Schumacher v. Wells Fargo Bank, N.A.

Filing 16

ORDER GRANTING 5 Motion to Dismiss ; DISMISSING 8 Motion for Extension of Time; DENYING 11 Motion to Cure Defective Pleading. Signed by Judge Sam Sparks. (ml)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

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17SEP21
CLERK,

WES1EI

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PAT SCHUMACHER,

AN 9:3g

O4STJCT
CSFt OF COURT
TEXAS

Plaintiff,
-vs-

Case No. A-17-CA-500-SS

WELLS FARGO BANK, N.A.,
Defendant.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and
specifically Defendant Wells Fargo Bank, N.A. (Wells Fargo)'s Motion to Dismiss [#5], Plaintiff
Pat Schumacher (Plaintiff)'s Motion to Cure a Defective Pleading [#11], Wells Fargo's Response
[#13] in opposition, Plaintiffs Request for Review [#12], and Wells Fargo's Response [#14] in
opposition.1

Having considered the aforementioned documents, the case file as a whole, and the

applicable law, the Court enters the following opinion and order.

Background
This case concerns real property located at 7701 Old Lockhart Highway, Buda, Texas, 78610
(the Property). Notice of Filing Suppl. [#4-1] Ex. A (State Court File) at 4-6. Plaintiff purchased the

Property in 2002 with a $117,000.00 note (Note) to Mortgage Outlet, Inc. d/b/a the Money Outlet
(Money Outlet) and executed a Deed of Trust in favor of Money Outlet (Deed of Trust) as security

for the Note (collectively, the Mortgage). Id. at 4.

'Plaintiff also filed a motion for extension of time to file a response to Wells Fargo's motion to dismiss. See
Mot. Extension [#81. However, the Court effectively ruled on this motion by directing Plaintiff to file her response by
July 14, 2017. See Order of June 30, 2017 [#9]. The Court therefore DISMISSES Plaintiffs motion for extension of
time.

In October 2015, the Property suffered damage from a thunderstorm. Id. Plaintiff contends

"[d]espite [Plaintiff] having paid for force-placed insurance, the Property was not repaired by Wells
Fargo or the insurance

company."2

Id. Because the Property was only partially inhabitable, Plaintiff

stopped making payments on the Mortgage. Id. at 4-5. Plaintiff alleges Wells Fargo is now

attempting to foreclose on the Property. Id. at 5.
On April 26,2017, Plaintiff filed the current lawsuit against Wells Fargo in Texas state court.
Id. at 3. Wells Fargo subsequently removed the case to this Court. Notice Removal [#1]. Plaintiff

asserts a single cause of action: breach of contract. State Court File at 5. In particular, Plaintiff claims
she "had a valid contract with the insurance company which was provided by Wells Fargo" and
"Wells Fargo breached the insurance contract by not paying for the covered damage." Id. In response
to Plaintiffs allegations and before this case was removed, the state court issued an ex parte

temporary restraining order preventing foreclosure on May 1, 2017. Id. at 10.
Before filing this suit, Plaintiff previously filed another lawsuit in Texas state court

concerning the Mortgage (Lawsuit I), attempting to prevent foreclosure on the Property. See Mot.
Dismiss [#5-1] (Lawsuit I R.). In Lawsuit I, Plaintiff sued Wells Fargo, alleging Wells Fargo
breached "the insurance contract by not paying for the covered damage" to the Property, which

occurred as a result of a thunderstorm in October 2015. Id. at 2-3. Following Plaintiffs notice of
nonsuit in Lawsuit I, the state court dismissed Lawsuit I with prejudice on August 5, 2016. Id. at 7.
Presently, Wells Fargo moves to dismiss this case for failure to state a claim in light of the

result in Lawsuit

I.

Wells Fargo argues res judicata bars re-litigation of Plaintiffs claims. In

2

party explains how Wells Fargo gained rights in the Mortgage or the Property. Additionally, neither
party provides any details on the insurance company from which Plaintiff purchased insurance coverage.

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response, Plaintiff seeks to supplement her complaint. See Mot. Cure [#11]. Plaintiff also asks this
Court to modify the state court order dismissing Lawsuit I with prejudice. See Req. Review [#12].

Analysis
I.

Legal Standard
Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain "a short and plain

statement of the claim showing that the pleader is entitled to relief"

FED.

R.

Civ. P.

8(a)(2). A

motion under Federal Rule of Civil Procedure 1 2(b)(6) asks a court to 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

motion to dismiss, the plaintiff must plead sufficient facts to state a claim for relief that is facially
plausible. Ashcrofi v. Iqbal, 556 U.S. 662,678(2009); BellAti. Corp.

v.

Twombly, 550 U.S. 544, 570

(2007). "A claim has facial plausibility when the plaintiffpleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 566
U.S. at 678. Although a plaintiffs factual allegations need not establish that the defendant is

probably liable, they must establish more than a "sheer possibility" a defendant has acted unlawfully.
Id. Determining plausibility is a "context-specific task," and must be performed in light of a court's

"judicial experience and common sense." Id. at 679.
In deciding a motion to dismiss under Rule 1 2(b)(6), a court generally accepts as true all

factual allegations contained within the complaint. Leatherman

v.

