Jordan et al v. Bank of America, N.A.

Filing 48

MEMORANDUM AND ORDER granting in part denying in part 25 MOTION to Dismiss 15 Amended Complaint/Counterclaim/Crossclaim etc. (Signed by Judge Keith P Ellison) Parties notified.(ArturoRivera, 4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MICHAEL T. JORDAN, et al.,

Plaintiffs,
VS.
BANK OF AMERICA, N.A.,

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February 05, 2024
Nathan Ochsner, Clerk

CIVIL ACTION NO. 4:23-cv-01092

Defendant.

MEMORANDUM & ORDER
Pending before the Court is a Motion to Dismiss Plaintiffs’ First Amended Complaint (the
“Motion”) filed by Defendant Bank of America, N.A. (“Defendant” or “BOA”). Doc. 15. The
Court held a hearing on the Motion on December 11, 2023, and took the matter under advisement.
After considering the Motion, briefings, arguments made at the hearing, and the applicable law,
the Court GRANTS IN PART and DENIES IN PART Defendant’s Motion to Dismiss for the
reasons explained below.
I.

BACKGROUND
A. Alleged Facts
In 2005, Plaintiff Michael Jordan (“Michael” or “Borrower”) bought the real property

located at 7739 Antoine Dr., Houston, TX 77088 (the “Property”). Doc. 15 ¶ 8. Michael partially
financed the purchase by taking out at $61,500 mortgage loan from GMAC Mortgage Corporation
secured by a first lien deed of trust on the Property. Id. ¶ 9. He subsequently took out a loan of
$34,061.03 from Defendant secured by a junior lien deed of trust on the Property (the “loan”). Id.
¶ 10; see also Doc. 25 at 7 (“On November 21, 2006, Borrower executed a Deed of Trust on the
Property in favor of BANA.”); id. at 8 (“The Deed of Trust granted BANA the power of sale upon
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Borrower’s default.”).
In February 2021, Michael gave power of attorney to his daughter, Plaintiff Uvalda Jordan
(“Uvalda,” and together with Michael, “Plaintiffs”). Doc. 15 ¶ 15. Michael defaulted on the loan
secured by the junior lien due to declining health and financial stress caused by, among other
factors, a rare and extreme freeze in Texas, and the COVID-19 pandemic. Id. ¶ 16.
In May 2022, Defendant filed a Notice of Acceleration and Notice of Trustee’s Sale in the
Harris County Property Records. Doc. 25 at 9. Parties do not dispute that the loan was in default
at this time. In July 2022, the Trustee conducted a foreclosure sale and sold the Property to SSS
Fortune, LLC for $167,500. Doc. 15 ¶ 12. At the time of the sale, Michael owed Defendant
approximately $9,967. Id. ¶ 13. The Property, he alleges, had a fair market value of at least
$225,000. Id. ¶ 14.
In spring 2022, Plaintiffs contacted Defendant to start the process of applying for loss
mitigation. Id. ¶ 17. Before the foreclosure sale has been noticed or scheduled, Plaintiffs claim
they submitted a loss mitigation application. Id. They were assigned Jansen Poole as the Loan’s
loss mitigation case manager. Id. Poole allegedly confirmed on the phone that Defendant had
received the application and that the foreclosure activity was on hold while Defendant reviewed
the application. Id. ¶ 18. However, Plaintiffs then learned of the foreclosure sale scheduled to take
place under the loan on July 5, 2022. Id. ¶ 19. Plaintiffs contacted Defendant, and were informed
that additional documents were needed, and that the sale would not take place if these documents
were provided. Id. ¶ 20. Plaintiffs provided the required documents. Id. ¶¶ 21-24, 27. Plaintiffs
also indicated that they intended to pay the loan off and asked for wire instructions. Id. ¶ 26. On
July 5, Plaintiffs called Defendant to check on the status of the loss mitigation application. Id. ¶
29. Defendant’s representative informed them that Defendant was still missing one form, Plaintiffs

