

Flaherty & Crumrine Preferred Income Fund,

565 F. 3d 200,

207

(5th Cir. 2009)

marks and citations omitted).

Inc. v.

(internal quotation

"Rule 9(b) requires that plaintiffs

plead enough facts to illustrate 'the "who, what, when, where, and
how" of the alleged fraud.'"
1171,

1174

(5th Cir.

2006)

453) .

A

principal

may

Carroll v. Fort James Corp., 470 F. 3d
(citing Bell Helicopter,
be

held
-8-

liable

for

the

417 F.3d at
fraudulent

misrepresentations of

its agent

"'so long as

the

third person

reasonably believed the agent was acting within the scope of his
authority. '"
(Tex. 1996)

NationsBank,

N.A.

v. Dilling,

922 S.W.2d 950,

953

(citing Bankers Life Ins. Co. of Neb. v. Scurlock Oil

Co., 447 F.2d 997, 1004 n.12 (5th Cir. 1971)); see also Bohnsack v.

Varco, L.P., 668 F.3d 262, 272-73 (5th Cir. 2012).
III.
A.

Analysis

Breach of Contract Claim

Plaintiffs argue that:
The actions commit ted by
contract because:

[BONY]

constitute breach of

A.

There exists a valid, enforceable contract between
Bridges and BONY;

B.

Bridges has standing to sue for breach of contract;

c.

Bridges performed, tendered performance, or was
his
contractual
excused
from
performing
obligations;

D.

BONY breached the contract; and

E.

The breach of
injury. 13

Plaintiffs'
"actions"

contract

Amended Complaint

does

by BONY
not

caused Bridges'

explain,

however,

which

they are referring to that formed the basis of their

breach of contract claim.

In Plaintiffs' Response they explain that

Plaintiffs' claim for breach of contract is not
based on the mortgage loan agreement
it is a
totally separate agreement wherein Plaintiffs agreed to

13

Plaintiffs' Amended Complaint, Docket Entry No. 9, p. 4
-9-

~

15.

put forth the time and effort to prepare and submit a
loan modification application .
and continue to exert
the time and effort necessary in order to comply with
Defendant's requests for further information (a positive
act) in exchange for Defendant declining to take certain
action (a negative act) .
This constitutes a separate
stand-alone agreement in which there was a meeting of the
minds and for which consideration was given. 14
1.

Whether Plaintiffs Have Standing

Defendant argues that Burtzlaff does not have standing because
she "was never in privity with BONY,
beneficiary

of

the

nor was she a

Loan Agreements. " 15

Defendant

third-party
argues

that

therefore Burtzlaff "cannot show that she suffered an injury in
fact from any alleged breach of the Loan Agreements, nor can she
show that a decision from this Court in her favor would redress any
alleged injuries." 16
Plaintiffs
standing to sue.

do

not

allege

facts

demonstrating

Spokeo, 136 S. Ct. at 1547.

Burtzlaff's

Even if they had, in

Texas "[a] party must establish its privity to the contract or its
status as a third-party beneficiary in order to sue for breach of
contract."
28

City of Dallas v. Delta Air Lines, Inc., 847 F. 3d 279,

(5th Cir.

S. W. 3d 752,

2017)
756-57

(citing Maddox v.
(Tex.

Vantage Energy,

App.- -Fort Worth

2012,

pet.

LLC,

361

denied) .

Burtzlaff is not in privity of contract with BONY because she was

14

Plaintiffs' Response, Docket Entry No. 19, p. 4.

15

Defendant's Motion to Dismiss, Docket Entry No. 18, p. 16

16

Id. at 16-17.
-10-

not

a

party

foreclose.
as

a

to

the

Loan

Documents

or

to

the

promise

Plaintiffs must therefore establish Burtzlaff

third-party

beneficiary.

