Martinez et al v. Capital Bank N.A.

Filing 12

MEMORANDUM OPINION AND ORDER - For the reasons explained, the court concludes that Plaintiffs have failed to state a claim upon which relief can be granted. However, Plaintiffs' Response articulates a potentially cognizable defamation or bus iness disparagement claim. Defendant Capital One, N.A.'s 5 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM is therefore GRANTED as to Plaintiffs' conversion, breach of fiduciary duty, breach of warranty, unconscionable acts, n egligence, and DTPA claims; and is GRANTED IN PART as to Plaintiffs' defamation claim. The court views this case as appropriate for mediation. Accordingly, if the parties are unable to settle the case by December 16, 2022, they shall provide the court with the name, address, email address, and telephone and facsimile numbers of an agreed upon mediator or request a settlement conference before the magistrate judge. (Signed by Judge Sim Lake) Parties notified.(sanderson, 4)

United States District Court
Southern District of Texas

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

November 18, 2022
Nathan Ochsner, Clerk

RAQUEL VEGA MARTINEZ d/b/a
§
AIRLINE INSURANCE and HUGO VEGA, §
§

Plaintiffs,

§

§
§
§
§
§

v.
CAPITAL ONE, N .A.

I

Defendant.

CIVIL ACTION NO. H-22-2767

§

MEMORANDUM OPINION AND ORDER

Raquel Vega Martinez

("Martinez") d/b/a Airline Insurance

("Airline") and Hugo Vega (collectively, "Plaintiffs") filed this
action in the District Court of Harris County,
Capital One,

N.A. ("Defendant").1

Texas,

against

Pending before the court is

Defendant Capital One, N .A.' s Motion to Dismiss Under Rule 12 (b) (6)
("Defendant's Motion to Dismiss" or "Defendant's MTD")
Entry No. 5).

(Docket

For the reasons stated below, Defendant's Motion to

Dismiss will be granted in part and denied in part.
I.

Factual Allegations and Procedural Background

Martinez is the sole proprietor of Airline Insurance,
independent

insurance

agency

and

multi

service

company

an
in

Plaintiffs' Original Petition and Application for Temporary
Restraining Order ("Complaint"), Exhibit 2 to Petition for Removal,
Docket Entry No. 1-2, p. 2. For purposes of identification all
page numbers reference the pagination imprinted at the top of the
page by the court's Electronic Case Filing ("ECF") system.
1

Harris County, Texas. 2

Airline previously had four locations in

Houston and eight employees. 3
with Defendant in 2019. 4

Martinez opened a business account

Martinez "applied for and received a PPP

loan on behalf of Airline Insurance from Customers Bank in the
amount of $7,292.00." 5

The funds were dispersed to Martinez's

business account with Defendant. 6

"Airline Insurance used the

funds for approved purposes under the CARES Act by using loan
proceeds on payroll costs and other eligible expenses, related to
payroll within her business." 7

"Customers Bank forgave the PPP

loan on October 8, 2021." 8
"On or about October 8, 2021 [Martinez] was made aware that
her business account was frozen by [Defendant] when business trans­
actions began to be declined." 9

Defendant informed Martinez that

it had frozen her Airline Insurance business account and her other
accounts and that it would close all of her accounts "due to an
'unauthorized PPP loan.' 1110

"Plaintiff informed Defendants that

at 3.
3

4

at 3-4.
8

at 4.

-2-

they were incorrect and demanded that the assets of Airline
Insurance remain available to her but, Capital One refused to do
so." 11 Defendant required documentation that Martinez "had employees
and proof that Airline Insurance was in operation." 12
complied. 13

Martinez

She "made countless calls to [Defendant]," but each

time "she is told that she will need to send her documents to prove
existence of her business and employees and wait for the review of
said documents." 14

Martinez "has sent the documents as instructed

and each time she follows up, [she] is told that the documents were
not received or that they are in the process of reviewing the
documents." 15

Defendant "has failed to provide any explanation for

their actions and every inquiry into the matter has revealed no
results to their investigations." 16

"Finally in January 2022

[Martinez] sent a demand for the release of the funds which were
frozen and notice of Deceptive Trade Practices." 17
not respond." 18

12
13
14

Id. at 5.

