Morris et al v. Chase Home Finance, LLC et al
ORDER GRANTING 18 Motion for Summary Judgment Signed by Judge Kathleen Cardone. (mc6)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
ANTHONY RYAN MORRIS and
CHASE HOME FINANCE, LLC,
EMC MORTGAGE CORPORATION,
and BANK OF AMERICA,
On this day, the Court considered the Motion for Summary Judgment (the “Motion”)
filed by Defendant JPMorgan Chase Bank, N.A. (“JPMC”),1 ECF No. 18, in the above-captioned
case (the “Case”). For the reasons set forth herein, the Motion is GRANTED.
The Court addressed the background of this matter in its Order granting in part and
denying in part Defendants’ motion to dismiss. See Order, ECF No. 13. In brief, Plaintiffs
Anthony Ryan Morris and Brenda Morris (singly or collectively “Plaintiffs”) brought suit
challenging JPMC’s foreclosure and sale of their home.2 The Court dismissed Plaintiffs’ claims
JPMC is the successor by merger to the named Defendant, Chase Home Finance LLC.
Though the record is not explicit on this point, it appears that Plaintiffs still occupy the home. See Mot. 9
(“Plaintiffs still occupy the property despite the fact that they are not making payments.”).
for wrongful foreclosure and violation of the Real Estate Settlement Procedures Act because they
failed to state a claim upon which relief could be granted. Id. at 9-12. The Court held that
Plaintiffs adequately pleaded a claim for breach of contract against JPMC, but not against the
other two defendants. Id. at 5-9, 12. The breach of contract claim against JPMC is therefore the
sole remaining claim in the Case. JPMC now moves for summary judgment on that claim.
In support of the Motion, JPMC has filed a list of Proposed Undisputed Facts, ECF No.
18-1 (“Proposed Facts”), and an appendix of supporting materials attached to the Declaration of
Alicia Brooks, ECF No. 18-2 (“Defendant’s Appendix”). Plaintiffs have filed a response to the
Motion, ECF No. 19, (“Response”), to which they attached their own affidavit (“Plaintiffs’
Affidavit”). Plaintiffs separately filed a second affidavit with an attached appendix of supporting
materials, ECF No. 20 (“Plaintiffs’ Appendix”). JPMC has filed a reply to the Response, ECF
No. 21 (“Reply”). Finally, Plaintiffs have filed responses to the Proposed Facts, ECF No. 26
(“Response to Proposed Facts”).
The Court here recounts the facts relevant to its disposition of the Motion. All facts listed
here are undisputed except as otherwise noted.3
Plaintiffs’ Response did not comply with the Court’s Standing Order Regarding Motions for Summary Judgment
(“Standing Order”) in that it did not admit or deny the Proposed Facts and did not enumerate the genuine disputes of
material fact to be tried. The Court therefore ordered Plaintiffs to submit a response that complied with the Standing
Order. See Order, ECF No. 25.
Despite the Court’s admonition, the Response to Proposed Facts that Plaintiffs have now submitted still does not
comply with the Standing Order. Though Plaintiffs now generally admit or deny each Proposed Fact, they fail to cite
specific points in the record to support their claims that certain facts are disputed, as required by the Standing Order.
Instead, they simply cite their affidavit as a whole. See Resp. to Proposed Facts ¶¶ 20-24, 29, 31-34, 38; Standing
Order ¶ 3. Moreover, after stating that certain Proposed Facts are disputed, Plaintiffs often add a gloss demonstrating
that they do not truly dispute the Proposed Fact, or at best leaving obscure exactly what they dispute. Compare
Proposed Facts ¶¶ 7, 10, 15, 21-24, 29, 31-34, 38 with Resp. to Proposed Facts ¶¶ 7, 10, 15, 21-24, 29, 31-34, 38.
Plaintiffs respond to one Proposed Fact with a non sequitur that neither admits nor denies it. Compare Proposed
Facts ¶ 11with Resp. to Proposed Facts ¶ 11. Finally, Plaintiffs have simply not submitted the list required by the
Standing Order specifying the genuine issues of material fact to be tried.
On or about October 26, 2006, Plaintiffs took out a home mortgage loan (the
“Mortgage”) from Home123 Corporation (“Home 123”) in the amount of $450,000 to purchase
real property located at 1032 Calle Milagro Drive in El Paso, Texas (the “Property”). Proposed
Facts ¶¶ 1-2; Resp. to Proposed Facts ¶¶ 1-2. One or both Plaintiffs executed various loan
documents pertinent to the Motion, including a promissory note payable to Home123 (the
“Note”), a deed of trust (the “Deed of Trust”) (collectively the “Loan Agreements”), and a
waiver of escrow (the “Waiver of Escrow”). Proposed Facts ¶¶ 1-4; Resp. to Proposed Facts ¶¶
The Note required Plaintiffs to make monthly payments on the first day of every month
to Home123 in the amount of $3,031.74. Proposed Facts ¶ 6; Resp. to Proposed Facts ¶ 6. The
Note specifies that if Plaintiffs “do not pay the full amount of each monthly payment on the date
it is due, [they] will be in default.” Defs.’ App. 5. The parties agree that the failure to timely
make any monthly payment would constitute a breach of the Deed of Trust and a default of the
Note. Proposed Facts ¶ 8-10; Resp. to Proposed Facts ¶ 8-10.