"A

third

party may

1

not
S

to

status

enforce

a

contract it did not sign when the parties to the contract entered
the agreement with the clear and express intention of directly
benefitting the third party."
(Tex. 2011)
indirect/

Tawes v. Barnes 1 340 S.W.3d 419 1 425

(citation omitted)

"When the contract confers only an

incidental benefit 1

contract."

a

third party cannot enforce the

Id.

The alleged promise not to foreclose was only made to Bridges/
without any intent to benefit Burtzlaff.
unequivocal

expression

of

directly benefit" Burtzlaff
beneficiary status to her.

the
1

contracting

Without
parties

"a clear and
1

intent

to

the court will not confer third-party
Id.

Because she is not a party to a

contract nor a third-party beneficiary/ Burtzlaff lacks standing to
sue BONY for breach of contract; and her claim will be dismissed.
Unlike Burtzlaff

1

Bridges has standing to sue BONY for breach of

contract because he was a party to the loan and to the promise the
SLS representative allegedly made.
2.

Whether Plaintiffs Have Stated a Claim

In Texas/ to state a claim for breach of contract plaintiffs
must allege "(1) the existence of a valid contract; (2) performance
by the plaintiff;

(3) breach of the contract by the defendant; and

(4) damages sustained by the plaintiff as a result of the breach."
-11-

Sport
453,

Supply
465

Group,

(5th Cir.

Inc.
2003)

v.

Col urnbia

Casualty

(citations omitted).

Co. ,

335

F. 3d

Defendant argues

that Plaintiffs failed to state a claim for breach of contract
because:
(1) by law Plaintiffs were never entitled to a loan
modification; (2) Bridges had admittedly committed a
prior breach; and (3) Plaintiffs have failed to allege
any facts that would support a claim that BONY breached
the
Loan Agreements-the
only
legally enforceable
contracts between BONY and Plaintiffs. 17
Defendant also argues that
to the extent Plaintiffs' breach of contract claim is
premised on an alleged contract arising out of the
alleged promise to forbear from foreclosing until the
loan modification process was completed, the flaw in
Plaintiffs' theory is that it assumes Plaintiffs had the
right to a loan modification. Quite to the contrary,
Plaintiffs had no such right. 18
Even if Defendant is correct that "a loan modification is not
a right,"

that argument does not address Plaintiffs'

breach of

contract claim based on an agreement not to foreclose.
The court has carefully reviewed the record and nowhere have
Plaintiffs or Defendant contended that a foreclosure occurred.
the

contrary,

house . 19
occurred,

Plaintiffs

admitted

that

they are

still

in

To
the

Because none of the documents show that a foreclosure
Plaintiffs have not

17

Id. at

claim for

breach of a

Id. at 20.

18

stated a

21.

19

See Transcript of Initial Conference, June 16, 2017, Docket
Entry No. 15, p. 3, ll. 1-2 ("Court: Are the plaintiffs still in
the horne? [Plaintiffs' attorney]: That is correct, Your Honor.").
-12-

promise not to foreclose.

Even if the court liberally construes

Plaintiffs' claim as a "breach of a promise not to take any action
to foreclose," and the court assumes that Defendant's posting of
the Notice of Foreclosure Sale constitutes a breach,
allege

no

damages

resulting

from

that

breach. 20

Plaintiffs
Therefore,

Plaintiffs have failed to state a claim for breach of contract upon
which relief may be granted.

B.

Common-Law Fraud Claim

Plaintiffs allege that "[t]he actions committed by [BONY]

[by

and through their agent [SLS]] constitute common law fraud because
SLS

made

false

and

material

representations

to

Bridges

when

informing Bridges that BONY would take no action to foreclose on
his Property while in loan modification status." 21

Plaintiffs argue

that
SLS knew that the representations were false or made
these
representations
recklessly,
as
a
positive
assertion, and without knowledge of its truth. In
addition, SLS made these representations with the intent
that Bridges act on them and Bridges relied on these
representations which caused Bridges' injury. 22
1.

