Jay v. Wells Fargo, N.A. et al

Filing 17

ORDER GRANTING IN PART Defendants' 16 MOTION for Summary Judgment: Jay's causes of action for fraud in the concealment, fraud in the inducement, IIED, slander of title, quiet title, and for violations of TILA and RESPA are DISMISSED W ITH PREJUDICE. ORDER that with respect to Jays remaining claims, Jay shall file a response to Defendants' motion on or before June 29, 2018. Defendants shall file a reply, if at all, within fourteen days of Jay's response. ORDER VACATING trial setting for July 23, 2018. Signed by Judge Robert Pitman. (lt)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
BENNY E. JAY,
Plaintiff,
v.
WELLS FARGO, as Trustee for Option One
Mortgage Loan Trust 2006-2, Asset-Backed
Certificates, Series 2006-2, et al.,
Defendants.

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1:17-CV-349-RP

ORDER
Before the Court is a motion for summary judgment, (Dkt. 16), filed by Defendants Wells
Fargo Bank, National Association, as Trustee for Option One Mortgage Loan Trust 2006-2, AssetBacked Certificates, Series 2006-2; Option One Mortgage Loan Trust; Ocwen Loan Servicing LLC;
Ocwen Federal Bank FSB; and Option One Mortgage Corporation (collectively, “Defendants”).
Having considered the parties’ arguments, the evidence, and the relevant law, the Court will grant
the motion in part and permit Plaintiff Benny Jay (“Jay”) additional time to file a response.
I. BACKGROUND
Jay, who is appearing pro se, filed this action in state court against Defendants to avoid the
foreclosure of the real property located at 4305 Hyridge Drive in Austin, Texas (the “Property”).
(Orig. Pet., Dkt. 1-2). In 2000, Jay secured a deed of trust in favor of Option One Mortgage
Corporation (“Option One”) in the amount of $388,000. (Deed of Trust, Mot. Summ. J. Ex. C, Dkt.
16-8). In 2012, Option One Mortgage Corporation assigned the deed of trust to Wells Fargo Bank,
N.A., as Trustee for Option One Mortgage Loan Trust 2006-2, Asset-Backed Certificates, Series
2006-2 (“the Trust”) (Assignment, Mot. Summ. J. Ex. D, Dkt. 16-9).

