Seeberger et al v. Bank Of America, N.A. et al

Filing 119

ORDER GRANT 84 Motion to Dismiss ; DENYING 101 Motion for Summary Judgment; DENIED AS MOOT 112 Motion for Partial Summary Judgment; DENIED AS MOOT 114 Motion to Strike ; DENIED AS MOOT 117 Motion to Strike Signed by Judge Kathleen Cardone. (vm1)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
RICK J. SEEBERGER AND SUSAN C.
SEEBERGER,
Plaintiffs,
v.
BANK OF AMERICA, N.A., BAC
HOME LOANS SERVICING, LP,
PRLAP, INC., BANK OF AMERICA
CORPORATION, VENTURES TRUST
2013 I.H.R., AND BSI FINANCIAL
SERVICES, INC.,
Defendants,
__________________________________
VENTURES TRUST 2013 I.H.R.,
Counter-Plaintiff,
v.
RICK J. SEEBERGER AND SUSAN C.
SEEBERGER,
Counter-Defendants.

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EP-14-CV-366-KC

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ORDER
On this day, the Court considered Defendants’ Motion to Dismiss the Second Amended
Complaint and Brief in Support (“Motion to Dismiss”), ECF No. 84, Plaintiffs’ Motion for
Judgment or to Rule on Plaintiffs’ Motion for Reconsideration (“Motion for Judgment”), ECF
No. 101, Plaintiffs’ Motion for Partial Summary Judgment (“New Motion for Partial Summary
Judgment”), ECF No. 112, Defendants’ Motions to Strike Plaintiffs’ Motion for Partial Summary
Judgment (collectively, “Motions to Strike”), ECF No. 114 and ECF No. 117, and Plaintiffs’

Reply and Objection to Defendants’ Motions to Strike (“Reply and Objection”), ECF No. 118.
For the reasons set forth herein, Defendants’ Motion to Dismiss is GRANTED, Plaintiffs’
Motion for Judgment is DENIED, Plaintiffs’ New Motion for Partial Summary Judgment is
DENIED as moot, Defendants’ Motions to Strike are DENIED as moot, and Plaintiffs’ Reply
and Objection is DENIED as moot.
I.

BACKGROUND
A.

Procedural Background

This case arises from events surrounding various loans secured against a homestead
property located at 6767 Gato Road, El Paso, Texas 79932 (the “Property”). See Second Am.
Compl. (“SAC”) ¶ 12, ECF No. 51. Plaintiffs Rick and Susan Seeberger (“Plaintiffs”) filed their
original complaint (“Complaint”) in this Court on October 1, 2014. See Compl., ECF No. 1. In
their Complaint, Plaintiffs alleged that Defendants Bank of America, N.A. (“BANA”) and BAC
Home Loans Servicing, LP (“BAC”) committed violations of the federal Truth in Lending Act
(“TILA”), 15 U.S.C. § 1601 et seq., breached their duties of good faith and fair dealing, and
committed common law fraud in relation to two notes secured against Plaintiffs’ real property.1
See Compl. 24-26.
Plaintiffs later filed a First Amended Complaint (“FAC”), adding PRLAP, Inc.
(“PRLAP”) and Bank of America Corporation (“BOA”) to the case as Defendants and asserting
additional causes of action against all Defendants for violations of the federal Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Texas Fair Debt
Collection Practices Act (“TDCA”), Tex. Fin. Code section 392.001 et seq. See FAC ¶¶ 1, 31-

1

This case has a lengthy procedural history, see, e.g., Order, ECF No. 83, and Plaintiffs have been involved in at
least three other related cases in this Court, as well as a related case in the United States Bankruptcy Court for the
Western District of Texas, see Notice of Rel. Cases, ECF No. 15. Thus, the Court does not provide an exhaustive
review of the litigation or procedural history, and instead, addresses only the relevant motions and facts.

2

32, ECF No. 10. Plaintiffs filed a Second Amended Complaint (“SAC”), which became the
active complaint in the case on March 6, 2015. See SAC. The SAC added as Defendants
Ventures Trust 2013 I.H.R. (“Ventures”) and BSI Financial Services, Inc. (“BSI”), and
ultimately alleged violations of TILA, TDCA, FDCPA, and Texas contract law, as well as breach
of the duty of good faith and fair dealing, and common law fraud. See SAC 5, 10, 15, 18, 20.
Defendants BANA, BAC, PRLAP, and BOA filed a Motion to Dismiss the SAC on June 30,
2015. See Mot. to Dismiss.
B.

Factual Background

The SAC is disjointed and convoluted, however the Court has been able to discern the
following facts relevant to its resolution of the instant Motion to Dismiss:2
On December 29, 2003, Plaintiffs obtained a Texas Home Equity loan in the amount of
$261,418.00 (“First Loan”), and executed an accompanying note (“First Note”) that was secured
by a Homestead Lien Contract and Deed of Trust naming BANA as the lender and PRLAP as the

2

Plaintiffs generally fail to differentiate among Defendants when stating claims; the Court therefore construes the
undifferentiated claims as if they are asserted against all Defendants. See Spencer v. Hughes Watters Askanse, LLP,
Civil Action No. 5:15-cv-00233, 2015 WL 3507117, at *5 (W.D. Tex. June 3, 2015) (construing counts in plaintiff’s
petition as asserted against all parties because plaintiff failed to differentiate among defendants when stating claims).
Furthermore, while only BANA, BAC, BOA, and PRLAP filed the Motion to Dismiss, see Mot. to Dismiss 1, the
Court construes the challenges to Plaintiffs’ SAC as alleged by all Defendants. The Court does so because
(1) Plaintiffs had an opportunity and did respond to the present Motion to Dismiss; (2) Plaintiffs’ claims are broadly
alleged against all Defendants and to the extent they are not, the Court construes them as such; and (3) as discussed
in more detail below, Plaintiffs have already amended their Complaint twice and alleged their best case. See, e.g.,
Real Estate Innovations, Inc. v. Hous. Ass’n of Realtors, Inc., 422 F. App’x 344, 352 (5th Cir. 2011) (affirming
district court’s sua sponte dismissal of plaintiff’s claim as fair because plaintiff already had multiple opportunities to
amend and had opportunity to allege its best case); Gaffney v. State Farm Fire & Cas. Co., 294 F. App’x 975, 977
(5th Cir. 2008) (explaining a district court’s inherent authority to dismiss a complaint sua sponte when the party has
notice of the court’s intention to dismiss and has had an opportunity to respond, or when the plaintiff has alleged his
best case and “dismissal [is] otherwise proper”); 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure, § 1357 (3d ed.) (“Even if a party does not make a formal motion under Rule 12(b)(6), the district judge
on his or her own initiative may note the inadequacy of the complaint and dismiss it for failure to state a claim as
long as the procedure employed is fair to the parties.”).

3

trustee. See FAC ¶ 16.3 That same day, Plaintiffs obtained another Texas Home Equity loan in
the amount of $278,261.27 (“Second Loan”), and executed an accompanying note (“Second
Note”) that was secured by a Deed of Trust naming BANA as the lender and PRLAP as the
trustee. Id. ¶ 17.
Plaintiffs ordered a Property Securitization Analysis Report (“Securitization Report”),
which indicated that on or about January 29, 2004, BOA split the First Note from its Homestead
Lien Contract and Deed of Trust, and the Second Note from its Deed of Trust. SAC ¶ 18(a)(ii).
The Securitization Report also indicated that “BOA . . . either sold, transferred, assigned and
securitized” the First and Second Notes. Id.; FAC ¶ 19.
On January 29, 2004, BOA also refinanced Plaintiffs’ First and Second Notes. See FAC
¶ 22(a). The First Note was refinanced in the amount of $319,000.00 and the Second Note was
refinanced in the amount of $263,385.16. Id. ¶ 20. According to Plaintiffs, the Mortgage
Electronic Registration Systems (MERS) showed that BANA’s branch personnel “handled the
documents” in connection with the First and Second Note refinancing or renewal, without
notifying Plaintiffs of the securitization of the Notes. SAC ¶ 35(b).
PRLAP knew “that residential mortgage-backed securities . . . trusts held [a] substantial
number of sub-standard loans.” Id. Moreover, according to Plaintiffs, “PRLAP failed to invoke
[its] rights in order to force loan originators and bond issuers to buy back these [residential
mortgage-backed securities].” Id.
3

The SAC cites and “reallege[s] and reincorporate[s] by reference” myriad paragraphs of the FAC. See generally
SAC 5-22. The Court makes no decision as to whether the portions of the FAC Plaintiffs cite in their SAC have
been properly incorporated. See Fed. R. Civ. P. 10(c) (“A statement in a pleading may be adopted by reference
elsewhere in the same pleading or in any other pleading or motion.”); Carroll v. Fort James Corp., 470 F.3d 1171,
1176 (5th Cir. 2006) (“The Federal Rules of Civil Procedure specifically allow for incorporation by reference in
supplemental pleadings.”); King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994) (“An amended complaint supersedes the
original complaint and renders it of no legal effect unless the amended complaint specifically refers to and adopts or
incorporates by reference the earlier pleading.”). Rather, out of an abundance of caution, the Court proceeds by
including all claims from the FAC that have been mentioned in the SAC, to the greatest extent possible given the
state of the pleadings.

4

In late 2005, BOA transferred Plaintiffs’ accounts to BOA’s “Premier Banking Division.”
Id. ¶ 36(b). On or about November 2, 2005, the Vice President of the Premier Banking Division
in El Paso, Texas, informed Plaintiffs that their accounts were being transferred because they
“had been loyal and quality customers.” Id.
1.

The Gato Loan

In late 2005, Plaintiffs applied to refinance the Property so they could “complete
construction on additional office facilities on the property and . . . expand business operations.”
FAC ¶¶ 22-22(a). The First and Second Notes were to be refinanced under this plan (the “Gato
Loan”). Id. ¶ 22(a).
The Premier Banking Division led “Plaintiffs to believe the [Gato Loan] was a ‘for sure’
deal.” Id. ¶ 25. However, “[t]he [Gato Loan] was never funded and BOA did not fulfill its
commitment to refinance the [First and Second] Notes as promised.” Id. ¶ 24. BOA never
explained its reasons for not funding the Gato Loan. Id. ¶ 25.
According to Plaintiffs, BOA’s failure to fund the Gato Loan contributed to “catastrophic
financial losses for Plaintiffs, delays in construction, and extreme inconvenience for employees
who could not work in suitable facilities.” Id. ¶ 24.
2.

The “Budget Fitter Program”

In June 2006, Plaintiffs “took advantage of an offer from BOA referred to as the ‘Budget
Fitter Program.’” Id. ¶ 28. Plaintiffs state that under this offer, BOA encouraged and permitted
them “to skip one payment on each of their mortgage accounts,” whereupon the skipped payment
would “be added to the end of the mortgage term.” Id.; SAC ¶ 95. Plaintiffs state that “[t]o the
best of [their] knowledge, they complied with [the program] and were led to believe these
payments would be added to the end of the loan term.” FAC ¶ 28. Plaintiffs took advantage of

5

the offer to use the Budget Fitter Program “in lieu of tendering payments for the month of June
2006.” SAC ¶ 30(b).
Plaintiffs assert, however, that BOA “never posted the transactions correctly to the
[Plaintiffs’] accounts,” which resulted in “BOA show[ing] Plaintiffs one month behind in each of
their mortgage accounts.” FAC ¶ 28. This caused Plaintiffs to be subject to late fees and
additional charges for over six months. Id. Subsequently, Defendants “threatened to foreclose.”
Id. ¶ 95.
3.