Three other provisions of the Deed of Trust are relevant to the Court’s disposition of the
Federal Rule of Civil Procedure 56(e) provides that when a party “fails to . . . properly address another party’s
assertion of fact as required by Rule 56(c), the Court may:
1) give an opportunity . . . to properly address the fact;
2) consider the fact undisputed for purposes of the motion;
3) grant summary judgment if the motion and supporting materials – including facts considered
undisputed – show that the movant is entitled to it; or
4) issue any other appropriate order.”
Fed R. Civ P. 56(e).
The Court has already given Plaintiffs an opportunity to properly address the Proposed Facts, but Plaintiffs have not
availed themselves of it. Though the Court may consider such improperly addressed facts undisputed for the
purposes of the Motion, the Court will nonetheless endeavor to construe Plaintiffs’ responses in the light most
favorable to them. The Court will, however, consider as undisputed those Proposed Facts that Plaintiffs only facially
“dispute,” do not properly address, and do not appear to truly contest, and that are supported by evidence in the
First, the section entitled “Payment of Principal, Interest, Escrow Items, Prepayment
Charges, and Late Charges” reads in pertinent part
Borrower shall pay when due the principal of, and interest on, the debt evidenced by the
Note and any prepayment charges and late charges due under the Note. Borrower shall
also pay funds for Escrow Items pursuant to Section 3 . . . . Lender may accept any
payment or partial payment insufficient to bring the loan current . . . but Lender is not
obligated to apply such payments at the time such payments are accepted . . . . Lender
may hold such funds unapplied funds until Borrower makes payment to bring the loan
Defs.’ App. 10, § 1.
Second, the section entitled “Application of Payments or Proceeds” (the “Application
Clause”) reads in pertinent part
Except as otherwise described in this Section 2, all payments accepted and applied by
Lender shall be applied in the following order of priority: (a) interest due under the Note;
(b) principal due under the note; (c) amounts due under Section 3 [concerning payments
for Escrow Items and any escrow shortage]. Such payments shall be applied to each
Periodic Payment in the order in which it became due. Any remaining amounts shall be
applied first to late charges, second to any other amounts due under this Security
Instrument, and then to reduce the principal balance of the Note.
If Lender received a payment from Borrower for a delinquent periodic payment which
includes a sufficient amount to pay any late charge due, the payment may be applied to
the delinquent payment and the late charge. If more than one Periodic Payment is
outstanding, Lender may apply any payment received from Borrower to the repayment of
the Periodic Payments if, and to the extent that, each payment can be paid in full .
Defs.’ App. 11, § 2.
Third, the section entitled “Funds for Escrow Items” requires Plaintiffs to make
additional monthly payments to Home123 to cover Home123’s payment of certain “Escrow
Items,” such as property taxes and homeowners insurance. However, Home123 waived this
requirement by the Waiver of Escrow. Proposed Facts ¶ 4, 7; Resp. to Proposed Facts ¶ 4, 7.
The Waiver of Escrow required Plaintiffs to timely pay the Escrow Items themselves, and
to notify Home123 of such payment within two weeks of Home123’s written request to provide
such notification. Proposed Facts ¶ 4, 7; Resp. to Proposed Facts ¶ 4, 7; Defs.’ App. 30. The
Waiver of Escrow provided that Home123 could re-establish an escrow account and require
Plaintiffs to make periodic payments for Escrow Items if any of the following occurred: a)
Plaintiffs failed to timely pay any of the Escrow Items; b) Plaintiffs failed to timely notify
Home123 of their payment of Escrow Items; c) Home123 advanced Plaintiffs funds to pay any
portion of the Escrow Items; or d) Plaintiffs were otherwise in default under the terms of any of
the loan documents. Proposed Facts ¶ 11-12; Resp. to Proposed Facts ¶ 11-12; Defs.’ App. 30.
At some point after the above instruments were executed, JPMC became the servicer of
the Note and the Deed of Trust. Proposed Facts ¶ 5; Resp. to Proposed Facts ¶ 5. JPMC
apparently thereby stepped into the shoes of Home123 for all purposes relevant to the Motion.