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Jay alleges a variety of deficiencies regarding the origination and transfer of interest in his
deed of trust and his note. He alleges that his deed of trust was not properly assigned to the Trust.
(Orig. Pet., Dkt. 1-2, ¶¶ 33–35). Jay alleges that Ocwen Loan Servicing is the actual holder and
owner of the deed of trust and of the note. (Id. ¶ 38). He alleges that any documents purporting to
transfer interest in his note are void. (Id. ¶ 40). Out of these allegations and others, Jay asserts causes
of action against Defendants for: (1) lack of standing to foreclose; (2) fraud in the concealment; (3)
fraud in the inducement; (4) intentional infliction of emotional distress; (5) slander of title; (6) quiet
title; (7) declaratory relief; (8) violations of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq.
(“TILA”); and (9) violations of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq.
(“RESPA”). (Orig. Pet., Dkt. 1-1, at 7–16). Defendants ask the Court to grant summary judgment in
their favor on each of Jay’s claims. (Mot. Summ. J., Dkt. 16, at 15).
Jay has not filed a timely response. See W.D. Tex. Loc. R. CV-7(e)(2) (requiring parties to file
responses to dispositive motions within 14 days). Jay has also not responded to Defendants’ requests
for discovery, nor did he attend his deposition. (Clark Aff., Dkt. 16-2, at ¶¶ 3–4).
II. LEGAL STANDARD
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure
only “if 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.” Fed. R. Civ. P. 56(a). A dispute is genuine only if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). “A fact issue is ‘material’ if its resolution could affect the
outcome of the action.” Poole v. City of Shreveport, 691 F.3d 624, 627 (5th Cir. 2012).
The party moving for summary judgment 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 Corp. v. Catrett, 477 U.S. 317,
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323 (1986). The “burden of production at trial ultimately rests on the nonmovant” and the movant
must merely show an “absence of evidentiary support in the record for the nonmovant’s case.”
Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir. 2010). The nonmoving party must then
come forward with specific facts showing that there is a genuine issue for trial. Id. There is “no issue
for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict
for that party.” Anderson, 477 at 249.
The nonmovant “must identify specific evidence in the record and articulate the manner in
which that evidence supports that party’s claim.” Johnson v. Deep E. Tex. Reg’l Narcotics Trafficking Task
Force, 379 F.3d 293, 301 (5th Cir. 2004) (citation omitted). 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); see also Larry v. White, 929 F.2d 206, 211 n.12 (5th Cir. 1991)
(“Unsworn pleadings, memoranda, or the like are not, of course, competent summary judgment
evidence.”). Summary judgment “cannot be granted by default even if there is a complete failure to
respond to the motion, much less when an attempted response fails to comply with Rule 56(c)
requirements.” Fed. R. Civ. P. 56(e) advisory committee’s note. Rather, if a party fails to properly
address the opposing party’s assertion of fact, a court should take an action designated by Rule 56(e).
Fed. R. Civ. P. 56(e). “The choice among possible orders should be designed to encourage proper
presentation of the record,” and courts should “take extra care with pro se litigants, advising them of
the need to respond and the risk of losing by summary judgment if an adequate response is not
filed.” Fed. R. Civ. P. 56(e) advisory committee’s note.
III. DISCUSSION
Defendants have met their initial burden under Rule 56: in their motion for summary
judgment, which applies to each of Jay’s claims against each Defendant, they have informed the
Court of the basis for their motion and identified the portions of the pleadings that demonstrate the
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absence of a genuine issue of material fact. Celotex Corp., 477 U.S. at 323. Accordingly, the burden
shifts to Jay to identify evidence that demonstrates a genuine issue of material fact for trial. Cuadra,
626 F.3d at 812. Jay cannot rely on the allegations in his unsworn original petition. Duffie, 600 F.3d at
371; Larry, 929 F.2d at 211 n.12. Because Jay has not submitted a timely response to Defendants’
motion, he has failed to address Defendants’ assertions of fact with appropriate summary judgment
evidence. The Court therefore has several options under Rule 56(e). In order to promote a proper
presentation of the record and taking care to advise a pro se litigant of the need to respond
appropriately, the Court will give Jay the opportunity to properly address the facts in Defendants’
motion that his unsworn original petition fails to address.
However, the Court will address several arguments in Defendants’ motion whose resolution
does not turn on factual determinations. Defendants ask the Court to grant summary judgment on
Jay’s claims for fraud in the concealment, fraud in the inducement, IIED, slander of title, quiet title,
and for violations of TILA and RESPA. (Mot. Summ. J., Dkt. 16, at 6–15). Because those claims fail
as a matter of law, the Court need not wait for Jay to provide evidence in support of his allegations.
First, Jay’s fraud in the concealment claim fails as a matter of law. Jay alleges that Defendants
concealed the fact that his loan would be securitized, which had “an adverse effect on the value of
[his] home,” and that this concealment induced him into the loan transaction. (Orig. Pet., Dkt. 1-2,
¶¶ 74–82). A defendant’s failure to disclose information does not constitute fraud “unless there is a
duty to disclose the information.” Bradford v. Vento, 48 S.W.3d 749, 755 (Tex. 2001). In order for a
duty to disclose to arise, the parties must be in a confidential or fiduciary relationship. Union Pac. Res.
Grp., Inc. v. Rhone–Poulenc, Inc., 247 F.3d 574, 586 (5th Cir. 2001). Lenders generally do not owe
borrowers a fiduciary duty. Jones v. Thompson, 338 S.W.3d 573, 583 (Tex. App—El Paso 2010, pet.
denied). Defendants are lenders or mortgagees; Jay is a borrower or mortgagor. As such, Defendants

