Boelter et al v. US Bank Trust National Association, Not In Its Individual Capacity But Solely As Owner Trustee For VRMTG Asset Trust incorrectly named US Bank Trust National Assoc. for VRMTG Asset Trust et al

Filing 13

REPORT AND RECOMMENDATIONS re 11 Motion for Summary Judgment, filed by Fay Servicing, LLC. Signed by Judge Susan Hightower. (dm)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
COREY J. BOELTER and JENNIFER L.
BOELTER,
Plaintiffs
v.
US BANK TRUST NATIONAL
ASSOCIATION as Owner Trustee for
VRMTG ASSET TRUST, FAY
SERVICING, LLC, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., and DOES 1-20,
Defendants

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CASE NOS. 1:22-CV-01214-ADA-SH
1:23-CV-00272-ADA

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO:

THE HONORABLE ALAN D. ALBRIGHT
UNITED STATES DISTRICT JUDGE

Before the Court is Defendants US Bank Trust National Association as Owner Trustee for
VRMTG Asset Trust, Fay Servicing, LLC, and Mortgage Electronic Registration Systems, Inc.’s
Motion for Summary Judgment, filed July 11, 2023 (Dkt. 11). On April 24, 2024, the District
Court referred all pending and future dispositive motions in this case to this Magistrate Judge for
Report and Recommendation, pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil
Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court
for the Western District of Texas (“Local Rules”). Dkt. 12.
I.

Background

Plaintiffs Corey J. Boelter and Jennifer L. Boelter took out a home mortgage loan for $184,500
(“Loan”) from Wells Fargo Home Mortgage, Inc. on August 27, 2003. Dkt. 11-2. They executed
both a note and a deed of trust secured against their home at 6029 Almelo Drive, Round Rock,
Texas 78681 (“Property”). Dkts. 11-2, 11-3. On March 21, 2018, Wells Fargo Bank, N.A., as

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successor to Wells Fargo Home Mortgage, assigned the deed of trust to Specialized Loan Servicing
LLC. Dkt. 11-5. On March 2, 2021, Specialized assigned the deed of trust to Defendant US Bank
Trust National Association, not in its individual capacity but solely as owner trustee for VRMTG
Asset Trust (“Trustee”). Dkt. 11-6. Defendant Fay Servicing, LLC is the Trustee’s mortgage
servicer. Dkt. 11-7 at 2; Dkt. 11 at 3.
The Boelters have been in default on the Loan since June 1, 2018. Dkt. 11-7 at 2. The Trustee
sent the Boelters a notice of default and intent to accelerate on April 8, 2022, and sent a notice of
acceleration on August 17, 2022. Id. at 2, 6; Dkt. 11-8 at 5-6. The Trustee scheduled a nonjudicial
foreclosure sale for October 4, 2022. Dkt. 11-8 at 7.
On October 3, 2022, the Boelters, proceeding pro se, sued the Trustee, Fay, and Defendant
Mortgage Electronic Registration Systems, Inc. (“MERS”) and ten “John Doe” defendants in state
court. Original Petition, Dkt. 1-4. They alleged wrongful foreclosure, slander of title, violations of
the Texas Deceptive Trade Practices Act (“DTPA”), slander of credit, intentional infliction of
emotional distress, and fraud. Id. ¶¶ 20-26, 39-43. They also alleged that MERS “had no legal
authority to assign Plaintiffs’ mortgage.” Id. ¶ 31. The Boelters asked the state court for a
temporary restraining order enjoining the foreclosure sale. Id. ¶ 44.
The named Defendants removed the case to this Court based on diversity jurisdiction. Dkt. 1.
They alleged that the Boelters are citizens of Texas, Trustee is a citizen of Delaware, and MERS
is a citizen of Delaware and Virginia. Id. at 3. Defendants alleged that Fay Servicing is a citizen
of Texas, among other states, but is improperly joined. Id.
The Boelters filed a second suit in state court on February 27, 2023 against Fay and twenty
“John Doe” defendants, alleging similar facts related to improper mortgage servicing. Boelter v.
Fay Servicing, LLC, No. 1:23-CV-00272-ADA (W.D. Tex. Mar. 13, 2023) (“Member Case”). In

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their second suit, the Boelters, again proceeding pro se, alleged intentional infliction of emotional
distress, slander of title, violations of the DTPA, slander of credit, that Fay and the Doe Defendants
did not have the right to foreclose, and violations of the Truth in Lending Act (“TILA”) and Real
Estate Settlement Procedures Act (“RESPA”).1 Id. at Dkt. 1-4 at 6-12. Fay removed the case to
this Court on March 13, 2023 based on federal question jurisdiction. Id. at Dkt. 1 at 3.
The Court consolidated the cases on March 30, 2023. Dkt. 5. The named Defendants filed this
motion for summary judgment as to all claims on July 11, 2023. Dkt. 11. A response was due July
25, 2023, but the Boelters have failed to respond. Local Rule CV-7(d).
II.

