Warren v. PNC Bank, National Association et al

Filing 15

MEMORANDUM AND ORDER granting granting 11 MOTION for Partial Summary Judgment , 12 MOTION for Summary Judgment (Signed by Judge Keith P Ellison) Parties notified. (aar4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

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Plaintiff,
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VS.
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PNC BANK, NATIONAL
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ASSOCIATION F/K/A BBVA USA, et al, §
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Defendants.

June 05, 2024
Nathan Ochsner, Clerk

COURTNEY B. WARREN,

CIVIL ACTION NO. 4:23-cv-1397

MEMORANDUM & ORDER
Before the Court are two motions: (1) a Motion for Partial Summary Judgment filed by
Defendant Hughes Watters & Akanase, LLP and Dominique Varner (collectively, the “HWA
Defendants”), and (2) a Motion for Summary Judgment filed by Defendant PNC Bank, N.A.,
successor in interest to BBVA, USA (“PNC”). ECF Nos. 11, 12. For the reasons that follow, the
Court GRANTS both Motions in their entirety.
I.

BACKGROUND1
This action arises out of Plaintiff Courtney Warren’s default on the Note and Deed of

Trust encumbering real property located at 402 Hunt Street, Houston, Texas, 77003. Warren
purchased the property in question in November 2019. In order to purchase the property, on
November 8, 2019, Warren financed $363,375.00 with PNC and executed a Note providing for
repayment. See ECF No. 12-2. On that same day, she executed a Deed of Trust. ECF No. 12-3.

Because Plaintiff failed to respond to Defendants’ Motions for Summary Judgment, the Court accepts Defendants’
allegations as undisputed. Bernal v. The Bank of New York Mellon, No. 4:14-CV-03436, 2015 WL 8207498, at *2
(S.D. Tex. Dec. 7, 2015) (Ellison, J.) (citing Eversley v. MBank Dallas, 843 F.2d 172, 174 (5th Cir. 1988)).
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In relevant part, the Deed provides that Warren will “promptly furnish to Lender [PNC] all
notices of amounts to be paid,” including tax bills. ECF No. 11-6 at 4, § 3. It further provides
that, should Warren fail to honor the covenants in the Deed, PNC “may do and pay for whatever
is reasonable or appropriate to protect [its] interest in the Property and rights under this Security
Instrument” including “paying any sums secured by a lien which has priority over this Security
Instrument [such as property taxes].” Id. at 6, § 9. Lastly, the Deed notes that if PNC disburses
funds in accordance with those provisions, those amounts “shall become the additional debt of
Borrower [Warren].” Id.
At the time of closing, based on PNC’s estimates, Warren gave PNC $3,511.79 to pay her
2019 property taxes. ECF No. 11-13. PNC placed those funds into an escrow account. Id. Warren
also made a $1,096.29 initial escrow deposit, which was to go towards four months of
homeowner’s insurance and two months of property tax payments. Id.
Though PNC had estimated a yearly property tax of $3,511.71, Warren’s November 29,
2019 tax bill indicated that no taxes were due for the 2019 tax year. ECF No. 11-16. This created
an apparent escrow surplus, and, accordingly, PNC mailed Warren a $7,124.32 refund check.
ECF No. 12-9. Later, the taxing authority re-assessed the 2019 taxes at a base levy of $3,361.30.2
ECF No. 11-17. The taxing authority sent the revised bill to Warren, not to PNC. Id. At the time
that Warren received her “surplus” check from PNC, she was aware that she had not paid her
2019 or 2020 taxes, yet did not use the funds to pay these taxes. See HWA Def.’s Mot. ¶ 34,
PNC Def.’s Mot, ¶ 7.