Whether Plaintiffs Have Standing

Defendant argues that "[t] his supposed representation was made
only to Bridges and is directly tied to the alleged modification of

20

Al though Plaintiffs' breach of contract claim is clearly
barred by the statute of frauds, Defendant does not make this
argument as to the breach of contract claim.
21

Plaintiffs' Amended Complaint, Docket Entry No. 9, p. 4

zzid.

-13-

~

17.

the

Loan

Agreements

to

which

Burtzlaff

is

not

a

party. " 23

Plaintiffs' allegations do not mention Burtzlaff, specify how she
was injured by the alleged fraud or misrepresentation, or show that
this court could redress her injuries.

Burtzlaff therefore has no

standing to assert a claim for common-law fraud.
2.

Whether Plaintiffs Have Stated a Claim

Plaintiffs'

conclusory

allegations

fail

to

specify

the

statements, state when and where they were made, or explain why the
statements were fraudulent.

Flaherty, 565 F.3d at 207.

Plaintiffs

provide the court with the general facts surrounding the alleged
misrepresentations, but do not provide specific facts to meet the
heightened pleading standard under Rule 9(b).
Defendant argues that even if Plaintiffs adequately pled the
common-law fraud claim, the claim should be dismissed because it is
barred by the

statute of

frauds

and the

economic

loss

rule. 24

Plaintiffs do not respond to these arguments.
Texas courts apply the economic loss doctrine, which precludes
recovery under tort law when the plaintiff's economic loss is based
on contract law alone.
Consultants, Inc.,
Dist.]

2012,

pet.

Arlington Home, Inc. v. Peak Environmental

361 S.W.3d 773, 779
denied).

"[A]

(Tex. App.--Houston [14th

fraud claim sounds in contract

alone when the only injury alleged is contractual economic loss."

23

Defendant's Motion to Dismiss, Docket entry No. 18, p. 17.

24

Id. at 24-27.
-14-

Metropolitan Life Insurance Co. v. Haden & Co., 158 F.3d 584, *6
(5th Cir. 1998)

(citing Leach v. Conoco, Inc., 892 S.W.2d 954, 960

(Tex. App.--Houston [1st Dist.] 1995, writ dism'd w.o.j.)).

"'When

a plaintiff, in his claim asserting fraud, attempts to rely upon an
allegedly fraudulent oral promise,'" the statute of frauds is a
defense

to

his

Association,

fraud

claim.

Cooper

Civil Action No.

12-3190,

(S.D. Tex. Jan. 24, 2014)
BONY's

alleged

v.

U.S.

Bank,

National

2014 WL 12531345,

at *4

(quoting Leach, 892 S.W.2d at 960).

oral

promise

considered modifying Bridges'

not

to

foreclose

while

it

loan is barred by the statute of

frauds because the promise would modify the underlying mortgage
agreement's foreclosure terms, and the mortgage exceeded $50,000.
See Tex. Bus. & Com. Code

§

31

881

F.

Supp.

3d

876,

26.02; Stolts v. Wells Fargo Bank, NA,
n.3

(S.D.

Tex.

Jan.

16,

2014)

("Modifications to mortgages exceeding $50,000 are subject to the
statute of frauds.").

Because Plaintiffs' Amended Complaint does

not meet the heightened pleading requirements of Rule 9(b) and the
claim is barred by the economic loss doctrine and the statute of
frauds, Plaintiffs' common-law fraud claim will be dismissed.
C.

Promissory Estoppel Claim

Plaintiffs

allege

that

"BONY made

a

promise

to

Bridges;

Bridges reasonably and substantially relied on the promise to his
detriment; Bridges' reliance was foreseeable by BONY; and Injustice
can be avoided only by enforcing BONY's promise." 25

25

Plaintiffs' Amended Complaint, Docket Entry No. 9, p. 5
-15-

~

19.

1.

