Juarez v. Wells Fargo Bank, N.A.
REPORT AND RECOMMENDATIONS re 3 Motion to Dismiss filed by Wells Fargo Bank, N.A., The Clerk shall serve a copy of this Report & Recommendations on all parties via Electronic Transmission, or by Certified Mail, Return Receipt of all Non-Registered users. This case is hereby returned to the District Court for all other Purposes. Signed by Judge Richard B. Farrer. (wg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
WELLS FARGO BANK, N.A.,
REPORT AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
To the Honorable United States District Judge Fred Biery:
This Report and Recommendation concerns the Motion to Dismiss, Dkt. No. 3, filed by
Defendant Wells Fargo Bank, N.A. All pretrial matters in this case have been referred to the
undersigned for disposition pursuant to Rules CV-72 and 1(c) & (d) of Appendix C to the Local
Rules for the United States District Court for the Western District of Texas. Dkt. No. 6. The
Court has diversity jurisdiction over this case, see 28 U.S.C. § 1332, and the undersigned has
authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set
forth below, it is recommended that Defendant’s Motion to Dismiss, Dkt. No. 3, be GRANTED.
Plaintiff Pedro Juarez’s promissory estoppel claim must be dismissed because, as
pleaded, the claim runs afoul of the statute of frauds. His assertion, made for the first time in his
response to the pending motion to dismiss, see Dkt. No. 4, that he raised claims for breach of
contract and violation of the Texas Debt Collection Act (“TDCA”) is unavailing. Those claims
are not included in his live pleadings and thus cannot be used now as a basis to maintain this
action. But even assuming for argument’s sake those claims were included in his live complaint,
they would nonetheless be subject to dismissal as well.
The undersigned recognizes that a district court may, following dismissal of a plaintiff’s
claims and in the interest of justice, permit an opportunity to re-plead to correct the deficiencies
addressed in an order of dismissal. See Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir.
1977) (“[A] court ordinarily should not dismiss the complaint except after affording every
opportunity for the plaintiff to state a claim upon which relief can be granted.”). Here, given the
nature of the allegations and arguments advanced by the plaintiff, the undersigned is of the view
that any such opportunity to re-plead would be an exercise in futility. The decision on repleading, of course, ultimately rests with the District Court.
Factual and Procedural Background
Pedro Juarez initiated this action on July 31, 2017, in the 150th Judicial District Court in
Bexar County, Texas. He did so to prevent foreclosure on his property on West Magnolia
Avenue in San Antonio, Texas, which was scheduled to occur the next day, on August 1, 2017.
Dkt. No. 1-1, at 6-11 (Pl.’s Orig. Pet.). Juarez’s Original Petition in state court asserts a single
claim for promissory estoppel. Id. ¶ 11. In it Juarez admits he “has fallen behind on his mortgage
payments” but alleges that Wells Fargo promised to review his application for a home-loan
modification prior to proceeding with foreclosure. Id. ¶¶ 9, 11. Despite this alleged promise,
Juarez alleges, Wells Fargo posted the property for foreclosure without reviewing Juarez’s loanmodification application. Id. Juarez alleges he relied on this promise to his detriment, and he
seeks to compel Wells Fargo to specifically perform its alleged promise. His state court petition
also seeks temporary injunctive relief to preserve the status quo during the pendency of the
action. Id. ¶¶ 11-14.
The same day that he initiated this action Juarez also obtained a temporary restraining
order in state court, which prohibited Wells Fargo from foreclosing for 14 days. See Dkt. No. 1-1
at 4. Wells Fargo removed the action to federal court on August 10, 2017, on the basis of
diversity jurisdiction. Dkt. No. 1. On August 15, 2017, Wells Fargo filed the instant motion to
dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dkt. No. 3.
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 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.” Id. “Although a
complaint “does not need detailed factual allegations,” the “allegations must be enough to raise a
right to relief above the speculative level.” Twombly, 550 U.S. at 555. The allegations pleaded
must show “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S.
In reviewing a motion to dismiss under Rule 12(b)(6), a court “accepts all well-pleaded
facts as true, viewing them in the light most favorable to the plaintiff.” Martin K. Eby Const. Co.
v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quotation marks omitted). A
court, however, need not credit conclusory allegations or allegations that merely restate the legal
elements of a claim. Chhim v. Univ. of Tex. at Austin, 836 F.3d 467, 469 (5th Cir. 2016) (citing
Iqbal, 556 U.S. at 678).