Plaintiffs’ bankruptcy proceedings

On January 24, 2007, Plaintiffs filed for Chapter 11 bankruptcy. Id. ¶ 29. During
Plaintiffs’ Chapter 11 bankruptcy proceeding, their lawyer “attempted multiple times to reach a
settlement with BOA concerning the administrative error, associated late fees and penalties
assessed by Defendants.” Id. ¶ 31. Plaintiffs’ lawyer was unable to reach an agreement with
BOA regarding the mortgage arrearages. Id.
In their proposed Chapter 11 Plan of Reorganization, Plaintiffs “requested the arrearages
be added to the end of the loans as was called for in the [Budget Fitter Program],” but did not
reach an agreement with BOA. Id. Plaintiffs’ proposed Chapter 11 Plan of Reorganization
“provided that the Plaintiffs would get/stay current with BOA with a waiver of penalties and
interest,” however the Bankruptcy Court did not confirm the Plan of Reorganization. Id. ¶¶ 3334.
On the same day Plaintiffs filed for bankruptcy, BOA also informed Plaintiffs that they
were in arrears one month on the accounts associated with the First Note and Second Note, due
to Defendants’ administrative errors. Id. ¶ 29.

6

On April 22, 2008, Plaintiffs converted their Chapter 11 bankruptcy to a Chapter 7
bankruptcy. Id. ¶ 35. At that time, “BOA showed Plaintiffs in arrears on their mortgages” in the
amount of $3,058.40 for the First Note and $2,686.58 for the Second Note. Id. ¶ 35(a).
Plaintiffs state that “if BOA had handled the administrative process related to the [Budget Fitter
Program] properly, Plaintiffs would not have been in arrears and late fees and penalties would
not have been assessed.” Id.
Plaintiffs further state that “Defendants failed to provide an adequate reaffirmation
agreement to Plaintiffs” during their Chapter 7 bankruptcy. SAC ¶ 27.
4.

Closure of Plaintiffs’ accounts

Plaintiffs allege that throughout their bankruptcy proceedings and until June 2008, they
made timely payments to BOA. FAC ¶ 36. On June 5, 2008, BOA accepted a $2,686.58
payment for the Second Note. Id. However, Plaintiffs allege that on or about June 19, 2008,
“BANA’s branch teller personnel” at a BANA location in El Paso, Texas, “ceased accepting
payments tendered by Plaintiffs made in a timely manner,” SAC ¶ 19, informing Plaintiff Susan
Seeberger that Plaintiffs’ “mortgage accounts had been closed and payments would no longer be
accepted,” FAC ¶ 36. According to Plaintiffs’ Credit Bureau Reports, their mortgage accounts
were closed in August 2008. SAC ¶ 19. From then on, BOA refused to accept payments for the
First or Second Notes “even though timely and properly tendered to BOA.” FAC ¶ 36; see SAC
¶ 95. Plaintiffs state that BOA’s actions are contrary to the terms of the Notes. SAC ¶ 33.
On August 29, 2008, Plaintiffs state that BOA sent them communications “in the form of
[a] NOTICE OF DEFAULT, DEMAND FOR PAYMENT AND INTENTION TO
ACCELERATE.” FAC ¶ 37.

7

Plaintiffs’ lawyer contacted BOA’s attorneys over a period of several months, requesting
an explanation as to why the mortgage accounts were closed, and seeking “to resolve the matter
and to allow Plaintiffs to continue making mortgage payments.” Id. ¶ 39. BOA did not respond
and never explained why they refused Plaintiffs’ mortgage payments. Id. ¶¶ 38, 39. As a result,
Plaintiffs assert that they have experienced pain and suffering, that their “careers have been
irreparably damaged,” and that Plaintiff Rick Seeberger has endured “depression, pain, suffering,
and anxiety, for which he is still under a doctor’s care.” Id. ¶ 39.
Plaintiffs state that thereafter, “Defendants failed to file suit or complete a foreclosure
sale.” SAC ¶ 30(c)(i).
5.

Attempts to modify the Notes
a.

“Letter Agreement” to modify the Second Note

Plaintiffs received a letter from BOA, dated September 17, 2008 (“Letter Agreement”),
“constituting an offer to modify” their Second Note. FAC ¶ 40. Plaintiffs state that they
“communicated verbally and in written correspondence that the [Letter Agreement] would have
to include certain provisions or terms consistent with their unique situation.” Id. Plaintiffs
prepared a letter on September 27, 2008 (“September 27 Letter”), “addressing the issue of late
fees and penalties resulting from the failure to properly acknowledge the [Budget Fitter
Program],” and requiring BOA “to correct any derogatory entries on the Plaintiffs’ credit
reports.” Id. ¶ 41. Plaintiffs returned their September 27 Letter along with the Letter Agreement
to BOA. Id.

8

According to Plaintiffs, “[b]oth parties signed the Letter Agreement with the provisions
‘based on the terms set forth in [the September 27 Letter] contemporaneously tendered with the
[Letter Agreement].’” Id. ¶ 40.
b.

“Repayment Agreement” to modify the First Note

A separate “Repayment Agreement” was issued with respect to the First Note. Id. ¶ 43.
According to Plaintiffs, BOA subsequently sent them correspondence “thank[ing] Plaintiffs for
bringing their loan current” and requesting certain documents to be returned to BOA within
forty-eight hours. Id. Plaintiffs assert that this correspondence also requested that they include
with the signed agreement a forbearance down payment in the amount of $6,116.80. Id. The
BOA correspondence also included a payment schedule, as well as a “terms and conditions of
repayment agreement” that had been discussed with Plaintiffs. Id.
Plaintiffs assert that they “timely executed and returned” the terms and conditions of
repayment agreement, but included “a notation next to the signature line demanding” that the
agreement be subject to the terms in their September 27 Letter. Id. ¶ 44. Plaintiffs state that they
sent the $6,116.80 forbearance down payment and that “BOA accepted the payment.” Id. ¶ 45.
According to Plaintiffs, BOA deposited the down payment “prior to the agreed upon date
after BOA had represented it would not do so,” causing Plaintiffs “embarrassment and extra
fees.” Id. ¶ 46.
Plaintiffs assert that “[a]fter going through the process to attempt to modify the mortgage
accounts, BOA . . . proceeded to harass Plaintiffs with telephone calls, letters and certified
letters, stating that the Plaintiffs were in arrears and that the mortgages were in foreclosure.” Id.
¶ 47. According to Plaintiffs, “[n]one of [this] was true or factual.” Id.

9

On October 7, 2008, Plaintiffs sent letters to BOA’s Homeownership Retention
Department “informing BOA that Plaintiffs had complied with the terms of the Letter Agreement
dated September 27, 2008 by making the required payments,” and to BOA’s Loss Mitigation
Department “regarding the failure to process the Loan Repayment Agreement based on the
conditional terms set-forth in the [September 27 Letter].” Id. ¶¶ 48, 49.
6.

Bankruptcy order

On October 31, 2008, the United States Bankruptcy Court for the Western District of
Texas, El Paso Division, issued a “Discharge of Debtor” (“Bankruptcy Discharge”) in Plaintiffs’
Chapter 7 bankruptcy. See SAC ¶ 26. According to Plaintiffs, the Bankruptcy Discharge served
as a Permanent Injunction and discharged all of Plaintiffs’ debts. Id. The Bankruptcy Discharge
states, in relevant part:
The discharge prohibits any attempt to collect from the debtor a debt that has been
discharged.
....
However, a creditor may have the right to enforce a valid lien, such as a mortgage or
security interest, against the debtor’s property after the bankruptcy, if that lien was not
avoided or eliminated in the bankruptcy case.
....
Most, but not all, types of debts are discharged if the debt existed on the date the
bankruptcy case was filed.
....
This information is only a general summary of bankruptcy discharge. There are
exceptions to these general rules.
Bankruptcy Discharge 2, In re: Rick Joseph Seeberger and Susan Carol Seeberger, Case No. 0730066-lmc (Bankr. W. D. Tex. Oct. 31, 2008), ECF No. 114.4

4

In deciding a 12(b)(6) motion, a court may take judicial notice of matters of public record, Norris v. Hearst Tr.,
500 F.3d 454, 461 n.9 (5th Cir. 2007); Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994), including court
orders. See Meyers v. Textron, Inc., 540 F. App’x 408, 409 (5th Cir. 2013) (“[A] district court may take into account
. . . matters of public record, orders, [and] items appearing in the record of the case.”); Davis v. Bayless, 70 F.3d
367, 372 & n.3 (5th Cir. 1995).

10

7.

First Note “charged off” and marked “Paid in Full,” and Second Note
“written off”

Plaintiffs assert that the First Note was “charged off” on July 25, 2009, but they “were
not notified officially until September 8, 2014.” SAC ¶ 24. Additionally, Plaintiffs assert that in
a related case, Defendants presented into evidence the First Note and Homestead Lien Contract
and Deed of Trust marked “Paid in Full,” on or about April 10, 2012. FAC ¶¶ 80(a), 81.
However, “BOA has refused numerous times to release the lien associated with [the First Note].”
Id. ¶¶ 78(c), 80(a). Plaintiffs note that BOA later stated that marking the Promissory Note and
Deed of Trust as “Paid in Full” was a mistake. Id. ¶ 80(a). Additionally, an IRS Form 1099-C,
Cancellation of Debt Income (“IRS Form 1099-C”), was issued with respect to the First Note on
September 27, 2013, in the amount of $253,643.72. SAC ¶ 24.
According to Plaintiffs, BOA also admitted that on June 25, 2009, the Second Note was
“written off.” FAC ¶ 80(a).
8.

First QWR

Plaintiffs allege that on August 13, 2009, they sent a qualified written request (“QWR”)
to BOA’s Loss Mitigation Department. Id. ¶ 62. According to a receipt, BOA received the
QWR on August 17, 2009, yet BOA never responded to the QWR. Id. According to Plaintiffs,
the QWR requested that Defendants “provide proof of ownership and possession of the Notes.”
SAC ¶ 18(a).
9.

Payment of Plaintiffs’ past due property taxes

Plaintiffs came to an agreement with the City of El Paso, Texas “regarding the payment
of past due property taxes.” Id. ¶ 32. The agreement established a payment plan whereby
Plaintiffs would pay property taxes they owed on the Property over a specified period of time.

11

Id. ¶ 32(a). Pursuant to the agreement, the City of El Paso would “waive a portion of the accrued
interest rate, late fees and penalties,” and would accept monthly payments from Plaintiffs. Id.
Plaintiffs made monthly payments on a timely basis pursuant to the agreement. Id. Plaintiffs’
lawyer “advised Defendants’ counsel of [the] agreement,” on April 29, 2010, however
Defendants paid the property taxes and penalties to the City of El Paso in the amount of
$32,668.78, without notifying Plaintiffs or their counsel. Id. ¶ 32(a)(i). Subsequently, according
to Plaintiffs, Defendants “improperly tried to collect the delinquent taxes and penalties from
Plaintiffs.” Id.
10.

