Opinion
CIVIL CASE NO. 4:20-CV-186-SDJ
2021-03-16
Moses KOVALCHUK v. WILMINGTON SAVINGS FUND SOCIETY, FSB, A TRUSTEE OF UPLAND MORTGAGE LOAN TRUST A
Robert Clarence Newark, III, A Newark Firm, Dallas, TX, for Moses Kovalchuk. Matt D. Manning, McGlinchey Stafford, PLLC, Houston, TX, Helen Guadalupe Mosothoane, McGlinchey Stafford, PLLC, Dallas, TX, for Wilmington Savings Fund Society, FSB.
Robert Clarence Newark, III, A Newark Firm, Dallas, TX, for Moses Kovalchuk.
Matt D. Manning, McGlinchey Stafford, PLLC, Houston, TX, Helen Guadalupe Mosothoane, McGlinchey Stafford, PLLC, Dallas, TX, for Wilmington Savings Fund Society, FSB.
MEMORANDUM ADOPTING THE REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
SEAN D. JORDAN, UNITED STATES DISTRICT JUDGE
Came on for consideration the Report and Recommendation of the United States Magistrate Judge ("Report"), this matter having been referred to the Magistrate Judge pursuant to 28 U.S.C. § 636. On January 25, 2021, the Report of the Magistrate Judge, (Dkt. #27), was entered containing proposed findings of fact and recommendations that Defendant Wilmington Savings Fund Society, FSB, a Trustee of Upland Mortgage Loan Trust A's Motion for Judgment on the Pleadings, (Dkt. #17), be granted. Having assessed the Report and considered Plaintiff Moses Kovalchuk's Objection, (Dkt. #28), and Wilmington's Response, (Dkt. #31), the Court determines that the Magistrate Judge's Report should be adopted.
Defendant will sometimes be referenced herein as "Wilmington."
REPORT AND RECOMMENDATION
Kovalchuk asserted claims against Wilmington for negligence, violation of Section 51.022 of the Texas Property Code, breach of contract, wrongful foreclosure, quiet title, and attorney's fees. In her thorough Report, the Magistrate Judge recommended that the Court grant Wilmington's Motion for Judgment on the Pleadings and dismiss Kovalchuk's claims with prejudice. Kovalchuk does not object to any of the substantive legal or factual analyses in the Report supporting the Magistrate Judge's dismissal recommendation. Kovalchuk objects only to the recommendation that his request for leave to amend his complaint be denied. The Magistrate Judge concluded that Kovalchuk's request to amend his complaint should be denied because Kovalchuk declined to amend his complaint upon removal or the filing of the Motion for Judgment on the Pleadings, the deadline to amend has passed, and Kovalchuk failed to articulate any particular grounds for amendment. (Dkt. #28 at 24 n.16). Kovalchuk objects to this conclusion.
OBJECTION TO REPORT AND RECOMMENDATION
A party who files timely written objections to a magistrate judge's report and recommendation is entitled to a de novo review of those findings or recommendations to which the party specifically objects. 28 U.S.C. § 636(b)(1)(C) ; Fed. R. Civ. P. 72(b)(2)–(3).
I. Rule 16(b) ’s "Good Cause" Standard Applies to Kovalchuk's Amendment Request.
The only issue presented by Kovalchuk's Objection is whether he should be afforded an opportunity to amend his complaint. (Dkt. #28 at 1, 3). Kovalchuk argues that "there is no evidence that Defendant would be prejudiced" by permitting amendment, that a continuance could be granted to cure any prejudice, and that his response requesting leave if the Court determined dismissal appropriate was filed prior to the expiration of the deadline for amending pleadings. (Dkt. #28 at 2). In response, Wilmington asserts that: (1) Kovalchuk had ample time to file an amended complaint after the Motion for Judgment on the Pleadings was filed; (2) Kovalchuk has failed to explain why amendment is important or would cure the deficiencies identified by the Magistrate Judge; (3) Wilmington would be prejudiced if Kovalchuk were permitted to amend; and (4) a continuance to cure any such prejudice would unnecessarily delay trial. (Dkt. #31 at 2–4).
12Federal Rule of Civil Procedure 16(b) governs amendment of pleadings once a scheduling order has been issued. S&W Enters., L.L.C. v. SouthTrust Bank of Ala., N.A., 315 F.3d 533, 536 (5th Cir. 2003). "While Federal Rule of Civil Procedure 15(a) provides that leave to amend shall be ‘freely’ given, Rule 16(b)(4) limits modifications to a scheduling order to situations where good cause is shown." United States ex rel. Bias v. Tangipahoa Par. Sch. Bd., 816 F.3d 315, 328 (5th Cir. 2016). The good cause standard requires the "party seeking relief to show that the deadlines cannot reasonably be met despite the diligence of the party needing the extension." S&W Enters., 315 F.3d at 535 (quoting 6A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1522.1 (2d ed. 1990) ). A court considers the following four factors when determining if good cause has been shown: "(1) the explanation for the failure to [timely move for leave to amend]; (2) the importance of the [amendment]; (3) potential prejudice in allowing the [amendment]; and (4) the availability of a continuance to cure such prejudice." Bias, 816 F.3d at 328 (alterations in original) (quoting S&W Enters., 315 F.3d at 536 ).
II. Kovalchuk's Failure to Submit a Proper Request To Amend His Complaint Is Fatal to His Objection, and He Also Fails to Meet the Good Cause Standard.
Kovalchuk's objection runs headlong into his own litigation decision not to amend his complaint when he was afforded an express invitation to do so and his related decision not to file, at any time, a motion for leave to amend. Kovalchuk was provided an express opportunity to amend his complaint when this case was removed to federal court. See (Dkt. #6). He elected not to do so. Kovalchuk also elected not to file an amended complaint in response to Wilmington's Motion for Judgment on the Pleadings. And Kovalchuk failed to file a motion for leave to amend before the deadline to amend pleadings had passed on August 28, 2020. See (Dkt. #12).
34 In the body of his response to Wilmington's motion, Kovalchuk makes a passing reference to the potential amendment of his complaint as follows, "Plaintiff would also request leave to amend any other cause of action which the Court determines should be dismissed." (Dkt. #22 at 8). It appears Kovalchuk attempts to rely on this single sentence as a proxy for the submission of a motion for leave to amend. Under either Rule 16(b), or the more liberal standard of Rule 15(a), "[a] formal motion [for leave to amend] is not always required, so long as the requesting party has set forth with particularity the grounds for the amendment and the relief sought." U.S. ex rel. Willard v. Humana Health Plan of Tex., Inc., 336 F.3d 375, 387 (5th Cir. 2003). However, a "bare request in an opposition to a motion to dismiss—without any indication of the particular grounds on which the amendment is sought," does not constitute a motion for leave to amend a complaint. Id. Because Kovalchuk failed to file a motion for leave to amend his complaint and likewise failed to set forth with particularity, in any document, the grounds for the amendment, he has not properly presented his pleading-amendment request to the Court and his objection therefore fails at the outset.
