Hacker v. Truist Bank

Filing 20

ORDER GRANTING 19 Motion to Dismiss. However, the Court grants Hacker leave to file an amended complaint curing the deficiencies identified in this order no later than January 31, 2023. Signed by Judge Xavier Rodriguez. (nm)

Case 5:22-cv-00886-XR Document 20 Filed 01/17/23 Page 1 of 10

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
GARY HACKER,

Plaintiff

-vsTRUIST BANK,

Defendant

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SA-22-CV-00886-XR

ORDER
On this date, the Court considered Defendant’s motion to dismiss (ECF No. 19). After
careful consideration, the Court issues the following order.
BACKGROUND
Plaintiff Gary Hacker (“Hacker”) is the mortgagor of a property located at 514 Cordillera
Trace, Boerne, Texas (the “Property”). ECF No. 18 ¶ 4. Hacker failed to pay his property taxes in
full and on time, anticipating the creation of a payment plan with the tax assessor. Id. In response,
Defendant Truist Bank (“Truist”), the mortgagee, paid Hacker’s overdue and upcoming property
taxes. Id. ¶¶ 4–5. To cover its prepayment, Truist converted Hacker’s loan to an escrow loan,
charging an additional monthly fee that Hacker refused to pay. Id. ¶ 5. As a result, Hacker fell into
default, and Truist asserted its right to foreclose. Id.
On July 21, 2022, Hacker filed his original petition in the 451st District Court of Kendall
County, Texas, seeking to prevent Truist from foreclosing on the Property. ECF No. 1-1, App. B1. On July 26, 2022, Hacker filed his first amended petition to correct the listed address of the
Property. See id. App. B-2. It is undisputed that, following the filing of the amended petition, Truist
reinstated the loan, and the Property was pulled from the foreclosure sale. See ECF No. 1 ¶ 3; ECF
No. 7 ¶¶ 1, 5. On August 11, 2022, Truist removed the action to this Court on the basis of both

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diversity and federal question jurisdiction. ECF No. 1 ¶ 6. On November 23, 2022, Hacker filed
his second amended petition. ECF No. 18.
In his petition, Hacker asserts claims for violations of the Texas Debt Collections Practices
Act (“TDCA”), the Texas Deceptive Trade Practices Act (“DTPA”), and the Real Estate
Settlement Protection Act (“RESPA”). Id. ¶¶ 9–10. He also seeks a declaratory judgment that
Truist must credit him for previous payments allegedly made and that Truist must demand the
correct payment amount and provide proper notice of and alternatives to foreclosure before
initiating foreclosure proceedings. Id. ¶ 8.
Truist has moved to dismiss Hacker’s petition in its entirety, on several grounds. ECF No.
19. First, Truist contends that Hacker’s TDCA claim fails because threatening foreclosure after
default is not an action prohibited by law, and, in any event, Hacker failed to “allege he sustained
any damages.” ECF No. 19 at 3–4. Second, Truist argues that Hacker’s DTPA claim fails because
he “is not a ‘consumer’ as defined by the statute.” Id. at 4. Third, Truist contends that Hacker failed
to plead damages under RESPA. Id. at 5. And finally, Truist concludes that, in light of Hacker’s
failure to plead his substantive claims, declaratory relief must be denied. Id. at 7. Hacker has not
filed a response to the motion, and the time in which to do so has expired.
DISCUSSION
I.

Legal Standard
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for the dismissal of a

complaint for “failure to state a claim upon which relief can be granted.” 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.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678.
In considering a motion to dismiss under Rule 12(b)(6), all factual allegations from the
complaint should be taken as true, and the facts are to be construed in the light most favorable to
the nonmoving party. Fernandez-Montes v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993).
Still, a complaint must contain “more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “‘[N]aked assertions’
devoid of ‘further factual enhancement,’” and “threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements,” are not entitled to the presumption of truth.
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557); see also R2 Invs. LDC v. Phillips, 401
F.3d 638, 642 (5th Cir. 2005) (stating that the Court should neither “strain to find inferences
favorable to plaintiffs” nor accept “conclusory allegations, unwarranted deductions, or legal
conclusions”).
II.

Analysis
A.

Violations of the Texas Debt Collections Practices Act

In his petition, Hacker vaguely alleges violations of the TDCA, failing to specify which
provisions support his claim. ECF No. 18 ¶ 9. Accordingly, the Court construes Hacker’s claim
under each relevant statute, determining whether Truist’s unrebutted arguments are dispositive.
i.