Settlement Commitment Agreement

On August 12, 2011, BOA began foreclosure proceedings with a Notice of Acceleration
and Sale. FAC ¶ 69. However, Plaintiffs and BOA agreed that BOA would forego the
foreclosure because the parties had a scheduled mediation on September 28, 2011, in connection
with a different case they had pending in this Court. Id.
At the conclusion of the mediation on September 28, 2011, Plaintiffs and BOA entered
into a Settlement Commitment Agreement. Id. ¶ 71. Plaintiffs assert that they complied with the
terms, but that BOA “ignored the terms of the [Settlement Commitment Agreement] and
proceeded to treat the process as a ‘standard loan modification.’” Id. ¶ 72.
Plaintiffs assert that beginning on January 3, 2012, they “began making principal and
interest payments for [the Second Note].” Id. ¶ 74. Plaintiffs sent correspondences with these
payments, “along with indorsement [sic] stipulations . . . on each check” stating that their
payment was being “tendered in accordance with and satisfaction of express terms as outlined”
in the attached correspondence. Id.

12

Plaintiffs state that they sent principal and interest payments each month through June
2012, and that BOA “accept[ed] and deposit[ed] the checks and accompanying correspondence.”
Id. ¶ 75. Plaintiffs assert, however, that Defendants “refused to honor the stipulated provisions
and terms set forth in the Agreements.” Id. (emphasis omitted).
According to Plaintiffs, Defendants accepted payments related to the Settlement
Agreement “with the representation that payments tendered would be applied to Plaintiffs[’]
Note as prescribed by the terms of [the] written correspondence and endorsements accompanying
payments tendered.” Id. ¶ 36(d).
In early 2012, Plaintiffs hired “a private investor who committed to refinancing the first
mortgage and made an effort to pay-off the first mortgage to BOA and secure the first lien,
provide[ed] BOA release[] the second lien.” Id. ¶ 76. Plaintiffs state that while BOA “was
advised of the offer,” it did not respond. Id. Accordingly, “the private investor’s offer was
withdrawn in July 2012.” Id.
11.

BOA’s Consent Judgment with the federal government

Plaintiffs assert that on April 4, 2012, BOA entered into a Consent Judgment with the
federal government, agreeing “to release second mortgage liens which met certain parameters.”
FAC ¶ 77. According to Plaintiffs, their second mortgage lien met these parameters. Id.
Plaintiffs assert that as a result of the Consent Judgment, BOA “implemented a national program
to release second lien mortgages,” and thereafter sent letters to borrowers “informing them that
they had been determined eligible for BOA’s Principal Forgiveness Program.” Id. ¶ 78.
Plaintiffs include an excerpt from BOA’s Press Release regarding the Principal
Forgiveness Program. Id. ¶ 78(a). The Press Release states, in relevant part, that “[a]s part of
Bank of America’s ongoing efforts to help customers in need of mortgage assistance, this

13

company is in the process of mailing approximately 150,000 letters to pre-qualified homeowners
offering automatic extinguishment of their second lien mortgages.” Id.
Before December 31, 2012, Plaintiffs requested an independent mortgage review from
Rust Consulting, Inc., which indicated that Plaintiffs were “eligible to receive a payment as a
result of an agreement between Bank of America and federal banking regulators . . . announced
in January” and that Plaintiffs would “receive a check or additional information about [their]
payment.” Id. ¶ 78(b). Nonetheless, BOA has never “offered or otherwise mentioned this
remedy/relief to Plaintiffs.” Id. 78(c).
Plaintiffs assert that because “BOA failed to follow” the Consent Judgment, BOA created
a cloud over Plaintiffs’ Deed of Trust. Id. ¶ 79. Plaintiffs assert that as a result, they were
prevented from refinancing their first mortgage lien. Id. This “further damaged [their] financial
condition, caused emotional stress, pain and suffering, and has prevented [them] from advancing
their professional careers, business operations, and services to the community.” Id.
12.

Sale of the Second Note and additional QWRs

Plaintiffs assert that on September 26, 2014, Defendants sold the Second Note. SAC
¶ 20. Plaintiffs assert that they received notice from Defendants that the Note “would be sold or
transferred” to BSI, and received notice from BSI that the Note was sold to Ventures. Id. ¶ 20.
Additionally, Plaintiffs assert that before, during, and after the sale of the Second Note,
“Defendants had full knowledge of the status of” both Notes. Id. ¶¶ 22, 25.
On November 5, 2014, Plaintiffs sent QWRs to BSI and Ventures requesting that they
“provide proof of ownership and possession of the Notes,” but the inquiries were ignored. Id.
¶ 20(a).

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13.

Additional facts

Plaintiffs state that “Defendants understated the finance charges by approximately
$9,626.37.” Id. ¶ 18; FAC ¶ 89. Additionally, Plaintiffs assert that BANA has “created multiple
layers of communication,” “customer service contacts,” and “legal entities being involved . . . [,]
making it nearly impossible for Plaintiffs to determine how all of these parties interface or are
related.” SAC ¶ 21.
Additionally, BOA sent Plaintiffs two letters dated May 1, 2014, and August 5, 2014,
respectively. Id. ¶ 37. Plaintiffs allege that Defendants “made false representations and
misleading statements” in these letters. Id.
C.

Plaintiffs’ Requests

Plaintiffs seek one hundred million dollars in damages, as well as quiet title and
declaratory relief. Id. ¶ 11. Specifically, Plaintiffs allege that Defendants “willfully closed
Plaintiffs[’] mortgage accounts,” caused Plaintiffs to default “under the terms of the respective
promissory notes, deeds of trust and related documents,” and sold the Notes to Banc of America
Mortgage Securities and to Ventures. Id. ¶ 12.
Plaintiffs further explain that Defendants have attempted to collect a discharged debt
“and have no present right to foreclose” on the Property. Id. Plaintiffs seek to “remove
encumbrances and obtain damages arising from Defendants’ wrongful efforts to collect [the]
previously discharged debt.” FAC ¶ 10. Furthermore, Plaintiffs seek to require Defendants to
“bring forward evidence that they are in possession of the original Notes.” SAC ¶ 13.
According to Plaintiffs, there is no evidence that “BOA is the rightful owner” of the First and

15

Second Notes, “and therefore the liens and claims to the [Property] may not be valid.” FAC
¶ 21.
II.

DISCUSSION
A.

Motion to Dismiss
1.

Standard

A motion to dismiss pursuant to Rule 12(b)(6) challenges a complaint on the basis that it
fails to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). In ruling on a
Rule 12(b)(6) motion, the court must accept well-pleaded facts as true and view them in a light
most favorable to the plaintiff. Calhoun v. Hargrove, 312 F.3d 730, 733 (5th Cir. 2002); Collins
v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Though a complaint need
not contain “detailed factual allegations,” it must allege sufficient facts “to state a claim to relief
that is plausible on its face.” Colony Ins. Co. v. Peachtree Constr., Ltd., 647 F.3d 248, 252 (5th
Cir. 2011) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
“[A] plaintiff’s obligation to provide the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks
omitted) (citation omitted). Ultimately, the “[f]actual allegations [in the complaint] must be
enough to raise a right to relief above the speculative level.” Id. (citation omitted).
Nevertheless, “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual
proof of those facts is improbable, and ‘that a recovery is very remote and unlikely.’” Id. at 556

16

(quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). Additionally, “when a successful
affirmative defense appears on the face of the pleadings, dismissal under Rule 12(b)(6) may be
appropriate.” Kansa Reins. Co., Ltd. v. Cong. Mortg. Corp. of Texas, 20 F.3d 1362, 1366 (5th
Cir. 1994) (citing Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)).
The court must hold a pro se complaint “to less stringent standards than formal pleadings
drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal quotation marks
omitted) (quoting Estelle v. Gamble, 429 U.S. 97, 106 (1976)); see also Fed. R. Civ. P. 8(e)
(“Pleadings must be construed so as to do justice.”). It is appropriate to treat a pro se petition as
one seeking the appropriate remedy, however inartfully pleaded. Clymore v. United States, 217
F.3d 370, 373 (5th Cir. 2000); United States v. Robinson, 78 F.3d 172, 174 (5th Cir. 1996).
However, pro se litigants are still required to provide sufficient facts in support of their claims;
mere conclusory allegations are insufficient. See United States v. Pineda, 988 F.2d 22, 23 (5th
Cir. 1993).
Plaintiffs style this case as arising under TILA, TDCA, FDCPA, Texas contract law, the
duty of good faith and fair dealing, and common law fraud. However, to the extent Plaintiffs
also attempt to assert claims under the “show-me-the-note” theory, the “split-the-note” theory,
the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, breach of
fiduciary duty, and tortious interference, the Court addresses these claims as well. 5 See
Clymore, 217 F.3d at 373; Robinson, 78 F.3d at 174.

5

Because this Court has diversity jurisdiction over this case, the Court applies Texas law to Plaintiffs’ state law
claims. See, e.g., Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233, 237 (5th Cir. 2014) (“Except where a
matter is governed by federal law, a federal district court sitting in a diversity case has the obligation to apply the
law of the forum state.” (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)).

17

2.

TILA claims

Plaintiffs assert two causes of action against Defendants under TILA: (1) an action for
actual and statutory damages, and (2) an action for rescission. See SAC ¶¶ 17-25. In support of
these claims, Plaintiffs assert that “Defendants understated the finance charges by approximately
$9,626.37 . . . and failed to post payments made by Plaintiffs in a timely and accurate manner,”
SAC ¶ 18, and that “BANA . . . created multiple layers of communication, multiple customer
service contacts, multiple legal entities being involved including Defendants BAC and PRLAP;
Banc of America Mortgage Securities; and . . . BSI and Ventures making it nearly impossible for
Plaintiffs to determine how all of these parties interface or are related,” SAC ¶ 25.
Defendants argue that Plaintiffs’ TILA claim must be dismissed because (1) Plaintiffs fail
to articulate any TILA violations or to outline a “short and concise set of facts” underlying the
claim; (2) the claim is time-barred; and (3) Plaintiffs have not pled, and cannot show, damages.
Mot. to Dismiss 8-11.
The purposes of TILA are “to assure a meaningful disclosure of credit terms” so
consumers can “compare more readily the various credit terms available to [them] and avoid the
uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing
and credit card practices.” 15 U.S.C. § 1601(a); Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412
(1998) (citing Mourning v. Family Publ’ns Serv., Inc., 411 U.S. 356, 363-68 (1973)).
“Accordingly, [TILA] requires creditors to provide borrowers with clear and accurate disclosures
of terms dealing with things like finance charges, annual percentage rates of interest, and the
borrower’s rights.” Beach, 523 U.S. at 412 (citing 15 U.S.C. §§ 1631, 1632, 1635, 1638); see
also Lyles v. Commercial Credit Plan Consumer Disc. Co., 660 F.2d 129, 130 (5th Cir. 1981)
(“Congress addressed the vexatious problem of borrowers obligating themselves without an

18

adequate understanding of interest, charges, and penalties for default by enacting [TILA] . . . .
[which] requires a meaningful disclosure of credit terms, sufficient to enable the average
consumer to shop comparatively for credit.”).
Failure to satisfy TILA’s requirements “subjects a lender to . . . statutory and actual
damages traceable to a lender’s failure to make the requisite disclosures.” Beach, 523 U.S. at
412 (citing 15 U.S.C. § 1640). In some instances, “a borrower may assert the right to damages
‘as a matter of defense by recoupment or set-off’ in a collection action brought by the lender.”
Id. Additionally, TILA gives borrowers the right to rescind certain loans. See 15 U.S.C. § 1635;
Jesinoski v. Countrywide Home Loans, Inc., --- U.S. ----, 135 S. Ct. 790, 791 (2015).
a.