5 Further, even if the Court overlooks Kovalchuk's failure to properly submit a motion for leave to amend, his request is substantively meritless because he does not meet the good cause standard. As to the first factor in determining good cause, Kovalchuk provides no explanation for his failure to timely seek leave to amend his complaint. In his objection to the Report, Kovalchuk only offers the following: "Plaintiff attempted to make a timely motion [to amend] and would have but for the fact that the Motion for Judgment was not ruled upon by the Court." See (Dkt. #28). But the fact that Wilmington's motion was pending before the Court presented no impediment to Kovalchuk seeking leave to amend his complaint. Kovalchuk's assertions otherwise blink reality.
The second factor as to the importance of the amendment also weighs against Kovalchuk's request because he provides no explanation as to why the intended amendments to his complaint are important. Kovalchuk's contention that his proposed amendments are "important to the scope of this case," (Dkt. #28), amounts to nothing more than a conclusory assertion bereft of any specific information describing why the amendments are "important." Likewise, Kovalchuk does not explain "what would be accomplished by further amendment" if the Court permitted it. See Molina-Aranda v. Black Magic Enterprises, L.L.C., 983 F.3d 779, 789 (5th Cir. 2020).
As to the third factor concerning prejudice, Kovalchuk asserts that allowing him to amend will not prejudice Wilmington "at this still relatively early stage" of the case. (Dkt. #28). But this case is not in its early stages. Under the Court's scheduling order discovery has ended, the dispositive motion deadline has passed, and trial is scheduled for May 2021. Allowing Kovalchuk to amend now would prejudice Wilmington as it would likely entail additional discovery and motion practice when the parties should be preparing for trial.
Finally, the fourth factor, which concerns the availability of a continuance to cure any prejudice, is also unfavorable to Kovalchuk. If the Court permits Kovalchuk to amend his complaint it will also have to allow Wilmington discovery related to any such amendments, thereby unnecessarily delaying trial in this case. Under the circumstances, the fourth factor weighs against Kovalchuk's request to amend his pleadings.
In sum, all four "good cause" factors weigh against Kovalchuk's requested amendment. For this additional reason, his objection is overruled.
CONCLUSION
Having considered Plaintiff's Objection, (Dkt. #28), and Defendant's Response, (Dkt. #31), the Court adopts the Magistrate Judge's Report and Recommendation, (Dkt. #27), as the findings and conclusions of the Court.
It is therefore ORDERED that Defendant Wilmington Savings Fund Society, FSB, a Trustee of Upland Mortgage Loan Trust A's Motion for Judgment on the Pleadings, (Dkt. #17), is GRANTED. Plaintiff's claims are DISMISSED WITH PREJUDICE.
All relief not previously granted is DENIED.
So ORDERED and SIGNED this 16th day of March, 2021.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Christine A. Nowak, UNITED STATES MAGISTRATE JUDGE
Pending before the Court is Defendant Wilmington Savings Fund Society, FSB a Trustee of Upland Mortgage Loan Trust A's ("Defendant") Motion for Judgment on the Pleadings ("Motion") [Dkt. 17]. Having considered Defendant's Motion, Plaintiff's Response [Dkt. 22], Defendant's Reply [Dkt. 23], and all other relevant filings, the Court recommends that Defendant's Motion for Judgment on the Pleadings [Dkt. 17] be GRANTED .
BACKGROUND
Plaintiff Moses Kovalchuk ("Plaintiff") initiated this lawsuit in the 431st Judicial District Court for Denton County, Texas on July 9, 2019, seeking relief from the foreclosure of his home, the real property located at 6068 Northview Court, Aubrey, Texas 76227 ("the Property"), and to reinstate his defaulted Loan [Dkt. 3]. Plaintiff purchased the Property on October 30, 2007 by executing a promissory note (the "Note") in the amount of $880,000.00, which was secured by a Deed of Trust (the "Deed of Trust") [Dkts. 3 at 2; 17 at 3]. On that same day, the Deed of Trust was assigned to JP Morgan Chase Bank, N.A. ("JPMC") (the "First Assignment") [Dkts. 17 at 3; 17-1]. Approximately eleven years later, in April 2018, Plaintiff defaulted on his mortgage [Dkt. 17 at 4-5].1
On January 9, 2019, the Deed of Trust was assigned by JPMC to Defendant (the "Second Assignment") [Dkts. 17 at 3-4; 17-4]. As such, Defendant is the mortgagee under the Deed of Trust. Plaintiff alleges he was not informed of the transfer of his Loan to Defendant [Dkt. 3 at 2]. Defendant argues to the contrary that Plaintiff was provided a Notice of Sale of Ownership [Dkts. 17 at 4; 17-4]. Defendant further contends its predecessor JPMC sent Plaintiff a Notice of Default on June 8, 2018, informing Plaintiff of his past due payments and how to cure default [Dkt. 17-7]. Plaintiff failed to cure the default, and JPMC proceeded to file a "Notice of Substitute Trustee's Sale" on December 10, 2018 (the First "Notice of Substitute Trustee's Sale") [Dkt. 17-8]. A foreclosure sale was scheduled to take place on January 2, 2019 [Dkt. 17-8]. On December 11, 2018, JPMC also sent Plaintiff the first "Notice of Acceleration" informing Plaintiff of the scheduled sale [Dkt. 17-9]. To stop the sale, on January 1, 2019, Plaintiff filed a bankruptcy petition in the Eastern District of Texas [Dkt. 17-10]. This bankruptcy was dismissed on January 28, 2019, with prejudice to refiling for ninety days [Dkts. 17-10 at 3; 17-12]. Thereafter, on March 6, 2019, Defendant sent Plaintiff a second "Notice of Acceleration" and "Notice of Substitute Trustee Sale" (the "Second Notice of Sale") [Dkt. 17-13]. The second foreclosure sale was scheduled for April 2, 2019 [Dkt. 17-13 at 5].
Relevant to the Court's consideration herein, Plaintiff argues that the Court should not consider the aforementioned notices; Plaintiff contends the notices were "prepared by a predecessor mortgagee, [JPMC]" and have not been properly authenticated, and as well, the notices have not been established as "the business records of Defendant as to qualify under the Business Exception Provision" [Dkt. 22 at 5].
Plaintiff did not cure the default but did submit a loan modification application to Defendant before this second scheduled sale, which was denied in a "Cancellation Notice" on March 8, 2019 [Dkt. 17-14]. The reason given for denial of Plaintiff's application for mortgage assistance was that his initial application was received within thirty-seven (37) days of the scheduled foreclosure sale [Dkt. 17-14 at 2].
Next, on April 2, 2019, the date of the second scheduled foreclosure sale, Plaintiff filed yet another bankruptcy petition [Dkts. 17-16; 17-17; 17-18]. Notwithstanding the filing, Defendant proceeded with the foreclosure sale [Dkt. 17-6]. Plaintiff's second bankruptcy petition was ultimately dismissed on April 11, 2019, as Plaintiff was "an individual who was not eligible to be a debtor in a Title 11 case at the time of the filing of the voluntary petition in this case on April 2, 2019" [Dkt. 17-19 at 2]. In concert with dismissal, the bankruptcy court directed: "the automatic stay invoked under 11 U.S.C. § 362(a) by the unauthorized filing of the petition by the [Plaintiff] in the above referenced case is hereby ANNULLED so as to validate any and all actions taken by creditors of the [Plaintiff] since the filing of the petition on April 2, 2019" [Dkt. 17-19 at 3].