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informed her that they had already provided the form, and the representative advised them to send
it again. Id. The representative did not inform Plaintiffs that the foreclosure sale was taking place
that day.
Two days later, Plaintiffs received a cold call stating the Property had been foreclosed on.
Id. ¶ 30. Plaintiffs called Defendant and spoke with their case manager, Poole, who stated that one
form was still needed (which Plaintiffs allege they had already submitted) and that the foreclosure
was on pause while Defendant waited for the document. Id. When Plaintiffs asked about the cold
call they had received, Poole put Plaintiffs on hold and then came back on the line and admitted
that the Property was foreclosed two days prior. Id. ¶ 32. The line was disconnected. Id. Plaintiffs
attempted multiple times after that to speak with Defendant and Defendant’s lawyers about the
foreclosure. Id. ¶ 33-37. Plaintiffs allege that, during one of these calls, Defendant’s representative
“admitted the foreclosure was not right because BOA told Plaintiffs the sale was paused and on
hold and would not take place when that was not true.” Id. ¶ 37.
In August 2022, Defendant’s lawyer emailed Plaintiffs with two options: either Defendant
could rescind the sale and restore the Property in Michael’s name, or Plaintiffs could accept the
excess proceeds resulting from the sale. Id. ¶ 38. Plaintiffs responded that they would accept the
recission of the sale and additionally requested that all construction work commenced on the
Property by the third-party buyer, SSS Fortune, be completed and up-to-code, and that any hazards
resulting from the work be remedied. Id. ¶ 41. Plaintiffs allege that the buyer had begun to make
unauthorized improvements to the Property that were not approved by the homeowners’
association and were not up-to-code, leaving the Property uninhabitable. Id. ¶¶ 47-48. Defendant’s
lawyer emailed Plaintiffs stating that Defendant was “obtaining bids from vendors with respect to
the repairs/work needed at the property” and that Defendant had “instructed [the lawyer] would

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move forward with the sale recission process.” Id. ¶ 44. Plaintiffs asked for a timeline, and
Defendant’s lawyer replied that the sale recission process would take 1-2 weeks once the required
documents were completed and that he could not provide a time estimate for work to be performed
at the Property. Id. ¶ 45.
In September 2022, Defendant’s lawyer called Plaintiffs and told them Defendant would
not (1) complete a rescission of the foreclosure sale and have title to the Property restored to
Michael’s name; (2) complete all work and improvements started at the Property by SSS Fortune;
(3) remedy hazards resulting from the work and improvements started at the Property by SSS
Fortune. Id. ¶ 46.
B. Procedural History
Plaintiffs commenced this action in state court in February 2023, alleging violations of the
Real Estate Settlement Procedures Act (RESPA), breach of contract, common law fraud, fraud by
non-disclosure, violations of the Texas Debt Collection Act (TDCA), negligent misrepresentation,
promissory estoppel, and a claim for excess proceeds. Doc. 1-1. Defendant removed the case to
this Court. Defendant previously brought a Motion to Dismiss under Rule 12(b)(1) for lack of
standing with respect to Uvalda, and under 12(b)(6) for failure to state a claim on all claims. Doc.
6. This Court dismissed with prejudice Plaintiffs’ TDCA and RESPA claims and dismissed the
other claims without prejudice to Plaintiffs repleading. See Minute Entry dated 06/07/2023.
Plaintiffs filed their First Amended Complaint (the “Complaint”) in June 2023. Doc. 15.
Defendant now moves to dismiss Uvalda’s claims for lack of standing, pursuant to Rule 12(b)(1),
and moves to dismiss the Complaint in its entirety, with prejudice, pursuant to Rule 12(b)(6), for
failure to state a plausible claim for relief.

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II.

STANDARD OF REVIEW
A. Rule 12(b)(1)
A court may dismiss a complaint for lack of subject-matter jurisdiction. Fed. R. Civ. P.