Statutory and actual damages

Under § 1640(e), an action for damages “may be brought . . . within one year from the
date of the occurrence of the violation,” however any action “with respect to any violation of
section 1639, 1639b, or 1639c . . . may be brought . . . before the end of the 3-year period
beginning on the date of the occurrence of the violation.”6 15 U.S.C. § 1640(e); see also Beach,
523 U.S. at 412. A violation “occurs when the transaction is consummated.” Moor v. Travelers
Ins. Co., 784 F.2d 632, 633 (5th Cir. 1986) (internal quotation marks omitted) (citations
omitted). A transaction “is consummated at the moment ‘a contractual relationship is created
between [a creditor and a customer].’” Id. (alteration in original) (citations omitted). A
contractual relationship is created between a creditor and customer when a loan and security
instruments are executed. See id. (treating date defendant loaned plaintiff money, secured by a
deed of trust on plaintiff’s property, as moment credit transaction was consummated); Allen v.
Bank of America, N.A., No. EP-14-CV-429-KC, 2015 WL 1726986, at *13 (W.D. Tex. Apr. 15,
6

Section 1639 provides specific “[r]equirements for certain mortgages,” 15 U.S.C. § 1639, and outlines “eight
disclosures which must be made in consumer credit arrangements other than open end loans,” Lyles v. Commercial
Credit Plan Consumer Disc. Co., 660 F.2d 129, 130 (5th Cir. 1981) (citing 15 U.S.C. § 1639).

19

2015) (equating date plaintiff executed note and security instrument as moment loan was
consummated and accordingly, as moment of alleged TILA violation). Refinancing a loan also
creates a contractual relationship between creditor and customer. See Jesinoski, 135 S. Ct. at 790
(treating date petitioners refinanced the mortgage on their home as the relevant consummated
transaction). Moreover, “[n]ondisclosure is not a continuing violation” for purposes of TILA’s
time limitations. Moor, 784 F.2d at 633.
As Defendants point out, Plaintiffs fail to explain how any particular act or action taken
by any of the Defendants amount to a specific TILA violation. Mot. to Dismiss 8-9; see SAC
¶¶ 17-25. Plaintiffs do not indicate when Defendants “understated the finance charges,” “failed
to post payments . . . in a timely and accurate manner,” or “created multiple layers of
communication,” nor do they elaborate on these allegations. See SAC ¶ 18-25. Thus, the Court
is left to speculate as to precisely what acts of Defendants allegedly constitute a TILA violation,
and when the supposed acts occurred. See Washington v. Giant of Maryland LLC, No. PWG-132599, 2015 WL 518573, at *2 (D. Md. Feb. 6, 2015) (“Plaintiff does not specify the date of his
termination, leaving the Court to speculate as to when it was and how much time elapsed before
he filed suit . . . , rather than providing the Court with ‘factual content that allows that court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.’” (quoting
Iqbal, 556 U.S. at 678)). Accordingly, the TILA claim for damages is dismissed on this ground
alone. See Twombly, 550 U.S. at 555 (“Factual allegations [in the complaint] must be enough to
raise a right to relief above the speculative level.”).
However to the extent Plaintiffs allege that Defendants committed a TILA violation when
(1) they executed the First and Second Loans, the First and Second Notes, and the accompanying
security instruments on December 29, 2003; (2) BOA refinanced their First and Second Notes on

20

January 13, 2005; or (3) BOA failed to post payments timely and accurately after Plaintiffs took
advantage of the Budget Fitter Program in June 2006, Plaintiffs’ TILA claim for damages is
time-barred. Using any of these possible dates for the alleged violations, Plaintiffs’ claim
became time-barred in December 2004 at the earliest, and in June 2009 at the latest. See 15
U.S.C. § 1640(e) (providing one year and three year time limits for damages under TILA).
However, Plaintiffs filed their Complaint on October 1, 2014. See Compl. Thus, it is evident
from the face of the SAC that Plaintiffs’ claim for damages under TILA is time-barred and must
be dismissed. See, e.g., Allen, 2015 WL 1726986, at *13 (dismissing claim for damages under
TILA as time-barred); Moor, 784 F.2d at 633 (affirming dismissal of claim for damages under
TILA as time-barred).
b.

Right to rescind

Plaintiffs’ TILA claim for rescission is similarly time-barred. Under TILA, “when a loan
made in a consumer credit transaction is secured by the borrower’s principal dwelling, the
borrower may rescind the loan agreement if the lender fails to deliver certain forms or to disclose
important terms accurately.” Beach, 523 U.S. at 411 (citing 15 U.S.C. § 1635). “However, a
borrower’s right to rescind a loan is not unending; the statute provides that ‘it shall expire three
years after the date of the consummation of the transaction or upon the sale of the property,
whichever occurs first.’” Allen, 2015 WL 1726986, at *13 (quoting 15 U.S.C. § 1635(f)) (citing
Beach, 523 U.S. at 411, 413; Lowery v. Capital One Mortg., 429 F. App’x 377, 378 (5th Cir.
2011); Taylor v. Domestic Remodeling, Inc., 97 F.3d 96, 98 (5th Cir. 1996)). A plaintiff must
notify the creditor of her intention to rescind within the three-year time period. See Jesinoski,
135 S. Ct. at 792.

21

As noted above, Plaintiffs fail to explain how any action taken by any of the Defendants
amounts to a violation of a particular TILA provision, and do not specify when any alleged
violation occurred. Mot. to Dismiss 8-9; see SAC ¶¶ 17-25. However, to the extent Plaintiffs
allege that Defendants committed a TILA violation when (1) they executed the First and Second
Loans, the First and Second Notes, and the accompanying security instruments on December 29,
2003; (2) BOA refinanced their First and Second Notes on January 13, 2005; or (3) BOA failed
to post payments timely and accurately after Plaintiffs took advantage of the Budget Fitter
Program in June 2006, Plaintiffs’ TILA claim for rescission is time-barred. At the earliest,
Plaintiffs’ right to rescind expired in December 2008 and at the latest in June 2009. See 15
U.S.C. § 1635 (limiting plaintiff’s right to rescission to three years after TILA violation).
Plaintiffs filed their Complaint on October 1, 2014, see Compl., and have not have not indicated
that they otherwise notified Defendants of their intention to rescind. Thus, Plaintiffs’ request for
rescission is untimely. See Jesinoski, 135 S. Ct. at 792. Accordingly, Plaintiffs’ claim for
rescission under TILA fails as a matter of law and must be dismissed. See, e.g., McCrimmon v.
Wells Fargo Bank, NA, 516 F. App’x 372, 375 (5th Cir. 2013) (affirming dismissal of claim for
rescission under TILA as time-barred); Allen, 2015 WL 1726986, at *13 (dismissing claim for
rescission under TILA as time-barred).
Plaintiffs also “seek a right of rescission for recoupment claim,” but fail to explain the
basis for such a claim. See SAC ¶ 23. “[A] borrower may assert the right to damages ‘as a
matter of defense by recoupment or set-off’ in a collection action brought by the lender even
after the one year is up.” Beach, 523 U.S. at 412; § 1640(e); see also Allen, 2015 WL 1726986,
at *13 (citing Williams v. Countrywide Home Loans, Inc., 504 F. Supp. 2d 176, 187 (S.D. Tex.
2007), aff’d 269 F. App’x 523 (5th Cir. 2008)). However, the right of rescission is “completely

22

extinguishe[d] . . . at the end of the 3-year period.” Beach, 523 U.S. at 412. Accordingly, as
explained above, Plaintiffs’ “rescission for recoupment claim” is time-barred.
3.

TDCA claims

Plaintiffs allege that Defendants violated the TDCA, Tex. Fin. Code
section 392.304(a)(8), by seeking to collect a debt that was “discharged and/or extinguished
against them” in their October 31, 2008, Bankruptcy Discharge. SAC ¶ 26. In support of their
TDCA claim, Plaintiffs also allege that Defendants (1) “wrote off” and/or “charged off” the First
and Second Notes in July 2009; (2) prepared and produced to Plaintiffs on April 10, 2012, the
First Note and Deed of Trust marked “Paid in Full,” although Plaintiffs note that Defendants
maintain this was a mistake; and (3) issued an IRS Form 1099-C with respect to the First Note on
September 27, 2013. See SAC ¶ 24; FAC ¶¶ 80(a), 81. Plaintiffs also allege that “BOA’s
wrongful act to collect this debt . . . was intentionally committed with the malicious desire to
harass, annoy and oppress the Plaintiffs.” FAC ¶¶ 65, 91.
Next, Plaintiffs assert that Defendants violated Tex. Fin. Code sections 392.304(1), (3),
(5)(B)(14), and (5)(B)(19), and section 392.403(1)(2) because “Defendants engaged in
fraudulent, deceptive, or misleading representations in their debt collection efforts.” SAC
¶ 26(b). Additionally, Plaintiffs claim that Defendants violated Tex. Fin. Code section 392.304
“by using multiple names, organizations, and accounts to reference a single debt in their
collection efforts.” SAC ¶ 27(a).
In moving to dismiss Plaintiffs’ TDCA claim, Defendants argue that (1) the claim fails
for lack of certainty; (2) Plaintiffs fail to support their allegation that their loans were discharged
such that the liens are invalid and do not need to be paid; and (3) the process of foreclosing does
not constitute a TDCA violation. Mot. to Dismiss 11-13.

23

The TDCA prohibits debt collectors from using wrongful practices in the collection of
consumer debts. See Brown v. Oaklawn Bank, 718 S.W.2d 678, 680 (Tex. 1986) (“[T]he
Legislature passed the Debt Collection Act to prevent creditors from preying upon a consumer’s
fears and ignorance of the law to pursue allegedly delinquent debts.” (citation omitted)); Ford v.
City State Bank of Palacios, 44 S.W.3d 121, 135 (Tex. App. 2001). To maintain a cause of
action under the TDCA, a plaintiff must show that: (1) the defendant is a debt collector; (2) the
defendant committed a wrongful act in violation of the TDCA; (3) the wrongful act was
committed against the plaintiff; and (4) the plaintiff was injured as a result of the defendant’s
wrongful act. Birchler v. JPMorgan Chase Bank, CIVIL ACTION NO 4:14-CV-81, 2015 WL
1939438, at *5 (E.D. Tex. Apr. 29, 2015); O’Neil v. CitiMortgage, Inc., Civil Action No. 4:13cv-656-O, 2014 WL 1199338, at *4 (N.D. Tex. Mar. 24, 2014).
At the outset, the Court notes that Plaintiffs do not allege how they were injured, if at all,
as a result of the Defendants’ wrongful acts. Thus, Plaintiffs fail to state a claim under the
TDCA on this basis alone. See Birchler, 2015 WL 1939438, at *5; O’Neil, 2014 WL 1199338,
at *4. Nonetheless, the Court also understands Plaintiffs to be asserting specific claims under
Texas Finance Code, sections 392.304(a)(1), (a)(3), (a)(5)(B), (a)(8), (a)(14), and (a)(19), and
addresses the infirmities in Plaintiffs claims in turn.7
a.

Section 392.304(a)(1)

Section 392.304(a)(1) prohibits debt collectors from “using a name other than the . . . true
business or professional name or the true personal or legal name of the debt collector while
engaged in debt collection.” Tex. Fin. Code § 392.304(a)(1).