16

-3-

"Defendant[] did

Defendant has continued to withdraw a monthly maintenance

charge from Martinez's frozen account. 19 Airline Insurance collects

insurance premiums from insureds on behalf of other insurance

companies . 20

Those insurance companies continued to attempt to

collect the premiums that had been paid to Airline, but the account
freeze prevented these transactions.21

Defendant charged the

account $30 for each of these returned transactions for a total of
$510.

22

One insurance company terminated its relationship with

Airline because Airline could not pay them the premiums. 23
Airline also offers an auto title processing service.

It

"collects the cost of title, tax, registration and license plates
from the client,

. prepare[s] the documents on behalf of the

client and a runner will go to the Harris County Tax Office and
process the title change for a fee."24

Some title clients' funds

were in the frozen account, and "a total of (6) six checks [were]
returned to the Harris County Tax Office for title services that
the business had conducted. "25

"The Harris

County Assessor-

Collector sent a 10 day demand" for the title funds plus returned
19Id
.

20Id. at 6
21Id.
22Id.

23rd.

24I d at
.
25Id
.

7•

-4-

check fees, a total of $4,988.55.

The Harris County Tax Office

also threatened criminal action against Plaintiffs, and Airline
risked "losing [its] license to conduct business as a title service

in Harris County. 1126

The company providing payroll services to Airline was unable
to debit the frozen bank account and therefore blocked access to

Airline's payroll account. 27

Plaintiffs lost "access to employee

hours, withholding totals, employee insurance and 401k contributions
required to be made by Airline. 1128
Defendant continued to accept deposits, automatic commissions,
and credit card payments by clients into the frozen account.29

"The

total sum of Merchant processed credit card payments collected by
Defendant and held was ($18,870.44) ." 30 It was two weeks before
Plaintiffs had new accounts at other banks ready "to accept credit
for commissions and payment credits which had normally gone to
[Defendant] . 1131

Plaintiffs also shared a joint personal checking

account kept by Defendant, which was frozen along with the Airline
business account.32 "I n or around March 2022 [Defendant] closed the
26Id.
27Id.

2 sid .
29

Id. at 8.

30

31Id.
Id. at 3-4.

32

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Plaintiffs' personal joint checking account and mailed Plaintiff a
check for the funds that remained in the account." 33
Airline was delayed in doing payroll, "became delinquent in
rental

payments,"

employees." 34

and

"closed

one

"The actions of

location

[Defendant]

and

laid off

4

effectively soured

several business relationships, clients began to call the office
and appear in person, demanding their money back and accusing the
business publicly of theft.

1135

"At least one valuable employee

resigned after reporting being pressured by her family that she
might be blamed for the transactions she processed for clients.
Another staff member resigned after the stress of the clients
calling and leveling accusations of theft and threatening staff
over

refunds

payroll." 36

for

title

transactions

coupled

with

delays

in

"Though the Plaintiffs were eventually able to pay the

Harris County Tax Assessor and the insurance companies, they now
retain 4 employees and operate 2 locations. 1137

Plaintiffs "were

forced to rent out their home and are currently staying in the
guest room of a friend so that they were able to recover from the
financial setback [Defendant] caused.

33

Id. at 9.

34Id. at

7,

9.

Jsrd. at 8
6
3
37

Id. at 9.

3eid. at 9-10.
-6-

11

38

"The Plaintiffs primary

residence was nearly defaulted on the loan and the mortgage company
which holds the loan on a rental property is still threatening

foreclosure." 39

Martinez's credit score has also been lowered

because of Defendant's actions.40

"In or around April of 2022, Plaintiff received a bank
statement for Airline Insurance showing that on March 25, 2022
there was a check paid for the amount of $7,292.00, when Plaintiff
called Capital One she was told that no information can be given to
her and she was transferred to the fraud department.

Capital One

fraud reported that they could not give any information on who
authorized the check but that someone would contact Plaintiff by

phone and no more information could be given. "41 "Plaintiff did not
draw any check or authorize for any check to be paid from the
Insurance

Airline

[Defendant} . "42

business

account

improperly

frozen

by

On July 21, 2022, Plaintiffs filed this action in the District
Court of Harris County, Texas,

against Defendant. 43

Plaintiffs

allege conversion, breach of fiduciary duty, breach of warranty,
unconscionable acts, defamation, negligence, and violations of the
39Id. at 10.
4oid

.

42Id

. at 14.