Plaintiff then filed the instant suit in the 431st Judicial District Court for Denton County, Texas on July 9, 2019, seeking to set aside the foreclosure sale [Dkt. 3 at 7]. The gravamen of Plaintiff's complaint is that Defendant failed to provide proper notice of the sale of the Loan, failed to provide proper pre-foreclosure notice, failed to cancel the foreclosure sale despite notice of his bankruptcy filing, and made false representations related to the Loan [Dkt. 3]. Based on this factual predicate, Plaintiff asserts claims for negligence, violations of the Texas Property Code, breach of contract, wrongful foreclosure, and quiet title [Dkt. 3 at 2-7].
Defendant was served on February 25, 2020 [Dkt. 1 at 2] and removed the instant action to the Eastern District of Texas Sherman Division on March 6, 2020 [Dkt. 1]. Upon removal to the Eastern District of Texas, the Court ordered "the Parties to replead as necessary to comply with the Federal Rules of Civil Procedure and the Court's Local Rules[,]" and gave Plaintiff thirty days to file an amended complaint [Dkt. 6 at 1 (emphasis in original)]; Plaintiff chose not to replead. Per the Scheduling Order in this case, Plaintiff's deadline to amend his pleadings with leave of court was August 28, 2020 [Dkt. 12 at 1], and the deadline to file dispositive motions was December 7, 2020 [Dkt. 12 at 2]. Each of these deadlines has now passed.
Defendant removed this action on the basis of diversity jurisdiction, arguing that Defendant Christopher Waid-Nato was improperly joined to destroy diversity [Dkt. 1 at 3]. On June 27, 2020, Plaintiff filed a Notice of Voluntary Dismissal of Defendant Waid-Nato [Dkt. 19]. Due to the dismissal of Defendant Waid-Nato, all Parties agree complete diversity exists.
On June 16, 2020, Defendant moved for Judgment on the Pleadings [Dkt. 17]. Plaintiff filed a "Memorandum Response to Defendant's Motion for Judgment on the Pleadings" ("Response") on July 7, 2020 [Dkt. 22]. On July 13, 2020, Defendant filed its "Reply to Plaintiff's ‘Memorandum Response to Defendant's Motion for Judgment on the Pleadings’ " ("Reply") [Dkt. 23]. Defendant's Motion for Judgment on the Pleadings is ripe for consideration.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(c), "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." FED. R. CIV. P. 12(c). "A motion for judgment on the pleadings pursuant to Rule 12(c), [ ] is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Turner v. Criswell , No. 4:19-CV-00226-ALM-CAN, 2020 WL 1901086, at *3 (E.D. Tex. Jan. 6, 2020) (citing Rosa v. Morvant , No. CIV.A. 9:06-CV-252, 2007 WL 3132613, at *1 (E.D. Tex. Oct. 23, 2007) ; Hebert Abstract v. Touchstone Properties, Ltd. , 914 F.2d 74, 76 (5th Cir. 1990) ), report and recommendation adopted , No. 4:19-CV-226, 2020 WL 613963 (E.D. Tex. Feb. 10, 2020). A "judicially noticed fact" is one that "is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot be questioned." Taylor v. Charter Med. Corp. , 162 F.3d 827, 829 (5th Cir. 1998) (citing FED. R. EVID. 201(b) ); Karch v. JPMorgan Chase Bank, N.A. , 2017 WL 1426755, at *2 (E.D. Tex. Apr. 20, 2017).
Rule 12(c) motions are governed by the same standards applicable to motions under Rule 12(b)(6). Johnson v. Pharm. USA, Inc. , 758 F.3d 605, 610 (5th Cir. 2014) ; Jay v. Specialized Loan Servicing LLC , No. 4:19-CV-680-RWS-KPJ, 2020 WL 5637934, at *2 (E.D. Tex. Aug. 28, 2020), report and recommendation adopted , No. 4:19-CV-00680-RWS-KPJ, 2020 WL 5632658 (E.D. Tex. Sept. 21, 2020). "Accordingly, a court considering such a motion must assume the truth of all material facts alleged in the complaint, as well as all reasonable inferences that can be drawn from such facts." Id. (citing St. Paul Insurance v. AFIA Worldwide Ins. , 937 F.2d 274 (5th Cir. 1991) ).
PRELIMINARY MATTER - REQUEST FOR JUDICIAL NOTICE
Defendant requests the Court take judicial notice of: (1) the Deed of Trust [Dkt. 17 at 3 n.3]; (2) the First Assignment [Dkt. 17 at 3 n.5]; (3) the Second Assignment [Dkt. 17 at 4 n.6]; (4) the Substitute Trustee's Deed [Dkt. 17 at 4 n.11]; (5) the Notice of Default [Dkt 17 at 4 n.11]; (6) the First "Notice of Substitute Trustee's Sale" [Dkt. 17 at 5 n.17]; (7) the First "Notice of Acceleration" [Dkt. 17 at 6 n.19]; (8) the Second Notice of Sale [Dkt. 17 at 7 n.27]; (9) the Cancellation Notice [Dkt. 17 at 7 n.29]; and (10) the Second Notice of Substitute Trustee's Sale [Dkt. 17 at 7 n.31]. Defendant asserts the Court may take such notice, because each document is either filed in the public record or is central to Plaintiff's claim [Dkt. 17 at 3-7]. Plaintiff objects only to the request for the Court to take judicial notice of the Notices of Acceleration and Default [Dkt. 22 at 5]. Generally, a court may "consider documents referenced in the plaintiff's complaint and central to the plaintiff's claim and may take judicial notice of publicly filed documents when analyzing a Rule 12(c) motion for judgment on the pleadings." Jay , 2020 WL 5637934, at *3 (citing Van Duzer v. U.S. Bank Nat'l Ass'n , 995 F. Supp. 2d 673, 685 (S.D. Tex. 2014) ); see also Wallace v. U.S. Bank, N.A. , No. 4:17-CV-437-ALM-CAN, 2018 WL 3321463, at *4 (E.D. Tex. Jan. 22, 2018) (Though a court generally cannot look beyond the pleadings in deciding a Rule 12(b)(6) or Rule 12(c) motion, "documents ‘attached[d] to a motion to dismiss are considered part of the pleadings, if they are referred to in the plaintiff's complaint and are central to her claims.’ "), report and recommendation adopted , No. 4:17-CV-437, 2018 WL 1224508 (E.D. Tex. Mar. 9, 2018).
Defendant refers to this exhibit as the "First Notice of Sale," however, this exhibit contains the first "Notice of Acceleration" [Dkt. 17-9].
Defendant's refer to this exhibit as the "Second Notice of Sale," the document contains both a Notice of Acceleration and a Notice of Substitute Trustee's Sale [Dkt. 17-13].
Plaintiff does not specifically delineate which notices he objects to, but it appears to be the "Notice of Default" [Dkt. 17-7]; "Notice of Substitute Trustee's Sale" [Dkt. 17-8]; "Notice of Acceleration" [Dkt. 17-9]; "Second Notice of Sale" [Dkt. 17-13].
