Baker v. RoundPoint Mortgage Servicing Corporation

Filing 23

MEMORANDUM AND OPINION entered: Summary judgment is granted for Roundpoint. (Docket Entry No. 16). Baker's requests for damages and attorney's fees are denied. (Docket Entry No. 1 at 4142). Final judgment is separately entered.(Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DARRIN BAKER,
Plaintiff,
VS.
ROUNDPOINT MORTGAGE
SERVICING CORPORATION,
Defendant.

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June 19, 2019
David J. Bradley, Clerk

CIVIL ACTION NO. H-18-1964

MEMORANDUM AND OPINION
In May 2018, Darrin Baker sued Roundpoint Mortgage Servicing Corporation in state court
over a foreclosure dispute. (Docket Entry No. 1-1). Seeking a temporary restraining order,
damages, and attorney’s fees, Baker alleged contract breach, wrongful foreclosure, and Texas Debt
Collection Act and the Texas Deceptive Trade Practices Act violations. (Id. at 8–14). Roundpoint
removed. (Docket Entry No. 1). The court held an initial conference and issued a scheduling and
docket control order that set a dispositive-motion briefing schedule. (Docket Entry Nos. 18, 19).
Roundpoint timely moved for summary judgment in May 2019. (Docket Entry No. 21). Baker
has not responded or cross-moved for summary judgment, though his deadline to do so has passed.
After a careful review of the motion, record evidence, and the applicable law, the court
grants summary judgment for Roundpoint and separately enters final judgment. The reasons are
explained in detail below.
I.

Background
In August 2014, Baker obtained a $264,093 home-mortgage loan from Cornerstone Home

Lending, Inc. (Docket Entry Nos. 21-2, 21-3). His promissory note required him to make
payments of $1,299.18 on the first day of each month for 30 years. (Docket Entry No. 21-2 at 1).

The note stated that if Baker made a late payment, Cornerstone could collect a late fee totaling
four percent of the overdue amount. (Id. at 2). If Baker defaulted “by failing to pay in full any
monthly payment,” Cornerstone could demand immediate payment of the unpaid loan balance.
(Id.). The deed of trust also required Baker to make timely payments under the note. (Docket
Entry No. 21-3 at 2). If Baker missed payments and did not repay the overdue amounts, even after
receiving notice and an opportunity to reinstate the loan, Cornerstone had the right to sell Baker’s
home. (Id. at 4–7).
In November 2014, Cornerstone gave Roundpoint the right to collect payments under the
mortgage. (Docket Entry No. 21-4). In April 2018, Cornerstone assigned the note and deed to
Roundpoint. (Docket Entry No. 21-5). These transactions were recorded in Fort Bend County’s
public records.
Baker stopped making loan payments in May 2017. (Docket Entry No. 21-1 at 2). After
Hurricane Harvey hit Greater Houston, Roundpoint granted Baker’s request for a temporary
forbearance, outlining the terms in a September 2017 letter. (Docket Entry No. 21-6). Even though
Baker complied with the forbearance agreement, he failed to make his December 2017 loan
payment. (Docket Entry No. 21-1 at 2). Baker made a payment in January 2018, but it did not
bring the loan current. (Id.).
Baker applied for loan modifications in April 2018 and January 2019. (Docket Entry No.
21-8 at 1; Docket Entry No. 21-10 at 1). Roundpoint denied the applications, explaining that his
“earned income [was] not sufficient to repay the total amount due.” (Id.). A total of $58,876.71
is required to reinstate the loan. (Docket Entry No. 21-7).
In May 2018, Baker sued Roundpoint in the 268th Judicial District Court of Fort Bend
County on the same day that it denied his first loan-modification application. (Docket Entry No.

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1-1 at 5). Roundpoint removed, and the court delayed holding an initial conference or entering a
scheduling and docket control order based on the parties’ settlement negotiations. (See Docket
Entry Nos. 1, 10, 11, 12, 15, 16). The parties did not resolve the case, and Roundpoint moved for
summary judgment in May 2019. (Docket Entry No. 21).
II.