In 2008, Plaintiffs failed to pay taxes owed on the Property, thereby breaching the Waiver
of Escrow. Proposed Facts ¶ 13; Resp. to Proposed Facts ¶ 13. Though JPMC would have been
entitled to revoke the Waiver of Escrow at that time, it allowed Plaintiffs to pay the relevant
penalties and interest and left the Waiver of Escrow in place. Proposed Facts ¶ 14; Resp. to
Proposed Facts ¶ 14. Plaintiffs fell behind on their periodic payments from February 2009
through October 2009,4 and again breached the Waiver of Escrow by failing to pay taxes owed
on the property in November and December 2009. Proposed Facts ¶¶ 15-18; Resp. to Proposed
Facts ¶¶ 15-18. As Plaintiffs, per the terms of the Waiver of Escrow, had not been paying JPMC
for Escrow Items, JPMC’s payment of the taxes on Plaintiffs’ behalf resulted in a substantial
escrow shortage. Proposed Facts ¶ 19; Resp. to Proposed Facts ¶ 19. Plaintiffs’ two January
2010 payments were sufficient to cover the principal, interest, and late fees that were due at that
The parties dispute the extent to which Plaintiffs were behind on their periodic payments at that time. The Court
need not resolve this dispute to rule on the Motion.
time, as well as some of the escrow shortage, leaving the escrow shortage at $32,212.34.
Proposed Facts ¶ 20; Resp. to Proposed Facts ¶ 20.
JPMC claims that after it received the January payments, it established an escrow account
in accordance with the terms of the Deed of Trust.5 Proposed Facts ¶ 21; Defs.’ App. 58. In
support of this claim, JPMC has filed a document addressed to Plaintiffs entitled “Annual
Escrow Account Statement” dated December 29, 2009. JPMC does not aver that it sent this
statement to Plaintiffs, and the Court can find no evidence in the record indicating that JPMC
sent the statement. The statement notifies Plaintiffs that they would henceforth be required to
make additional monthly payments of $1,068.08 for Escrow Items. Proposed Facts ¶¶ 21-22;
Defs.’ App. 58. The statement also instructed Plaintiffs to make twelve monthly payments of
$3,069.93 to cover the escrow shortage, which at the time was $36,839.16.6 Proposed Facts ¶ 23;
Defs.’ App. 58. As described on the account statement, the escrow shortage comprised both the
funds already disbursed by JPMC for Escrow Items as well as an increase to the cushion for
Plaintiffs’ escrow account. Defs.’ App. 59. According to the statement, Plaintiffs’ total monthly
payment was therefore to be $7,187.75 beginning in March 2010. Defs.’ App. 58.
Plaintiffs dispute the Proposed Facts concerning the establishment of the escrow account,
claiming that they “were never notified of the escrow account or the new payment amount . . . .
[h]ad the Defendant notified the Plaintiffs to pay the amount in full they would have done so . . .
. Plaintiffs did not know the payment increased.” Resp. to Proposed Facts ¶¶ 21-23. Plaintiffs do
Though Defendants state that the escrow account was established after the January payments were received, it
appears to have been established by December 29, 2009, the date of the escrow account statement. See Proposed
Facts ¶¶ 20-21; Defs’ App. 58.
Plaintiffs could opt out of making the listed default monthly payment for the escrow shortage by paying all or part
of the amount due in a lump sum, and then making lower monthly payments.
not appear to dispute whether an escrow account was in fact established in accordance with the
Deed of Trust, nor whether JPMC expected them to make increased monthly payments. See id.
The parties agree that Plaintiffs did not pay $7,187.75 per month beginning in March
2010. Instead, having brought the account current by making payments of $3,000 and $1,000 in
January, Plaintiffs made no payment in February, paid $3,500 per month in March and April, and
made no payment in May. See Proposed Facts ¶¶ 24-25; Resp. to Proposed Facts ¶¶ 24-25; Pls.’
On May 10, 2010, JPMC generated another escrow account statement. Like the previous
statement, it is addressed to Plaintiffs, but JPMC does not claim that it was sent, and no evidence
in the record indicates that it was sent. See Proposed Facts ¶¶ 32-34; Defs.’ App. 62. The
statement informed Plaintiffs that as of July 2010, their payments into the escrow account and for
the escrow shortage would be adjusted. Defs.’ App. 62. In addition to their usual monthly
payment of principal and interest in the amount of $3031.74, they were to increase their escrow
account deposit to $1,226.64 and decrease their escrow shortage payment to $2,125.12, for a
total monthly payment of $6,383.50. Proposed Facts ¶¶ 32-34; Defs.’ App. 62.
Plaintiffs deny the Proposed Facts related to the May 10 escrow account statement. Resp.
to Proposed Facts ¶¶ 32-34. They state “[t]he Plaintiff [sic] stood ready to pay the entire amount
of escrow shortage and tried to communicate with the Defendant to find out an amount.” Id. ¶ 32.
On June 9, 2010, JPMC sent Plaintiffs a Notice of Intent to Accelerate and Demand for
Payment (the “June 9 Notice”) stating that Plaintiffs were in default. Id. ¶ 26; Resp. to Proposed
Facts ¶ 26; Defs.’ App. 69. The June 9 Notice stated that as of June 1, the record date of the
Notice, Plaintiffs had missed the April, May, and June payments of $7,187.75 each, for a total of
$21,563.25.7 Id. As set forth on the June 9 Notice, subtracting from that amount $2,870.97 that
was in a suspense account, and $21.70 for “Corporate advances,” left $18,670.58 as the amount
required to cure the default. Id. The June 9 Notice warned Plaintiffs that “you may owe the
amount of any other payments and late charges which may fall due after the date of this letter . . .