7

Plaintiffs also allege that Defendants violated sections 392.403(1) and (2), however these provisions do not exist.
Sections 392.403(a)(1) and (2), however, merely state that a person may sue for injunctive relief or for actual
damages. See Tex. Fin. Code §§ 392.403(a)(1)-(2). Thus, the Court does not analyze Plaintiffs’ claims under these
provisions as “violations,” as Plaintiffs seem to suggest.

24

While Plaintiffs state that Defendants used “multiple names, organizations, and accounts
to reference a single debt in their collection efforts,” a careful review of the SAC reveals that
Plaintiffs do not allege that these “multiple names” are not the “true business or professional
name[s]” of the debt collectors. Id. Moreover, to demonstrate Defendants’ violation of
section 392.304(a)(1), Plaintiffs simply state that “Defendants engaged in fraudulent, deceptive,
or misleading representations in their debt collection efforts.” SAC ¶ 26(b). Plaintiffs do not
state specific facts, elaborate, or otherwise attempt to identify an instance where Defendants used
a name other than the “true business or professional name[s] . . . of the debt collectors while
engaged in debt collection,” and rely instead on conclusory allegations. Accordingly, Plaintiffs’
claim under section 392.304(a)(1) must be dismissed for failure to state a claim. See Twombly,
550 U.S. at 555 (“[A] plaintiff’s obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions.”).
b.

Section 392.304(a)(3)

Section 392.304(a)(3) prohibits debt collectors from “representing falsely that the debt
collector has information or something of value for the consumer in order to solicit or discover
information about the consumer.” Tex. Fin. Code § 392.304(a)(3).
To demonstrate Defendants’ violation of section 392.304(a)(3), Plaintiffs simply state
that “Defendants engaged in fraudulent, deceptive, or misleading representations in their debt
collection efforts.” SAC ¶ 26(b). Plaintiffs do not elaborate or attempt to identify an instance
where Defendants “represent[ed] falsely that [they] ha[d] information or something of value for
[Plaintiffs] in order to solicit or discover information about [Plaintiffs],” and rely instead on
conclusory allegations. Accordingly, Plaintiffs’ claim under section 392.304(a)(3) must be
dismissed for failure to state a claim. See Twombly, 550 U.S. at 555.

25

c.

Section 392.304(a)(5)

Section 392.304(a)(5) prohibits third-party debt collectors from:
failing to disclose, except in a formal pleading made in connection with a legal action . . .
that the communication is an attempt to collect a debt and that any information obtained
will be used for that purpose, if the communication is the initial written or oral
communication between the third-party debt collector and the debtor, . . . [or] that the
communication is from a debt collector, if the communication is a subsequent written or
oral communication between the third-party debt collector and the debtor.
Tex. Fin. Code §§ 392.304(a)(5)(A)-(B).
Again, to demonstrate Defendants’ violation of section 392.304(a)(5), Plaintiffs simply
state that “Defendants engaged in fraudulent, deceptive, or misleading representations in their
debt collection efforts.” SAC ¶ 26(b). Plaintiffs do not elaborate or attempt to identify an
occasion where Defendants “failed to disclose . . . that [a] communication [was] an attempt to
collect a debt” or was “from a debt collector,” and rely instead on conclusory statements.
Accordingly, Plaintiffs’ TDCA claim under section 392.304(a)(5) must be dismissed for failure
to state a claim. See Twombly, 550 U.S. at 555.
d.

Section 392.304(a)(8)

Section 392.304(a)(8) prohibits debt collectors from “misrepresenting the character,
extent, or amount of a consumer debt, or misrepresenting the consumer debt’s status in a judicial
or governmental proceeding.” Tex. Fin. Code § 392.304(a)(8). A plaintiff must show that the
debt collector “made a misrepresentation that led her to be unaware (1) that she had a mortgage
debt, (2) of the specific amount she owed, or (3) that she had defaulted.” Rucker v. Bank of
America, N.A., --- F.3d ----, No. 15-10373, 2015 WL 7445448, at *2 (5th Cir. Nov. 20, 2015)
(citing Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 723 (5th Cir. 2013)). A
misrepresentation is “an affirmative statement” by the debt collector that is “false or misleading.”
Robinson v. Wells Fargo Bank, N.A., 576 F. App’x 358, 363 (5th Cir. 2014) (internal quotation

26

marks omitted) (quoting Verdin v. Fed. Nat’l Mortg. Ass’n, 540 F. App’x 253, 257 (5th Cir.
2013)); see also Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233, 241 (5th Cir. 2014).
Even assuming that Defendants’ actions in (1) seeking to collect a debt that was
discharged against Plaintiffs through their Bankruptcy Discharge; (2) “writing off” and/or
“charging off” the First and Second Notes in 2009, and notifying Plaintiffs of this between 2012
and 2014; (3) preparing and producing the First Note and Deed of Trust marked “Paid in Full” to
Plaintiffs in evidence, on April 10, 2012; and (4) issuing an IRS Form 1099-C with respect to the
First Note on September 27, 2013, are “misrepresentations” under the TDCA, Plaintiffs do not
allege that these misrepresentations caused them to believe that (1) they did not have a mortgage
debt of the specific amount they owed, or (2) they had not defaulted.
With respect to the Bankruptcy Discharge, Plaintiffs do not allege that Defendants’
assertion that Plaintiffs owe money caused Plaintiffs to be unaware of their debt under the First
and Second Notes. It appears that Plaintiffs actually may be arguing that the Bankruptcy
Discharge and their interpretation of it, as opposed to anything Defendants did, led them to
believe their debts were discharged. 8 This certainly cannot amount to a claim for
misrepresentation of a debt.
Next, while Plaintiffs assert that at some point between 2012 and 2014, they became
aware of the First and Second Notes being “written off” and/or “charged off,” Plaintiffs appear to

8

Plaintiffs argue that Defendants’ “misrepresentation” is that Plaintiffs owe money under the First and Second
Notes when, in fact, they do not. See SAC ¶ 26(a). However, based on the facts in Plaintiffs’ SAC, Plaintiffs cannot
establish that Defendants’ assertion that Plaintiffs owe them money under the First and Second Notes is false or
misleading. The plain language of the Bankruptcy Discharge does not clearly indicate that Plaintiffs’ First and
Second Loans were discharged. To the contrary, the plain language explicitly leaves open the possibility that
Plaintiffs are still liable for these loans, and states: “a creditor may have the right to enforce a valid lien, such as a
mortgage or security interest, against the debtor’s property after the bankruptcy, if that lien was not avoided or
eliminated in the bankruptcy case.” Bankruptcy Discharge 2. Moreover, obtaining a discharge in a Chapter 7
bankruptcy “extinguishes only ‘the personal liability of the debtor’ . . . . [while] a creditor’s right to foreclose on the
mortgage survives or passes through the bankruptcy.” Johnson v. Home State Bank, 501 U.S. 78, 82-83 (1991)
(emphasis omitted).

27

use this as a basis for arguing that their debts were discharged, but present no facts to indicate
that discovering the Notes were “written” or “charged off” led them to become unaware that they
owed a debt in a particular amount, or that they had defaulted. To the extent Plaintiffs claim that
Defendants’ “writing off” and “charging off” the First and Second Notes constitute assertions
that Plaintiffs’ debts have been discharged, this argument is untenable because “[t]he designation
of a loan as ‘written-off’ or ‘charged-off’ is an accounting practice and does not by itself reflect
that the loan has been discharged.” Miller v. Bank One, No. 11-97-00299-CV, 1998 WL
34194017, at *2 (Tex. App. Dec. 31, 1998) (citing Long v. Turner, 134 F.3d 312 (5th Cir.1998)).
Instead, “writing off” or “charging off” a debt
merely reflects the creditor’s determination at the time that none of the debt is then either
collectible or has any likelihood of ever becoming so, . . . but it does not constitute a
legally effective discharge or release of the indebtedness and it does not imply that the
creditor intends to thereby legally divest himself of ownership of the debt or to legally
preclude any further efforts to collect.
Long v. Turner, 134 F.3d 312, 317-18 (5th Cir. 1998).
Accordingly, Defendants did not represent to Plaintiffs that the First and Second Loans were
discharged by “writing” or “charging” them off.
Additionally, while Defendants “presented and produced” the First Note marked “Paid in
Full” into evidence in a different case, Plaintiffs also recognize that Defendants stated this
notation was a mistake. FAC ¶ 80(a). Plaintiffs do not allege that Defendants presenting this
evidence and stating that it was a mistake led them to believe they did not owe their debt;
instead, Plaintiffs simply state these facts, without more.
Finally, Plaintiffs fail entirely to allege that the IRS Form 1099-C, issued on September
27, 2013, led them to be unaware that they owed a debt in a particular amount or had defaulted.
To the extent Plaintiffs claim that the IRS Form 1099-C constitutes an assertion that Plaintiffs’
debts in connection with the First and Second Notes were discharged, this argument is unavailing

28

because “a 1099–C does not discharge debtors from liability.” Capital One, N.A. v. Massey, No.
4:10-CV-01707, 2011 WL 3299934, at *3 (S.D. Tex. Aug. 1, 2011); see also FDIC v. Cashion,
720 F.3d 169, 178-80 (4th Cir. 2013) (concluding “that filing a Form 1099–C is a creditor’s
required means of satisfying a reporting obligation to the IRS; it is not a means of accomplishing
an actual discharge of debt, nor is it required only where an actual discharge has already
occurred”).
Thus, because Plaintiffs fail to allege any causal link between Defendants’ alleged
misrepresentations and Plaintiffs’ unawareness that they owed a debt in a particular amount, or
that they had defaulted, Plaintiffs’ fail to state a claim under section 392.304(a)(8), and the claim
must be dismissed. See Rucker, 2015 WL 7445448, at *3 (noting that plaintiff failed to establish
elements of a Section 392.304(a)(8) claim where plaintiff “never allege[d] that BOA made her
unaware of her mortgage debt . . . . [,] [and] fail[ed] to show how BOA’s alleged
misrepresentations misled her as to the ‘specific amount’ owed”); Miller, 726 F.3d at 723
(dismissing section 392.304(a)(8) claim for failure to state a claim because plaintiffs “always
were aware (i) that they had a mortgage debt; (ii) of the specific amount that they owed; (iii) and
that they had defaulted,” and because nothing in plaintiffs’ allegations suggested that debt
collector “led them to think differently with respect to the character, extent, amount, or status of
their debt”).
e.

Section 392.304(a)(14)

Section 392.304(a)(14) prohibits debt collectors from “representing falsely the status or
nature of the services rendered by the debt collector or the debt collector’s business.” Tex. Fin.
Code § 392.304(a)(14); see also Miller, 726 F.3d at 724 (holding that plaintiffs stated a claim
under section 392.304(a)(14) by alleging that debt collector promised to consider plaintiffs’ loan

29

modification application before foreclosure, failed to fulfill its promise, and thereby “may have
harmed [plaintiffs] by causing them . . . to decline to liquidate property or seek alternative
financing before the . . . foreclosure date”).
Plaintiffs merely cite section 392.304(a)(14) without elaborating or alleging any specific
facts indicating that Defendants “represent[ed] falsely the status or nature of the services
rendered.” Instead, Plaintiffs state that “Defendants engaged in fraudulent, deceptive, or
misleading representations in their debt collection efforts.” SAC ¶ 26(b). While conclusorily
restating a cause of action fails to state a claim under Twombly, 550 U.S. at 555, Plaintiffs’
allegations do not rise to that level; they do not even allege that Defendants “falsely represented
the status or nature” of any services rendered by Defendants. Such conclusory allegations fail to
state a claim and accordingly, Plaintiffs’ claim under section 392.304(a)(14) must be dismissed.
See Iqbal, 556 U.S. at 678 (“A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.”); Colony Ins., 647 F.3d at 252 (holding that a complaint must allege
sufficient facts “to state a claim to relief that is plausible on its face” (quoting Twombly, 550 U.S.
at 555, 570)).
f.