Legal Standards

Summary judgment shall be rendered when the pleadings, the discovery and disclosure
materials, and any affidavits on file show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir.
2007). A dispute regarding a material fact is “genuine” 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,
248 (1986). When ruling on a motion for summary judgment, the court is required to view all
inferences drawn from the factual record in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Washburn, 504 F.3d
at 508.
Once the moving party has shown the absence of a genuine issue of material fact, the party
opposing the motion must come forward with competent summary judgment evidence of the

The caption names “Does 1 through 10, inclusive,” but the body of the petition names “Does 1-20.”
Member Case, Dkt. 1-4 at 2. “Although the caption may serve as a guide, courts look to the body of the
complaint to determine the parties.” Abecassis v. Wyatt, 902 F. Supp. 2d 881, 911 (S.D. Tex. 2012).
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existence of a genuine fact issue. Matsushita, 475 U.S. at 585 n.10, 586-87. If the nonmoving party
fails to make a showing sufficient to establish the existence of an element essential to its case and
on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477
U.S. at 322-23.
A court cannot grant a motion for summary judgment “simply because there is no opposition,
even if failure to oppose violated a local rule.” Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 362
n.3 (5th Cir. 1995) (citation omitted). But when no response is filed, “the court may accept as
undisputed the facts set forth in support of the unopposed motion.” Fleet Operators, Inc. v.
Nautilus Ins., 615 F. Supp. 3d 548, 553 (S.D. Tex. 2022).
III.

Jurisdiction

A district court must remand a case to state court if it determines that it lacks subject matter
jurisdiction at any time before final judgment. 28 U.S.C. § 1447(c). The party that removed the
case “bears the burden of showing that federal jurisdiction exists and that removal was proper.”
Barker v. Hercules Offshore, Inc., 713 F.3d 208, 212 (5th Cir. 2013) (citation omitted).
Defendants acknowledge that the Court would lack diversity jurisdiction over the lead case as
removed because Fay has a member who is a citizen of Texas, but as stated above, they argue that
Fay is improperly joined. Dkt. 1 at 3.
Plaintiffs assert a claim for “slander of credit.” Dkt. 1-4 ¶ 41. They allege that Defendants’
actions have harmed their credit and ask for “statutory punitive damages pursuant to state and
federal law.” Id. Although the Boelters do not expressly name it, the Fair Credit Reporting Act
(“FCRA”) prohibits a person from furnishing “any information relating to a consumer to any
consumer reporting agency if the person knows or has reasonable cause to believe that the
information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A). Because the Boelters ask for damages

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against Defendants “pursuant to state and federal law,” the Court “liberally construe[s]” their
pro se petition as asserting a claim against Defendants under the FCRA as well as for state law
defamation. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted).
The Court has federal question jurisdiction over Plaintiffs’ FCRA claim. All of Plaintiffs’
factual allegations and claims relate to their mortgage and Defendants’ conduct in accelerating the
Loan and preparing to foreclose, so the Court may exercise supplemental jurisdiction over the state
law claims because they are so related that they form part of the same case or controversy.
28 U.S.C. § 1367(a). The Court has subject matter jurisdiction.
IV.

Analysis

Because Plaintiffs did not file a response in opposition to Defendants’ motion for summary
judgment, the Court accepts as undisputed the facts and evidence set forth in Defendants’ motion.
Fleet Operators, 615 F. Supp. 3d at 553.
1. Wrongful Foreclosure
To succeed on a claim for wrongful foreclosure under Texas law, a plaintiff must show “(1) a
defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal
connection between the defect and the grossly inadequate selling price.” Biggers v. BAC Home
Loans Servicing, LP, 767 F. Supp. 2d 725, 729 (N.D. Tex. 2011) (citation omitted). Because an
inadequate selling price “is a necessary element of a wrongful foreclosure action,” the foreclosure
sale must actually have occurred, and Texas law does not recognize a claim for attempted wrongful
foreclosure. Id. at 729-30. The Boelters do not allege and present no evidence that a foreclosure
sale occurred, so Defendants are entitled to judgment as a matter of law.