41Id at 13-14.
.
43Id. at 2' 33.
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Texas Deceptive Trade Practices Act ("DTPA"} . 44
seek[]

"Plaintiff[s]

award for the damages to their good name,

and further

damages for the income Plaintiffs would have received had they not
been forced to close one of their locations."45

Plaintiffs also

seek

injunctions,

temporary

restraining

orders,

temporary

a

restoration order, interest, damages under the DTPA, and attorney's
fees and costs. 46
On August 15, 2022, Defendant removed the action to this court
based on diversity jurisdiction.47
filed its Motion to Dismiss.48

On October 12, 2022, Defendant

On October 20, 2022, Plaintiffs

filed Plaintiff's Response to Defendant Capital One, N.A.'s Motion
to Dismiss Under Rule 12(b) ( 6) ("Plaintiffs' Response") (Docket
Entry No. 6) .49
II.
A.

Legal Standard

Rule 12 (b) (6)

A Rule 12(b) (6) motion 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."
44

Id. at 14-18.

45

Id. at 17.

46

Id. at 17, 20.

47

Petition for Removal, Docket Entry No. 1, pp. 1, 6.

48

Defendant's MTD, Docket Entry No. 5, p. 1.

49

Plaintiffs' Response, Docket Entry No. 6, p. 1.
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Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert.
denied sub nom. Cloud v. United States, 122
"To

survive

a

motion

to

dismiss,

a

s. Ct. 2665 (2002).

complaint

must contain

sufficient factual matter, accepted as true, to 'state a claim to
relief that is plausible on its face.'"

Ashcroft v. Iqbal, 129

S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly,
127 S. Ct. 1955, 1974 (2007)).

The court generally is not to look

beyond the pleadings in deciding a motion to dismiss.

Spivey v.

Robertson, 197 F.3d 772, 774 (5th Cir. 1999).
III.
A.

Application

Conversion

The Complaint alleges that Defendant

"by its actions of

unlawfully freezing the personal account of Plaintiffs and the
business account for Airline Insurance have deprived Plaintiffs of
rightful ownership interest in their bank accounts, thus depriving
Plaintiffs of their property and their conduct has caused the
Plaintiffs to suffer harm, financially and to their reputation and
good name. 1150

Defendant argues that Plaintiff cannot state a valid

claim for conversion because a depositor generally cannot assert a
claim of conversion for the depositor's assets held by the bank. 51
Plaintiff responds that "Defendants are guilty or using false,
°Complaint, Exhibit 2 to Petition for Removal, Docket Entry
No. 1-2, p. 14.
5

51

Defendant's MTD, Docket Entry No. 5, pp. 10-11.
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misleading and deceptive acts of practice, for no good cause," that
Defendant never gave "a truthful or valid defense, or explanation,

11

and that "Defendants have intentionally and objectively gained
control of Plaintiff's accounts." 52
"Money may be the subject of an action for conversion if the
fund can be described or identified as a specific chattel."

First

National Bank of Bellaire v. Hubbs, 566 S.W.2d 375, 377 {Tex. Civ.
App.-Houston [1st Dist.] 1978).

"Ordinarily, a general deposit of

money with a bank creates a creditor-debtor relationship between
the depositor and the bank."

Hodge v. Northern Trust Bank of

Texas, N.A., 54 S.W.3d 518, 522 {Tex. App. 2001) (citing Bandy v.
First State Bank, Overton, Texas, 839 S.W.2d 609, 618 n.4 (Tex.
1992)).

A conversion claim therefore generally exists only where

the funds are a "special deposit," meaning "the bank keeps or
transmits identical property or funds entrusted to it."

Id.

The

person claiming that funds are special deposits bears the burden of
showing that the parties agreed to such an arrangement.

See

Citizens National Bank of Dallas v. Hill, 505 S.W.2d 246, 248 (Tex.
1974).
Plaintiff has not alleged that any of her funds were special
deposits or alleged any facts to that effect.

Therefore the

presumption that the parties had a debtor-creditor relationship
precludes Plaintiff from bringing a conversion action to recover
52

Plaintiff's Response, Docket Entry No. 6, p. 3
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1

8.

the deposited funds.
at 377;

First National Bank of Bellaire, 566 S.W.2d

see also E-Dealer Direct v. Bank of America,

N.A.,

EP-21-CV-62-DB, 2021 WL 2115299, at *4 (W.D. Tex. May 25, 2021)
(holding that bank's freezing plaintiff's general deposit account
could not be conversion).
Breach of Fiduciary Duty

B.