Section 392.304(a)(19)

Section 392.394(a)(19) prohibits debt collectors from “using any other false
representation or deceptive means to collect a debt or obtain information concerning a
consumer.” Tex. Fin. Code § 392.304(a)(19). However, “even though [section] 392.304(a)(19)
appears to be a catch-all, or residual, provision for proceeding under the TDCA,” a plaintiff must
allege “specific, deceptive acts or practices . . . that could constitute a violation of the provision.”
Miller, 726 F.3d at 724. Vague references to the debt collector “using a false representation or

30

deceptive means to collect a debt” will not suffice to overcome dismissal under Rule 12(b)(6).
Id. (internal quotation marks omitted).
Again, Plaintiffs merely cite section 392.304(a)(19) without elaborating or alleging any
“specific, deceptive acts or practices” to explain how Defendants violated this provision.
Instead, Plaintiffs rely on the vague assertion that “Defendants engaged in fraudulent, deceptive,
or misleading representations in their debt collection efforts.” SAC ¶ 26(b). Such conclusory
allegations fail to state a claim under section 392.304(a)(19) and accordingly, Plaintiffs’ claim
must be dismissed. See Twombly, 550 U.S. at 555.
In conclusion, Plaintiffs fail to state a claim under the TDCA. Accordingly, their TDCA
claims are dismissed.
4.

FDCPA claim

In support of their FDCPA claim, Plaintiffs state that “Defendants failed to file suit or
complete a foreclosure sale thereby demonstrating no present intention to take possession of the
property thereby violating [15 U.S.C.§ 1692f(6)(B)].” SAC ¶ 30(c)(i). Plaintiffs appear to claim
that Plaintiffs violated 15 U.S.C. § 1692f(6)(B) because “a person must bring suit on the
following actions not later than four years after the day the cause of action accrues[:]
(a)(1) specific performance of a contract for the conveyance of real property and (a)(3) debt.”
SAC ¶ 30(c)(i) & n.9. Defendants urge the Court to dismiss the FDCPA claim because the
FDCPA does not regulate foreclosures and the claim therefore fails as a matter of law. Mot. to
Dismiss 15-16.
One purpose of the FDCPA is “to eliminate abusive debt collection practices by debt
collectors.” 15 U.S.C. § 1692(e). The FDCPA prohibits a “debt collector” from, among other
things, using “unfair or unconscionable means to collect or attempt to collect any debt,” by

31

[t]aking or threatening to take any nonjudicial action to effect dispossession or
disablement of property if . . . (A) there is no present right to possession of the property
. . .; (B) there is no present intention to take possession of the property; or (C) the
property is exempt by law from such dispossession or disablement.
Id. § 1692f(6).
The Act defines a “debt collector” as
any person who uses any instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of debts, or who regularly
collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be
owed or due another.
Id. § 1692a(6).
Furthermore, “[f]or the purpose of section 1692f(6) . . . [debt collector] also includes any person
who uses any instrumentality of interstate commerce . . . in any business the principal purpose of
which is the enforcement of security interests.” Id. However, a plaintiff must bring an action
under the FDCPA “within one year from the date on which the violation occur[ed].” Id.
§ 1692k(d); see also Serna v. Law Office of Joseph Onwuteaka, P.C., 732 F.3d 440, 442-43 (5th
Cir. 2013).
Plaintiffs never allege that Defendants were collecting or attempting to collect a debt
when they closed Plaintiffs’ mortgage accounts and subsequently failed to file suit or complete a
foreclosure sale, and the claim fails for this reason. Indeed, by not taking action after the
mortgage account had been closed, it would seem that Defendants were not attempting to collect
a debt, let alone by unfair means. Moreover, to the extent that Defendants’ alleged failure to act
within four years of closing Plaintiffs’ mortgage accounts in August 2008 was an unfair means to
collect a debt, this claim fails because it is time-barred. See 15 U.S.C. § 1692k(d) (imposing
one year statute of limitations). Plaintiffs filed their Complaint in October 2014, more than one
year after the latest the alleged FDCPA violation could have possibly occurred in August 2012.
See Compl. Accordingly, Plaintiffs’ FDCPA claim is dismissed. See Mathurin v. Wells Fargo,

32

N.A., No. A-14-CA-708-SS, 2014 WL 4441963, at *2 (W.D. Tex. Sept. 9, 2014) (granting
12(b)(6) motion to dismiss FDCPA claim as time-barred).
5.

Texas contract claim

Plaintiffs appear to claim that Defendants are liable under breach of contract for
(1) breaching the contracts under the First and Second Notes, SAC ¶ 30; (2) “den[ying] Plaintiffs
the opportunity to tender payments beginning in June 2008” and closing their mortgage accounts
in August 2008, id. ¶ 30(c); (3) “mis[leading] Plaintiffs to believe [their] payments would cure
any defaults . . . but then . . . fail[ing] to honor the agreement terms associated with payments
tendered,” id. ¶ 30(c)(ii); and (4) breaching the Letter Agreement and Repayment Agreement, id.
¶ 34.
In response, Defendants argue that Plaintiffs (1) fail to allege the existence of a contract
or any specific terms that were violated; (2) admit they unilaterally changed the terms of the only
“alleged” agreement such that no valid contract exists; (3) set forth only extremely vague and
convoluted assertions; (4) were not damaged by any alleged breach; and (5) cannot maintain a
suit for breach of contract because they are in default. Mot. to Dismiss 13-15.
The essential elements of a breach of contract claim under Texas law are: “(1) the
existence of a valid contract; (2) performance or tendered performance by the plaintiff;
(3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result
of the breach.” Smith Intern., Inc. v. Egle Group, LLC, 490 F.3d 380, 387 (5th Cir. 2007)
(internal quotation marks omitted) (quoting Valero Mktg. & Supply Co. v. Kalama Int’l, L.L.C.,
51 S.W.3d 345, 351 (Tex. App. 2001)). Typically, to sustain a claim for breach of contract, a
plaintiff “must identify the specific provision in the contract that was breached,” and cannot rely
on general allegations that the defendant is in breach of an agreement. Williams, 560 F. App’x at

33

238 (citing Watson v. Citimortgage, Inc., 814 F. Supp. 2d 726, 732 (E.D. Tex. 2011)); Fannie
Mae v. U.S. Prop. Solutions, L.L.C., Civil Action No. H-08-3588, 2009 WL 1172711, at *2 (S.D.
Tex. Apr. 28, 2009) (granting defendant’s motion to dismiss breach of contract claim, in part,
because plaintiffs failed to assert which provision of the contract was breached by defendant and
instead “alleg[ed] generally that [defendant was] in breach of the loan documents”). “Moreover,
if . . . plaintiffs fail to allege they [are] current on their payments under the deed of trust,
dismissal of their breach of contract claim is proper.” Williams, 560 F. App’x at 238 (citing
Marsh v. JPMorgan Chase Bank, N.A., 888 F. Supp. 2d 805, 815 (W.D. Tex. 2012)).
To the extent Plaintiffs claim that Defendants breached the Homestead Lien Contract and
Deed of Trust associated with the First Note, the Deed of Trust associated with the Second Note,
the Letter Agreement and Repayment Agreement, or any other agreement between Plaintiffs and
Defendants, Plaintiffs fail to identify any specific provision that Defendants breached. Indeed,
Plaintiffs fail to allege facts from which the Court could discern how Defendants’ actions
constitute a breach of a particular promise or portion of the agreements. Accordingly, even
assuming Plaintiffs established the existence of valid contracts, that Plaintiffs performed or
tendered performance, and that Plaintiffs sustained damages, any breach of contract claim arising
from the agreements Plaintiffs allude to must be dismissed. See id. (affirming dismissal of
breach of contract claim because complaint failed to identify the provision that defendant
allegedly breached); U.S. Prop. Solutions, L.L.C., 2009 WL 1172711, at *2. Moreover,
dismissal is appropriate because Plaintiffs also fail to allege they were current on their payments
under the Deeds of Trust. See id. Thus, Plaintiffs’ “Texas contract law” claim for breach of
contract is dismissed.

34

6.

Breach of good faith and fair dealing claim

Next, Plaintiffs assert that Defendants breached their duty of good faith and fair dealing
by closing Plaintiffs’ mortgage accounts and refusing to accept timely, properly tendered
payments, SAC ¶ 33, and by “fail[ing] in their duty” to follow “the Reaffirmation Agreement
procedure,” id. ¶ 34. Plaintiffs also assert that PRLAP “had responsibility of ensuring the Notes
were handled, serviced, transferred, [and] sold in a proper manner.” Id. ¶ 35.
Defendants argue that the duty of good faith and fair dealing is inapplicable to the
mortgagor-mortgagee relationship, and that the duty does not exist “in the area of mortgage
loans.” Mot. to Dismiss 16.
To maintain a claim for breach of the duty of good faith and fair dealing, a plaintiff must
show that the common law duty exists between the parties. See Vogel v. Travelers Indem. Co.,
966 S.W.2d 748, 753 (Tex. App. 1998). “Ordinarily, there is no such duty in lendor/lendee
relationships.” Id. (citing Fed. Deposit Ins. Corp. v. Coleman, 795 S.W.2d 706, 709 (Tex. 1990);
English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983)). Similarly, “[t]he relationship of
mortgagor and mortgagee ordinarily does not involve a duty of good faith,” nor does the
relationship between a creditor and guarantor. Fed. Deposit Ins. Corp v. Coleman, 795 S.W.2d
706, 709 (Tex. 1990). Furthermore, under Texas law, a trustee does not owe a duty of good faith
and fair dealing to the mortgagor. Burgos v. Bank of Am., N.A., No. EP-13-CV-63-PRM, 2013
WL 8480675, at *4 (W.D. Tex. Aug. 19, 2013) (citing Marsh v. Wells Fargo Bank, 760 F. Supp.
2d 701, 708 (N.D. Tex. 2011)). However, such a relationship may still exist, but only “where a
‘special relationship,’ marked by a shared trust or an imbalance in bargaining power, exists.”
Vogel, 966 S.W.2d at 753 (citing Coleman, 795 S.W.2d at 708-09; Great Am. Ins. Co. v. North
Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 418-20 (Tex. 1995)).

35

Plaintiffs cannot state a claim for breach of the duty of good faith and fair dealing
because they have not established that Defendants owe them this duty. Defendants, as either
lenders, mortgagees, creditors, or trustees, owe no duty of good faith and fair dealing to
Plaintiffs. See Vogel, 966 S.W.2d at 753; Coleman, 795 S.W.2d at 709; Burgos, 2013 WL
8480675, at *4. Moreover, Plaintiffs have neither argued nor pleaded any facts to indicate that
they have a “special relationship” with Defendants, such that the duty of good faith and fair
dealing exists among the parties. Thus, Plaintiffs’ claim for breach of the duty of good faith and
fair dealing is dismissed. See Vogel, 966 S.W.2d at 753 (requiring plaintiffs to show “that [a]
common law duty of good faith and fair dealing exists between [the] parties); In re Interlogic
Trace, Inc., 37 F. App’x 91, No. 01-50715, 2002 WL 1022038, at *2 (5th Cir. May 13, 2002)
(affirming dismissal of claim where “[n]o special relationship existed between the parties that
would support the existence of a duty of good faith and fair dealing”); Roberts v. Dayton Hudson
Corp., 914 F. Supp. 1421, 1424 (N.D. Tex. 1996) (granting motion to dismiss claim for breach of
duty of good faith and fair dealing where plaintiff presented “no compelling facts . . . which
would suggest a special relationship existed to warrant imposing . . . a duty of good faith and fair
dealing”).
7.