Defendants explain that the property tax rose following a remodel that significantly increased the property’s value.
See HWA Def.’s Mot. at ¶¶ 17–19, ECF No. 11; PNC Def.’s Mot. ¶ 9 n.2. Defendants also note that the previous
owner had a tax exemption. HWA Def.’s Mot. at ¶ 3; PNC Def.’s Mot. at 2.
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In February 2021, the Harris County Appraisal District filed an action against Warren and
PNC for delinquent taxes for the 2019 tax year. In accordance with the terms of the Deed, PNC
paid the 2019 and 2020 taxes to protect its lien, recalculated the escrow, and sent Warren notice
of a new mortgage payment, which she subsequently failed to pay. See ECF No. 11-8, 11-9. PNC
later sent Warren a Notice of Default. ECF No. 11-10. After she failed to cure the default, PNC
hired HWA to foreclose on the Deed of Trust lien on Warren’s property. HWA Def.’s Mot. ¶ 38.
In an effort to stop the foreclosure, Warren filed suit against PNC, as well as HWA, its
attorney, Ms. Varner, and every appointed substitute trustee. The HWA Defendants and PNC
each filed a Motion for Summary Judgment.
II.

LEGAL STANDARD
Rule 56 of the Federal Rules of Civil Procedure authorizes summary judgment against a

party who fails to make a sufficient showing of the existence of an element essential to the
party’s case and on which that party bears the burden at trial. See Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).
The movant bears the initial burden of “informing the district court of the basis for its motion”
and identifying those portions of the record “which it believes demonstrate the absence of a
genuine issue of material fact.” Celotex, 477 U.S. at 323; see also Martinez v. Schlumber, Ltd.,
338 F.3d 407, 411 (5th Cir. 2003). Summary judgment is appropriate where “the pleadings, the
discovery and disclosure materials on file, and any affidavits show that there is no genuine issue
as to any material fact and that the movant is entitled to judgment as a matter of law.” FED. R.
CIV. P. 56(c).
If the movant meets its burden, the burden then shifts to the nonmovant to “go beyond the
pleadings and designate specific facts showing that there is a genuine issue for trial.” Stults v.
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Conoco, Inc., 76 F.3d 651, 656 (5th Cir. 1996) (citing Tubacex, Inc. v. M/V Risan, 45 F.3d 951,
954 (5th Cir. 1995); Little, 37 F.3d at 1075). “To meet this burden, the nonmovant must ‘identify
specific evidence in the record and articulate the “precise manner” in which that evidence
support[s] [its] claim[s].’” Stults, 76 F.3d at 656 (citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th
Cir. 1994), cert. denied, 513 U.S. 871 (1994)). It may not satisfy its burden “with some
metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated
assertions, or by only a scintilla of evidence.” Little, 37 F.3d at 1075 (internal quotation marks
and citations omitted). Instead, it “must set forth specific facts showing the existence of a
‘genuine’ issue concerning every essential component of its case.” Am. Eagle Airlines, Inc. v. Air
Line Pilots Ass’n, Intern., 343 F.3d 401, 405 (5th Cir. 2003) (citing Morris v. Covan World Wide
Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998)). Thus, “[t]he appropriate inquiry [on summary
judgment] is ‘whether the evidence presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as a matter of law.’” Septimus v.
Univ. of Hous., 399 F.3d 601, 609 (5th Cir. 2005) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 251–52 (1986)).
Plaintiff has not filed a response to either Motion for Summary Judgment, despite being
granted a fourteen-day extension to respond to PNC’s Motion. See ECF No. 14. Per this
District’s Local Rules, “[f]ailure to respond to a motion will be taken as a representation of no
opposition.” S.D. Tex. L.R.7.4. However, [a] motion for summary judgment cannot be granted
simply because there is no opposition, even if failure to oppose violated a local rule.” Bernal,
2015 WL 8207498, at *2 (Ellison, J.) (quoting Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 362
n.3 (5th Cir. 1995)). As such, Defendants retain the burden of establishing the absence of a
genuine issue of material fact.
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III.