The court’s review of a motion to dismiss is limited to the complaint, any documents
attached to the complaint, and any documents attached to the motion to dismiss that are “central
to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank
PLC, 594 F.3d 383, 387 (5th Cir. 2010). The district court may also take judicial notice of
matters of public record. See Norris v. Hearst Trust, 500 F.3d 454, 461 n. 9 (5th Cir. 2007). In
this case, Wells Fargo attached Juarez’s Deed of Trust to its Motion to Dismiss. See Ex. A to
Mot. This document is central to Juarez’s claims in that it provided the authority for Wells Fargo
to foreclose. Moreover, the Deed of Trust has been recorded and is a matter of public record.
Accordingly, the Court will consider the Deed of Trust in deciding Wells Fargo’s motion to
Dismissal of this action is appropriate. Juarez’s claim for promissory estoppel, although
not moot as Wells Fargo contends, is barred by the statute of frauds. Juarez’s “claims” for breach
of contract and for violation of the TDCA, which he asserts for the first time in his Response, are
noticeably absent from Juarez’s live pleadings. Moreover, an analysis of these purported claims
reveals that, in the course of advancing them in his Response, Juarez does not allege any facts
from which the Court could find a plausible claim for breach of contract or violation of the
TDCA. Permitting Juarez an opportunity to amend his pleadings to include these claims, in other
words, would be futile.
Mootness. As a threshold matter, the Court must first address Wells Fargo’s contention
that this action is moot because the foreclosure sale did not occur as originally scheduled. See
Matter of Commonwealth Oil Ref. Co., Inc., 805 F.2d 1175, 1180 (5th Cir. 1986) (“Since the
mootness question strike[s] at the very heart of federal subject matter jurisdiction, decision of
that question cannot be avoided.”) (quotation marks omitted). Based on the briefing of the parties
and the record, it appears Wells Fargo did not re-post the property for foreclosure once Juarez
obtained his temporary restraining order in state court. Although Wells Fargo’s decision to stay
foreclosure until this dispute is resolved moots Juarez’s request for temporary injunctive relief, it
does not moot the entire controversy between the parties.
A live controversy is presented by Juarez’s request for specific enforcement of Wells
Fargo’s alleged promise to review his loan application prior to proceeding with foreclosure.
Wells Fargo has not agreed to the relief requested, and Juarez still has an interest in this
litigation. Accordingly, this dispute is not moot. See, e.g., Envtl. Conservation Org. v. City of
Dallas, 529 F.3d 519, 527 (5th Cir. 2008) (recognizing that “[a] case should not be declared
moot as long as the parties maintain a concrete interest in the outcome and effective relief is
available to remedy the effect of the violation”) (quoting Dailey v. Vought Aircraft Co., 141 F.3d
224, 227 (5th Cir. 1998)) (quotation marks omitted).
Promissory Estoppel. Juarez’s promissory estoppel claim is barred by the statute of
frauds, as Wells Fargo contends. In Texas, which provides the applicable substantive law in this
diversity action, a “loan agreement in which the amount involved . . . exceeds $50,000 in value
is not enforceable unless the agreement is in writing and signed by the party to be bound or by
that party’s authorized representative.” Tex. Bus. Com. Code § 26.02(b). Where a contract falls
within the ambit of the statute of frauds, then “any subsequent oral material modification to the
contract” is generally unenforceable. SP Terrace, L.P. v. Meritage Homes of Tex., LLC, 334
S.W.3d 275, 282 (Tex. App.—Houston [1st Dist.] 2010, no pet.). An agreement to modify a loan
or delay foreclosure—precisely the type of agreement that Juarez alleges underlies his
promissory estoppel claim—is subject to the statute of frauds. Martins v. BAC Home Loans
Servicing, L.P., 722 F.3d 249, 256-57 (5th Cir. 2013); Milton v. U.S. Bank Nat’l Ass’n, 508 Fed.
App’x 326, 329 (5th Cir. Jan. 18, 2013). Although promissory estoppel can sometimes provide a
“narrow exception to the statute of frauds,” Hurd v. BAC Home Loans Servicing, L.P, 880 F.
Supp. 2d 747, 761 (N.D. Tex. 2012), to fall within such an exception “there must have been a
promise to sign a written contract which had been prepared and which would satisfy the
requirements of the statute of frauds,” Martins, 722 F.3d at 256-57.
Pursuant to the Deed of Trust, the loan amount on the property here is for $92,000. See
Ex. A to Mot. Accordingly, the statute of frauds applies to an agreement to modify the loan or
delay foreclosure of the property. See Tex. Bus. Com. Code § 26.02(b). Juarez’s claim for
promissory estoppel is premised on Wells Fargo’s alleged agreement to delay foreclosure until
Juarez’s application for loan modification had been processed. But Juarez has not alleged that
Wells Fargo memorialized this alleged promise in a written agreement or that Wells Fargo
promised to sign an existing written agreement that would satisfy the statute of frauds.