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do not owe Joseph a fiduciary duty. Therefore, Jay has failed to allege that Defendants owe him a
duty to disclose, and therefore his claim for fraud in the concealment fails as a matter of law.
Second, Jay’s fraud in the inducement claim fails as a matter of law. Jay alleges that
Defendants misrepresented that they are the holder of the note and are attempting to collect on a
debt in which they have no interest. (Orig. Pet., Dkt. 1-2, at ¶ 85). To prevail on a fraud claim, a
plaintiff must prove that (1) the defendant made a material representation that was false; (2) it knew
the representation was false or made it recklessly as a positive assertion without any knowledge of its
truth; (3) it intended to induce the plaintiff to act upon the representation; and (4) the plaintiff
actually and justifiably relied upon the representation and thereby suffered injury. Ernst & Young,
L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001). Fraudulent inducement is a
particular species of fraud that arises only in the context of a contract and requires the existence of a
contract as part of its proof. Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001). That is, in a
fraudulent inducement claim, the elements of fraud must be established as they relate to an
agreement between the parties. Id. The misrepresentations alleged by Jay, even if true, arose after he
executed the note and the deed of trust and therefore cannot constitute conduct that induced him to
execute those contracts. Accordingly, his claim for fraud in the inducement fails as a matter of law.
Third, Jay’s claim for intentional infliction of emotional distress (“IIED”) fails as a matter of
law. Jay alleges that Defendants have threatened him with the loss of his property without having
any interest in that property, which has caused him severe emotional distress. (Orig. Pet., Dkt. 1-2, at
¶¶ 91–101). To prevail on an IIED claim, a plaintiff must establish that the defendant acted
“intentionally or recklessly; (2) its conduct was extreme and outrageous; (3) its actions caused her
emotional distress; and (4) the emotional distress was severe.” Kroger Texas Ltd. P’ship v. Suberu, 216
S.W.3d 788, 796 (Tex. 2006). Jay alleges that Defendants’ conduct has caused “[a] lack of sleep,
anxiety, and depression.” (Orig. Pet., Dkt. 1-2, at ¶ 98). To state a claim for IIED, a plaintiff “must
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show more than mere worry, anxiety, vexation, embarrassment, or anger.” Blanche v. First Nationwide
Mortg. Corp., 74 S.W.3d 444, 454 (Tex. App.—Dallas 2002, no pet.). Jay has failed to allege more
than mere anxiety; his IIED claim therefore fails as a matter of law.
Fourth, Jay’s slander of title claim fails as a matter of law. Jay alleges that Defendants
disparaged his title by posting notices of default and sale. (Orig. Pet., Dkt. 1-2, at ¶¶ 102–09). A
plaintiff is “required to prove the loss of a specific sale or sales in order to recover on [the plaintiff’s]
slander of title action.” Ellis v. Waldrop, 656 S.W.2d 902, 905 (Tex. 1983); see also Hill v. Heritage Res.,
Inc., 964 S.W.2d 89, 116 (Tex. App.—El Paso 1997, pet. denied) (“[A] claim for slander of title does
not accrue until there has been a loss of a specific sale.”). Because Jay has not pleaded the loss of a
specific sale, Defendants are entitled to summary judgment on his slander of title claim.
Fifth, Jay’s quiet title claim fails as a matter of law. Jay alleges that Defendants have no
interest in the property because none “hold a perfected and secured claim” to the property. (Orig.
Pet., Dkt. 1-2, at 110–17). Although it is not stated explicitly, Jay’s allegations appear to be related to
his claims elsewhere that only the Trust’s certificateholders are the holders of the note. (Id. ¶¶ 55–
59). “A suit to quiet title is an equitable action . . . [and a] plaintiff in a suit to quiet title must prove
and recover on the strength of his own title, not the weakness of his adversary’s title.” Fricks v.