12(b)(1). A court lacks subject matter jurisdiction over a plaintiff if that plaintiff lacks standing to
bring a claim. Moore v. Bryant, 853 F.3d 245, 248 (5th Cir. 2017). To establish constitutional
standing under Article III, a moving party must show (1) injury in fact which is (a) concrete and
particularized and (b) actual or imminent (the “case or controversy” requirement); (2) a causal
connection between the injury and the conduct complained of; and (3) likely that the injury will
be redressed in a favorable direction. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).
B. Rule 12(b)(6)
A court may dismiss a complaint for “failure to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6). “To survive a Rule 12(b)(6) motion to dismiss, a complaint
‘does not need detailed factual allegations,’ but must provide the plaintiff’s grounds for entitlement
to relief—including factual allegations that when assumed to be true ‘raise a right to relief above
the speculative level.’” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
A complainant must plead “enough facts to state a claim of relief that is plausible on its
face.” Twombly, 550 U.S. at 570. This must be more than “[a]n unadorned, the-defendantunlawfully-harmed-me accusation” or “a sheer possibility that a defendant has acted unlawfully.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rather, a claim is plausible on its face only “when the
pleaded factual content allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. at 678. While the court must accept well-pleaded facts as
true, legal conclusions are not entitled to the same assumption of truth. Id.

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III.

ANALYSIS
A. Whether Uvalda has Standing Under Rule 12(b)(1)
Defendant first argues that the Court should dismiss Uvalda’s claims against Defendant

pursuant to Rule 12(b)(1) because she lacks Article III standing. According to Defendant:
It is indisputable that Non-Borrower [Uvalda] is not a party to the Note or Deed of Trust,
as those contracts were executed by Borrower only. Thus, Non-Borrower does not have
standing to bring any claims against BANA relating to the Note, the Deed of Trust, the
servicing of the Loan, or the foreclosure sale. Because each of Plaintiffs’ claims stems from
the Note and Deed of Trust, and because Non-Borrower is not a party to those contracts,
she lacks Article III standing.
Doc. 25 at 12. Plaintiffs do not respond to this part of Defendant’s MTD. Pursuant to Local Rule
7.4, failure to respond to a motion will be taken as representation of no opposition. Moreover, the
Court agrees with Defendant that Uvalda, as a non-borrower, lacks Article III standing as to the
claims remaining in the lawsuit. The Court dismisses with prejudice Uvalda’ claims pursuant to
Rule 12(b)(1).
B. Whether Michael Plausibly States Claims under Rule 12(b)(6)
Having dismissed Uvalda’s claims under Rule 12(b)(1), the Court turns to considering the
claims properly asserted by Michael. The Complaint alleges breach of post-foreclosure contract,
common law fraud, fraud by non-disclosure, negligent misrepresentation, and promissory
estoppel. Defendant asserts that Michael fails to state a plausible claim for relief and urges the
Court to dismiss the Complaint in its entirety.
i.

Breach of a Post-Foreclosure Contract

Michael alleges that, following the foreclosure, he entered a valid contract with Defendant
to rescind the foreclosure sale, complete all construction work to bring the Property up to code,
and remedy any hazards resulting from the work by the third-party purchaser. On September 8,
2022, Defendant informed Michael that it would not rescind the foreclosure sale nor make the
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improvements to the Property. Doc. 28 at 3. Michael claims that “BANA breached the [postforeclosure] contract by refusing and failing to perform their promises, by voluntarily acting to
make its performance of its contractual obligations impossible, by voluntarily acting to make
Michael Jordan’s performance of his contractual obligations impossible, by repudiating the
contract, and by terminating the contract.” Doc. 28 at 13.
Under Texas law, the elements of a breach of contract claim 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 to the plaintiff resulting from the breach.” Lewis v. Bank of Am.
NA, 343 F.3d 540, 544-45 (5th Cir. 2003). To form a valid and binding contract, the following
elements are needed: “(1) an offer, (2) acceptance in strict compliance with the terms of the offer,
(3) a meeting of the minds, (4) each party’s consent to the terms, and (5) execution and delivery
of the contract with the intent that it be mutual and binding.” Gallier v. Woodbury Fin. Servs., Inc.,
171 F. Supp. 3d 552, 567 (S.D. Tex. 2016) (quoting Thornton v. Dobbs, 355 S.W.3d 312, 316
(Tex.App.–Dallas 2011, no pet.)).
According to Michael, a series of emails between the parties (outlined below) forms the
basis of the alleged contract because “there was an offer, a clear and definite acceptance, mutual
assent, execution and delivery of the contract with the intent that it be mutually binding, and
consideration.” Doc. 28 at 12.
•