. As a word of caution, payment of the amount noted above will not be accepted once the default
has increased, so it is absolutely essential that you call for an updated quote when preparing to
remit the amount past due.” Defs.’ App. 69. Plaintiffs received this letter on June 14. Pls.’ Aff.
In response to the June 9 Notice, Plaintiffs sent JPMC a check for $18,670.58 (the “June
18 Payment”), the total amount demanded in the letter. Proposed Facts ¶ 27; Resp. to Proposed
Facts ¶ 27. In a letter enclosing the June 18 Payment, Anthony Morris wrote “[p]lease apply to
the outstanding escrow balance. This should reduce balance on escrow, additional payments
forthcoming should be applied to loan principal balance.” Pls.’ App. 25.
JPMC did not – at least initially – apply the June 18 Payment to the outstanding escrow
balance as Plaintiffs requested. Instead, it claims that it applied $14,527.09 to the past due
payments of principal, interest, escrow, and late charges for April and May 2010. Proposed Facts
¶ 27; Defs.’ App. 40. Plaintiffs disclaim any knowledge of how the June 18 Payment was applied
to their account. Resp. to Proposed Facts ¶ 27. The parties agree that because a late charge came
due after the June 9 Notice was sent but before Plaintiffs made the June 18 Payment, the amount
remaining from the June 18 Payment was insufficient to make payment that was overdue for the
Though Plaintiffs made a payment of $3,500 in April, this payment was, as far as the Court can tell, applied to the
outstanding March payment. The March payment was outstanding because the payment Plaintiffs made in March
had been applied to the missing February payment. Though Plaintiffs made two more payments of $3,500 on June 2
and June 8, these were not reflected on the Notice because they were made after the date the Notice was generated.
See Defs.’ App. 39-40, 69; Pls.’ App. 29-30. In any event, Plaintiffs do not challenge Defendants’ calculation of the
amounts due as stated in the June 9 Notice.
month of June.8 Proposed Facts ¶ 28; Resp. to Proposed Facts ¶ 28. Nevertheless, the parties also
agree that Plaintiffs cured their breach by making the June 18 Payment. See Am. Compl. 4;
On July 13, 2010, JPMC sent Plaintiffs a letter explaining the amounts then owed for
escrow. Proposed Facts ¶ 35; Resp. to Proposed Facts ¶ 35. The letter stated that the escrow
shortage was $25,501.46 – the same amount listed on the May 10 escrow account statement, thus
indicating that none of the June 18 Payment had been applied to the escrow shortage as of that
date. Defs. App. 67.
The parties agree that on July 14, 2010, JPMC reversed the previous four payments,
applied a portion of the funds to the escrow balance, and then reapplied the remaining funds to
the outstanding payments in accordance with the Deed of Trust. Proposed Facts ¶ 30; Resp. to
Proposed Facts ¶ 30. JPMC represents that it did so at Plaintiffs’ request, despite the fact that the
“Deed of Trust does not permit a payment to be applied in that manner when the loan is in
default.” Mot. 4-5. It is not clear whether JPMC refers to the request in the letter accompanying
the June 18 Payment, or a later request of which there is no evidence in the record.9 JPMC claims
that after the reapplication, Plaintiffs had an escrow shortage of $15,242.60. Proposed Facts ¶ 31;
Defs.’ App. 56. Plaintiffs dispute this Proposed Fact, stating that “this was never communicated
to Plaintiffs.” Proposed Facts ¶ 32.
It is difficult to reconcile Plaintiffs’ denial of any knowledge as to how the funds from the June 18 Payment were
applied with their admission that insufficient funds remained from that payment to make the payment that was due
for the month of June due to the intervening late charge. See Resp. to Proposed Facts ¶¶ 27-28.
JPMC represents that “Plaintiffs paid the delinquent amount, but then requested that it be applied to escrow rather
than to cure their default,” thereby indicating that the payment and the request were not contemporaneous. Mot. 4.
However, the record does not reflect any such requests between when Plaintiffs sent the June 18 Payment and when
JPMC reversed and reapplied the payments in mid-July. Defs.’ App. 40-41, 56.
Thereafter, from July 2010 through January 4, 2011 – the date of the foreclosure sale –
Plaintiffs made only the following payments: $3,500 in July, $3,500 in August, none in
September, and $3,500 in October. Proposed Facts ¶ 36; Resp. to Proposed Facts ¶ 36; Pls.’ App.
29-30. Plaintiffs claim they made an additional payment of $3,500 in December 2010, which
JPMC disputes. See Pls.’ App. 29-30; Mot. 5 n.1. These payments were less than the required
monthly payment of $4,258.38, which does not include any amount to repay the escrow shortage,
or $6,383.50 which includes the amount required to repay the escrow shortage.