Hancock, 45 S.W.3d 322, 327 (Tex. App.—Corpus Christi 2001, no pet.). “[A] plaintiff asserting a
quiet title claim has the burden of establishing his superior right to the property.” Mason v. Fremont
Inv. & Loan, 671 F. App’x 880, 883 (5th Cir. 2016) (citing Fricks, 45 S.W.3d at 327). The United
States Court of Appeals for the Fifth Circuit (“Court of Appeals”) has repeatedly held that
challenges to the validity of an assignment of a deed of trust are not a sufficient basis for a quiet title
action under Texas law. Mason, 671 F. App’x at 883; Warren v. Bank of Am., N.A., 566 F. App’x 379,
383 (5th Cir. 2014); Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., 586 F. App’x 631, 633 (5th Cir.
2013). The Court of Appeals has similarly rejected—as a matter of law—quiet title actions premised
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on the theory that a defendant “is not the present owner of the note” and therefore lacks “the right
to sell the property at a foreclosure sale.” Warren, 566 F. App’x at 381, 383. Jay’s quiet title is based
not on the strength of his own title but on allegations about ownership of the note and the validity
of the assignments of Jay’s deed of trust. As the Court of Appeals has explained, these allegations
are insufficient to state a quiet title claim under Texas law.
Jay’s claims for damages and rescission under TILA fail because they are time-barred. (Orig.
Pet., Dkt. 1-2, at 130–36, 144–48). Jay alleges that he executed his note in December 2000. (Id. ¶ 28).
A claim for damages under TILA must be brought within one year of the alleged violation. 15
U.S.C. § 1640(e). A claim for rescission is subject to a three-year statute of limitations. 15 U.S.C.
§ 1635(f). A cause of action under TILA accrues on the date the financial transaction occurred. See
Moor v. Travelers Ins. Co., 784 F.2d 632, 633 (5th Cir. 1986) (stating that “[c]oncluding a credit
transaction without giving the required disclosures constitutes a TILA nondisclosure violation”
because “[t]he violation occurs when the transaction is consummated”) (citation and quotation
marks omitted). Accordingly, Jay’s causes of action accrued well over a decade ago, and his claims
are barred by TILA’s statutes of limitations.
Finally, Jay’s RESPA claim fails because it is time-barred. (Orig. Pet., Dkt. 1-2, at 137–43). A
RESPA cause of action is subject to either a one- or three-year statute of limitations, and it accrues
when the violation is alleged to have occurred. 12 U.S.C. § 2614. Jay does not specify which
provision of RESPA provides him with a cause of action; however, he does allege that his cause of
action arises out of misrepresentations made at the time the note was executed. (Orig. Pet., Dkt. 1-2,
at 137–43). Even under RESPA’s longest statute of limitations, Jay’s claim would be time-barred.
VII. CONCLUSION
For these reasons, the Court ORDERS that Defendants’ Motion for Summary Judgment,
(Dkt. 16), is GRANTED IN PART. Specifically, Defendants’ motion is granted with respect to
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Jay’s causes of action for fraud in the concealment, fraud in the inducement, IIED, slander of title,
quiet title, and for violations of TILA and RESPA. Those claims are DISMISSED WITH
PREJUDICE.
With respect to Jay’s remaining claims, Jay shall be given the opportunity to properly address
the facts in Defendants’ motion that his unsworn amended complaint and response fail to address.
Jay shall file a response to Defendants’ motion on or before June 29, 2018. If Jay fails to timely file
a response within this extended response period, the Court will dismiss his claims without prejudice.
Defendants shall file a reply, if at all, within fourteen days of Jay’s response.
Finally, in light of this supplemental briefing schedule, the jury trial currently scheduled for
July 23, 2018, is VACATED. The Court will reschedule the trial at a later date following the parties’
briefing.
SIGNED on June 12, 2018.
_____________________________________
ROBERT PITMAN
UNITED STATES DISTRICT JUDGE

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