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2. DTPA
To prove a claim under the DTPA, a plaintiff must show that (1) the plaintiff is a consumer,
(2) the defendant committed a false, misleading, or deceptive act, and (3) the defendant’s wrong
caused the plaintiff’s damages. Indel Food Prods., Inc. v. Dodson Int’l Parts, Inc., 561 F. Supp. 3d
722, 733 (W.D. Tex. 2021). For a plaintiff to be a consumer under the DTPA, “two requirements
must be established. First, the person must seek or acquire goods or services by purchase or lease.
Second, the goods or services purchased or leased must form the basis of the complaint.” Miller v.
BAC Home Loans Servicing, L.P., 726 F.3d 717, 725 (5th Cir. 2013) (citation omitted). A
“borrower of money may qualify as a consumer when the borrower’s objective in seeking a loan
is the purchase or lease of a good or service which forms the basis of the complaint.” Gonzales v.
Citi Mortg., Inc., No. W-12-CV-302, 2013 WL 12120401, at *2 (W.D. Tex. Feb. 21, 2013). If a
mortgagor uses a loan to buy a house, “servicing of a loan or a loan modification cannot support a
DTPA claim because it does not involve the purchase or lease of a good or service.” Id.
The Boelters are not consumers under the DTPA because their claims relate only to
“Defendants’ servicing of the loan, or [their] contention regarding a requested modification of their
home loan.” Preston v. Seterus, Inc., 931 F. Supp. 2d 743, 768 (N.D. Tex. 2013) (dismissing DTPA
claim). Defendants are entitled to summary judgment on this claim.
3. Slander of Title
A claim for slander of title requires the plaintiff to show that “the defendant made a false and
malicious statement, disparaging property in which the plaintiff holds an interest, and causing
special damages.” U.S. Enercorp, Ltd. v. SDC Mont. Bakken Expl., LLC, 966 F. Supp. 2d 690, 696
(W.D. Tex. 2013) (citation omitted). A plaintiff who sues for slander of title also must plead and
prove the loss of a specific sale. Id. Because Plaintiffs allege only that Defendants have impaired

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their title and do not allege or provide any evidence for the loss of a specific sale, they have not
shown facts sufficient to establish their claim for slander of title. Dkt. 1-4 ¶ 39.
4. Intentional Infliction of Emotional Distress2
To establish a claim for intentional infliction of emotional distress, a plaintiff must show that
(1) the defendant acted intentionally or recklessly; (2) the defendant’s conduct was extreme and
outrageous; (3) the defendant’s actions caused the plaintiff emotional distress; and (4) the resulting
emotional distress was severe. Hernandez v. Baylor Univ., 274 F. Supp. 3d 602, 622 (W.D. Tex.
2017). In Texas, “conduct associated with asserting a legal right cannot be extreme and
outrageous,” so “courts have rejected claims asserting intentional infliction of emotional distress
where defendants simply exercised rights owed under mortgage loan documents.” Matthaei v.
JP Morgan Chase Bank, Nat’l Ass’n, No. A-14-CV-104 LY, 2014 WL 12877375, at *8
(W.D. Tex. June 9, 2014), R. & R. adopted, 2014 WL 12877374 (W.D. Tex. June 25, 2014).
Plaintiffs allege they have suffered emotional distress through “Defendants’ attempt to
fraudulently foreclose” on the Property. Dkt. 1-4 ¶ 42. The Trustee presents evidence that it was
the valid assignee of the Boelters’ deed of trust and that Fay operated as its mortgage servicer.
Dkt. 11-6; Dkt. 11-8 at 5. Defendants also state that there is no evidence MERS was involved with
the Loan or the foreclosure proceedings. Dkt. 11 at 9, 17.
Defendants have shown that the Trustee and Fay acted under their legal right to initiate
foreclosure proceedings and that MERS did not act to fraudulently foreclose on the Property. The
Court finds that Defendants are entitled to judgment on their claim for intentional infliction of
emotional distress.