The Legal Standard for Summary Judgment
“Summary judgment is appropriate only when ‘the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.’”
Shepherd on Behalf of Estate of Shepherd v. City of Shreveport, 920 F.3d 278, 282–83 (5th Cir.
2019) (quoting FED. R. CIV. P. 56(a)). “A material fact is one that might affect the outcome of the
suit under governing law,” and “a fact issue is genuine if the evidence is such that a reasonable
jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, L.L.C., 901
F.3d 605, 611 (5th Cir. 2018) (quotations and citations omitted). The moving party “always bears
the initial responsibility of informing the district court of the basis for its motion,” and identifying
the record evidence “which it believes demonstrate[s] the absence of a genuine issue of material
fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
“Where the non-movant bears the burden of proof at trial, ‘the movant may merely point
to the absence of evidence and thereby shift to the non-movant the burden of demonstrating that
there is an issue of material fact warranting trial.”” Kim v. Hospira, Inc., 709 F. App’x 287, 288
(5th Cir. 2018) (alteration omitted) (quoting Nola Spice Designs, L.L.C. v. Haydel Enters., Inc.,
783 F.3d 527, 536 (5th Cir. 2015)). The moving party must demonstrate the absence of a genuine
issue of material fact, but it need not negate the elements of the nonmovant’s case. Austin v.
Kroger Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017). “If the moving party fails to meet [its] initial
burden, the motion must be denied, regardless of the nonmovant’s response.” Pioneer Expl.,

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L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014) (quoting Kee v. City of Rowlett, 247
F.3d 206, 210 (5th Cir. 2001)).
“When the moving party has met its Rule 56(c) burden, the nonmoving party cannot
survive a summary judgment motion by resting on the mere allegations of its pleadings.” Duffie
v. United States, 600 F.3d 362, 371 (5th Cir. 2010). The nonmovant must identify specific
evidence in the record and articulate “the precise manner in which” that evidence supports that
party’s claim. Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014) (quoting Forsyth v. Barr,
19 F.3d 1527, 1537 (5th Cir. 1994)). “A party cannot defeat summary judgment with conclusory
allegations, unsubstantiated assertions, or only a scintilla of evidence.” Lamb v. Ashford Place
Apartments L.L.C., 914 F.3d 940, 946 (5th Cir. 2019) (quotation omitted). “A failure on the part
of the nonmoving party to offer proof concerning an essential element of its case necessarily
renders all other facts immaterial and mandates a finding that no genuine issue of fact exists.”
Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006). Because Baker failed
to respond to Roundpoint’s motion, the issue is “whether the facts presented by [Roundpoint]
create an appropriate basis to enter summary judgment against the plaintiff[s].” Id.
III.

Analysis1
Baker asserts that Roundpoint used “unreasonable debt collection practices” to coerce

payment; breached the note and deed; breached the duty of good faith and fair dealing; violated

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The summary judgment evidence includes Hannah Harvey’s affidavit; the note; the deed; the
notice sent to Baker of Cornerstone’s assignment of its right to collect payments under the note and deed
to Roundpoint; the assignment of the note and deed; Roundpoint’s letter agreeing to Baker’s forbearance
request; Roundpoint’s letter to Baker calculating the loan reinstatement amount; Roundpoint’s
acknowledgment of Baker’s April 2018 loan-modification application; Roundpoint’s denial of Baker’s
application; and Roundpoint’s denial of Baker’s January 2019 loan-modification application. (Docket
Entry Nos. 21-1–10).

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the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act; and wrongfully
foreclosed on Baker’s property. The court addresses each in turn.
A.