On August 30, 2010, JPMC sent Plaintiffs a second Notice of Intent to Accelerate and
Demand for Payment, by which it demanded that Plaintiffs remit all past due payments to cure
their default. Proposed Facts ¶ 37; Resp. to Proposed Facts ¶ 37. The notice stated that the total
amount due at that time to cure the default was $10,033.23. Defs.’ App. 76. That amount
comprised missed payments of $6,383.50 for July and August 2010 and $454.77 in late charges,
less $7.70 in corporate advances and a $3,180.84 suspense balance. Defs.’ App. 76.
JPMC claims that Plaintiffs did not cure that default, but instead further breached the
Loan Agreements by making only two payments over the next five months in the insufficient
amount of $3,500 (namely the above-referenced October payment and the disputed December
payment). Proposed Facts ¶ 38; Defs.’ App. 41-43. Plaintiffs deny that they were in default by
stating “Plaintiffs made a number of attempts to contact and communicate with the Defendant
and never received a response as to what was actually owed; the Plaintiff disputes that they were
in default.” Resp. to Proposed Facts ¶ 38. Plaintiffs cite their affidavit as a whole in support of
this claim, such that it is not clear what if any summary judgment evidence supports their
contention that they were not in default.
A court must enter summary judgment “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); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Weaver v. CCA Indus.,
Inc., 529 F.3d 335, 339 (5th Cir. 2008). “A fact is ‘material’ if its resolution in favor of one party
might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of
Tex., 560 F.3d 316, 326 (5th Cir. 2009) (quoting Hamilton v. Segue Software, Inc., 232 F.3d 473,
477 (5th Cir. 2000) (per curiam)). A dispute about a material fact 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, 248 (1986); Ellison v. Software Spectrum, Inc.,
85 F.3d 187, 189 (5th Cir. 1996).
“[The] party seeking summary judgment always bears the initial responsibility 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; Wallace v. Tex. Tech. Univ., 80 F.3d 1042, 1046-47 (5th Cir. 1996). To show
the existence of a genuine dispute, the nonmoving party must support its position with citations
to “particular parts of materials in the record, including depositions, documents, electronically
stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory
answers, or other materials[,]” or show “that the materials cited by the movant do not establish
the absence . . . of a genuine dispute, or that [the moving party] cannot produce admissible
evidence to support the fact.” Fed. R. Civ. P. 56(c). The court resolves factual controversies in
favor of the nonmoving party; however, factual controversies require more than “conclusory
allegations,” “unsubstantiated assertions,” or “a ‘scintilla’ of evidence.” Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam) (citations omitted). Further,
when reviewing the evidence, the court must draw all reasonable inferences in favor of the
nonmoving party, and may not make credibility determinations or weigh evidence. Man Roland,
Inc. v. Kreitz Motor Express, Inc., 438 F.3d 476, 478-79 (5th Cir. 2006) (citing Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). Thus, the ultimate inquiry in a
summary judgment motion 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.”
Anderson, 477 U.S. at 251-52. 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.
Breach of Contract
In pertinent part, Plaintiffs allege in their First Amended Complaint that:
[JPMC] refused and continues to refuse to account for how the [June 18 Payment]
was applied to [their] obligations or if it was applied at all.
The Plaintiffs were not in default of the promissory note, the deed of trust, or any
other contracts or agreements with any of the Defendants. Among [sic] with
regular monthly mortgage payments, the Plaintiffs sent $18,670 to [JPMC] which
was improperly credited or not credited at all to the Plaintiffs[’] loan account. The
nonjudicial foreclosure conducted by the Defendants agents in January of 2011
was a breach of the contract.
[JPMC] also violated Paragraph 2 under the heading “UNIFORM
COVENANTS” found on page 4 of the Deed of Trust [the “Application Clause”].
Am. Compl. ¶¶ 6, 14, 15.
Because this is a diversity case, the Court applies state substantive law. See In re Katrina
Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007) (citing Erie R.R. Co. v. Tompkins, 304
U.S. 64, 78 (1938)). The parties do not dispute that Texas law applies.
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 contract
by the defendant, and (4) resulting damages to the plaintiff.” Rice v. Metro. Life Ins. Co., 324
S.W.3d 660, 666 (Tex. App. 2010) (citations omitted). The parties do not dispute that the
Mortgage was a valid contract, but they dispute the other three elements.
Performance or tendered performance by the plaintiff
JPMC argues that Plaintiffs variously breached the Waiver of Escrow, the Deed of Trust,
and the Note by failing to timely pay taxes, failing to repay the funds JPMC paid on their behalf
for Escrow Items, failing to timely make payments, and failing to increase their monthly
payments to include deposits into the escrow account. Mot. 7; Reply 4. JPMC argues that it is
therefore “entitled to summary judgment because Plaintiffs breached the contract and are barred
from maintaining a claim for breach of contract.” Mot. 7.
Plaintiffs respond that they complied with the Deed of Trust. Resp. 2-5. In support of this
proposition, Plaintiffs make several arguments which bear no apparent connection to their
compliance with the Deed of Trust, and, moreover, are otherwise irrelevant to the disposition of
the Motion. The Court addresses them below.