Whether Plaintiffs Have Standing

Defendant argues that
Similar to the breach of contract and common-law fraud
claims
discussed
above,
because
Burtzlaff
never
communicated with Defendant or SLS, Burtzlaff cannot show
that she suffered an injury in fact from reliance on an
alleged promise to modify the Loan Agreements, nor can
she show that a decision from this Court in her favor
would redress any alleged injuries. 26
The court agrees.
Burtzlaff' s

Plaintiffs do not meet the standard to establish

standing because they do not mention her

in their

allegations, state that she relied on any of Defendant's promises,
or specify how she was injured by the alleged reliance.
2.

Whether Plaintiffs Have Stated a Claim

Under Texas law "' [t] he requisites of promissory estoppel are:
( 1)

a

promise,

promisor,

and

detriment.'"
F.3d 286,

300

( 2)
(3)

foreseeability
substantial

2010)

S.W.2d 521, 524 (Tex. 1983)).

reliance

thereon by

the

reliance by the promisee to his

Addicks Services,
(5th Cir.

of

Inc.

v.

GGP-Bridgeland,

(citing English v.

LP,

596

Fischer,

660

"Promissory estoppel claims premised

on promises to negotiate fail as a matter of law because they are
not sufficiently definite."
(citing Addicks Services,

Stolts,

Inc.,

31 F.

Supp.

3d at 881 n.4

596 F.3d at 300;

and Gillum v.

Republic Health Corp., 778 S.W.2d 558, 570 (Tex. App.--Dallas 1989,
no writ)) .

26

Defendant's Motion to Dismiss, Docket Entry No. 18, p. 17.
-16-

Promissory estoppel can bar the application of the statute of
frauds to allow the enforcement of an otherwise unenforceable oral
agreement.

Stolts,

31 F.

Supp.

at

881

(citing Exxon Corp.

v.

Breezevale Ltd., 82 S.W.3d 429, 438 (Tex. App.--Dallas 2002, pet.
denied)).

To meet the promissory estoppel exception to the statute

of

under Texas

frauds

law the promisor must

"agree

to sign a

document that had already been prepared or 'whose wording had been
agreed upon'

that would satisfy the statute of

frauds."

McKinney Ltd. v. Credit Suisse First Boston Mortgage Capital, 192
S.W.3d 20, 29 (Tex. App.--Houston [14th Dist.] 2005, pet. denied)
(quoting Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 769
(5th Cir. 1988) .

"A mere promise to prepare a written contract is

not sufficient."

1001 McKinney Ltd., 192 S.W.3d at 29.

Plaintiffs' conclusory allegations fail to state which promise
Plaintiffs allegedly relied on or how they suffered an injury from
it.

Plaintiffs state in their Response that
the focus needs to be placed on the agreement between the
parties whereby Defendant declined to take certain action
(a negative act) if Plaintiffs put forth the time and
effort to prepare and submit a short sale application,
along with the supporting documents, and continue to
exert the time and effort necessary in order to comply
with Defendant's requests for further information (a
positive act) . 27

Even if the court could look beyond Plaintiffs' Amended Complaint
to decide whether Plaintiffs stated a claim, Plaintiffs' Response

27

Plaintiffs' Response, Docket Entry No. 19, p. 7.
-17-

does not cure the deficiencies of Plaintiffs' Amended Complaint.
Therefore,

Plaintiffs

failed

to

state

a

claim

for

promissory

estoppel.
Assuming arguendo that Plaintiffs did properly state a claim,
it fails for a number of other reasons.

To the extent Plaintiffs'

promissory estoppel claim is based on any promise to complete the
loan modification process,

the claim fails as a matter of law.

Stolts, 31 F. Supp. 3d at 881 n.4 (reasoning that because Texas law
requires that the promise is not vague and indefinite, a promise
that the plaintiff's loan modification was "under consideration" is
too indefinite to sustain a promissory estoppel claim) .

Such a

claim fails also because the promise to modify the loan is not in
writing.