Public Records
The Court takes judicial notice and considers in deciding the pending Motion each of the Deed of Trust, the First Assignment, the Second Assignment, the Substitute Trustee's Deed, the First Notice of Substitute Trustee's Sale, and the Second Notice of Substitute Trustee's Sale [Dkts. 17-2; 17-3; 17-4; 17-6; 17-8; 17-15]; these are public records, each having been previously filed in the real property records of Denton County. See FED. R. EVID. 201 ; Sanders v. Univ. of Texas Pan Am. , 776 F. App'x 835, 837 (5th Cir. 2019) ("The district court did not err by taking such judicial notice. It is well settled that courts may take judicial notice of matters of public record") (citing Norris v. Hearst Trust , 500 F.3d 454, 461 n.9 (5th Cir. 2007) ) ("it is clearly proper in deciding a 12(b)(6) motion to take judicial notice of matters of public record"); Crear v. JPMorgan Chase Bank, N.A. , 491 F.Supp.3d 207, 213 (N.D. Tex. 2020) (taking judicial notice of Substitute Trustee's Deed, Deed of Trust, Assignment of Note and Deed of Trust, Release of Lien, and Quitclaim Deed because they are matters of public record); Rentfrow v. JP Morgan Chase Bank, Nat'l Ass'n , No. 4:19-CV-3507, 2020 WL 1893558, at *2 (S.D. Tex. Mar. 25, 2020), report and recommendation adopted sub nom. Rentfrow v. JP Morgan Chase Bank, N.A. , No. CV H-19-3507, 2020 WL 1891848 (S.D. Tex. Apr. 16, 2020) ("[T]he Court takes judicial notice of the Deed of Trust for the subject property, the Notice of Federal Tax Lien on the subject property, and the November 1, 2014 written Loan Modification" as they are all public documents.) (internal citations omitted).
Moreover, notwithstanding Plaintiff's objection, on May 29, 2019, Plaintiff filed the "[Second] Notice of Sale" sent on March 6, 2019, as part of his "Exhibit and/or Witness List" filed in his initial Bankruptcy case in the Eastern District of Texas. See Moses Kovalchuk , Bankruptcy Petition No. 19-40036 [Dkt. 18 at 33-36]. Therefore, the Court properly takes judicial notice of the Second Notice of Sale as well [Dkt. 17-13], as such document also constitutes a public record. See Moses Kovalchuk , Bankruptcy Petition No. 19-40036 [Dkt. 18 at 33-36]; see also Crear , 491 F.Supp.3d at 213 (taking judicial notice of "filings, orders, and judgments from Plaintiff's previous lawsuits" because they are matters of public record); Pittard v. CitiMortgage, Inc. , No. SA-19-CV-1370-XR, 2020 WL 4289385, at *1 n.1 (W.D. Tex. July 24, 2020) ("The Court here takes judicial notice of the prior lawsuits and the exhibits attached to those, specifically the note and deed of trust.") (citing Krystal One Acquisitions, LLC v. Bank of Am., N.A. , 805 F. App'x 283, 287 (5th Cir. 2020) (permitting district court to take judicial notice of filings, including deeds, from prior lawsuits because such documents were public records)).
Defendant's include the same "Notice of Sale" in their exhibits attached to the Motion as the "Second Notice of Sale" [Dkt. 17-13].
Central to Plaintiff's Claim
Central to Plaintiff's negligence claim is his assertion that Defendant failed to provide adequate pre-foreclosure notice. Defendant contends it did in fact send Plaintiff each of the requisite notices [Dkt. 17 at 13-14]. Specifically, Defendant contends that Plaintiff received proper notice of default and foreclosure in the form of: "Notice of Default" [Dkt. 17-7]; the first "Notice of Substitute Trustee's Sale" [Dkt. 17-8]; the first "Notice of Acceleration" [Dkt. 17-9]; and "Second Notice of Sale" [Dkt. 17-13]. Defendant has attached purported copies of these notices as exhibits to the pending Motion [Dkts. 17-7; 17-8; 17-9; 17-13]. This Court has previously found similar notices to be central to a plaintiff's claim; however, different here, Plaintiff has filed a response, objecting to the Court's consideration of the notices as they were "prepared by a predecessor mortgagee," are unauthenticated, and do not "qualify under the Business Exception Provision" [Dkt. 22 at 5]. Plaintiff correctly contends that the unauthenticated notices submitted by Defendant are not properly before the Court, and therefore cannot be considered in ruling on the pending Motion. See Walker v. Fed. Nat'l Mortg. Ass'n , No. 1:14-CV-01602-RWS-RGV, 2014 WL 12069852, at *5 (N.D.) ("Plaintiff correctly contends that the unauthenticated notice of default and acceleration submitted by [Defendant] is not properly before the Court, and therefore, it will not be considered in ruling on the pending motion to dismiss."); Favors v. Select Portfolio Servicing, Inc. , No. 3:14-CV-00190-TCB-RGV, 2015 WL 11557583, at *7 (N.D. Ga. June 18, 2015) (same), report and recommendation adopted , No. 3:14-CV-190-TCB, 2015 WL 12434466 (N.D. Ga. July 8, 2015) ; see Scanlan v. Texas A&M Univ. , 343 F.3d 533, 536 (5th Cir. 2003) ("The fact that the plaintiffs did not object to, or appeal, the district court's consideration of those documents was central to this Court's approval of that practice.").
Although Plaintiff has objected to the Court's consideration of any notice attached to Defendant's Motion, as the Court previously noted, the Second Notice of Acceleration/Notice of Substitute Trustee's Sale, sent on March 6, 2019 [Dkt. 17-13], is properly noticed by this Court as the notice is contained in the Bankruptcy Court's public records.
See Douglas v. Wells Fargo Bank, N.A. , No. 4:19-CV-00737-ALM-CAN, 2020 WL 6588598, at *3 (E.D. Tex. Oct. 21, 2020) ("The Court likewise takes notice of the Notice of Acceleration and Notice of Substitute Trustee's Sale, as this document is ‘referred to in the plaintiff's complaint and is central to the plaintiff's claim.’ "), report and recommendation adopted , No. 4:19-CV-737, 2020 WL 6581863 (E.D. Tex. Nov. 10, 2020).
Such finding does not preclude the Court's disposition of Plaintiff's negligence claim as such claim is barred by, among other bases the economic loss doctrine.
ANALYSIS
Plaintiff's Complaint lists claims for: (1) negligence; (2) violation of the Texas Property Code § 51.022; (3) breach of contract; (4) wrongful foreclosure; (5) quiet title; and (6) attorney's fees [Dkt. 3]. Defendant asserts that each of Plaintiff's claims are subject to dismissal under Rule 12(c) [Dkt. 17 at 26].