On August 3, Defendant’s attorney, Jeffrey S. Aiken, sent Plaintiffs an offer via email to
either rescind the foreclosure sale or provide the excess proceeds. The email encouraged
Plaintiffs to make a decision as quickly as possible because the “Third Party Purchaser is
presently cooperating and we want to keep things cordial with them.” Doc. 15 ¶ 38.

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•

On August 11, Plaintiffs accepted the recission and requested that all work commenced on
the house by the third-party purchaser be completed and up-to-code and that any hazards
be remedied. Id. ¶ 41.

•

On August 30, Defendant’s attorney emailed Plaintiffs stating Defendant was obtaining
bids from vendors with respect to the repair work, and that Defendant “also instructed me
to move forward with the sale recission process. This will ultimately place title back in
[Michael’s] name (as the borrower).” Id. ¶ 44.

•

On August 31, in response to an email from Plaintiffs asking how the long the sale recission
and repair process would take to complete, Defendant’s attorney confirmed that “[o]nce
everything is lined up, the recession process can be completed in one – two weeks” and
“[a]s for the work to be performed at the property, that is not something which I can
estimate.” Id. ¶ 45.
Michael claims that as consideration, he “agreed to sign documents drafted by BANA to

rescind the foreclosure sale, agreed to forego $154,000 in excess proceeds due to him, and agreed
to the Loan being reinstated against him and the Property.” Doc. 28 at 12.
Defendant makes two arguments for the lack of a valid contract. First, Defendant claims
there was no acceptance and meeting of the minds on the terms of any post-foreclosure agreement.
According to Defendant, Michael’s “alleged ‘acceptance’ of BANA’s alleged ‘offer’ was not in
‘strict compliance with the terms of the offer’ because [Michael’s] ‘request’ that ‘repairs on the
house be completed’ was not part” of Defendant’s original offer. Doc. 31 at 4. Defendant contends
that Michael’s response “introduced a new material contractual term (that ‘repairs on the house be
completed’) and was a counteroffer, which BANA did not accept or assent to in writing.” Id.
“Under contract law, the determination of a meeting of the minds, and thus offer and

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acceptance, is based on an objective standard. Therefore, a contract can still be effective if signed
by only one party. Specifically, if one party signs, the other may accept by his acts, conduct, or
acquiescence in the terms of the contract.” Brown v. Mesa Distributors, Inc., 414 S.W.3d 279,
285 (Tex. App. 2013) (internal citations omitted) (emphasis added). Defendant’s argument that it
never accepted Plaintiffs’ counteroffer seems contrary to Defendant’s alleged words and conduct.
In response to Plaintiffs’ counteroffer, Defendant’s counsel said Defendant was “currently
obtaining bids from vendors with respect to the repairs/work needed at the property” and
immediately followed this statement by saying Defendant has “also instructed me [counsel] to
move forward with the sale recission process.” Doc. 15 at 10.
The Court agrees with Michael that by showing that Defendant started the process of
obtaining bids (conduct) and unequivocally stating that it was moving forward with the sale
recission process (words), Michael has provided sufficient factual material to support acceptance
(and therefore contract formation) on behalf of Defendant.
Next, Defendant claims that even if a contract were formed, Michael did not satisfy the
condition precedent:
[T]he Borrower’s responsibility to provide the required documents to BANA in advance
of the scheduled sale was a condition precedent to any performance by BANA. Because
this condition was not satisfied (there is no evidence BANA told Plaintiff his obligation to
provide documentation was satisfied), no performance was required of BANA aside from
the obligations set forth in the mortgage documents.
Doc. 31 at 5.
The Court understands Defendant to be referring to Michael’s alleged failure to supply all
of the forms required for his loan modification application. However, contrary to Defendant’s
representation, Michael is alleging that he and Defendant entered into a valid contract separate
from the loan contract. Defendant does not point to any authority indicating that a condition