1001 McKinney Ltd., 192 S.W.3d at 29.

Plaintiffs' factual allegations state "the SLS representative
stated

that

she

was

memorializing

the

conversation

by

contemporaneously drafting an agreement to that effect which would
be signed by her supervisor and mailed to Bridges . .
Defendant had merely promised to prepare an agreement.

"28

Here,

Because

Plaintiffs do not allege that a written agreement had been prepared
or that

the parties had agreed on the wording,

estoppel claim will be dismissed.

the promissory

See 1001 McKinney Ltd.,

192

S.W.3d at 29.

28

Plaintiffs' Amended Complaint, Docket Entry No. 9, p. 2
-18-

~

9.

D.

RESPA Claim

Plaintiffs allege that Defendant violated Section 1024.41 of
the

Real

Estate

Settlement

Procedures

Act. 29

Specifically,

Plaintiffs allege that the actions committed by BONY constitute
violations of RESPA because:
A.

Bridges was working
mitigation options;

with

BONY

pursuing

loss

B.

BONY did not exercise reasonable diligence in
obtaining
all
documents
needed
to
complete
Bridges's [sic] loss mitigation application;

c.

Bridges submitted a
complete loss mitigation
application prior to BONY's first notice of filing;

D.

Alternatively, Bridges submitted a complete loss
mitigation application more that [sic] 37 days
prior to the foreclosure sale;

E.

BONY did not notify Bridges within 5 days after
submission
of
missing
documents
that
his
application was incomplete;

F.

BONY completed the violation by posting Bridges'
Property for foreclosure sale on March 7, 2017. 30

1.

Whether Plaintiffs Have Standing

Defendant argues that Burtzlaff lacks standing to assert a
RESPA claim because she is a non-borrower. 31

At least one court

held that "the protections of RESPA apply only to borrowers and/or
loan applicants."

Smith v. JPMorgan Chase Bank, N.A., Civil Action

~~

29

Id.

30

Id. at 6 ~ 23.

31

Defendant's Motion to Dismiss, Docket Entry No. 18, p. 18.

at 5-6

20-23.

-19-

No. 4:15-00682-ALM, 2016 LEXIS 127350, at *30 (E.D. Tex. Aug. 11,
2016) (Magistrate Judge's report recommending dismissal for lack of
standing adopted by Smith v.

JPMorgan Chase Bank,

Action No. 4:15-682, 2016 WL 4974899, at *7
2016)).
sue.

N .A.,

Civil

(E.D. Tex. Sept. 19,

Because Burtzlaff is a non-borrower, she lacks standing to

Moreover, Plaintiffs have failed to allege any other facts

that would support Burtzlaff's standing to bring a RESPA claim.
2.

Whether Plaintiffs Have Stated a Claim

Upon

submission

requires a

of

a

loss

loan servicer to

within 5 days .

mitigation

application,

RESPA

" [n] otify the borrower in writing

. after receiving the loss mitigation application

. that the servicer has determined that the loss mitigation
application
§

is

either

1024.41(b)(2)(B).

complete

or

Additionally,

incomplete."
RESPA

12

contains

C.F.R.
various

prohibitions on foreclosure referrals if the borrower submits a
complete loss mitigation application.

12 C.F.R.

§

1024.41(f) (2).

"To recover, a claimant must show that actual damages resulted from
a RESPA violation."
F. App'x 833,

836

Whittier v. Ocwen Loan Servicing, L.L.C., 594
(5th Cir.

2014); see also Solis v. U.S. Bank,

N.A., Civil Action No. H-16-00661, 2017 LEXIS 211711, at *10 n.10
(S.D.

Tex.

June

23,

2017)

(granting the defendant's motion to

dismiss the RESPA claim under
plaintiffs

"fail

to

§

establish

1024.41 because, inter alia, the
a

nexus

between

any

of

[the

defendant's] alleged RESPA violations and the damages suffered as
a result").
-20-

Plaintiffs'

general

assertions

that

Bridges

submitted

a

complete loss mitigation application and that BONY "did not notify
Bridges within 5 days after submission of missing documents" are
not sufficient to plausibly plead a violation of RESPA.