Threats or Coercion

Under the TDCA, “a debt collector may not use threats, coercion, or attempts to coerce
[by] . . . threatening to take an action prohibited by law” when collecting a consumer debt. TEX.
FIN. CODE § 392.301(a)(8); see Brown v. Oaklawn Bank, 718 S.W.2d 678, 680 (Tex. 1986). Truist

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contends that because Hacker admitted to defaulting on his loan, foreclosure was “not an action
prohibited by law.” ECF No. 19 at 3–4. The Court agrees.
Assuming arguendo that Truist threatened Hacker with foreclosure, 1 that is not prohibited
by law when the mortgagee has a “right to foreclose.” McCaig v. Wells Fargo Bank (Tex.), N.A.,
788 F.3d 463, 478 (2015). “Because a default generally triggers a mortgag[ee]’s right to foreclose
under a deed of trust, . . . claims premised on a threat of foreclosure generally turn on whether the
mortgage is in default.” Id. (citing Wildy v. Wells Fargo Bank, NA, No. 12-CV-01831, 2012 WL
5987590, at *3 (N.D. Tex. Nov. 30, 2012)); see Rucker v. Bank of Am., N.A., 806 F.3d 828, 831
(5th Cir. 2015) (holding foreclosure threats are not prohibited by law when the mortgagor is in
default); Byrd v. Lakeview Loan Servicing, L.L.C., 855 F. App’x 187, 191–92 (5th Cir. 2021)
(same).
Here, Hacker admits to defaulting on his loan by failing to pay his property taxes timely
and making incomplete mortgage payments. See ECF No. 18 ¶¶ 4–5, 8. And he does not allege
that Truist “waived its contractual right to foreclose.” Rucker, 806 F.3d at 831. Thus, Truist acted
within its rights and did not threaten an action prohibited by law. Id.; see TEX. FIN. CODE. §
392.301(a)(8). Any claim based on this provision, therefore, fails to state a claim upon which relief
can be granted. 2

Based solely on the petition, this fact is unclear. According to Hacker, Truist merely “asserted a right to
foreclose” after his default. See ECF No. 18 ¶¶ 5, 8.
2
Truist also contends that Hacker did not suffer actual damages because it never foreclosed on the Property.
ECF No. 19 at 3. While the Court need not consider this contention because Hacker’s claim fails on other grounds, it
notes that a plaintiff may recover damages absent foreclosure. See McCaig, 788 F.3d at 471, 483–84 (affirming jury
award of mental anguish damages under the TDCA even though the defendant “never consummated a foreclosure
sale”); see also TEX. FIN. CODE § 392.403 (providing injunctive relief, actual damages, attorney’s fees, and statutory
damages for violations of the TDCA).
1

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ii.

Unfair or Unconscionable Means

Debt collectors are also forbidden from using “unfair or unconscionable means” while
“collecting or attempting to collect . . . a charge, fee, or expense incidental to the obligation unless
[it] is expressly authorized by the agreement.” TEX. FIN. CODE § 392.303(a)(2). “If . . . even one
dollar” is improperly collected outside the terms of the agreement, that could violate Section
392.303(a)(2). Colbert v. Wells Fargo Bank, N.A., 850 F. App’x 870, 874 (5th Cir. 2021).
Here, Hacker alleges that Truist charged an “increased amount” through escrow and failed
to apply his partial payments to the delinquent balance. ECF No. 18 ¶ 5. He does not, however,
allege that these actions violated the deed of trust. Without alleging a violation of the agreement,
Hacker fails to state a legally cognizable claim under this provision. See Williams v. Wells Fargo
Bank, N.A., 560 F. App’x 233, 240 (5th Cir. 2014) (holding a plaintiff must “allege that the
imposition of the charges was not authorized by the . . . agreement,” making a “general assertion
of ‘wrongful charges’ . . . insufficient”); Page v. JPMorgan Chase Bank, N.A., No. 13-CV-407,
2013 WL 11309350, at *5 (N.D. Tex. Nov. 25, 2013) (granting a motion to dismiss because the
plaintiff “wholly fail[ed] to allege any facts suggesting that any of the charges . . . were not
authorized by the loan documents as a result of the default”), aff’d 605 F. App’x 272 (5th Cir.
2015).
iii.