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precedent to the original mortgage contract would transfer automatically to a subsequent contract,
such as the one allegedly formed here through email correspondence regarding foreclosure
recession and property repairs. Moreover, Michael pleads that he was excused from performing
on the alleged post-foreclosure contract because of Defendant’s material breach (or alternatively,
Michael pleads that Defendant repudiated Michael’s dependent promise or prevented him from
performing). Doc. 15 at 12-13. As Michael correctly notes, “[a]ccording to basic contract law, the
non-breaching party would be excused from further performance under the contract.” Doc. 28 at
17; see also Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994) (“A fundamental
principle of contract law is that when one party to a contract commits a material breach of that
contract, the other party is discharged or excused from any obligation to perform.”).
The Court finds that Michael has pleaded in sufficient detail a factual situation whereby a
valid and enforceable post-foreclosure agreement was made and breached by Defendant. Thus, the
Court finds Michael’s breach of contract claim to be facially plausible and denies Defendant’s
Motion to Dismiss with respect to this claim.
ii.

Common Law Fraud

Michael asserts a tort claim for common law fraud. According to Michael, Defendant
represented that the foreclosure activity was paused, and that it would notify Plaintiffs if that
changed. Michael alleges that these representations were false—Defendant was going forward
with the foreclosure. Michael claims he relied on these representations by not paying off the loan
and continuing to seek mitigation alternatives. Common law fraud exists where:
(1) a material representation was made; (2) the representation was false; (3) when
the representation was made, the speaker knew it was false or made it recklessly
without any knowledge of the truth and as a positive assertion; (4) the
representation was made with the intention that it be acted upon by the other party;
(5) the party acted in reliance on upon the representation; and (6) the party suffered
injury.
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Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998).
The Federal Rules of Civil Procedure impose a heightened pleading standard for fraud
allegations, requiring a plaintiff to “state with particularity the circumstances constituting fraud or
mistake.” Fed. R. Civ. P. 9(b). “At a minimum, Rule 9(b) requires that a plaintiff set forth the
‘who, what, when, where, and how’ of the alleged fraud.” U.S. ex rel. Thompson v. Columbia/HCA
Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (quoting Williams v. WMX Tech., Inc., 112
F.3d 175, 179 (5th Cir.1997)). Rule 9(b) also provides that any state-of-mind requirement for a
fraud claim “may be alleged generally.” Fed. R. Civ. P. 9(b). Here, the Complaint sets forth the
“who, what, when, where” of the alleged fraud:
A few days after the application was submitted [in May 2022], Plaintiffs called BOA and
spoke with Jansen Poole [the loan’s loss mitigation case manager]. Jansen Poole confirmed
that BOA received the application and Jansen Poole stated that foreclosure activity on the
Property was on hold and paused while BOA reviewed the application. Jansen Poole also
indicated that if foreclosure activity would be resumed, BOA would notify Plaintiffs.
Doc. 15 ¶ 18.
However, in-mid June, Plaintiffs became aware of a scheduled foreclosure sale of the
Property. The Court finds no allegations that Defendant represented to Plaintiffs, at that point in
time, that the foreclosure activity was paused—only that it would be paused once Defendant
received the required outstanding documentation. Plaintiffs do not allege that Defendant ever told
them that all the required documentation had been received. See Doc. 15 ¶ 25 (“On the same June
17, 2022 call . . . Meagan stated that the foreclosure sale scheduled for July 5, 2022 would not take
place once the form 4506T was provided.”); id. ¶ 29 (“On July 5, 2022, Plaintiffs called BOA to
check the status of the loss mitigation application and spoke with Kathleen. Kathleen stated that