Negligence
Defendant argues that Plaintiff's negligence claim fails for three independent reasons: (1) Plaintiff's factually devoid statements do not meet the standard set forth in Federal Rule of Civil Procedure 8 [Dkt. 17 at 10]; (2) Defendant owed no duty to Plaintiff beyond the contract at issue [Dkt. 17 at 1, 12-13]; and (3) Plaintiff's claim is barred by the economic loss rule [Dkt. 17 at 1, 10-11]. Defendant goes on to delineate that the bulk of Plaintiff's allegations concerning duty are flawed because: (1) the Deed of Trust imposes no duty on Defendant to give notice of the sale of the loan; (2) the Deed of Trust does not contain a provision about proper management of the loan and escrow account as alleged in the complaint; (3) Plaintiff's allegation that Defendant failed to meet cross-collateralization requirements is erroneous and confusing because the Deed of Trust bears no such provision and Plaintiff's Complaint has not set forth any allegation about the existence of a second property or lien for cross-collateralization; and (4) the Deed of Trust does not obligate Defendant to grant Plaintiff a loan modification [Dkt. 17 at 12-13]. Conversely, Plaintiff avers that he "has plead[ed] enough facts in order to bring forth a claim in negligence" and there are "two duties that are clearly listed in the Deed of Trust" and that are owed by Defendant—the requirement to provide notice of transfer or sale of the note and management of the loan and escrow account [Dkt. 22 at 4]. Plaintiff further counters that Defendant's duties to Plaintiff arise under the Real Estates Settlement Procedures Act ("RESPA"), rather than the Deed of Trust [Dkt. 22 at 5]. Moreover, Plaintiff argues that his negligence claim is not barred by the economic loss rule as it is not based on a contract, but rather Regulation X [Dkt. 22 at 5].
No Duty to Plaintiff
In order to state a viable negligence claim under Texas law, Plaintiff must establish "a legal duty, a breach of that duty, damages, and that the breach is the proximate cause of the plaintiff's damages." Pate v. Fed. Nat'l Mortg. Ass'n , No. 3:13-CV-3481-B, 2014 WL 12570894, at *3 (N.D. Tex. Apr. 3, 2014) (citing Nabors Drilling, U.S.A., Inc. v. Escoto , 288 S.W.3d 401, 404 (Tex. 2009) ). The existence of a duty is a threshold question of law. St. John v. Pope , 901 S.W.2d 420, 424 (Tex. 1995) (citing Bird v. W.C.W. , 868 S.W.2d 767, 769 (Tex. 1994) ). A "duty" is a legal obligation that requires a defendant to conform to a certain standard of conduct. In re Thrash , 433 B.R. 585, 596 (Bankr. N.D. Tex. 2010) (citing San Benito Bank & Trust Co. v. Landair Travels , 31 S.W.3d 312, 317 (Tex. App.—Corpus Christi 2000, no pet.) ; Wheaton Van Lines, Inc. v. Mason , 925 S.W.2d 722, 729 (Tex. App.—Fort Worth 1996, writ denied) ). The nonexistence of a duty ends the inquiry into whether negligence liability may be imposed. See St. John , 901 S.W.2d at 424 (holding summary judgment was proper because there was no duty between the plaintiff and defendant); Graff v. Beard , 858 S.W.2d 918, 919 (Tex. 1993). "A plaintiff carries the burden of proving the existence and violation of an independent obligation imposed by law." In re Thrash , 433 B.R. at 596 (citing Am. Nat'l Ins. Co. , 933 S.W.2d at 686 ; Ranger Conveying & Supply Co. v. Davis , 254 S.W.3d 471 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) ).
In the mortgage context, Texas law imposes "no ‘special’ or fiduciary relationship between a mortgage servicer and borrower or a lender and borrower." Hernandez v. Servis One, Inc. , No. 4:15-CV-00596-ALM-CAN, 2017 WL 9250371, at *7 (E.D. Tex. Feb. 6, 2017) (citing Neresova v. Suntrust Mortg., Inc. , No. 3:11-CV-976-BH, 2011 WL 13127891, at *5 (N.D. Tex. Nov. 16, 2011) ), report and recommendation adopted , No. 4:15-CV-596, 2017 WL 2644641 (E.D. Tex. June 20, 2017) ; see also Hurd v. BAC Home Servicing, LP , 880 F. Supp. 2d 747, 763-64 (N.D. Tex. 2012). To be clear, "Texas does not impose a legal duty on a mortgagee or mortgage servicer to a mortgagor that would give rise to a negligence claim." Del Rio Trejo v. Bank of Am., N.A. , No. 3:19-CV-01406-L, 2020 WL 982004, at *2 (N.D. Tex. Jan. 21, 2020) (citing Scott v. Bank of Am., N.A. , 597 F. App'x 223, 225 (5th Cir. 2014) (noting that there is no legal duty between parties to a contract absent some special relationship between them and holding that no such special relationship exists between mortgagor and mortgagee)), report and recommendation adopted as modified , No. 3:19-CV-1406-L, 2020 WL 980951 (N.D. Tex. Feb. 28, 2020). "Absent a ‘special relationship,’ any duty to act in good faith is contractual in nature and its breach does not amount to an independent tort." Escanlar v. Wells Fargo Bank, N.A. , No. 4:10-CV-498, 2011 WL 1466279, at *5 (E.D. Tex. Mar. 28, 2011), report and recommendation adopted , No. 4:10-CV-498, 2011 WL 1465518 (E.D. Tex. Apr. 18, 2011). No special relationship has been identified by Plaintiff here. The only duties owed by Defendant are spelled out in the contract between the Parties.
No Duty to Notify Plaintiff of Sale
To that end, paragraph twenty of the Deed of Trust explicitly states that "[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower" [Dkt. 17-2 at 14 (emphasis added)]. Defendant therefore had no contractual duty to give notice of the sale of the loan. Nor has any statutory duty to notify Plaintiff of the Loan's sale been identified. See Dreher v. PNC Fin. Servs. Grp., Inc. , No. CV 18-07827-MWF (FFMX), 2020 WL 6260008, at *6 (C.D. Cal. Sept. 23, 2020) (finding that defendant "had no statutory or contractual duty to notify Plaintiffs of the Loan's sale or the Deed's assignment").
No Duty to Properly Manage the Loan/Grant Loan Modification
Moreover, while Plaintiff points to paragraphs one, two, and three of the Deed of Trust to establish a duty to properly manage the loan and escrow account, no such duty is contained in the named paragraphs [Dkt. 17-2 at 6-7]. The Court also finds no provision therein mandating a loan modification be granted to Plaintiff, nor has Plaintiff identified such a provision or provided any facts supporting that Defendant "mislead" him when he applied for a loan modification [Dkt. 3 at 2-3]. As such, the Court finds no duty to "properly manage the loan" or "provide a loan modification" exists in the Deed of Trust.
No Duty to Cross-Collateralize the Loan
Plaintiff has failed to point the Court to the controlling provision in the Deed of Trust that governs cross-collateralization of the loan, and upon further inspection, the Court is unable to discern any provision even discussing cross-collateralization in the Deed of Trust. Further, as Defendant has aptly pointed out, there is only a single property at issue and thus there can be no cross-collateralization of the lien, or duty for such. See In re Highway 82/Fannin Joint Venture , 581 F. App'x 453, 454 (5th Cir. 2014) ("The Deed of Trust contained a cross-collateralization clause whereby the property served as additional collateral for any and all obligations owed by Ragon to Capital One, whether then existing or thereafter arising.").
