Opinion
6:22-CV-01002-ADA-JCM
10-24-2022
RAMIL L. BARATANG, Plaintiff, v. CARRINGTON MORTGAGE SERVICES, LLC, Defendant.
THE HONORABLE ALAN D ALBRIGHT, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
JEFFREY C. MANSKE, UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(C), Fed.R.Civ.P. 72(b), and Rules 1(f) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. Before the Court is Defendant Carrington Mortgage Services, LLC's Motion to Dismiss Plaintiff's Amended Original Petition and Application for Temporary Restraining Order and Temporary Injunction (ECF No. 2). For the reasons described below, the Court RECOMMENDS that Defendant's Motion be GRANTED.
I. BACKGROUND
Plaintiff is a borrower allegedly in default of his mortgage obligations. Def.'s Mot. at 1. Defendant attempted to foreclose on the defaulted property. Id. Plaintiff sued Defendant for violations of the Texas Debt Collection Act, Texas Business and Commerce Code, and Texas Property Code relating to Defendant's foreclosure attempt. Def.'s Notice of Removal, Ex. A at 10. Plaintiff seeks economic damages, punitive damages, exemplary damages, and injunctive relief. Id. at 13, 15-16. Defendant filed a Notice of Removal on September 23, 2022. Def.'s Notice of Removal at 6.
Defendant then filed this Motion to Dismiss. Defendant argues that Plaintiff's claim should be dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Def.'s Mot. at 1. Defendant argues that there is no private right of action under Section 51.002 of the Texas Property Code; that Plaintiff is not a consumer under the Texas Business & Commerce Code; and that Plaintiff's Texas Debt Collection Act (“TDCA”) claim fails because the relevant code provision does not apply to non-judicial foreclosure. Id. at 2, 3.
II. LEGAL STANDARD
To avoid dismissal for failure to state a claim pursuant to Rule 12(b)(6), a plaintiff must plead enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).
The court determines whether the plaintiff has stated both a legally cognizable and plausible claim; the court should not evaluate the plaintiff's likelihood of success. Lone Star Fund V. (U.S.), LP v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). Based upon the assumption that all the allegations in the complaint are true, the factual allegations must be enough to raise a right to relief above the speculative level. Twombly, 550 U.S. at 555. A court, however, need not blindly accept each and every allegation of fact; properly pleaded allegations of fact amount to more than just conclusory allegations or legal conclusions masquerading as factual conclusions. Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002); see Twombly, 550 U.S. at 555; Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
When the plaintiff pleads factual content that allows the court to reasonably infer that the defendant is liable for the alleged misconduct, then the claim is plausible on its face. Iqbal, 556 at 678. The plausibility standard, unlike the “probability requirement,” requires more than a sheer possibility that a defendant acted unlawfully. Id. A pleading offering “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” will not suffice. Twombly, 550 U.S. at 555.
III. ANALYSIS
A. Plaintiff does not have a private right of action under the Texas Property Code.
Plaintiff alleged that the Defendant failed to give proper notice of the acceleration and collection action. Def.'s Notice of Removal, Ex. A at 12. Plaintiff alleged that the Defendants failed to give proper notice because “all transfers of the lien were not recorded timely” before the acceleration and collection action underlying this lawsuit. Id.
Lenders are required to provide a notice of default and intent to accelerate, specify the action required to cure the default, and give the debtor an opportunity to cure the default. Tex. Prop. Code § 51.002. Section 51.002 does not, however, provide a plaintiff a cause of action prior to a foreclosure sale. Gates v. Pennymac Loan Services, LLC, No. SA-22-CV-00356-XR, 2022 WL 1785623, at *4 (W.D. Tex. June 1, 2022) citing Suarez v. Ocwen Loan Servicing, LLC, No. 5:15-CV-664-DAE, 2015 WL 7076674, at *3 (W.D. Tex. Nov. 12, 2015).
To the extent that this reference to the Texas Property Code is intended to support a claim for wrongful foreclosure, that claim also fails because no foreclosure sale has occurred. Plaintiff did not allege that the property has been sold. See Def.'s Notice of Removal, Ex. A. A wrongful foreclosure claim cannot survive if the party asserting the claim never lost the property in question. Foster v. Deutsche Bank Nat'l Trust Co., 848 F.3d 403, 406 (5th Cir. 2017) (reasoning that recovery is premised on loss of possession of the property). Thus, Plaintiff has no cognizable claim under the Texas Property Code or under a wrongful foreclosure theory.
B. Plaintiff is not a “consumer” under the Texas Business & Commerce Code.
The Court will interpret Plaintiff's allegations under Texas Business & Commerce Code as violations of the DTPA. See Def.'s Notice of Removal, Ex. A. The DTPA requires the plaintiff to be a “consumer.” Tex. Bus. & Com. Code § 17.50(a). A consumer is “an individual ... who seeks or acquires by purchase or lease, any goods or services.” Tex. Bus. & Com. Code § 17.45(4). Generally, “a pure loan transaction lies outside the DTPA because money is considered to be neither a good nor a service.” Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169, 174 (Tex. 1980). Further, if a party only services a loan after the loan is assigned, that party's actions only facilitate a mortgage loan and as a matter of law the transaction is not a good or service under the DTPA. Hansberger v. EMC Mortg. Corp., No. 04-08-00438-CV, 2009 WL 2264996, at *2 (Tex. App.-San Antonio July 29, 2009, pet. denied). Plaintiff does not allege that Defendant did anything other than service the loan, Plaintiff is not a consumer under the DTPA and cannot bring a cause of action under it.
C. The TDCA does not apply to non-judicial foreclosures.
Plaintiff alleges that Defendant violated the TDCA by using a false or deceptive means to collect or enforce a debt. Def.'s Notice of Removal, Ex. A at 13. A lender does not violate the TDCA by threatening to foreclose if it retains its contractual right to foreclose and the mortgage was in default. Rucker v. Bank of Am., NA, 806 F.3d 828, 831 (5th Cir. 2015). Additionally, this provision in the TDCA does not apply to non-judicial foreclosure. McCaig v. Wells Fargo Bank (Tex.), NA, 788 F.3d 463, 477 (5th Cir. 2015). Finally, a plaintiff must plead actual damages to sustain an action under the TDCA. Adams v. U.S. Bank, NA, No. 3:17-CV-723, 2018 WL 2164520, at *7 (N.D. Tex. Apr. 18, 2018). Plaintiff has failed to allege that Defendant did not retain its contractual right to foreclose, or that the foreclosure involved here is a judicial foreclosure, or that a foreclosure has actually occurred. See generally Def.'s Notice of Removal, Ex. A. Thus, Plaintiff has failed to state a cognizable claim under the TDCA.
IV. CONCLUSION
For the reasons outlined above, the undersigned RECOMMENDS that the Defendant's Motion (ECF No. 2) be GRANTED.
V. OBJECTIONS
The parties may wish to file objections to this Report and Recommendation. Parties filing objections must specifically identify those findings or recommendations to which they object. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report. See 28 U.S.C. § 636(b)(1)(C); Thomas v Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc). Except upon grounds of plain error, failing to object shall further bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas, 474 U.S. at 150-53; Douglass, 79 F.3d at 1415.