BOA still needed a completed form 4506T. Plaintiffs stated they had already provided the
completed form. Kathleen advised to send it again.”).
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In another case, a district court denied a defendant’s motion to dismiss a plaintiff’s common
law fraud claim when the plaintiff alleged that the defendant foreclosed on his property after telling
him “over the phone that no foreclosure sale would take place in April and Plaintiff would have
time to submit the documents necessary to obtain a loan modification.” Mandala v. Wells Fargo
Bank, N.A., No. CIV.A. 4:12-2335, 2013 WL 1828022, at *1 (S.D. Tex. Apr. 30, 2013). By
contrast, here, Michael does not allege that, after the July 5 foreclosure sale was scheduled,
Defendant represented to him that the sale would not take place while his incomplete loan
application was pending.
Moreover, a promise to do an act in the future is not actionable fraud (because it does not
constitute a misstatement of an existing fact) unless it is “made with the intention, design, and
purpose of deceiving, and with no intention of performing the act.” Spoljaric v. Percival Tours,
Inc., 708 S.W.2d 432, 434 (Tex.1986). Michael does not plead sufficient facts to demonstrate that
Defendant promised him it would cancel the sale (if he presented it with certain documents) while
knowing it would never do so. See Stolts v. Wells Fargo Bank, NA, 31 F. Supp. 3d 876, 883 (S.D.
Tex. 2014) (“[T]he facts do not demonstrate that . . . Defendant made a promise to consider a loan
modification while knowing it would never do so.”). Michael has not alleged that Defendant had
no intention of putting the sale on hold if he submitted all required documents.
Michael counters this by arguing that that “false statements of opinion about a future event
are actionable if, as Michael has alleged, the defendant: (1) purports to have special knowledge of
facts that will occur in the future; (2) has present knowledge that the statement is false; and (3)
offers an opinion based on facts known to be false.” Doc. 28 at 19; see Trenholm v. Ratcliff, 646
S.W.2d 927, 930 (Tex. 1983) (“An expression of an opinion as to the happening of a future event
may also constitute fraud where the speaker purports to have special knowledge of facts that will

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occur or exist in the future.”). While the Court agrees that Defendant may have had special
knowledge, the Court once again does not find that Michael has alleged facts that Defendant
(particularly during the July 5 call with Kathleen) represented that the foreclosure sale was not
proceeding that day.
Next, while the statute of frauds in Texas does not apply here because the loan agreement
between parties is less than $50,000 in value, Defendant points to the “express language of the
Deed of Trust, the parties’ operative agreement, which states that ‘Grantor understands Lender
will not give up any of Lender’s rights under this Deed of Trust unless Lender does so in writing’
and that any change or amendment to the Deed of Trust ‘must be in writing’ and signed by the
party to be bound.” Doc. 31 at 3. Michael does not allege Defendant provided a signed writing of
the alleged representation, which was required by the Deed of Trust because it would have altered
the terms of the parties’ loan agreement.
Lastly, Defendant argues that, under Texas law, a “borrower’s alleged reliance on a
lender’s purported oral promise not to foreclose his property before a particular date that was
beyond the loan maturity date provided for in the written deed of trust is not ‘justified’ as a matter
of law.” Doc. 31 at 6. Another court in this district reached the same conclusion in a case with a
similar fact pattern, finding that “the plaintiffs’ reliance on alleged oral representations by
customer service representatives that were contradicted by the terms of the loan agreement and the
notice of foreclosure was not reasonable as a matter of law.” Luebano v. Seterus, Inc., No. CV H13-0079, 2013 WL 12155019, at *1 (S.D. Tex. Mar. 28, 2013).
For the above reasons, the Court dismisses, with prejudice, Michael’s common law fraud
claim.
iii.