HWA DEFENDANTS’ MOTION

A. Fraud claims
The HWA Defendants assert that attorney immunity bars Warren’s fraud claims against
them. Attorney immunity is an affirmative defense pursuant to which attorneys are immune from
civil liability to non-clients for actions taken within the scope of their legal representation of a
client. Santiago v. Mackie Wolf Zientz & Mann, P.C., No. 05-16-00394-CV, 2017 WL 944027,
at *2–*3 (Tex. App. Mar. 10, 2017) (citing Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481
(Tex. 2015)). The Texas Supreme Court has stated that “[e]ven conduct that is ‘wrongful in the
context of the underlying suit’ is not actionable if it is ‘part of the discharge of the lawyer’s
duties in representing his or her client.’” Cantey Hanger, 467 S.W.3d at 481 (quoting Toles v.
Toles, 113 S.W.3d 899, 910–11 (Tex. App. 2003); Alpert v. Crain, Caton & James, P.C., 178
S.W.3d 398, 406 (Tex. App. 2005)). Attorney immunity is not absolute: attorneys may still be
liable for conduct that falls outside of the typical duties owed to their client. Id. at 482. For
example, attorney liability does not apply where an attorney participates in a fraudulent business
scheme with her client, id. (citing Poole v. Hous. & T.C. Ry. Co., 58 Tex. 134, 137 (1882)), or
assists his client in evading judgment through a fraudulent transfer, Essex Crane Rental Corp. v.
Carter, 371 S.W.3d 366, 382 (Tex.App.–Houston [1st Dist.] 2012, pet. denied).
The Court agrees with the HWA Defendants the attorney immunity applies here. Texas
courts have applied attorney immunity in cases like this one, where an attorney prosecuted a
foreclosure on behalf of a mortgagee. Santiago v. Mackie Wolf Zientz & Mann, P.C., No. 05-1600394-CV, 2017 WL 944027, at *3–*4 (Tex. App. Mar. 10, 2017); Campbell v. Mortgage
Electronic Registration Systems, Inc., No. 03–11–00429–CV, 2012 WL 1839357, at *6
(Tex.App.–Austin May 18, 2012, pet. denied); see also Cantey Hanger, 467 S.W.3d at 482 n.6
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“The majority of Texas cases addressing attorney immunity arise in the litigation context. But
that is not universally the case.”). An attorney-client relationship exists between HWA and
Varner as the attorneys and PNC as the client. See ECF No. 11-2. Plaintiff’s fraud claims against
HWA and Varner involve conduct that was within the scope of HWA and Varner’s
representation of PNC: that is, moving forward with the foreclosure, as PNC hired them to do.
Id. Therefore, attorney immunity applies to Plaintiff’s fraud claims against the HWA
Defendants.
B. TDCA and FDCA claims
Plaintiff asserts TDCA and FDCA claims against the HWA Defendants, based on
allegations that Defendants are “debt collectors” within the meaning of Tex. Fin. Code
392.001(6) and 15 U.S.C. § 1692a(6). These allegations are inaccurate. Section 392.001(6) does
not apply to the HWA Defendants, as they do not seek to collect debts for themselves. See Ruiz
de Balderas v. ETX Successor Athens, No. 6:19-CV-58-JDK-KNM, 2020 WL 1479583, at *8
(E.D. Tex. Mar. 4, 2020), report and recommendation adopted, No. 6:19-CV-58-JDK-KNM,
2020 WL 1478563 (E.D. Tex. Mar. 26, 2020). Likewise, § 1692a(6) does not apply to
Defendants, as Warren was not in default when she first obtained the loan. See Scarbrough v.
JPMorgan Chase Bank, N.A., No. 4:21-CV-3760, 2022 U.S. Dist. LEXIS 115812, at *28 (S.D.
Tex. 2022). Accordingly, Plaintiff’s TDCA and FDCA claims against the HWA Defendants fail
as a matter of law.
IV.

PNC’S MOTION
A. Breach of contract claim
Warren’s breach of contract claim fails as a matter of law. The parties agree that Warren