Fraudulent, Deceptive, or Misleading Representations

Finally, debt collectors are prohibited from using “fraudulent, deceptive, or misleading
representations [by] . . . misrepresenting the character, extent, or amount of a consumer debt[.]”
TEX. FIN. CODE § 392.304(a)(8). To violate this provision, debt collectors need not intend to
mislead the debtor. McCaig, 788 F.3d at 480–81. Rather, “facially innocuous misrepresentations
made in the course of an attempt to collect a debt constitute a violation.” Id. at 481 (citing several

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cases). But a misrepresentation must cause the debtor “to think differently with respect to the
character, extent, amount, or status of their debt.” Miller v. BAC Home Loans Servicing, L.P., 726
F.3d 717, 723 (5th Cir. 2013). Here too, Hacker’s petition fails to state a claim.
While Hacker alleges that “the delinquent amount cited by [Truist] is incorrect,” ECF No.
18 ¶ 5, he does not argue it created a misapprehension. Id. ¶¶ 5–6. Rather, Hacker contends that
he remained “[a]t all times, even up to the time of the filing of the petition in Texas State District
Court, . . . ready to pay a correct delinquent amount.” Id. ¶ 6. In other words, Hacker was aware:
(1) “that [he] had a mortgage debt”; (2) “the specific amount that [he] owed”; and (3) “that [he]
had defaulted.” Id.; see Douglas v. Wells Fargo Bank, N.A., 992 F.3d 367, 375 (5th Cir. 2021)
(citing Miller, 728 F.3d at 723) (holding that misrepresentations cannot support a claim under
Section 392.304(a)(8) when the debtor believes them to be inaccurate). Because the purported
misrepresentation did not cause Hacker to think differently about his debt, he has failed to state a
claim upon which relief can be granted.
B.

Violations of the Texas Deceptive Trade Practices Act

Hacker’s petition also alleges a violation of the DTPA. On this claim, Truist contends that
Hacker is not a consumer, placing him outside the Act’s ambit. To assert a DTPA claim, a plaintiff
must plead facts demonstrating he is a “consumer.” See Amstadt v. U.S. Brass Corp., 919 S.W.2d
644, 649 (Tex. 1996). The term consumer means any “individual . . . who seeks or acquires by
purchase or lease, any goods or services.” TEX. BUS. & COM. CODE § 17.45. A consumer must: (1)
“seek or acquire goods or services by purchase or lease”; and (2) “the goods or services purchased
or leased must form the basis of the complaint.” Miller, 726 F.3d at 724–25 (quoting Mendoza v.

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Am. Nat’l Ins. Co., 932 S.W.2d 605, 608 (Tex. App.—San Antonio 1996, no writ)) (internal
quotation mark omitted).
“As a general rule, where the underlying transaction is a loan, consumer status is not
conferred because money is neither a good [n]or service.” Reule v. M & T Mortg., 483 S.W.3d
600, 614 (Tex. App.—Houston [14th Dist.] 2015, pet. denied) (citing Riverside Nat’l Bank v.
Lewis, 603 S.W.2d 169, 173–74 (Tex. 1980)); see Flenniken v. Longview Bank & Tr. Co., 661
S.W.2d 705, 706–08 (Tex. 1983). But, “where the mortgagor’s primary objective was to acquire a
good or service, and that good or service forms the basis of the complaint, the mortgagor qualifies
as a consumer under the DTPA.” Forbes v. Citimortgage, Inc., 998 F. Supp. 2d 541, 552 (S.D.
Tex. 2014) (citing Miller, 726 F.3d at 725); see Flenniken, 661 S.W.2d at 708 (“[T]he Flennikens
did not seek to borrow money; they sought to acquire a house. The house thus forms the basis of
their complaint.”).
“But a mortgagor challenging how an existing mortgage is serviced is not a consumer
because the basis of the claim is ‘the subsequent loan servicing and foreclosure activities, rather
than the goods or services acquired in the original transaction.’” HHH Farms, L.L.C. v. Fannin
Bank, 648 S.W.3d 387, 417 (Tex. App.—Texarkana 2022, pet. filed) (quoting Ebrahimi v. Caliber
Home Loans, Inc., No. 05-18-00456-CV, 2019 WL 1615356, at *8 (Tex. App.—Dallas Apr. 15,
2019, pet. denied) (mem. op., not designated for publication)) (internal quotation marks omitted);
see Miller, 726 F.3d at 725 (citing Ayers v. Aurora Loan Servs., LLC, 787 F. Supp. 2d 451, 455
(E.D. Tex. 2011)).