Unreasonable Collection Practices

Baker’s complaint alleges that Roundpoint’s “actions” constitute “unreasonable collection
practices which proximately caused [Baker’s] direct and consequential damages.” (Docket Entry
No. 1-1 at 8). Baker’s complaint also alleges that Roundpoint unreasonably attempted to foreclose
on his home because he had applied for a loan modification, and because Roundpoint’s actions,
not Baker’s, delayed the application’s review and caused its denial. (Id. at 9).
Assuming Baker asserts common-law unreasonable debt collection, an intentional tort
under Texas law, he must show that Roundpoint’s conduct “amount[ed] to a course of harassment
that was willful, wanton, malicious, and intended to inflict mental anguish and bodily harm.” EMC
Mortg. Corp. v. Jones, 252 S.W.3d 857, 868 (Tex. App.—Dallas 2008, no pet.) (quoting
Montgomery Ward & Co. v. Brewer, 416 S.W.2d 837, 838 (Tex. Civ. App.—Waco, 1967, writ
ref’d n.r.e.)). Baker has not submitted or identified evidence showing that Roundpoint acted with
the requisite culpability, and his complaint alleges, at most, that the company negligently mixed
up his file with another applicant’s paperwork. (See Docket Entry No. 1-1 at 8–9). There is no
basis to find that Roundpoint unreasonably collected a debt from Baker.
B.

Contract Breach

Baker asserts that Roundpoint breached the note and deed. (Docket Entry No. 1-1 at 9).
“In Texas, the essential elements of a breach of contract action are: (1) the existence of a valid
contract; (2) performance or tendered 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.” Smith Int’l,
Inc. v. Egle Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007) (alteration and quotation omitted).

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The undisputed record evidence shows that Baker defaulted and failed to cure the default.
(See Docket Entry No. 21-7). Baker has missed 22 mortgage payments, and he must pay
$58,876.71 to reinstate the loan. (Id. at 1). This claim fails under the well-settled rule that a
nonperforming party cannot assert contract breach. See Bonney v. U.S. Bank Nat’l Ass’n, 5-151057-CV, 2016 WL 3902607, at *5 (Tex. App.—Dallas July 14, 2016, no pet.).
Even assuming Baker had performed, he has not submitted or identified evidence
supporting a reasonable inference of breach.

Baker’s complaint alleges three breaches by

Roundpoint: (1) mishandling and denying his loan-modification application; (2) initiating
foreclosure proceedings; and (3) failing to apply Baker’s payments to the loan. Baker appears to
claim that he was entitled to a loan modification, otherwise there would be no basis to claim
contract breach for Roundpoint’s alleged paperwork error. But Texas law does not recognize a
general right to loan modification, and neither the note nor the deed gives Baker such a right.
Castro v. SN Servicing Corp., No. SA:15-CV-925-DAE, 2016 WL 2587294, at *4 (W.D. Tex.
May 4, 2016); (Docket Entry Nos. 21-2, 21-3).
The deed authorizes Roundpoint to sell Baker’s home if he defaulted and failed to cure the
default. (Docket Entry No. 21-3 at 6–7). Baker did default and failed to either pay the overdue
amount or seek reinstatement, triggering Roundpoint’s right to foreclose on the property. (See
Docket Entry No. 21-7). No record evidence supports that Roundpoint failed to credit Baker’s
payments. See Bank of Am. Nat’l Ass’n v. Stauffer, 728 F. App’x 412, 412–13 (5th Cir. 2018)
(after the summary judgment movant satisfies its burden, the nonmovant “cannot rest upon mere
allegations in the pleadings”).

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C.

Breach of Duty of Good Faith and Fair Dealing

According to Baker’s complaint, Roundpoint owed him a duty of good faith and fair
dealing and breached that duty by mishandling and denying his loan-modification application.
(Docket Entry No. 1-1 at 10–11). “Under Texas law, a duty of good faith is implied only in
contracts involving a special relationship marked by shared trust or an imbalance in bargaining
power, which ordinarily does not include a mortgagor and mortgagee relationship.” Smith v.
JPMorgan Chase Bank, N.A., 699 F. App’x 393, 395 (5th Cir. 2017) (citing FDIC v. Coleman,
795 S.W.2d 706, 708–09 (Tex. 1990)). Because Baker has not pointed to record evidence showing
that he had a special relationship with Roundpoint, he cannot prevail on this claim.
D.