Plaintiff next alleges that Defendant's actions breached its
fiduciary duty to Plaintiffs.53

Defendant argues that it does not

owe Plaintiff a fiduciary duty under Texas law.54

Plaintiff

disagrees, citing a few cases and the Texas Business and Commerce
Code.55
None of Plaintiffs' cited

authority

states that a bank

normally owes its depositor a fiduciary duty.

To the contrary,

" [t] he relationship between a bank and its customer does not
usually create a fiduciary relationship."
v. Citizens Bank of Texas,

N.A.,

Wells Fargo Bank, N.A.

181 S.W.3d 790,

801

(Tex.

App.-Waco 2005); Wil-Roye Investment Co. II v. Washington Mutual
Bank, FA, 142 S.W.3d 393, 410 (Tex. App.-El Paso 2004).

Where

courts have found that a bank-customer relationship created a
fiduciary duty, they have relied on "extraneous facts and conduct,
Complaint, Exhibit 2 to Petition for Removal, Docket Entry
No. 1-2, p. 15.
53

54

1

55

22.

Defendant's MTD, Docket Entry No. S, pp. 11-13.

Plaintiffs' Response, Docket Entry No. 6, p. 5 1 19, p. 6
-11-

such as excessive lender control over,
borrower's business activities."

or influence in,

the

Davis v. West, 317 S.W.3d 301,

312 (Tex. App.-Houston 2009).
Plaintiffs' cited authority does not state that a bank owes a
fiduciary duty to its depositor. See Tex. Bus.

&

Com. Code§ 1.203

(merely imposing a duty of good faith); Hartford Casualty Insurance
Co. v. Walker County Agency, Inc., 808 S.W.2d 681, 687-88 (Tex.
App.-Corpus Christi 1991) (discussing fiduciary duty in principalagent relationships).

Plaintiff also cites no "extraneous facts

and conduct" indicating that their dealings with Defendant go
beyond an ordinary bank-customer relationship.
at 312.

For these reasons,

Davis, 317 S.W.3d

Plaintiffs' claim for a breach of

fiduciary duty fails as a matter of law.

c.

Breach of Warranty
The Complaint then alleges three "breaches" under the heading

"Breach of Warranty:"

"Defendants are guilty of breaching their

Express Warranty by actions which are improper and unauthorized.
Defendants are guilty of breaching their Merchantable duty, by use
of actions which are not performed as the Defendant so marketed.
Defendants are guilty [of]

breaching their Duty of Fitness, by

failing to provide service or resolution as their employees or
agents insured they would." 56
Complaint, Exhibit 2 to Petition for Removal, Docket Entry
No. 1-2, p. 16.
56

-12

Plaintiffs cite no authority and provide no explanation how
Defendant's alleged conduct satisfies the elements of any of these
claims.

Plaintiffs do not cite any express warranty or marketing

statement made by Defendant. Plaintiffs' Response does not resolve
these defects.

For these reasons, Plaintiffs' claims for "Breach

of Warranty" fail as a matter of law.
D.

Unconscionable Acts

The Complaint then alleges that "[t]he Defendants are guilty
of taking advantage of Plaintiffs' who are consumers,

lack of

knowledge, ability, experience, or capacity to a grossly unfair
degree." 57

The court construes this as a claim under Tex. Bus.

Com.

§

Code

17.50 (a) (3),

&

as the court is aware of no other

"unconscionable acts" claim under Texas law.

Section 17 .45 (5)

defines an "Unconscionable action or course of action" as one that
"takes advantage of the lack of knowledge, ability, experience, or
capacity of the consumer to a grossly unfair degree."

The

Complaint recites this definition but fails to explain what
knowledge or experience Plaintiffs lacked and how Defendant's
actions took advantage of Plaintiffs.

Defendant's Motion to

Dismiss will therefore be granted as to Plaintiffs' "unconscionable
acts" claim.
E.