Common law fraud claim

Next, Plaintiffs assert a claim for common law fraud. SAC ¶¶ 36, 37. The Court has
identified three grounds that Plaintiffs appear to allege as bases for their fraud claim. Plaintiffs
allege Defendants made false representations and misleading statements to Plaintiffs (1) with
respect to “their actions to resolve the outstanding issues” concerning their First and Second
Notes and corresponding loan accounts in September and October 2008; (2) in connection with
the Settlement Commitment Agreement arising out of Seeberger v. Bank of America, EP-11-CV-

36

278-DCG (W.D. Tex. Oct. 28, 2011); and (3) in letters Defendants sent to Plaintiffs on May 1,
2014, and August 5, 2014. Id.
Plaintiffs elaborate on their fraud claim stemming from the Settlement Commitment
Agreement, stating that “Defendants have made false representations and willful omissions with
respect to material facts with the knowledge of its falsity and with intent to deceive the Plaintiffs
and the Plaintiffs relied on the false representations.” Id. ¶ 36(a). Plaintiffs also state that
Defendants “represented that payments tendered would be applied to Plaintiffs[’] Note as
prescribed by the terms of written correspondence and endorsements accompanying payments
tendered.” Id. ¶ 36(d).
Defendants argue that Plaintiffs (1) have failed “to allege that Defendants made
representations with the intent to deceive and with no intention of performing as represented;”
(2) are attempting to contort a breach of contract claim into a tort claim; and (3) have failed to
meet the heightened pleading standard required under Rule 9(b) of the Federal Rules of Civil
Procedure. Mot. to Dismiss 17-21.
“The elements of fraud in Texas are (1) the defendant made a representation to the
plaintiff; (2) the representation was material; (3) the representation was false; (4) when the
defendant made the representation the defendant knew it was false or made the representation
recklessly and without knowledge of its truth; (5) the defendant made the representation with the
intent that the plaintiff act on it; (6) the plaintiff relied on the representation; and (7) the
representation caused the plaintiff injury.” Shandong Yinguang Chem. Indus. Joint Stock Co. v.
Potter, 607 F.3d 1029, 1032-33 (5th Cir. 2010) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life
Ins. Co., 51 S.W.3d 573, 573 (Tex. 2001)).

37

Moreover, “[w]hen a plaintiff brings a state law fraud claim in federal court, she must
satisfy the heightened pleading requirements set forth in Federal Rule of Civil Procedure 9(b).”
Allen, 2015 WL 1726986, at *15 (citing Sullivan v. Leor Energy, LLC, 600 F.3d 542, 550-51
(5th Cir. 2010)); see also Fed. R. Civ. P 9(b) (requiring a party alleging fraud to “state with
particularity the circumstances constituting fraud”). “Pleading fraud with particularity in this
circuit requires ‘time, place and contents of the false misrepresentation, as well as the identity of
the person making the misrepresentation and what [that person] obtained thereby.” Williams v.
WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir. 1997) (alteration in original) (quoting
Tuchman v. DSC Commc’ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994)).
Apart from the conclusory statements that “Defendants have made false representations
and willful omissions with respect to material facts with the knowledge of its falsity and with
intent to deceive the Plaintiffs and the Plaintiffs relied on the false representations,” SAC ¶ 36(a),
Plaintiffs fail entirely in alleging specific facts that establish a fraud claim, not to mention the
heightened pleading standard under Federal Rule of Civil Procedure 9(6). Most glaringly,
Plaintiffs fail to state facts demonstrating that Defendants made any representations knowing
they were false or made representations recklessly; that Defendants made these representations
intending that Plaintiffs act on them; that Plaintiffs relied on any representations; and that these
representations caused Plaintiffs injury. Plaintiffs fail to state a fraud claim and accordingly, the
claim must be dismissed. See Shandong Yinguang Chem. Indus. Joint Stock Co., 607 F. 3d at
1032-33, 1035-36.
In the SAC, Plaintiffs also provide a list in Paragraphs 37(a)(i) – (b)(iii) of “false” and
“misleading” representations. For example, Plaintiffs state:

38

i) MISLEADING: Defendants failed to acknowledge and adhere to Plaintiffs’ Chapter 7
bankruptcy discharge and Permanent Injunction from October 31, 2008 thus misleading
anyone reading the correspondence to belief [sic] a debt was still owed;
(ii) MISLEADING: Defendants failed to mention payments tendered by Plaintiffs
associated with three separate agreements;
(iii) FALSE REPRESENTATION AND MISLEADING: Defendants failed to mention
that Plaintiffs were not provided with the proper Reaffirmation procedure entitled to them
under federal statute
SAC ¶ 37(a)(i)-(iii).
The Court is at a loss to decipher how any facts on the list could amount to fraud, and Plaintiffs
fail entirely to allege any facts establishing the elements of a fraud claim. Thus, to the extent
Plaintiffs argue that the facts listed in the SAC are fraud claims, these claims are also dismissed.
8.

“Show-me-the-note” theory

To the extent Plaintiffs attempt to assert a claim under the “show-me-the-note” theory,
their claim must be dismissed. Plaintiffs seek declaratory relief and assert that Defendants “have
no present right to foreclose on Plaintiffs’ homestead.” SAC ¶ 12. Plaintiffs elaborate that
defendants “have a common law duty to bring forward evidence that they are in possession” of
the First and Second Note. SAC ¶¶ 13, 18(a)(i), 18(a)(iii). The Court understands Plaintiffs to
be asserting what is colloquially known as the “show-me-the-note” theory, which “stems from its
advocates’ belief that ‘only the holder of the original wet-ink signature note has the lawful power
to initiate a nonjudicial foreclosure.’” Allen, 2015 WL 1726986, at *5 (quoting Preston v.
Seterus, Inc., 931 F. Supp. 2d 743, 757 (N.D. Tex. 2013) (internal quotation marks omitted)
(citation omitted)). “This theory has been ‘roundly rejected’ in Texas, and it fares no better
when applied to the facts of the instant case.” Id. (citing Martins v. BAC Home Loans Servicing,
L.P., 722 F.3d 249, 253 (5th Cir. 2013)).

39

The Fifth Circuit has held that “[t]he original, signed note need not be produced in order
to foreclose.” Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253-54 (5th Cir.
2013). The Fifth Circuit has consistently “reaffirmed its unequivocal rejection of the ‘show-methe-note’ theory each time it has surfaced on appeal.” Allen, 2015 WL 1726986, at *5 (citing
Fifth Circuit cases rejecting “show-me-the-note” theory). To the extent Plaintiffs assert a “showme-the-note” claim, their claim must be dismissed “[b]ecause there is simply no requirement in
Texas that a foreclosing party must produce the original note in order to foreclose.” Id. (citing
Shaver v. Barrett Daffin Frappier Turner & Engel, L.L.P., 593 F. App’x 265, 274 (5th Cir.
2014)).
9.

“Split-the-note” theory

To the extent Plaintiffs attempt to assert a claim under the “split-the-note” theory, their
claim must be dismissed. Plaintiffs appear to seek a declaratory judgment that Defendants “have
no present right to foreclose on Plaintiffs’ homestead,” SAC ¶ 12, asserting that BOA split the
First BOA Note from its Homestead Lien Contract and Deed of Trust, and the Second Note from
its Deed of Trust, SAC ¶ 18(a)(ii); FAC ¶ 20. While Plaintiffs do not elaborate on this claim,
the Court understands their argument to be that BOA split the First and Second Notes when it
“either sold, transferred, assigned and securities the Notes through Banc of America Mortgage
Securities, Inc.,” thus rendering any assignment of the Notes void. See Allen, 2015 WL
1726986, at *6 (citing Martins, 722 F.3d at 254; Johnson v. Wells Fargo Bank, NA, 999 F. Supp.
2d 919, 927 (N.D. Tex 2014)).
Like the “show-me-the-note” theory, the Fifth Circuit has repeatedly rejected the “splitthe-note” theory “as inapplicable in Texas.” Id. at *7 (citing Wiley v. Deutsche Bank Nat. Trust
Co., 539 F. App’x 533, 536-37 (5th Cir. 2013); Martins, 722 F.3d at 255; Rojas v. Wells Fargo

40

Bank, N.A., 571 F. App’x 274, 278 (5th Cir. 2014); Farkas v. GMAC Mortg., L.L.C., 737 F.3d
338, 342 (5th Cir. 2013)). Thus, to the extent Plaintiffs suggest, through a “split-the-note”
theory, that they are entitled to declaratory relief establishing that Defendants have no right to
foreclose, Plaintiffs’ claim fails as a matter of law. See id.
10.

RESPA claim

To the extent Plaintiffs attempt to assert a RESPA claim in their SAC, this claim must be
dismissed. Plaintiffs argue that Defendants violated RESPA by failing to acknowledge receipt of
their First QWR in August 2009, and “to either remove any past due mortgage payments or
provide a detailed explanation as to why the charges are being made.” FAC ¶ 62. Therefore,
Plaintiffs conclude, “Defendants should be required to pay Plaintiff’s [sic] damages.” Id. ¶ 62.
Congress enacted RESPA “to insure that consumers throughout the Nation are provided
with greater and more timely information on the nature and costs of the settlement process and
are protected from unnecessarily high settlement charges caused by certain abusive practices that
have developed in some areas of the country.” 12 U.S.C § 2601(a). Section 2605(e)
provides that if a loan servicer receives a qualified written request from the borrower for
information relating to the servicing of her loan, the loan servicer must send a written
response acknowledging receipt of the correspondence within five days, unless the
requested action is taken before the five-day period expires.
Allen, 2015 WL 1726986, at *11 (citing 12 U.S.C. § 2605(e)(1)(A)).
“Additionally, RESPA requires that the loan servicer take corrective action or otherwise
substantively respond to the borrower’s inquiry within thirty days of receiving the qualified
written request.” Id. (citing 12 U.S.C. § 2605(e)(2)). To state a viable claim under § 2605(e), a
plaintiff must plead “that their correspondence met the requirements of a [QWR], that
[Defendants] failed to make a timely response, and that this failure caused them actual damages.”

41

Williams, 560 Fed. App’x at 241 (citing 12 U.S.C. §§ 2605(e), (f); Hurd v. BAC Home Loans
Servicing, LP, 880 F. Supp. 2d 747, 768 (N.D. Tex. 2012)).
Assuming that Plaintiffs have pled sufficient fact to establish that their correspondences
met the statutory requirements of a QWR, Plaintiffs fail entirely to allege any facts indicating
that Defendants’ failure to respond caused them actual damages. Instead they merely declare
that “Defendants should pay Plaintiff’s [sic] damages.” Accordingly, to the extent Plaintiffs
attempt to assert a RESPA claim, that claim is dismissed. See Williams, 560 F. App’x at 241.
11.