In its Order granting in part and denying in part the motion to dismiss, the Court found
that Plaintiffs adequately pleaded that they tendered performance because they alleged that they
“were not in default of the promissory note, the deed of trust, or any other contracts or
agreements with any of the Defendants.” See Order 7, Am. Compl. ¶ 14. The Court further noted
that the documents attached to the Amended Complaint were consistent with Plaintiffs’ claims
Defendants note that in January 2010, the Mortgage was “current.” Even though
Plaintiffs only made additional Mortgage payments that year in March, April,
June, July, August, October, and December, Plaintiffs may still not have been in
default at any time in 2010. This is because the Mortgage contains prepayment
and cure provisions. The Mortgage notes that the required monthly payment is
$3,031.74. But Plaintiffs’ payments, after January 2010, were for $3,500—well in
excess of this amount. Therefore it is possible that Plaintiffs were prepaying their
Mortgage throughout 2010 and therefore there were no outstanding payments that
year. Moreover, even if Plaintiffs did owe money on the Mortgage at some point
in 2010, they may have cured any deficiency with their June 18, 2010, payment of
$18,670.58. Accordingly, because of these provisions, the Court cannot conclude
at this stage of the proceedings that Plaintiffs failed to perform by not making the
required Mortgage payments in 2010.
Order 7 (citations omitted).
For the following reasons, the Court finds that the undisputed summary judgment
evidence demonstrates that Plaintiffs failed to perform under the terms of the Loan Agreements.
As the Court noted in its Order, Plaintiffs’ account was current as of January 2010.
Proposed Facts ¶ 20; Resp. to Proposed Facts ¶ 20. However, at that time Plaintiffs had an
escrow shortage of at least $32,212.34 due to their nonpayment of taxes which had not yet been
reduced to an obligation to repay JPMC. Proposed Facts ¶¶ 17-20; Resp. to Proposed Facts ¶¶
17-20. JPMC then established an escrow account and required Plaintiffs to begin making
monthly deposits to the escrow account and paying down the escrow shortage as of their March
2010 payment. Proposed Facts ¶¶ 21-23; Defs.’ App. 10-11. Though Plaintiffs purport to dispute
those Proposed Facts, at bottom, Plaintiffs appear to contend merely that they were not notified
of the new payment. They do not dispute whether the escrow account was established in
accordance with the Deed of Trust. See Resp. to Proposed Facts ¶¶ 21-23. To the extent Plaintiffs
do dispute that point, they have not properly supported that claim with a citation to the record,
and in any event, the Waiver of Escrow and the Deed of Trust clearly allow JPMC to establish an
escrow account and require payments for Escrow Items and repayments of any escrow shortage.
See Defs.’ App 11-12, 30; Proposed Facts ¶¶ 21-23; Resp. to Proposed Facts ¶¶ 21-23. The Court
therefore considers it undisputed that JPMC established an escrow account in accordance with
the Deed of Trust.
Plaintiffs never made the required payment of $7,187.75 from March through June 2010,
and instead made only sporadic, late payments of $3,500. Pls.’ App. 29-30. They were therefore
in breach of the terms of the Loan Agreements. Proposed Facts ¶ 8-10; Resp. to Proposed Facts ¶
8-10. Upon receiving the June 9 Notice, Plaintiffs cured this breach by making the June 18
Payment. See Am. Compl. 4; Reply 4. But after curing that default, Plaintiffs continued to
underpay and skip monthly payments. Plaintiffs made, at most, four payments of $3,500 from
July 2010 through January 4, 2011. Proposed Facts ¶ 36; Resp. to Proposed Facts ¶ 36; Pls.’
App. 29-30. They thereby again breached the terms of the Mortgage, and did not cure that breach
before the foreclosure sale. Proposed Facts ¶ 38; Pls.’ App. 29-30. Though Plaintiffs assert that
they were not in default, they do not meaningfully cite the summary judgment record in support
of their claim. See Resp. to Proposed Facts ¶ 38. Contrary to Plaintiffs’ unsupported assertion,
Plaintiffs’ Affidavit and Appendix indisputably indicate that they made, at most, four payments
between July 2010 and January 2011. Proposed Facts ¶ 36; Resp. to Proposed Facts ¶ 36; Pls.’
App. 30; Pls.’ Aff. 8. Moreover – to the extent Plaintiffs’ protestation that they were previously
unaware of the increased monthly payment is of any consequence – they were unquestionably
aware of the increased payment after receiving the June 9 Notice, which reflected missed
monthly payments in the same amounts demanded in the December 29, 2009 escrow account
statement.10 See Proposed Facts ¶ 26; Resp. to Proposed Facts ¶ 26; Defs.’ App. 69. The Court
therefore accepts as undisputed that Plaintiffs defaulted again after June 2010, and remained in
default until JPMC sold the Property at a foreclosure sale on January 4, 2011. See Pls.’ App. 44.