Defamation and Business Disparagement

The Complaint alleges that Defendant defamed Plaintiffs.
Defendants argue that "Plaintiffs' defamation claim fails because

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(1) there was no publication' and (2) if Plaintiffs contend they
were damaged due to negative credit reporting, these claims are
preempted by the Fair Credit Reporting Act." 59

Plaintiffs respond

that Defendant returned Plaintiffs' checks to their clients unpaid
and labeled them "NSF." 59

Plaintiffs argue several other theories

of defamation, including that Defendant defamed Plaintiffs by
locking their accounts, that Defendant defamed Plaintiffs "by the
process of foreclosure, which Plaintiff is currently undergoing by
Defendant's

refusal

to

return

Plaintiff's

funds,"

and

that

Plaintiffs were defamed by having to file this lawsuit. 60
Under Texas law, "[d] efamation's elements include

(1) the

publication of a false statement of fact to a third party, (2) that
was defamatory concerning the plaintiff, (3) with the requisite
degree of fault, and (4) damages, in some cases."
460 S.W.3d 579, 593 (Tex. 2015).

In re Lipsky,

"'Publication' occurs if the

defamatory statements are communicated orally, in writing, or in
print to some third person who is 'capable of understanding their
defamatory import and in such a way that the third person did so
understand."'
(Tex. 2017).

Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 579
"[A] statement

defamatory if it tends to injure a

person's reputation and thereby expose the person to public hatred,
58

Defendant's MTD, Docket Entry No. 5, p. 15.

59

Plaintiffs' Response, Docket Entry No. 6, p. 17 � 61.

60

Id. at 11

�1

37-38, 40.
-14-

contempt, ridicule, or financial injury or to impeach any person's
honesty, integrity, virtue, or reputation."

Texas Disposal Systems

Landfill, Inc. v. Waste Management Holdings, Inc., 219 S.W.3d 563,
580 (Tex. App.-Austin 2007). When the defamed person is a private
individual, the requisite degree of fault is negligence as to the
statement's falsity.
Texas

also

In re Lipsky, 460 S.W.3d at 593.

recognizes

the

similar

tort

of

business

disparagement, which "applies to derogatory publications about the
plaintiff's economic or commercial interests.
460 S.W.3d at 591.

11

See In re Lipsky,

The elements of business disparagement are

"that (1) the defendant published false and disparaging information
about

[the plaintiff's business],

(2) with malice,

(3) without

privilege, (4) that resulted in special damages to the plaintiff."
Id. at 592. A statement is published with malice if the defendant
knew of its falsity.

See Hurlbut v. Gulf Atlantic Life Insurance

Co., 749 S.W.2d 762, 766 (Tex. 1987).
privilege,

The third element, lack of

means that a defendant can assert privilege as an

affirmative defense, not that the plaintiff must negate it.

See

Cisco Systems, Inc. v. Mushkin, Inc., Civil Action No. 3:20-CV2588-K, 2021 WL 3550515, at *9 (N.D. Tex. Aug. 11, 2021) (citing
Burbage v. Burbage, 447 S.W.3d 249, 254 (Tex. 2014)).

The special

damages element requires that plaintiff establish "pecuniary loss
that has been realized or liquidated as in the case of specific
lost sales."

Id. at *10.
-15-

A bank can commit business disparagement by bouncing a payor's
checks

while

falsely

telling

the

payee

insufficient funds to cover the check.

that

the

payer

had

See F.D.I.C. v. Perry

Brothers, Inc., 854 F. Supp. 1248, 1274 (E.D. Tex. 1994), vacated
on other grounds, Nationsbank v. Perry Brothers, Inc., 68 F.3d 466,
1995 WL 581536 (5th Cir. 1995).

In F.D.I.C. the court found that

a defendant "returned unpaid ('bounced') approximately $130,000 in
checks drawn on [the plaintiff'sJ checking accounts." Id. at 1258.
The defendant told the payees that the plaintiff "had 'insufficient
funds' in its checking accounts .

. to cover the checks."

Id.

But "at the time these checks were presented to [the defendant],
[the plaintiff's} accounts contained sufficient funds."
court held that the plaintiff had

Id.

The

"established its business

disparagement claim against" the defendant.

Id. at 1274.

On

appeal, the Fifth Circuit remanded the case for further findings
regarding causation and damages, but the Fifth Circuit affirmed the
finding that the "dishonored checks" were business disparagement.
Nationsbank, 68 F.3d 466, at *2.
Plaintiffs' defamation claim is insufficiently pled in the
Complaint.