Accordingly, Juarez has failed to state a plausible promissory estoppel claim that could avoid
Wells Fargo’s statute of frauds defense.1
Notably, Juarez does not request an opportunity to correct this pleading deficiency. He in
fact does not address his claim for promissory estoppel in his Response. Accordingly, it appears
that Juarez concedes the validity of Wells Fargo’s arguments and has abandoned his promissory
estoppel claim. See, e.g., Gann v. Fruehauf Corp., 52 F.3d 1320, 1328 (5th Cir. 1995)
See, e.g., Martins, 722 F.3d at 256-57 (plaintiff’s promissory estoppel claim barred by the
statute of frauds where plaintiff alleged defendant orally promised not to foreclose if plaintiff
submitted a Home Affordable Modification Program application, which he did, but plaintiff
failed to allege a promise by defendant to sign an agreement validating the oral agreement);
Milton, 508 Fed. App’x at 329 (noting that “[p]laintiff’s promissory estoppel claim is unavailing
because plaintiff has failed to allege or introduce evidence that Ocwen promised to reduce its
alleged oral misrepresentations into writing”); Avila v. Compass Bank, No. SA-5:14-CV-686,
2014 WL 4999440, at *2 (W.D. Tex. Oct. 7, 2014) (granting defendants’ motion to dismiss
plaintiffs’ promissory estoppel claim where plaintiffs failed to allege that any of defendants’
alleged promises regarding loan modification or postponement of a foreclosure sale were in
writing or that defendants promised to sign a written modification that would comply with the
statute of frauds).
(recognizing that a party’s failure to advance arguments in a brief results in forfeiture or
abandonment of those arguments). Dismissal of this claim is therefore appropriate.
Finally, because Juarez’s claim for promissory estoppel is barred by the statute of frauds,
the Court need not address the other reasons raised by Wells Fargo in its motion to dismiss
which might also justify dismissal.
Breach of contract. Even assuming for argument’s sake that Juarez advances a claim for
breach of contract in his live pleadings—he does not—the Response’s arguments about such a
claim do not describe or allege any facts that would support a plausible breach-of-contract claim.
According to Juarez, Wells Fargo breached the promissory note and deed of trust by not allowing
Juarez all opportunities to cure the default, including providing “full consideration” of Juarez’s
application for home-loan modification pursuant to the Home Affordable Modification Program
(HAMP) before initiating the foreclosure process.
As a preliminary matter, Juarez would have great difficulty in prevailing on a breach-ofcontract claim because he expressly admits to defaulting on his mortgage, and any such default
would have pre-dated the alleged contract he later entered into concerning the mortgage. See
Compl. ¶ 9. Having failed to perform his obligations pursuant to the Promissory Note and Deed
of Trust, it is difficult (perhaps even impossible) to see how Juarez could ever prevail on a
breach of contract claim of the type he describes. See Vera v. Bank of Am., N.A., 569 Fed. App’x
349, 352 (5th Cir. Jun. 3, 2014) (applying Texas law and holding that a borrower could not
maintain a breach of contract claim against its lender after defaulting on its monthly mortgage
payments without excuse).
Even if Juarez had alleged that he performed his contractual duty to make regular
mortgage payments or otherwise was somehow excused for defaulting, Juarez has failed to point
to any provision in the Deed of Trust or Promissory Note that required Wells Fargo to consider
Juarez’s application for loan modification prior to initiating the foreclosure process. Instead,
Juarez argues generally that the Promissory Note required Wells Fargo to provide Juarez with all
opportunities to cure default, which would allegedly include considering a homeowner’s request
for loan-modification pursuant to HAMP. Even if the Note included such language as Juarez
suggests, “loan modification does not cure default but rather is an alternative to foreclosure in the
event of default.” See Davis v. DRRF Tr. 2015-1, No 5:15-CV-880 RP, 2016 WL 8257126, at *2
(W.D. Tex. Jan. 6, 2016). To be clear, Juarez does not describe an alleged agreement with Wells
Fargo in which Wells Fargo agreed to abandon any and all right to foreclose in favor of a
Juarez also does not cite any authority to support his position that Wells Fargo’s alleged
failure to abide by HAMP’s guidelines provides him with an independent cause of action for
breach of contract. Instead, Juarez cites the Making Home Affordable Program Handbook for
Servicers of Non-GSE Mortgages for the proposition that HAMP imposed an obligation on
lenders not to foreclose before borrowers received a decision on their HAMP application. See
Resp. at 4. But district courts in the Fifth Circuit have uniformly rejected the argument that
HAMP contractually obligates a mortgagee to consider a plaintiff’s application for loan
modification, especially in the absence of language in the loan documents expressly
incorporating HAMP. See, e.g., Caldera v. Bank of New York Mellon, No. SA-17-CV-00116XR, 2017 WL 972154, at *3 (W.D. Tex. Mar. 10, 2017) (“Because Plaintiff has no private right
of action directly through . . . HAMP, the only way he might state a claim [for breach of
contract] would be if the loan documents expressly incorporate the regulations.”); Martinez v.