Breach of fiduciary duty claim

To the extent Plaintiffs attempt to pursue a claim against Defendants, and specifically
against PRLAP as trustee, for breach of fiduciary duty, see SAC ¶¶ 20(b), 31, 35(b), 37, these
claims fail as a matter of law and must be dismissed. “Under Texas law, the elements of a cause
of action for breach of fiduciary duty are: (1) that the plaintiff and defendant had a fiduciary
relationship; (2) the defendant breached its fiduciary duty to the plaintiffs; and (3) the
defendant’s breach resulted in injury to the plaintiff.” Williams v. Countrywide Home Loans,
Inc., 504 F. Supp. 2d 176, 192 (S.D. Tex. 2007), aff’d, 269 F. App’x 523 (5th Cir. 2008) (citing
Jones v. Blume, 196 S.W.2d 440, 447 (Tex. App. 2006)). Plaintiffs cannot meet these elements
because “Texas courts have held that the relationship between a borrower and lender is not a
fiduciary one.” Id. (citing 1001 McKinney Ltd. v. Credit Suisse First Box. Mortg Capital, 192 S.
W. 3d 20, 36 (Tex. App. 2005); Mfrs.’ Hanover Tr. Co. v. Kingston Inv’rs Corp., 819 S.W.2d
607, 610 (Tex. App. 1991)); see also Allen, 2015 WL 1726986, at *15; Bittinger v. Wells Fargo
Bank NA, 744 F. Supp. 2d 619, 626 (S.D. Tex. 2010) (“Texas law does not recognize a fiduciary
relationship between a borrower and a lender.”). The relationship between a trustee and a
mortgagor is not a fiduciary one either. Burgos, 2013 WL 8480675, at *4. Thus, to the extent

42

Plaintiffs attempt to pursue claims for breach of fiduciary duty against Defendants, those claims
are dismissed. See Allen, 2015 WL 1726986, at *15.
12.

Tortious interference claim

Buried in Paragraph 32 of the SAC, under Plaintiffs’ “Third Cause of Action . . . Claims
for Violation of the FDCPA and Texas Contract Law,” Plaintiffs state that “Defendant BANA
tortuously [sic] interfered with a separate matter related to the [Property]” when it paid Plaintiffs’
past due property taxes and penalties to the City of El Paso despite knowing that Plaintiffs had
reached an agreement with the City regarding a payment plan. SAC ¶ 32. According to
Plaintiffs, Defendants then “improperly tried to collect the delinquent taxes and penalties from
Plaintiffs.” Id. ¶ 32(a)(i). To the extent Plaintiffs attempt to pursue a claim for tortious
interference with contract, this claim is dismissed for failure to state a claim.
“Under Texas law, the elements of a claim for tortious interference with contract are:
(1) a contract subject to interference; (2) the defendant's act of interference was willful and
intentional; (3) the defendant's intentional act was a proximate cause of the plaintiff's damage;
and (4) actual damage or loss occurred.” 5636 Alpha Rd. v. NCNB Texas Nat. Bank, 879 F.
Supp. 655, 662 (N.D. Tex. 1995) (citing Personal Preference Video, Inc. v. Home Box Office,
Inc., 986 F.2d 110, 111 (5th Cir.1993)). “The plaintiff must present evidence that a contract
provision was breached.” Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598,
674-75 (S.D. Tex. 2010) (citing N.Y. Life Ins. Co. v. Miller, 114 S.W.3d 114, 125 (Tex. App.
2003); Archives of Am., Inc. v. Archive Litig. Servs., Inc., 992 S.W.2d 665, 667–68 (Tex. App.
1999)). Moreover, “a plaintiff must show that the defendant took an active part in persuading a
party to breach its contract . . . .[;] [m]erely entering into a contract with a party with the
knowledge of that party’s contractual obligations to someone else is not the same as inducing a

43

breach.” Settlement Funding LLC v. RSL Funding, LLC, 3 F. Supp. 3d 590, 607-08 (S.D. Tex.
2014).
While Plaintiffs allege that Defendants were aware they had reached an agreement with
the City of El Paso regarding paying their delinquent property taxes and penalties, and that
Defendants subsequently paid the delinquent property taxes and penalties to the City of El Paso,
Plaintiffs fail to allege that Defendants acted willfully or intentionally, or took an active part in
persuading the City of El Paso to breach its contract with Plaintiffs. See Settlement Funding
LLC, 3 F. Supp. 3d at 607-08. Plaintiffs also fail to allege facts or explain how or whether
Plaintiffs suffered any actual damage or loss. See 5636 Alpha Rd, 879 F. Supp. at 662. Thus,
Plaintiffs fail to state a claim for tortious interference. Accordingly, to the extent Plaintiffs
attempt to pursue such a claim, it is dismissed.
13.

Equitable action to quiet title

Plaintiffs repeatedly assert, without elaboration, that they are seeking to quiet title. See,
e.g., SAC ¶¶ 31(b), 33(a), 34, 35(a) and (d), 36(a). “A suit to quiet title is an equitable cause of
action to remove a cloud from the title of a property created by an invalid claim.” Allen, 2015
WL 1726986, at *9 (citing Hahn v. Love, 321 S.W.3d 517, 531 (Tex. App. 2009)). To prevail in
a suit to quiet title, “a plaintiff must establish that: (1) she has an interest in a specific property,
(2) the title to the property is affected by a claim by the defendant, and (3) the claim, although
facially valid, is invalid or unenforceable.” Id. (citing Hurd, 880 F. Supp. 2d at 766). Moreover,
“[a] plaintiff . . . must prove and recover on the strength of [her] own title, not the weakness of
[her] adversary’s title.” Id. (internal quotation marks omitted) (citations omitted).
Plaintiffs do not allege that they are current on their mortgage payments. Moreover,
instead of alleging facts establishing that they have superior title to the Property, Plaintiffs argue

44

generally that Defendants lack authority to enforce the Notes and to foreclose on the Property.
Thus, Plaintiffs’ claim to quiet title is dismissed for failure to state a claim. See Herrera v. Wells
Fargo Bank, N.A., Civil Action No. H-13-68, 2013 WL 961511, at *9 (S.D. Tex. Mar. 12, 2013)
(holding that plaintiff failed to state a claim to quiet title because plaintiff did not deny falling
behind on his mortgage payments, and because“[t]he gravamen of his argument that Wells Fargo
lacks authority to enforce the Note and foreclose on the property is not relevant to nor does it
support a claim to quiet title”); Allen, 2015 WL 1726986, at *9 (dismissing claim to quiet title
where plaintiff did not allege she was current on her mortgage payments or deny defaulting on
the note).
14.

Leave to Amend

Having dismissed Plaintiffs’ federal and state causes of action, the Court must determine
whether to grant Plaintiffs an opportunity to amend their claims. When a court dismisses one or
more of a plaintiff’s claims pursuant to Rule 12(b)(6), the court generally should give the
plaintiff an opportunity to amend the complaint. See Hart v. Bayer Corp., 199 F.3d 239, 247-48
n.6 (5th Cir. 2000). However, “[t]he court may deny leave to amend . . . if the defects are
incurable or the plaintiffs have already alleged their best case.” Pierce v. Hearne Indep. Sch.
Dist., No. 14-50788, 2015 WL 81995, at *5 (5th Cir. Jan. 7, 2015) (citing Great Plains Tr. Co. v.
Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002); Bazrowx v. Scott, 136
F.3d 1053, 1054 (5th Cir. 1998)).
After due consideration, the Court is of the opinion that Plaintiffs should be denied
another opportunity to amend their complaint. Plaintiffs have already put forth three versions of
their Complaint from October 2014 to February 2015, see Compl.; FAC; SAC, and have been
involved in at least three other cases before this Court, as well as a related case in the U.S.

45

Bankruptcy Court for the Western District of Texas, since 2009, stemming from the same or
similar set of facts, see Notice of Rel. Cases. At this point, Plaintiffs have already alleged their
best case, with ample opportunity to amend, and further amendments would be futile. See, e.g.,
Turner v. AmericaHomeKey Inc., 514 F. App’x 513, 517 (5th Cir. 2013) (affirming district
court’s decision to deny plaintiff leave to amend where district court had already granted plaintiff
leave to amend, and where granting leave to amend was unnecessary because plaintiff already
alleged his best case); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139, 142 (5th Cir. 1993) (noting
that “[i]n deciding whether to grant leave to file an amended pleading, the district court may
consider such factors as undue delay, . . . dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing
party, and futility of the amendment,” and holding that district court did not abuse its discretion
in denying leave to file second amended complaint); Brown v. Bd. of Trs. Sealy Indep. Sch. Dist.,
No. 11-cv-1755, 2012 WL 3069844, at *4 (S.D. Tex. Jul. 27, 2012) (denying leave for plaintiff
to file second amended complaint because amended complaint would be futile).
B.

Plaintiffs’ Motion for Judgment

Turning to Plaintiffs’ Motion for Judgment, Plaintiffs appear to dispute the Court’s denial
of Plaintiffs’ Motion for Partial Summary Judgment, ECF No. 52, which was filed on March 9,
2015, as moot. See Order, ECF No. 83. Plaintiffs appear to argue that this Court should grant
Plaintiffs’ Motion for Partial Summary Judgment because Defendants did not respond to
Plaintiffs’ Motion. See Motion for Judgment 8.
Plaintiffs’ request is misguided because Defendants’ failure to respond does not entitle
Plaintiffs to a default judgment, see Slack v. Baker, Civil Action No. 6:09cv72, 2011 WL
830646, at *1 (E.D. Tex. Mar. 2, 2011) (adopting magistrate court’s ruling that “failure of a

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nonmovant to respond to a motion for summary judgment does not entitle the movant to a default
judgment”), or to a ruling in their favor on the motion, see Hooks v. Hillite Industries Inc., No.
3:00-CV-2358-X (N.D. Tex. Apr. 25, 2001), 2001 WL 432623, at *1 (“When the nonmoving
party fails to respond to the motion for summary judgment . . . , the court may not grant
summary judgment on this basis alone.). Moreover, although the Motion for Partial Summary
Judgment was filed three days after Plaintiffs filed the SAC on March 6, 2015, see SAC; Motion
for Partial Summary Judgment, the Motion refers only to the FAC, which was no longer the
operative complaint in the case, as Plaintiffs had filed a SAC. See Order 10, ECF No. 83. Thus,
Plaintiff’s Motion for Judgment is DENIED.
C.

Plaintiffs’ New Motion for Partial Summary Judgment, Defendants’ Motions
to Strike, and Plaintiffs’ Reply and Objection

Because Plaintiffs’ SAC is dismissed for failure to state a claim, Plaintiffs’ New Motion
for Partial Summary Judgment, Defendants’ Motions to Strike, and Plaintiffs’ Reply and
Objection, are DENIED as moot.
III.

CONCLUSION
For the reasons set forth above, Defendants’ Motion to Dismiss, ECF No. 84, is

GRANTED. Accordingly, Plaintiffs’ claims are DISMISSED in toto.
IT IS FURTHER ORDERED that Plaintiffs’ Motion for Judgment, ECF No. 101, is
DENIED.
IT IS FURTHER ORDERED that Plaintiff’s New Motion for Partial Summary
Judgment, ECF No. 112, and Defendants’ Motions to Strike, ECF No. 114 and ECF No. 117, are
DENIED as moot.
IT IS FURTHER ORDERED that Plaintiffs’ Reply and Objection, ECF No. 118, is
DENIED as moot.

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SO ORDERED.
SIGNED this 16th day of December, 2015.

KATHLEEN CARDONE
UNITED STATES DISTRICT JUDGE

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