Economic Loss Rule
Further, and the final death knell to Plaintiff's negligence claim herein, under a negligence theory of liability, a plaintiff must raise a genuine issue of material fact as to damages not barred by the economic loss rule in order to survive dismissal. Hernandez , 2017 WL 9250371, at *7. In this regard, Defendant specifically urges that Texas law unequivocally bars a negligence claim predicated on non-compliance with notice provisions under a deed of trust [Dkt. 17 at 11 n.59].
"Generally, the economic loss rule precludes recovery in tort where a plaintiff's only injury is an economic loss to the subject of a contract." Higher Perpetual Energy, LLC v. Higher Power Energy, LLC , No. 4:17-CV-00414, 2018 WL 3031780, at *6 (E.D. Tex. June 18, 2018) (citing Academy of Skills & Knowledge, Inc. v. Charter Schools, USA, Inc. , 260 S.W.3d 529, 541 (Tex. App.—Tyler 2008, pet. denied) ). "A claim is typically contractual if the only loss or damage is to the subject matter of the contract." Texas Bank and Trust Co. v. Zucker , 2019 WL 1922044, at *8 (E.D. Tex. 2019) (citing Flying J Inc. v. Media, Inc. , 373 S.W.3d 680, 685 (Tex. App.—San Antonio 2012, no pet.) ); see also Sharyland Water Supply Corp. v. City of Alton , 354 S.W.3d 407, 417 (Tex. 2011). Thus, "[t]o be entitled to damages for negligence, a party must plead and prove either a personal injury or property damage as contrasted to mere economic harm." Hernandez , 2017 WL 9250371, at *8 (citing Express One Int'l, Inc. v. Steinbeck , 53 S.W.3d 895, 898 (Tex. App.—Dallas 2001, no pet.) ). In deciding whether the economic loss rule applies to a negligence claim, the Court must "examine the source of the defendant's duty and the nature of the claimed injury." Clark v. PFPP Ltd. P'ship , 455 S.W.3d 283, 288 (Tex.App.—Dallas 2015, no pet.). The Texas Supreme Court has established the following framework for distinguishing between an action that sounds in tort and one that sounds in contract:
If the defendant's conduct—such as negligently burning down a house—would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff's claim may also sound in tort. Conversely, if the defendant's conduct—such as failing to publish an advertisement—would give rise to liability only because it breaches the parties’ agreement, the plaintiff's claim ordinarily sounds only in contract. In determining whether the plaintiff may recover on a tort theory, it is also instructive to examine the nature of the plaintiff's loss. When the only loss or damage is to the subject matter of the contract, the plaintiff's action is ordinarily on the contract.
Bowman v. CitiMortgage Inc. , No. 3:14-CV-4036-B, 2015 WL 4867746, at *3-4 (N.D. Tex. Aug. 12, 2015) (citing Formosa Plastics Corp. USA v. Presidio Engineers and Contractors, Inc. , 960 S.W.2d 41, 45 (Tex. 1998) ).
Here, none of the alleged injuries Plaintiff has suffered are independent of the Deed of Trust. The source of each of the alleged breached duties is the Deed of Trust. And Plaintiff is asking for damages based upon Defendant's alleged breach of these duties. Stated differently, Plaintiff's alleged injuries are based on the subject matter of the contract [Dkt. 17 at 11]. Plaintiff's negligence claim therefore falls squarely within the economic loss doctrine and is barred as "it does not allege a non-economic damage cause separately from the Deed of Trust." See Law v. Ocwen Loan Servicing, L.L.C. , 587 F. App'x 790, 796 (5th Cir. 2014) (dismissing negligence claim where "[plaintiff's] complaint asserts no basis for the duties [defendant] owed to [plaintiff] other than the deed of trust and various statutes"); Mitchell v. Carrington Mortg. Servs., LLC , No. 3:19-CV-1173-E, 2020 WL 825817, at *5 (N.D. Tex. Jan. 30, 2020) ("Because the potential loss of ownership and possession of the Property appears to be the sole injury relating to this claim, and because the Property was the ‘subject’ of the contracts at issue – the Note and Deed of Trust – her negligence claim is essentially nothing more than a ‘repackaged’ breach of contract claim. This claim is therefore barred by the economic loss doctrine and is subject to dismissal."), report and recommendation adopted , No. 3:19-CV-01173-E, 2020 WL 819515 (N.D. Tex. Feb. 18, 2020) ; Thicklin v. Caliber Home Loans, Inc. , No. 4:18-CV-00709-O-BP, 2019 WL 3536831, at *10 (N.D. Tex. July 16, 2019) (Dismissing negligence claim as "alleged injuries, such as attorneys’ fees and costs, loss of title, and damage to credit, are barred by the economic loss rule because they arise from the contract underlying the mortgage loan."), report and recommendation adopted , No. 4:18-CV-00709-O-BP, 2019 WL 3530637 (N.D. Tex. Aug. 2, 2019) ; Bingham v. Nationstar Mortg. LLC , No. 4:14-CV-2413, 2015 WL 12532480, at *5 (S.D. Tex. Oct. 9, 2015) (dismissing negligence claim where "the Court finds that the economic loss doctrine bars the [plaintiffs’] negligence claim" because it was based on defendant's failure to comply with notice provisions in the deed of trust).
In sum, because Plaintiff's negligence claim is based upon the contractual obligations under the Deed of Trust, the Court finds that even assuming Defendant failed to comply with any alleged duties owed under the Deed of Trust (including any non-compliance with the notice provisions in the Deed of Trust), Plaintiff's negligence claim is barred by the economic loss rule and should be dismissed. Violations of the Texas Property Code § 51.002
Separate and apart from the economic loss rule, Plaintiff argues for the first time in his Response that his negligence claim is not based upon the duties imposed by the Deed of Trust, but rather "duties imposed by Federal Law" [Dkt. 22 at 5]. See Joiner v. Greene Cty., Mississippi , No. 1:19CV14-HSO-JCG, 2020 WL 4572683, at *3 (S.D. Miss. Aug. 7, 2020) ("When a plaintiff makes new allegations for the first time in a response to a Rule 12 motion, courts generally treat such new claims as a motion to amend and consider the additional allegations raised in the response."); Cash v. Jefferson Assocs., Inc. , 978 F.2d 217, 218 (5th Cir. 1992) (holding that new allegation asserted in response to dismissal motion should have been treated as a motion to amend). Plaintiff states in his response "[t]he requirement to notify if the deed of trust has been transferred, the requirement to provide loan mitigation information, and information regarding escrow payments are all governed under Regulation X, which implements the Real Estate Settlement Procedure Act [("RESPA")]of 1974, as amended" [Dkt. 22 at 5]. Plaintiff's response includes one sentence asserting RESPA as a basis for his negligence claims, falling detrimentally short of the pleading requirements outlined in Rule 8. Federal Rule of Civil Procedure 8 states that a claim must contain "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" See Fed. R. Civ. P. 8(a)(2). Plaintiff's response makes only a conclusory reference to a possible federal claim and Defendant's duty under federal law to notify him or certain actions and provide him information, as such, the Court finds Plaintiff's claim for negligence should be dismissed on this ground as well. See King v. Life Sch. , 809 F. Supp. 2d 572, 581 (N.D. Tex. 2011) ("Here, even construed as a motion to amend, Plaintiff's response does not provide adequate factual support for her new claims and asserts them only in a vague and conclusory manner."); Wilson v. Deutsche Bank Tr. Co. Americas as Tr. for Residential Accredit Loans, Inc., Mortg. Asset-Backed Pass-Through Certificates, Series 2006-QS5 , No. 3:18-CV-0854-D, 2020 WL 570915, at *6 (N.D. Tex. Feb. 5, 2020) ("[E]ven if the court were to consider such new allegations, the [plaintiffs’] response does not cure the deficiencies in their pleading because they are too conclusory to credit.").