Am.’s Servicing Co., No. CV H-12-2606, 2013 WL 12140499, at *4 (S.D. Tex. Aug. 21, 2013)
(holding that because there is no private right of action under HAMP, plaintiff’s breach of
contract claim based on defendant’s alleged failure to fairly and objectively review plaintiff’s
application for loan modification pursuant to HAMP must be dismissed). The Deed of Trust does
not expressly incorporate HAMP, and nothing within Juarez’s pleadings or even his briefing
suggests that the Promissory Note contains such a provision. Accordingly, Juarez’s breach of
contract claim, even if it had been properly raised, should be dismissed.
Texas Debt Collection Act. Even assuming, again for argument’s sake, that Juarez pled a
claim for violation of the TDCA, Juarez does not allege any facts that could support a plausible
violation of the Act. Juarez summarily alleges in his Response that Wells Fargo violated the
TDCA because it “unlawfully took steps [to] collect on the debt while Juarez was being
considered for a home loan modification.” Resp. at 1. Under the TDCA, debt collectors are
prohibited from using threats, coercion, or other wrongful practices in the collection of consumer
debts, including threatening to take an action “prohibited by law.” Tex. Fin. Code Ann.
§ 392.301(a)(8). “However, the TDCA does not prevent a debt collector from ‘exercising or
threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does
not require court proceedings.’” Velazquez v. Wells Fargo Bank, N.A., No. SA13CA885FBHJB,
2014 WL 12594195, at *5 (W.D. Tex. Feb. 25, 2014) (quoting Tex. Fin. Code § 392.301(b)(3)).
Therefore, foreclosure is not an act “prohibited by law,” where the defendant bank has a
contractual right to foreclose and the plaintiff was in default, as here. See Rucker v. Bank of Am.,
N.A., 806 F.3d 828, 831 (5th Cir. 2015).
District courts in this circuit have also held that threats of foreclosure allegedly in
violation of HAMP guidelines are not actionable under the TDCA. See, e.g., Kreway v.
Countrywide Bank, No. SA15CA332OLGHJB, 2015 WL 11622495, at *5 (W.D. Tex. Jul. 21,
2015), report and recommendation adopted sub nom., 2015 WL 11622496 (W.D. Tex. Aug. 7,
2015), aff’d sub nom., 647 Fed. App’x 437 (5th Cir. 2016) (“[T]he law is clear that a TDCPA
claim cannot be based on alleged HAMP violations . . . .”); Brinson v. Universal Am. Mortg. Co.,
Civil Action No. G–13–0463, 2014 WL 4354451, * 8 (S.D. Tex. Sept. 2, 2014) (“[V]iolations of
HAMP guidelines cannot form the basis of a TDCPA claim . . .”). Accordingly, Juarez’s TDCA
claim, even if it had been properly raised, must also be dismissed.
For the reasons discussed above, the undersigned recommends that Defendant’s Motion
to Dismiss, Dkt. No. 3, be GRANTED.
Having considered and acted upon all matters for which the above-entitled and numbered
case were referred, IT IS ORDERED THAT the above-entitled and numbered case is
RETURNED to the District Court for all purposes.
Instructions for Service and Notice of Right to Object/Appeal
The United States District Clerk shall serve a copy of this report and recommendation on
all parties by either (1) electronic transmittal to all parties represented by attorneys registered as
a “filing user” with the clerk of court, or (2) by mailing a copy by certified mail, return receipt
requested, to those not registered. Written objections to this report and recommendation must be
filed within fourteen (14) days after being served with a copy of same, unless this time period is
modified by the district court. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The party shall file
the objections with the clerk of the court, and serve the objections on all other parties. A party
filing objections must specifically identify those findings, conclusions, or recommendations to
which objections are being made and the basis for such objections; the district court need not
consider frivolous, conclusive or general objections. A party’s failure to file written objections to
the proposed findings, conclusions, and recommendations contained in this report shall bar the
party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52
(1985); Acuña v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to
timely file written objections to the proposed findings, conclusions and recommendations
contained in this report and recommendation shall bar the aggrieved party, except upon grounds
of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal
conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415,
1428-29 (5th Cir. 1996) (en banc).
IT IS SO ORDERED.
SIGNED this 12th day of February, 2018.
RICHARD B. FARRER
UNITED STATES MAGISTRATE JUDGE
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