The Boelters allege that Defendants “intentionally or negligently” caused emotional distress. Dkt. 1-4
¶ 42. Texas does not recognize the tort of negligent infliction of emotional distress. Harris v. Ethicon, Inc.,
No. 1:20-CV-80-RP, 2020 WL 3579829, at *2 (W.D. Tex. Mar. 6, 2020).
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5. Fraud in the Concealment
The elements of fraud under Texas law are: (1) a material misrepresentation that (2) was false,
(3) was either known to be false when made or was asserted without knowledge of its truth, (4) was
intended to be acted upon, (5) was relied upon, and (6) caused injury. Jacked Up L.L.C. v. Sara
Lee Corp., 854 F.3d 797, 810 (5th Cir. 2017). Fraud by concealment has the same elements, “with
the exception that the misrepresentation element can be proven by the nondisclosure or
concealment of a material fact in light of a duty to disclose.” United Tchr. Assocs. Ins. v. Union
Lab. Life Ins., 414 F.3d 558, 567 (5th Cir. 2005).
Defendants argue that Plaintiffs allege “no set of facts on which Plaintiffs could prevail on
their fraud claim.” Dkt. 11 at 13. The Boelters allege that Defendants led them “to believe an
emergency loan modification was in the works” while preparing to start foreclosure proceedings,
failing to “engage fairly or forthrightly in negotiations for a modification.” Dkt. 1-4 ¶¶ 15, 43.
Plaintiffs offer no evidence that Defendants concealed any material fact. They establish no
injury because Defendants present uncontroverted evidence that Plaintiffs were in default on the
mortgage and Defendants lawfully began foreclosure proceedings, which did not result in
foreclosure. Dkt. 11-1 at 2; Moncibais v. NewRez LLC, No. 7:22-cv-00410, 2024 WL 1743146, at
*4 (S.D. Tex. Mar. 1, 2024). Plaintiffs’ unsubstantiated assertions that Defendants negotiated in
bad faith after they requested a loan modification do not show a genuine issue of material fact, and
Defendants are entitled to summary judgment on the fraud claim. Turner, 476 F.3d at 343.
6. Fair Credit Reporting Act and Slander of Credit
The FCRA requires furnishers of credit information to provide accurate information to credit
reporting agencies. Johns v. Chase Home Fin., No. EP-13-CV-066-KC, 2013 WL 5201155, at *7
(W.D. Tex. Sept. 12, 2013). It is “well-established law that a plaintiff cannot maintain a private

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right of action against a furnisher for alleged wrongful credit reporting until after the furnisher has
been notified of the formal dispute” received from the credit reporting agency. Wagner v. BBVA
Bank, No. 1:22-CV-00680, 2024 WL 1741350, at *3 (W.D. Tex. Mar. 11, 2024).
The Boelters allege that Defendants’ actions “have impaired their credit.” Dkt. 1-4 ¶ 41. They
neither allege nor show that they disputed any inaccurate credit information provided by
Defendants to a credit reporting agency, nor that a credit reporting agency notified Defendants of
a dispute. Their FCRA claims fail as a matter of law.
In addition, the FCRA preempts state law defamation or negligent reporting claims unless the
plaintiff consumer proves malice or willful intent to injure. Young v. Equifax Credit Info. Servs.,
Inc., 294 F.3d 631, 638 (5th Cir. 2002) (quoting 15 U.S.C. § 1681h(e)). Because the Boelters have
not pled or proven any malice or intent to injure their credit by Defendants, their state law
defamation claim is preempted by the FCRA.
7. Truth in Lending Act
Plaintiffs assert a TILA claim against Fay. Although unclear, they appear to allege Fay did not
provide “accurate material disclosures required under TILA” when the Boelters agreed to their
mortgage. Member Case, Dkt. 1-4 at 11. Notwithstanding that Fay was not party to the original
mortgage, TILA provides that any action against a creditor for failure to make required disclosures
must be brought “within one year from the date of the occurrence of the violation.” 15 U.S.C.
§ 1640(e). “The violation ‘occurs’ when the transaction is consummated. Nondisclosure is not a
continuing violation for purposes of the statute of limitations.” Koesler v. Beneficial Fin. I, Inc.,
267 F. Supp. 3d 873, 886 (W.D. Tex. 2016) (citation omitted).
The Boelters executed the note on August 27, 2003, so the statute of limitations for
nondisclosure ran on August 27, 2004. Dkt. 11-2 at 1. This claim is barred.