Even assuming arguendo that JPMC failed to properly apply the June 18 Payment to
Plaintiffs’ account, Plaintiffs were indisputably in breach after June 2010. That is, had JPMC
simply applied the June 18 Payment to the escrow shortage as Plaintiffs requested, it would have
reduced but not eliminated the escrow shortage. Plaintiffs admitted as much in their letter
enclosing the June 18 Payment. See Pls.’ App. 25 (noting that the June 18 Payment “should
reduce balance on escrow.”). Plaintiffs would then still have been in arrears for their missed
payments and underpayments of principal and interest between March and May, which were, in
reality, resolved by the application of the June 18 Payment. Proposed Facts ¶ 27. Plaintiffs
acknowledged that point as well when they stated in the letter accompanying the June 18
Payment that “additional payments forthcoming should be applied to loan principal balance.”
Pls.’ App. 25. Moreover, even if the June 18 Payment had resolved all of Plaintiffs’ then-existing
obligations for overdue payments and the escrow shortage, their sporadic payments of $3,500
There is also evidence indicating that Plaintiffs became aware of the increased monthly payment at an earlier time.
Plaintiffs state in their affidavit “[w]e made 10 payments of $3500 each in 2010 because the additional charge of
$3000 would have been double charging us for escrow.” Pls’ Aff. 8. That statement appears to indicate that
Plaintiffs were aware of the “additional charge of $3000” at the time they were making the $3500 payments, i.e.,
throughout the course of 2010. The Court will nonetheless accept as true Plaintiffs’ averment that they did not
receive the escrow account statements and were therefore not aware of the increased payment until June 14, 2010.
In that regard, the Court further notes that it is difficult to square Plaintiffs’ statement that they “made 10 payments
of $3500 each in 2010 because the additional charge of $3000 would have been double charging us for escrow” with
their claim that they “never refused to pay.” Pls.’ Aff. 9.
after June 18 were still less than the required monthly payment of $4,258.38 for principal,
interest, any applicable late charges, and deposits into the escrow account.
In sum, it is undisputed that Plaintiffs did not timely make payments that were due,
thereby breaching the Deed of Trust and defaulting under the Note. Proposed Facts ¶¶ 8-10, 38;
Resp. to Proposed Facts ¶¶ 8-10; Pls.’ App. 29-30. Though Plaintiffs have made “conclusory
allegations” and “unsubstantiated assertions” to the effect that they were not in breach, they have
not supported their position with citations to the record sufficient to raise a genuine dispute of
material fact. See Fed. R. Civ. P. 56(c); Liquid Air, 37 F.3d at 1075 (citations omitted).
“It is a well established rule that a party to a contract who is himself in default cannot
maintain a suit for its breach.” Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990). Under the
“well-established principles of Texas contract law” exemplified by Dobbins, materially
breaching the terms of the Mortgage by failing to make timely payments “would normally [with
an exception not relevant here] prevent [Plaintiffs] from maintaining a breach-of-contract claim.”
Thomas v. EMC Mortgage, 499 F. App’x 337, 341, No. 12-10143, 2012 WL 5984943 (5th Cir.
Nov. 30, 2012) (unpublished).
Federal district courts applying Texas contract law have invoked that “well-established
rule” to bar actions for breach of contract by borrowers who were themselves in breach. See
Manns-Rice v. Chase Home Fin., LLC, No. 4:11-CV-425-A, 2012 WL 2674551, at *5 (N.D.
Tex. July 5, 2012) (holding that where the “summary judgment record shows that plaintiff
admitted she became delinquent in the payment of her mortgage loan payments . . . . [her] failure
to perform her contractual obligations warrants summary judgment on her breach of contract
claim on that basis alone”); Chavez v. Wells Fargo Bank, N.A., No. 4:11-VC-864-Y, 2013 WL
3762894, at *4 (N.D. Tex. July 9, 2013) (dismissing borrower’s breach of contract claim because
borrower’s allegations demonstrated that he was in default under the deed of trust); Williams v.
Fed. Nat’l Mortg. Ass’n, No. 2:11-CV-157-J, 2012 WL 1853170, at *2 (N.D. Tex. May 21,
2012) (granting lender summary judgment when “Plaintiffs present no evidence to contradict
either their [not responded-to requests for] admissions or the notices of default that show that, at
the time of foreclosure, Plaintiffs owed a significant balance due on their mortgage and were in
default.”). The Court therefore holds that JPMC is likewise entitled to summary judgment on
Plaintiffs’ breach of contract claim because Plaintiffs were themselves in default.
As noted, Plaintiffs raise a number of off-point or otherwise ineffectual arguments
against summary judgment, which the Court now briefly addresses.