Moreover,

Plaintiffs failed to plead any actual damages resulting from the
alleged noncompliance with§ 1024.41 as required.

The court will

therefore dismiss Plaintiffs' RESPA claim.
E.

"No Notice of Default/Notice of Acceleration" Claim

Plaintiffs allege that they "did not receive proper notice of
default or notice of acceleration in order for Defendant to be able
to foreclose on their lien." 32
1.

Whether Plaintiffs Have Standing

Defendant argues that Bridges does not have standing to bring
this claim because he had no interest in the Property when BONY
sent the notice, and that Burtzlaff does not have standing because
she is neither a borrower nor a debtor and "makes no claim that she
is liable for Bridges'

admitted default as the borrower on the

underlying mortgage." 33
"The issue of identifying who properly has standing to contest
a

foreclosure

sale

in

Texas

is

well

Metropolitan Savings and Loan Ass'n,
1988).

settled."

Goswami

751 S.W.2d 487,

489

v.

(Tex.

"As a general rule, only the mortgagor or a party who is in

~

32

Plaintiffs' Amended Complaint, Docket Entry No. 9, p. 7

33

Defendant's Motion to Dismiss, Docket Entry No. 18, p. 19.
-21-

26.

privity with the mortgagor has standing to contest the validity of
a foreclosure sale pursuant to the mortgagor's deed of trust."
(citations omitted).

Id.

"However, when the third party has a property

interest, whether legal or equitable, that will be affected by such
a sale, the third party has standing to challenge such a sale to
the extent that its rights will be affected by the sale."

Id.

Because Bridges is the mortgagor and Burtzlaff has a property
interest in the Property through a special warranty deed, both have
standing to challenge the foreclosure.

See Reeves v. Wells Fargo

Home Mortgage, 544 F. App'x 564, 568 (5th Cir. 2013)

(finding that

a plaintiff who acquired a property interest through a recorded
quit-claim deed and made payments on the note had an interest in
the property "sufficient to challenge the validity of Defendants'
authority to foreclose").
2.

Whether Plaintiffs Have Stated a Claim

Plaintiffs argue that BONY "was about to wrongfully sell their
Property at a

foreclosure sale on March 7,

2017

.

without

proper and timely notice as required by the Texas Property Code
II

34

Defendant

argues

that

receipt of notice

is not a

requirement under Texas law for a loan to be validly accelerated
and for a foreclosure to be proper and that "Plaintiffs have not
made

(nor can they)

34

an allegation that Defendant failed to send

Plaintiffs' Amended Complaint, Docket Entry No. 9, p. 3
-22-

~

13.

proper notice to them as required by TEx. PROP. CoDE§ 51.002(e).'' 35
Plaintiffs respond that "it is an undisputed fact that Plaintiffs
never received the notices required by the Texas Property Code and
it

is

unproven

whether

Defendant

actually

sent

the

required

notices" and explain that they have served discovery on Defendant
to further prove this claim. 36

Defendant reiterates in its Reply

that "Plaintiffs admit they have not and cannot plead BONY did not
sent [sic] the proper foreclosure notices." 37
The Texas Property Code § 51.002 provides rules for a sale of
real property under a contract lien.
(d) .

Tex. Prop. Code§ 51.002(b),

It requires the mortgage servicer of the debt to provide

notice of the sale at least twenty-one days before the date of the
sale by:
(1)

posting at the courthouse door of each county in
which the property is located a written notice
designating the county in which the property will
be sold;

(2)

filing in the office of the county clerk of each
county in which the property is located a copy of
the notice posted under Subdivision (1) ; and

(3)

serving written notice of the sale by certified
mail on each debtor who, according to the records
of the mortgage servicer of the debt, is obligated
to pay the debt.

35

Defendant's Motion to Dismiss, Docket Entry No. 18, p. 30.

36

Plaintiffs' Response, Docket Entry No. 19, p. 10.