Defendant next argues there is no "cognizable claim" for a violation of Texas Property Code § 51.002, and such claim should rather be asserted under a wrongful foreclosure or breach of contract theory [Dkt. 17 at 2]. See Rucker v. Bank of Am., N.A. , 806 F.3d 828, 831 n.2 (5th Cir. 2015) ("[F]ederal district courts that have addressed it seem to conclude that Section 51.002(d) does not intend an independent private cause of action."). "Neither the Texas Supreme Court nor the Fifth Circuit has decided whether § 51.002 provides for a private right of action." Lott v. Wells Fargo Bank, N.A. , No. 3:17-CV-1270-L-BT, 2018 WL 4376413, at *4 (N.D. Tex. Aug. 22, 2018) (citing cases). However, numerous trial courts in the Northern and Eastern District of Texas have previously concluded that a borrower's claim that the defendant lenders "violated Tex. Prop. Code Ann. § 51.002(d) and (b)" must fail. Daniels v. Regions Bank , No. 4:19-CV-00416-P, 2019 WL 4735800, at *4 (N.D. Tex. Sept. 27, 2019) (citing Robinson v. Deutsche Bank Nat'l Tr. Co. as Tr. for Registered Holders of Long Beach Mortg. Loan Tr. 2005-WL1, Asset-Backed Certificates, Series 2005-WL1 , No. 3:18-CV-2425-D, 2019 WL 4139399, at *2 (N.D. Tex. Aug. 30, 2019) ). In Daniels , the Court explained that "[t]o the extent [borrower] intends to plead a claim for a violation of Tex. Prop. Code Ann. § 51.002(b) and (d), this claim fails as a matter of law because ‘[§] 51.002 ... does not provide a private right of action.’ " Id. (quoting Walker v. Willow Bend Mortg. Co. , No. 3:18-CV-0666-D, 2019 WL 1569683 (N.D. Tex. Apr. 11, 2019) ). Plaintiff does not argue against dismissal of this claim in his response, or otherwise contest this authority (that a violation of the Texas Property Code § 51.002 does not provide a recognized cause of action), instead agreeing that the "Court can consider the arguments made in [the violation of Texas Property Code § 51.002 ] cause of action as one of wrongful foreclosure" [Dkt. 22 at 6]. Therefore, Plaintiff's independent claim for violation of § 51.002 should dismissed.
Texas Property Code Chapter 51 provides Plaintiffs no private right of action to enforce its provisions as courts presently have interpreted it; therefore, courts construe such claims instead as those for wrongful foreclosure. See, e.g., Morse v. Ditech Fin., LLC , No. 4:16-CV-279, 2017 WL 4230550, at *11 (E.D. Tex. Sept. 25, 2017) ; Marsh v. Wells Fargo Bank, N.A. , 760 F. Supp. 2d 701, 708 (N.D. Tex. 2011) ("Breach of the trustee's duty [to comply with the notice provisions of section 51.002 ] is not itself an independent tort.... Instead, ‘breach of this duty may be stated under Texas law as a claim for wrongful foreclosure.’ "); see also Garcia v. Metro. Life Ins. Co. , No. 1:19-CV-113, 2020 WL 826642, at *4 (S.D. Tex. Jan. 27, 2020) (finding plaintiff's claim for violation of Texas Property Code § 51.002 fails as a matter of law because "there is no private right of action for violations of this statute"), report and recommendation adopted sub nom. Garcia v. Metro. Life Ins. , No. 1:19-CV-113, 2020 WL 824191 (S.D. Tex. Feb. 19, 2020).
Breach of Contract
Defendant advances that Plaintiff has inadequately pleaded his breach of contract claim because: (1) Plaintiff fails to identity the provisions in the contract that were purportedly breached; (2) Defendant provided all required notices of default and acceleration; and (3) Plaintiff's own breach of the contract precludes his claim [Dkt. 17 at 2]. Plaintiff rejoins that Defendant had a contractual obligation to provide notice of default and acceleration and failed to do so, and that Plaintiff's breach of contract claim was pleaded well enough to place Defendant "on notice of the claims against it" which is all Plaintiff has to do at this stage [Dkt. 22 at 6]. To succeed on a breach of contract claim under Texas law, Plaintiff must show: "(1) the existence of a valid contract; (2) performance or tendered performance by [Plaintiff]; (3) breach of contract by [Defendant]; and (4) damages sustained by [Plaintiff] as a result of the breach." Conn Credit I, L.P. v. TF LoanCo III, L.L.C. , 903 F.3d 493, 500 (5th Cir. 2018) (citing Smith Intern., Inc. v. Egle Grp., LLC , 490 F.3d 380, 387 (5th Cir. 2007) ).
Plaintiff also argues that his breach does not foreclose him bringing a breach of contract claim under the Fifth Circuits holding in Williams v. Wells Fargo Bank, N.A. , 884 F.3d 239, 244 (5th Cir. 2018) [Dkt. 22 at 6-7]. The Court notes that Plaintiff is correct in that the Fifth Circuit has recently clarified the impact of a borrower's default on a claim for breach of contract for failure to provide post-default notices, finding that default does not preclude such a contract claim. See Williams v. Wells Fargo, Bank, N.A. , 884 F.3d 239, 245 (5th Cir. 2018) (reasoning that "[i]f performance of the terms of a deed of trust governing the parties’ rights and obligations in the event of default can always be excused by pointing to the debtor's default under the terms of the note, the notice terms have no meaning."). Because Plaintiff alleges that Defendant violated the Deed of Trust by failing to uphold its post-default obligations (i.e., providing notice and an opportunity to cure), Plaintiff's admitted default does not by itself and/or standing alone preclude his breach of contract claim. See Lott , 2018 WL 4376413, at *2 ("Plaintiff's default on his loan obligations does not, by itself, bar his breach of contract claim based on Defendant's alleged failure to provide proper notice of the foreclosure sale, as required by the Deed of Trust."), report and recommendation adopted sub nom. , No. 3:17-CV-1270-L, 2018 WL 4362632 (N.D. Tex. Sept. 13, 2018). However, for the reasons discussed herein, the Court finds that Plaintiff's breach of contract claim should be dismissed.
Plaintiff's entire breach of contract claim reads as follows:
Plaintiff executed a Note, Deed of Trust and multiple loan extensions. At the time of filing this suit, both items are still valid contracts. The Defendant thus breached the contract with Plaintiff. As a result, Defendant has breached the written contractual agreements and covenants of the note by wrongfully foreclosing on the property without proper authority. As a result of Defendant's breach, Plaintiff has suffered harm as it has lost the benefit of the bargain between Plaintiff and unnamed third party entity and any equity in Property.