The Complaint

does

not

published by Defendant to a third party.

identify

any

statements

But Plaintiffs' Response

provides facts that may support a legally cognizable claim for
defamation, business disparagement, or both based on the "NSF"
checks. Plaintiffs state that Defendant "published and printed NSF
on the checks they returned unpaid to the Harris County Tax
-16-

assessor. " 61

Plaintiffs also state that Defendant "returned all

checks NSF" after the account freeze. 62

Taking as true that the

checks bounced because of the freeze and not because of the
account's balance, these allegations resemble the bank's statements
in F.D.I.C. Plaintiffs' Response alleges damages caused by the NSF
checks, stating that "Plaintiff was subject to prosecution for
issuing bad checks" and that Plaintiffs lost business relationships
with insurance clients as well as the Harris County Tax Assessor,
all due to the NSF checks.63

For these reasons, the facts stated

in Plaintiffs' Response may support a defamation or business
disparagement
throughout

But

claim.

Plaintiffs'

these

Response,

adequately plead these claims.

allegations

and

the

are

Complaint

scattered
does

not

"Generally, a district court errs

in dismissing a complaint for failure to state a claim under
Rule 12 (b) (6) without giving the plaintiff an opportunity to
amend."

Naglich v. Applied Optoelectronics, 436 F. Supp. 3d 954,

980 (S.D. Tex. 2020).

Dismissing the complaint is appropriate when

"a complaint alleges the plaintiff's best case.

Given

11

Plaintiffs' potential defamation and business disparagement claims,
the court is not persuaded that the Complaint alleges Plaintiffs'
Plaintiffs' Response, Docket Entry No. 6, p. 17 1 61.
court understands "NSF" to stand for "insufficient funds,
Plaintiffs should make that explicit.
61

11

62

Id. at 8 1 29.
-17-

The
but

best case.

The court will therefore allow Plaintiffs to file an

amended complaint by December 2,

2022.

The amended complaint

should allege facts supporting the elements of their business
disparagement and defamation claims and explain how those facts
support each element of the claims.
Plaintiffs also allege that they were defamed because (l} they
were locked out of the account, (2) the account freeze led to
foreclosure proceedings,
lawsuit.

and ( 3)

Plaintiffs had to file this

These allegations fail to state a defamation or business

disparagement claim because they do not identify any statement
published by Defendant to a third party.

See In re Lipsky, 460

S.W.3d at 593.
F.

Negligence

Plaintiffs appear to allege a negligence claim.

However,

Plaintiffs' Complaint and Response cite no authority and fail to
explain how the factual allegations satisfy the elements of a
negligence claim.

Defendant's Motion to Dismiss will therefore be

granted as to Plaintiffs' negligence claim.
G.

DTPA Claims

The Complaint includes a list of alleged DTPA violations.
Tex. Bus.

& Com. Code

§

17.46(b)

lists many types of "false,

misleading, or deceptive acts or practices.

11

Section 17. 50(a}

permits a consumer to bring a claim for an act specifically
-18-

enumerated in

§

17. 46{b) if the act was "relied on by a consumer to

the consumer's detriment."
The Complaint fails to plead these DTPA claims with any
particularity.

Instead, Plaintiffs merely list portions of the

DTPA that they claim Defendants violated.

Plaintiffs' Response

gives slightly more explanation of a few of the DTPA claims.

But

the only mention of the detrimental reliance requirement is
Plaintiffs' bare assertion that they relied to their detriment.
Defendant's Motion to Dismiss will therefore be granted as to
Plaintiffs' DTPA claims.
IV.

Conclusion and Order

For the reasons explained above, the court concludes that
Plaintiffs have failed to state a claim upon which relief can be
granted.

However, Plaintiffs' Response articulates a potentially

cognizable defamation or business disparagement claim.

Defendant

Capital One, N.A.'s Motion to Dismiss Under Rule 12{b) (6)

(Docket

Entry No. 5) is therefore GRANTED as to Plaintiffs' conversion,
breach of fiduciary duty, breach of warranty, unconscionable acts,
negligence,

and

DTPA claims;

and

is GRANTED

IN

PART

as to

Plaintiffs' defamation claim.
The court views this case as appropriate for mediation.
Accordingly,

if the parties are unable to settle the case by

December 16,

2022,

they shall provide the court with the name,
-19-

address, email address, and telephone and facsimile numbers of an
agreed upon mediator or request a settlement conference before the
magistrate judge.
SIGNED at Houston, Texas, on this 18th day of November, 2022.

SIM LAKE
SENIOR UNITED STATES DISTRICT JUDGE

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