Negligent Misrepresentation

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Michael alleges that Defendant negligently misrepresented that the foreclosure process was
on hold while Michael’s loss mitigation application was pending and that it would inform them if
it resumed and if a foreclosure sale was taking place. Michael claims he relied on these
representations to not pay off the home or try to sell the home: “But for the representations,
Plaintiffs would have paid the Loan off before the foreclosure sale and realized their full equity in
the Property rather than try to continue loss mitigation alternatives with BOA.” Doc. 15 ¶ 118.
Defendant argues that Michael’s negligent misrepresentation claim fails because, “under
Texas law, promises of future action are not actionable as a negligent-misrepresentation tort.” De
Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x. 200, 205 (5th Cir. 2012). Defendant
provides several authorities for the contention that oral promises not to foreclose are not actionable
under a negligent misrepresentation claim. See Doc. 25 at 21 (listing cases).
Michael attempts to characterize Defendant’s statements as statements of “existing fact,
namely that the foreclosure process was ‘paused’ or ‘on hold’ and that the required documents had
been ‘updated into BOA’s system.’” Doc. 28 at 21. However, in addition to not citing to on-point
authorities, Michael again does not allege that, after he was notified of the July 5 foreclosure sale,
Defendant made any representation to him that the outstanding documents had been received and
the sale had been paused.
Thus, the Court dismisses, with prejudice, Michael’s negligent misrepresentation claim.
iv.

Fraud by Non-Disclosure

Michael alleges that Defendant had a duty to disclose the ongoing foreclosure activities
because its previous representations were misleading or untrue. See Doc. 15 ¶ 124-136. For fraud
by non-disclosure, Defendant must have possessed a duty to disclose:
When particular circumstances impose on a person a duty to speak, silence can
constitute a false representation. An affirmative duty to disclose may arise in four
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circumstances: (1) where there is a fiduciary or confidential relationship between
the parties; (2) where a person voluntarily discloses information, he must disclose
the whole truth; (3) when a person makes a representation and new information
makes that earlier misrepresentation misleading or untrue; and (4) when a person
makes a partial disclosure and conveys a false impression. . . .
Where a duty to disclose exists, the elements of fraud by nondisclosure are (1) a
party conceals or fails to disclose a material fact within the knowledge of that party;
(2) the party knows that the other party is ignorant of the fact and does not have an
equal opportunity to discover the truth; (3) the party intends to induce the other
party to take some action by concealing or failing to disclose the fact, and (4) the
other party suffers injury as a result of acting without knowledge of the undisclosed
fact.
In re Enron Corp. Sec., Derivative & “ERISA” Litig., 490 F. Supp. 2d 784, 794 (S.D. Tex. 2007)
(internal citations and quotation marks omitted).
The Court finds that the Complaint sets forth specific, non-conclusory allegations that
adequately state a claim for fraud by nondisclosure. Michael alleges that, on June 17, Defendant’s
representative Meagan “stated that the foreclosure sale scheduled for July 5, 2022 would not take
place once the form 4506T was provided.” Doc. 15 ¶ 25. During that call, Michael allegedly also
told Meagan that he intended to pay the loan off if the foreclosure sale was not postponed. Id. ¶
26. Michael alleges that, shortly after this call, he provided Defendant with a completed form
4506T. Id. ¶ 27. On June 20, Defendant sent Michael a payoff statement, per his request. Id. ¶ 28.
On July 5, Michael again spoke with Defendant (this time, representative Kathleen), who informed
him that the form 4506T was still outstanding and advised him to send it again, without mentioning
that the foreclosure sale was proceeding that very same day. Id. ¶ 29.
Defendant failed to inform Michael that the foreclosure sale was taking place on the same
day it advised him to re-send the form 4506T (after representing to him that foreclosure
proceedings would be paused once the form was received) and with knowledge that Michael would
have paid off the loan if the sale was not paused. This omission satisfies the pleading standards to

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survive a 12(b)(6) motion to dismiss on this claim. Thus, the Court denies Defendant’s Motion to
Dismiss with respect to Michael’s claim for fraud by nondisclosure.
v.