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Because Hacker only challenges Truist’s servicing and foreclosure activities, the Property
does not form the basis of his petition. ECF No. 18 ¶¶ 4–5, 9. 3 Thus, Hacker is not a consumer
within the meaning of the DTPA and fails to state a claim thereunder.
C.

Violation(s) of RESPA

Hacker also alleges that Truist violated RESPA by “engag[ing] in dual tracking.” Id. ¶ 10.
Truist responds that the petition fails to plead facts supporting dual tracking and damages. ECF
No. 19 at 5–6. Under RESPA, “[d]ual tracking is the term given to situations in which the lender
actively pursues foreclosure while simultaneously considering the borrower for loss mitigation
options.” Gresham v. Wells Fargo Bank, N.A., 642 F. App’x 355, 359 (5th Cir. 2015) (citing 12
C.F.R. § 1024.41 (2022)). This practice is forbidden when “a servicer receives a complete loss
mitigation application more than 37 days before a foreclosure sale.” Id. (quoting 12 C.F.R. §
1024.41(c)(1)) (internal quotation marks omitted).
Because Hacker pleads no facts indicating he submitted a loss mitigation report to Truist,
he fails to state a claim under this provision. Id.; see Cabrera v. First Nat’l Bank of Trenton, No.
22-CV-00002, 2022 WL 2056186, at *2 (E.D. Tex. June 7, 2022) (“Cabrera never mentions an
application for complete loss mitigation . . . . Cabrera, thus, has not stated a claim for dual tracking
upon which relief can be granted.”).
D.

Declaratory Relief

Hacker seeks the following declarations: (1) that Truist was required to give him thirty (30)
days to cure any property tax default before putting him in escrow; (2) that Truist should credit

3

Hacker’s petition makes some allegations with respect to the underlying transaction for the Property. See
ECF No. 18 ¶ 9 (alleging Truist made “deceptive representations in connection with goods and services” and
“[m]isrepresent[ed] the authority of a salesman, representative[,] or agent to negotiate the final terms of a consumer
transaction”). However, these “naked assertion[s]” are devoid of “further factual enhancement.” Twombly, 550 U.S.
at 557. The Court cannot draw “reasonable inference[s]” from facts never pleaded. Iqbal, 556 U.S. at 678.

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him for payments made and accepted; (3) that the correct amount must be demanded prior to
claiming default and seeking foreclosure; (4) that Truist must provide him with proper notice of
and potential alternatives to foreclosure; and (5) that he was never six months behind on his
mortgage payments because he should have been credited for the partial payments accepted by
Truist, reducing his delinquency to four months at the maximum. ECF No. 18 ¶ 8. Because Hacker
fails to plead his substantive claims, his request for declaratory relief must be denied.
Declaratory relief, whether brought “under . . . state or federal law[,] depend[s] on an
otherwise justiciable case or controversy.” Lawry v. Bank of N.Y. Mellon Tr. Co., N.A., 797 F.
App’x 152, 156 (5th Cir. 2019) (citing Bauer v. Texas, 341 F.3d 352, 357–58 (5th Cir. 2003) and
Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995)); see Val-Com Acquisitions Tr.
v. Chase Home Fin., LLC, 434 F. App’x 395, 395–96 (5th Cir. 2011) (affirming the district court’s
dismissal of declaratory relief where the plaintiff failed to state a claim). “In other words,
declaratory relief is ‘merely a theory of recovery’ on an underlying cause of action—it is ‘a
procedural device’ that ‘does not create any substantive rights or causes of action.’” Lawry, 797
F. App’x at 156 (quoting Sid Richardson Carbon & Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d
746, 752 n.3 (5th Cir. 1996)). Thus, “declaratory and injunctive relief necessary fail” when the
underlying substantive claims are dismissed. Thomas v. EMC Mortg. Corp., 499 F. App’x 337,
343 (5th Cir. 2012).
Here, as discussed above, Hacker’s substantive claims fail to state a claim on which relief
can be granted. Without them, his procedural request for declaratory relief is meritless.
CONCLUSION
For the foregoing reasons, Truist’s motion to dismiss (ECF No. 19) is GRANTED and
Hacker’s claims are DISMISSED. However, the Court grants Hacker leave to file an amended

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complaint curing the deficiencies identified in this order no later than January 31, 2023.
It is so ORDERED.
SIGNED this 17th day of January, 2023.

____________________________
XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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