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8. Real Estate Settlement Procedures Act
The Boelters allege that Fay violated RESPA without citing a specific provision of the statute.
Member Case, Dkt. 1-4 at 12. Instead, Plaintiffs allege Fay’s actions were unlawful under a test
set out by the Department of Housing and Urban Development in a policy statement interpreting
RESPA’s prohibition against kickbacks and unearned fees in 12 U.S.C. § 2607. Id.; RESPA
Statement of Policy 1999-1, 64 Fed. Reg. 10,080, 10,084 (Mar. 1, 1999). The Court construes their
claim as arising under § 2607, which prohibits “kickback and referral fee arrangements whereby
any payment is made, or ‘thing of value’ is furnished, for the referral of real estate services.”
Moreno v. Summit Mortg. Corp., 364 F.3d 574, 576 (5th Cir. 2004) (quoting 12 U.S.C. § 2607(a)).
The Boelters allege that Fay’s charges were “disproportionate” to the services it provided, but
do not allege or offer evidence that Fay paid or received any kickbacks or fees in exchange for the
referral of their Loan. See Member Case, Dkt. 1-4 at 12. Plaintiffs do not carry their burden to
show that Fay paid or received kickbacks in violation of RESPA.
9. Claim for Declaratory Relief
Finally, Plaintiffs ask the Court to declare that Fay has no interest in the Property.
Member Case, Dkt. 1-4 at 10.
The federal Declaratory Judgment Act “does not create a federal cause of action.” Harris Cnty.
v. MERSCORP Inc., 791 F.3d 545, 552 (5th Cir. 2015). Because there is no genuine issue of
material fact on any claim, the request for declaratory relief is not “supported by some underlying
cause of action.” Reyes v. N. Tex. Tollway Auth., 861 F.3d 558, 565 n.9 (5th Cir. 2017).
10. Claims against Doe Defendants
No Doe Defendant has been served or appeared. When a defending party shows that a plaintiff
has no cause of action, the defense generally inures to the benefit of a defaulting defendant as well.

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Lewis v. Lynn, 236 F.3d 766, 768 (5th Cir. 2001). This rule applies to unserved “John Doe”
defendants who are similarly situated. Walters v. Lasalle Corr., No. EP-22-CV-00035-KC-ATB,
2022 WL 2240467, at *4 (W.D. Tex. June 21, 2022), R. & R. adopted, 2022 WL 22412866
(W.D. Tex. July 28, 2022).
The Boelters made no specific allegations against the Doe Defendants in their petitions,
asserting claims against the named Defendants and the Doe Defendants jointly. The Doe
Defendants are similarly situated to the named Defendants, and it would be incongruous and unfair
to grant summary judgment to the named Defendants and not the Doe Defendants. Lewis, 236 F.3d
at 768. This Magistrate Judge therefore recommends that the District Court grant summary
judgment for the Doe Defendants on all claims.
V.

Recommendation

For these reasons, this Magistrate Judge RECOMMENDS that the District Court GRANT
Defendants US Bank Trust National Association as Owner Trustee for VRMTG Asset Trust, Fay
Servicing, LLC, and Mortgage Electronic Registration Systems, Inc.’s Motion for Summary
Judgment (Dkt. 11).
This Magistrate Judge FURTHER RECOMMENDS that the District Court GRANT
summary judgment for Defendants John Does 1-20 and ENTER FINAL JUDGMENT for all
Defendants in Lead Case Boelter v. US Bank Trust National Association, No. 1:22-cv-1214-ADASH, and Member Case Boelter v. Fay Servicing, LLC, No. 1:23-CV-00272-ADA.
It is ORDERED that the Clerk remove this case from this Magistrate Judge’s docket and return
it to the docket of the Honorable Alan D. Albright.

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VI.

Warnings

The parties may file objections to this Report and Recommendation. A party filing objections
must specifically identify those findings or recommendations to which objections are being made.
The District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S.
Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987). A party’s failure to file written objections to
the proposed findings and recommendations contained in this Report within fourteen (14) days
after the party is served with a copy of the Report shall bar that party from de novo review by the
District Court of the proposed findings and recommendations in the Report and, except on grounds
of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings
and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1); Thomas v. Arn,
474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29
(5th Cir. 1996) (en banc).
SIGNED on June 4, 2024.

SUSAN HIGHTOWER
UNITED STATES MAGISTRATE JUDGE

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