Tarrant Narcotics Intelligence &

Coordination Unit, 507 U.S. 163, 164 (1993). However, a court is not bound to accept legal
conclusions couched as factual allegations. Papasan v. Allain, 478 U.S. 265, 286 (1986). Although
all reasonable inferences will be resolved in favor of the plaintiff, the plaintiff must plead "specific
facts, notmere conclusoryallegations." Tuchman v. DSC Commc 'ns Corp., 14 F.3d 1061, 1067(5th
Cir. 1994). In deciding a motion to dismiss, courts "must consider" the complaint, as well as other

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sources such as documents incorporated into the complaint by reference and matters of which a court

may take judicial notice. Tellabs, Inc.

II.

v.

Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).

Application
"Under resjudicata, a final judgment on the merits of an action precludes the parties or their

privies from relitigating issues that were or could have been raised in that action." OreckDirect, LLC
v.

Dyson, Inc., 560 F.3d 398, 401 (5th Cir. 2009) (quoting Allen

v.

McCurry, 449 U.S. 90, 94

(1980)). Four elements must be met for a claim to be barred by res judicata: "(1) the parties must be

identical in the two actions; (2) the prior judgment must have been rendered by a court of competent

jurisdiction; (3) there must be a final judgment on the merits; and (4) the same claim or cause of
action must be involved in both cases." Id. (quoting In re Ark-La-Tex Timber Co., 482 F.3d 319, 330
(5th Cir. 2007)). Because res judicata is an affirmative defense, the defendant bears the burden of

proving this defense. See Taylor v. Sturgell, 553 U.S. 880,907(2008) (noting a party asserting claim
preclusion carries the burden of proof).
Here, Wells Fargo proves each element of its res judicata defense. First, the parties in this

action and in Lawsuit I are identical. Second, the judgment in Lawsuit I was rendered by a court of
competent jurisdiction, the 3 53rd District Court for Travis County, Texas. See Lawsuit I R. at 7.
Third, as the Fifth Circuit has noted, "a dismissal with prejudice despite a court not having

adjudicated the claim.

. . .

is tantamount to ajudgment on the merits." Dean v. Riser, 240 F.3d 505,

509 (5th Cir. 2001); see also Epps v. Fowler, 351 S.W.3d 862, 868 (Tex. 2011) ("The resjudicata

effect of a nonsuit with prejudice works a permanent, inalterable change in the parties' legal

relationship to the defendant's benefit: the defendant can never again be sued by the plaintiff or its
privies for claims arising out of the same subject matter."). Fourth, this lawsuit involves the same
claim and issues as Lawsuit I. The allegations Plaintiff asserts in this lawsuit are identical to the

those alleged in Lawsuit I. Compare State Court File at 2-6 with Lawsuit I R. at 1-5. Thus, res

judicata bars this lawsuit.
And, although Plaintiff seeks to supplement her complaint with new causes of action,
amendment would be futile. Plaintiff seeks only to assert claims that could have been raised in
Lawsuit I as they concern Wells Fargo's alleged failure to compensate Plaintiff for damage to the

Property sustained in October 2015. See Mot. Cure [#11] at 4-12. Consequently, the Court denies

Plaintiff's motion to cure her defective complaint.
Finally, Plaintiff's request that this Court review and modify the state court's order

dismissing Lawsuit I with prejudice is improper. Plaintiff asks this Court to revise the state court
order to dismissing Lawsuit I from "with prejudice" to "without prejudice." See Req. Review [#12]
at 3. Under the RookerFeidman doctrine, "federal district courts, as courts of original jurisdiction,

lack appellate jurisdiction to review, modify, or nullify final orders of state courts." Weekly

v.

Morrow, 204 F.3d 613, 615 (5th Cir. 2000) (internal quotation omitted) (referencing Rooker v.

Fidelity Trust Co., 263 U.S. 413 (1923)). Therefore, if there is an error in the state court order from
Lawsuit I, such an error must be corrected by the appropriate state appellate court and not by this
Court. See Id. ("If a state trial court errs the judgment is not void, it is to be reviewed and corrected

by the appropriate state appellate court." (internal quotation omitted)). Thus, Plaintiff's request for

review of the state court order is denied.

Plaintiff appears to question her prior attorney's authority to dismiss Lawsuit I and indicates she has asserted
a claim against her prior attorney for an "ethical violation with the State Board." See Mot. Cure [#1 1] at 2. Yet, these
allegations to not allow Plaintiffto re-litigate claims that were brought or could have been brought against Wells Fargo
in Lawsuit I.

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Conclusion
Accordingly,
IT IS ORDERED that Plaintiff Pat Schumacher's Motion for Extension of Time [#8]
is DISMISSED;

IT IS FURTHER ORDERED that Plaintiff Pat Schumacher's Motion to Cure

Defective Pleading [#1

1]

is DENIED;

IT IS FURTHER ORDERED that Plaintiff Pat Schumacher's Request for Review

[#12] is DENIED;
IT IS FURTHER ORDERED that Defendant Wells Fargo Bank, N.A.'s Motion to

Dismiss [#5] is GRANTED; and
IT IS FiNALLY ORDERED that Plaintiff Pat Schumacher's claims are DISMISSED

WITH PREJUDICE.
SIGNED this the

OdayofSeptember2Ol7.

SARKS
UNITED

SD

STRICT JUDGE