Promissory Estoppel

Under Texas law, to establish a claim of promissory estoppel, Michael must show that: 1)
Defendant made a promise, 2) Michael reasonably relied upon that promise to his detriment, and
3) injustice can be avoided only by enforcing the promise. English v. Fischer, 660 S.W.2d 521,
524 (Tex. 1983).
a. Promises before Foreclosure
Michael alleges that Defendant communicated several promises to him before the
foreclosure, including “assuring the foreclosure process on the Loan was paused and on hold;
committing to inform Plaintiffs if the foreclosure process resumed; stating that the foreclosure sale
scheduled for July 5, 2022, would not occur if Plaintiffs submitted additional documentation as
requested by BANA.” Doc. 28 at 7.
Defendant relies on the statute of frauds to assert that the promises were not made in
writing, but in Texas, for the statute of frauds to apply, the loan agreement in question must exceed
$50,000 in value. Tex. Bus. & Com. Code § 26.02(b) (“A loan agreement in which the amount
involved in the loan agreement exceeds $50,000 in value is not enforceable unless the agreement
is in writing and signed by the party to be bound or by that party's authorized representative.”).
Here, it is undisputed by parties that the loan in question was less than $50,000—therefore, the
statute of frauds does not apply to any promises Defendant allegedly made before foreclosure.
b. Promises after Foreclosure
Michael alleges that Defendant promised to rescind the sale and complete all work started
by the third-party purchaser. Michael states that but for the promises, “Plaintiffs would not have

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refrained for so long from securing and weather proofing the Property after SSS Fortune had
abandoned their illegal construction work.” Doc. 15 ¶ 146.
Defendant argues that Plaintiffs must show that Defendant promised “to sign a written
agreement that complie[d] with the [s]tatute of [f]rauds.” Nagle v. Nagle, 633 S.W.2d 796, 800
(Tex. 1982). The Court agrees with Defendant that the recession of a sale falls in the statute of
frauds and therefore must be in writing. See, e.g., Givens v. Dougherty, 671 S.W.2d 877 (Tex.
1984) (holding that a “listing agreement for sale of real estate could not be orally rescinded” under
the statute of frauds). The Court finds that Michael has pleaded in sufficient detail a factual
situation whereby a valid and enforceable post-foreclosure agreement was made between parties
in writing via email.
Defendant raises the same arguments as it did under the breach of post-foreclosure contract
claim (e.g., no meeting of the minds occurred between the parties over email). Doc. 31 ¶ 8. For the
same reasons the Court rejected Defendant’s arguments above, it rejects them here, too.
Because the loan in question was less than $50,000 (and therefore is not subject to the
statute of frauds), and because the post-foreclosure promises were in writing (email), the Court
denies Defendant’s Motion to Dismiss as to Michael’s promissory estoppel claims.
IV.

CONCLUSION
In sum, the Court GRANTS IN PART and DENIES IN PART Defendant’s Motion to

Dismiss. Doc. 25. Uvalda’s claims are DISMISSED WITH PREJUDICE pursuant to Rule
12(b)(1). The claims asserted by Michael for common law fraud and negligent misrepresentation
are DISMISSED WITH PREJUDICE pursuant to Rule 12(b)(6). The Court DENIES
Defendant’s Motion to Dismiss with respect to the claims asserted by Michael for breach of postforeclosure contract, fraud by nondisclosure, and promissory estoppel.

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IT IS SO ORDERED.
SIGNED at Houston, Texas on this the 5th of February, 2024.

________________________________
KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE

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