First, Plaintiffs repeatedly assert that they were unaware of the increased monthly
payments as first demanded in the December 29, 2009 escrow account statement. See Resp. to
Proposed Facts ¶¶ 21-25. Plaintiffs do not articulate why this alleged lack of notice matters. To
the extent Plaintiffs now claim that JPMC breached the Loan Agreements by failing to provide
them notice of the increased payment, they did not plead such a failure to notify claim in their
Amended Complaint; the only notice-related claim they asserted in the Amended Complaint
concerned Defendants’ alleged violation of the Texas Property Code, which claim the Court
dismissed. See Am. Compl. 4-5; Order 11-12. Such a new improper notice claim is not relevant
to JPMC’s allegedly improper application of the June 18 Payment, which is the only remaining
claim in the Case. See Order 8 (“Plaintiffs’ breach of contract claim centers on [JPMC’s] alleged
failure to correctly apply the [June 18 Payment].”). In any event, Plaintiffs have not articulated
how, if at all, this alleged lack of notice breached the Loan Agreements, whether the breach was
material, or why it would obviate their own undisputed breach of the Loan Agreements after
June 2010. As such, this argument poses no obstacle to granting JPMC summary judgment as to
Second, Plaintiffs argue that they “cured the note . . . . in accordance with the demand
[and] the Deed of Trust” by submitting the June 18 Payment. Resp. 4. Plaintiffs are correct that
they cured their then-existing default by making the June 18 Payment, but that is irrelevant to
their subsequent default, which was the basis for the foreclosure. See August 30, 2010 Notice of
Intent to Accelerate and Demand for Payment, Defs.’ App. 79 (stating that past due sums
demanded are for missed July and August 2010 payments); see also Reply 4.
Third, Plaintiffs generally argue that they found it difficult or impossible to obtain from
JPMC information they desired about their account status. Resp. 2-4. Specifically, Plaintiffs
state that “the accounting and application of the [June 18 Payment] was never provided to the
Plaintiffs such that they had any idea what they owed.” Id. at 4. Plaintiffs also state that “it is for
a jury to decide whether the refusal of the Defendant to speak with the Plaintiff about the escrow
matter was a breach of the contract as the facts are clearly disputed.” Id. at 3-4. Plaintiffs have
not attempted to demonstrate with citation to the record that JPMC was required to provide them
an “accounting and application of the [June 18 Payment],” or any other information about their
account status. Any failure to provide such information or accounting is therefore of no moment
with regard to the Motion.
Finally, the Court cannot discern the substance of the argument in the Response
captioned “The Plaintiffs Did Not Receive the Notice of Trustees sale and Notice of Acceleration
Required by Section 51.002 of the Texas Property Code.” That argument consists of the caption,
citations to two cases, and the conclusion “[t]his is a clear breach of the deed of trust contract.
The Plaintiff [sic] at all time [sic] complied with the Deed of Trust.” Resp. 4-5. The Court has
already disposed of Plaintiffs’ notice claims based on the Texas Property Code in its Order
granting in part the Motion to Dismiss. See Order 11-12. Moreover, as noted above and
articulated in the Order, Plaintiffs did not plead a breach of contract on the basis of a failure to
give notice, so this argument is off-point.11 See Order 8.
Defendant’s Breach and Damages
As discussed, to prevail on a claim for breach of contract, Plaintiffs must ultimately prove
that they performed or tendered performance. See Rice, 324 S.W.3d at 666. “It is a well
established rule that a party to a contract who is himself in default cannot maintain a suit for its
breach.” Chavez, 2013 WL 3762894, at *4 (citing Dobbins, 785 S.W.2d at 378). The Court
holds, for the reasons explained above, that the undisputed summary judgment evidence shows
that Plaintiffs failed to perform or tender performance under the Loan Agreements. If the
nonmoving party on a motion for summary judgment 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. As Plaintiffs
have failed to establish the element of performance or tendered performance, which is essential
to their case, the Court must grant the Motion for Summary Judgment. Accordingly, the Court
The Court notes that Plaintiffs might have been excused from performing under the Loan Agreements, and their
own default mooted, if JPMC breached the Loan Agreements first. Such a breach could have consisted of the
misapplication of payments that Plaintiffs pleaded, or a different, earlier breach such as a failure to give notice of the
establishment of the escrow account and the increased monthly payment (that is, if such failure to give notice
occurred and was in fact a breach). See Levels v. Merlino, --- F. Supp. 2d. ----, No. 3-11-cv-3434-M-BN, 2013 WL
4733993, at *20 (N.D. Tex. Sept. 3, 2013) (denying summary judgment to lender because “neither party addresses
the timing of the others’ alleged breaches. Timing is important because Defendants are excused from performance
only if Plaintiffs breached the contract before Defendants’ alleged breach.”). Here, however, Plaintiffs did not argue
that they were excused from performance by a prior breach, and in any event, they have not put forth any evidence
that JPMC breached the Loan Agreements at any time, whether by misapplying the June 18 Payment or otherwise,
let alone evidence that JPMC breached first.
need not address the other elements of a breach of contract claim, namely, whether JPMC
breached the Loan Agreements and Plaintiffs suffered damages.
For the foregoing reasons, Defendant’s Motion for Summary Judgment, ECF No. 18, is
SIGNED this 7th day of February, 2014.
UNITED STATES DISTRICT JUDGE
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