failed to make the payments required under the relevant contracts. Therefore, Warren cannot
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sustain a breach of contract claim against PNC. See Villarreal v. Wells Fargo Bank, N.A., 814
F.3d 763, 767 (5th Cir. 2016).
B. Fraud claim
Plaintiff’s fraud claim against PNC asserts that PNC misrepresented the amounts that
Warren owed under her loan. See Original Pet. ¶¶ 131–37, ECF No. 1-3. PNC contests the
accuracy of these allegations, but argues that, even if the underlying allegations were true,
Plaintiff’s fraud claim would be barred by the economic loss rule. The Court agrees with PNC.
The allegations underlying Plaintiff’s fraud claim allege a breach of duty created by the Deed of
Trust, and Plaintiff’s related injuries are purely economic in nature. See Formosa Plastics Corp.
USA v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 45 (Tex. 1998); L. v. Ocwen
Loan Servicing, L.L.C., 587 F. App’x 790, 795 (5th Cir. 2014). Thus, a straightforward
application of the economic loss rule bars Plaintiff’s fraud claim.
C. DTPA claim
In order to pursue a claim under the DTPA, Warren must establish “consumer status.”
Reule v. M & T Mortg., 483 S.W.3d 600, 614 (Tex. App. 2015) (citing Amstadt v. U.S. Brass
Corp., 919 S.W.2d 644, 649 (Tex. 1996)). “As a general rule, where the underlying transaction is
a loan, consumer status is not conferred because money is neither a good or service.” Id. (citing
Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 173–74 (Tex. 1980)). Texas courts recognize
one narrow exception to this general rule, in situations “where the objective of the transaction
complained of was the purchase or lease of a good or service notwithstanding that the plaintiff
borrowed money to complete the transaction.” Id. That exception is inapplicable where a DTPA
plaintiff solely seeks to borrow money from the defendant. Flenniken v. Longview Bank & Tr.
Co., 661 S.W.2d 705, 707–08 (Tex. 1983).
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In this case, Warren has not established consumer status. The transaction complained of
concerns only borrowed money from PNC; the remainder of PNC’s complained-of actions were
incidental to, not separate from, the loan transaction. See id. Money is not a good or service
contemplated by the statute. Riverside Nat’l Bank, 603 S.W.2d at 173–74. Warren’s DTPA claim
fails as a matter of law.
D. TDCA claim
It is well-established that “foreclosure, or the threat of foreclosure, is not an action
prohibited by law when a plaintiff has defaulted on their mortgage.” McCaig v. Wells Fargo
Bank (Texas), N.A., 788 F.3d 463, 478 (5th Cir. 2015) (quoting Wildy v. Wells Fargo Bank, NA,
No. 3:12–CV–01831–BF, 2012 WL 5987590, at *3 (N.D.Tex. Nov. 30, 2012)). Further, a TDPA
claim must allege actual damages. Adams v. U.S. Bank, N.A., No. 3:17-CV-723-B-BN, 2018 WL
2164520, at *8 (N.D. Tex. Apr. 18, 2018) (dismissing TDCA claim, explaining that “no
foreclosure has occurred, and neither [plaintiff’s] lost income from time spent in prior litigation
nor her court costs in bringing this action qualify as actual damages”), report and
recommendation adopted, No. 3:17-CV-723-B-BN, 2018 WL 2150960 (N.D. Tex. May 10,
2018). Here, Warren has not alleged that PNC was prohibited from pursuing foreclosure under
the Deed of Trust (nor can she), and she has not alleged actual damages, given that the
foreclosure has not occurred. As a result, her TDCA claim against PNC fails as a matter of law.
E. Breach of fiduciary duty claim
Plaintiff’s claim for breach of fiduciary duty likewise fails as a matter of law. There are
no facts in the record that demonstrate that there is a fiduciary relationship between Plaintiff and
PNC. See Manufacturers’ Hanover Tr. Co. v. Kingston Invs. Corp., 819 S.W.2d 607, 610 (Tex.

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App. 1991 (“It is well settled that the relationship between a borrower and its lender is neither a
fiduciary relationship, nor a special relationship.”).
F. Declaratory judgment claim
Lastly, Plaintiff’s declaratory judgment claim cannot proceed. The Federal Declaratory
Judgment Act does not create a substantive cause of action, rather, it “presupposes the existence
of a judicially remediable right.” Reid v. Aransas Cnty., 805 F. Supp. 2d 322, 339 (S.D. Tex.
2011) (quoting Schilling v. Rogers, 363 U.S. 666, 677 (1960)). Thus, because all of Plaintiff’s
other claims fail as a matter of law, so too does her declaratory judgment claim.
V.

CONCLUSION
The Court extends its utmost sympathy towards Ms. Warren. The loss of one’s home is a

devastating event. Unfortunately, the applicable law offers little pliability in this case. The Court
finds that, as to each of Plaintiff’s claims, Defendants have established that there is no genuine
issue of material fact and that they are entitled to judgment as a matter of law. Defendants’
Motions for Summary Judgment are GRANTED and Plaintiff’s claims are DISMISSED WITH
PREJUDICE.
IT IS SO ORDERED.
SIGNED at Houston, Texas, on this the 5th day of June, 2024.

KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE

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