Defendant' s Reply to Plaintiffs' Response to Defendant's
Motion to Dismiss Plaintiffs'
First Amended Complaint or,
Alternatively, Motion for Summary Judgment, Docket Entry No. 20,
p. 6.
37

-23-

Tex. Prop. Code

§

51.002(b).

Section 51.002(d)

states that the

mortgage servicer must serve the "debtor in default

.

. 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

51.002(d).

under

Subsection

(b)."

Tex.

Prop.

Code

"'There is no legal requirement that personal notice

of a foreclosure be sent to persons not parties to the deed of
trust."'

Rodriguez v. Ocwen Loan Servicing, LLC, 306 F. App'x 854,

856 (5th Cir. 2009) (quoting Stanley v. CitiFinancial Mortgage Co.,
121 S.W.3d 811, 817

(Tex. App.--Beaumont 2003, pet. denied)).

purported purchaser of

the mortgagor's deed is not a

within the meaning of the Texas Property Code
The

Texas

independent

Property

private

cause

Code
of

§

51.002

action.

§

51.002.

does
See

not

America, N.A., 806 F.3d 828, 830 n.2 (5th Cir. 2015)
Texas

Supreme

district

Court

courts

that

has
have

not

decided

addressed

this
it

to

Id.
an

Bank of

("Although the

issue,

seem

"debtor"

provide

Rucker v.

A

the

federal

conclude

that

Section 51.002(d) does not intend an independent private cause of
action."); Ashton v. BAC Home Loans Servicing, L.P., Civil Action
No.

4:13-810,

2013 WL 3807756 at *4

(S.D.

Tex.

July 19,

2013)

("This Court has not found any cases that interpret section 51.002
to establish an independent right of action for damages.").

-24-

Thus,

Plaintiffs' claim under§ 51.002 will be dismissed because it fails
as a matter of law.
However, "federal courts have construed claims under section
51.002 to be wrongful foreclosure claims."
at *4.

Ashton, 2013 WL 3807756

To bring a wrongful foreclosure claim, a plaintiff must

show " ( 1)

a

defect

grossly inadequate
between the two."

in the foreclosure
selling price;

and

sale proceedings;
( 3)

a

causal

( 2)

a

connection

Martins v. BAC Horne Loans Servicing, L.P., 722

F.3d 249, 256 (5th Cir. 2013) (citing Charter National Bank-Houston
v. Stevens, 781 S.W.2d 368, 371 (Tex. App.--Houston [14th Dist.]
1989,

writ denied)).

" [A]

low foreclosure sale price does not

amount to wrongful foreclosure;
other

irregularities

contributed to a

in

the

the plaintiff must allege that

foreclosure

proceedings

grossly inadequate price."

caused or

Rodriguez at

856

(citing Powell v. Stacy, 117 S.W.3d 70, 75 (Tex. App.--Fort Worth
2003, no pet.).
Although Plaintiffs allege inartfully that Defendant failed to
provide the proper notices, Plaintiffs never allege that there has
been a foreclosure.

Plaintiffs' Amended Complaint was filed on

August 31, 2017, long after the March 7, 2017, date on which the
alleged foreclosure sale was to have been held.

Plaintiffs have

therefore failed to allege wrongful foreclosure as a matter of law
because

they

have

not

alleged

foreclosure.

therefore dismiss this claim.
-25-

The

court

will

IV.

Conclusions and Order

For the reasons discussed above,

in their Amended Complaint

(Docket Entry No. 9) Plaintiffs have failed to state a claim upon
which

relief

can

be

granted.

Defendant's

Motion

to

Dismiss

Plaintiffs' First Amended Complaint or, Alternatively, Motion for
Summary Judgment

(Docket Entry No. 18)

is therefore GRANTED, and

this action will be dismissed with prejudice.
SIGNED at Houston, Texas, on this 12th day of February, 2018.

SIM LAKE
UNITED STATES DISTRICT JUDGE

-26-