Texas Debt Collection Act Violations

Baker’s complaint alleges that Roundpoint violated Texas Finance Code §§ 392.301(a)(7)
and 392.303(2). (Docket Entry No. 1-1 at 11–12). Section 392.301(a)(7) prohibits debt collectors
from “threatening that nonpayment of a consumer debt will result in the seizure . . . of a person’s
property without proper court proceedings,” and § 392.303(2) proscribes collecting incidental
charges unless they are “expressly authorized” by a note or deed.

TEX. FIN. CODE

§§ 392.301(a)(7), 392.303(2).
The § 392.301(a)(7) claim turns on Roundpoint’s alleged violation of the parties’
forbearance agreement. (See Docket Entry No. 1-1 at 12). For example, Baker’s complaint alleges
that Roundpoint demanded loan payments “despite his forbearance,” suggesting that it extends to
the present date. (Id.). But Roundpoint consented to only a temporary, three-month forbearance,
not permanent relief. (Docket Entry No. 21-6). As to the alleged § 392.303(2) violation, the note
and deed authorized Roundpoint to collect interest, costs, and attorney’s fees if Baker defaulted.

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(Docket Entry No. 21-2 at 1–2; Docket Entry No. 21-3 at 4, 6–7). There are no factual disputes
material to either alleged violation, and both fail as a matter of law.
E.

Texas Deceptive Trade Practices Act Violations

Baker’s complaint alleges that Roundpoint committed unspecified violations of the Texas
Deceptive Trade Practices Act. Baker must point to evidence raising an inference that he is a
“consumer” under the Act. Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 724 (5th
Cir. 2013) (“The DTPA protects consumers; therefore, consumer status is an essential element of
a DTPA cause of action.” (quotation omitted)). To qualify as a consumer: (1) Brown must have
sought or acquired “goods or services by lease or purchase”; and (2) “the goods or services . . .
must form the basis of the [his] complaint.” Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 159 (Tex.
App.—Fort Worth, 2007, pet. denied). The Texas Court of Appeals has held that “the servicing
of an existing loan, foreclosure activities, and a request to modify an existing loan do not involve
a good or service under the [Act.]” Ebrahimi v. Caliber Home Loans, Inc., 5-18-456-CV, 2019
WL 1615356, at *9 (Tex. App.—Dallas Apr. 15, 2019, pet. filed). The court has no basis to find
that Baker is a consumer of Roundpoint’s goods or services.
F.

Wrongful Foreclosure

Lastly, Baker’s complaint alleges that Roundpoint “has progressed a potential wrongful
foreclosure” on his property. A wrongful-foreclosure claim requires: (1) a “defect” in the
foreclosure sale; (2) a “grossly inadequate selling price”; and (3) a “causal connection between the
defect and the grossly inadequate selling price.” Morris v. Deutsche Bank Nat’l Tr. Co., 528
S.W.3d 187, 197 (Tex. App.—Houston [14th Dist.] 2017, no pet.). Baker must submit or identify
record evidence showing a foreclosure sale, and because this suit stayed the June 2019 sale of his

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home, this claim fails as a matter of law. See EverBank, N.A. v. Seedergy Ventures, Inc., 499
S.W.3d 534, 544 (Tex. App.—Houston [14th Dist.] 2016, no. pet.).
IV.

Conclusion
Summary judgment is granted for Roundpoint. (Docket Entry No. 16). Baker’s requests

for damages and attorney’s fees are denied. (Docket Entry No. 1 at 41–42). Final judgment is
separately entered.
SIGNED on June 19, 2019, at Houston, Texas.
_______________________________________
Lee H. Rosenthal
Chief United States District Judge

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