[Dkt. 3 at 5]. Plaintiff's claim is insufficiently pleaded. Plaintiff has failed to identify the specific provision or provisions of the Deed of Trust Defendant breached. See King v. Wells Fargo Bank, N.A. , No. 3-11CV-0945-M-BD, 2012 WL 1205163, at *2 (N.D. Tex. Mar. 20, 2012) ("[A] plaintiff suing for breach of contract must point to a specific provision in the contract that was breached by the defendant."), report and recommendation adopted , No. 3-11-CV-0945-M-BD, 2012 WL 1222659 (N.D. Tex. Apr. 11, 2012), aff'd , 533 F. App'x 431 (5th Cir. 2013) ; Coleman v. Bank of Am., N.A. , No. 3-11-CV-0430-G-BD, 2011 WL 2516169, at *1 (N.D. Tex. May 27, 2011) (Dismissing claim for breach of contract because "plaintiff points to no specific provision in the Deed of Trust that was breached by defendant."), report and recommendation adopted , No. 3:11-CV-0430-G BD, 2011 WL 2516668 (N.D. Tex. June 22, 2011). Plaintiff's response is also devoid of any identification of the allegedly breached provisions. Therefore, Plaintiff's claim for breach of contract should be dismissed. BAPA Brooklyn 2004, LLC v. Guild Mortg. Co. , No. 3:20-CV-254-X-BN, 2020 WL 4341126, at *4 (N.D. Tex. July 13, 2020) ("In general, a plaintiff that sues for breach of contract ‘must point to a specific provision in the contract that was breached by the defendant.’ "), report and recommendation adopted , No. 3:20-CV-00254-X-BN, 2020 WL 4338895 (N.D. Tex. July 28, 2020) ; Maples v. Barrett Daffin Frappier Turner & Engel, LLP In Rem Only , No. 4:18-CV-875-ALM-CAN, 2019 WL 6333989, at *10 (E.D. Tex. Oct. 31, 2019) ("Without identification of the provisions breached, a breach of contract claim has not been stated. The Fifth Circuit has expressly found that to survive dismissal, ‘a claim for breach of contract of a note and deed of trust must identify the specific provisions in the contract that was breached.’ ") (citing Williams v. Wells Fargo Bank, N.A. , 560 F. App'x 233, 238 (5th Cir. 2014) ), report and recommendation adopted sub nom. Maples v. Barrett Daffin Frappier Turner & Engel, LLP , No. 4:18-CV-875, 2019 WL 6311022 (E.D. Tex. Nov. 25, 2019).
The Court notes that Plaintiff's Counsel, Robert C. Newark III, has been reminded by other courts of this requirement to specify the allegedly breached provision of the Deed of Trust to properly assert a breach of contract claim. See Hayes v. Bank of Am., N.A. , No. 3:19-CV-02929-G-BT, 2020 WL 3065936, at *4 (N.D. Tex. May 15, 2020) ("To state a claim for breach of the Deed of Trust, Plaintiff must point to the specific provision of the Deed of Trust that was breached, and he has not done so."), report and recommendation adopted , No. 3:19-CV-02929-G-BT, 2020 WL 3065520 (N.D. Tex. June 9, 2020) ; Del Rio Trejo v. Bank of Am., N.A. , No. 3:19-CV-01406-L, 2020 WL 982004, at *4 (N.D. Tex. Jan. 21, 2020) (same), report and recommendation adopted as modified , No. 3:19-CV-1406-L, 2020 WL 980951 (N.D. Tex. Feb. 28, 2020).
Wrongful Foreclosure
As to Plaintiff's wrongful foreclosure claim, Defendant contends Judgment on the Pleadings is proper as Plaintiff's complaint lacks the "requisite factual allegations and Plaintiff's purported notice of bankruptcy was insufficient to prevent the foreclosure" [Dkt. 17 at 2]. Specifically, "the April 2, 2019, foreclosure sale was proper and Defendant did not violate the automatic bankruptcy stay because such stay was annulled by the Second Bankruptcy Dismissal Order pursuant to the court's authority" [Dkt. 17 at 20]. To the contrary, Plaintiff interprets the bankruptcy court's order to mean that "any action taken by a Creditor including the Defendant after the filing of the petition is nullified[,]" and as such, "defendant should have rescinded the Trustee's Deed under Texas Law" [Dkt. 22 at 7].
"The purpose of a wrongful foreclosure action is to protect mortgagors against those sales where, through mistake, fraud, or unfairness, the sale results in an inequitably low price." In re Keener , 268 B.R. 912, 921 (Bankr. N.D. Tex. 2001). To establish a claim for wrongful foreclosure, Plaintiffs must demonstrate: "(1) a defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the defect and the grossly inadequate selling price." Thomas v. Bank of New York Mellon , No. 3:12-CV-4941-M-BH, 2013 WL 4441568, at *9 (N.D. Tex. Aug. 20, 2013) (quoting Hurd v. BAC Home Loans Servicing, LP , 880 F.Supp.2d 747, 766 (N.D. Tex. 2012) (citing Sauceda v. GMAC Mortg. Corp. , 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, no pet.) )). A claim for wrongful foreclosure "based merely on showing a defect in the foreclosure process" is not enough. Watson v. J.P. Morgan Chase Bank, N.A. , No. 3:19-CV-2612-G, 2020 WL 3036658, at *4 (N.D. Tex. June 5, 2020) (citing Biggers v. BAC Home Loans Servicing, LP , 767 F. Supp. 2d 725, 729 (N.D. Tex. 2011) ). "[I]t is also necessary that there be an inadequate selling price resulting from the defect." Id.
Here, Plaintiff contends only that there was a defect in the foreclosure sale proceedings as Defendant violated the Texas Property Code § 51.022 by posting his property for sale prior to working out the disputes "regarding his loan and payment history and pending loan workout alternatives" and sold the property while there was a pending bankruptcy petition [Dkt. 3 at 4-5]. While Plaintiff concedes the Bankruptcy Court nullified the automatic stay from the second bankruptcy proceeding, he contends Defendant has misinterpreted the order and that the order also nullifies the foreclosure sale [Dkt. 22 at 7]. Plaintiff is incorrect, the order explicitly states that the stay is nullified, and that "any and all actions taken by creditors of the Debtor since the filing of the petition on April 2, 2019" are validated [Dkt. 17-19 at 3]. The bankruptcy court has the power to annul the automatic stay pursuant to 11 U.S.C § 362(d). In re Castro , No. 15-34107-H3-13, 2016 WL 520305, at *3 (Bankr. S.D. Tex. Feb. 9, 2016) (citing Jones v. Garcia (In re Jones) , 63 F.3d 411, 412 (5th Cir. 1995), cert. denied , 517 U.S. 1167, 116 S.Ct. 1566, 134 L.Ed.2d 666 (1995) (post petition foreclosure sale held by one without notice of bankruptcy is not void; automatic stay held to have been lifted retroactively)). Annulment of the stay has the effect of eliminating it retroactively. Id. at *4 ; Sikes v. Global Marine, Inc. , 881 F.2d 176 (5th Cir. 1989) ; In re Pierce , 272 B.R. 198 (Bankr. S.D. Tex. 2001). Therefore, the bankruptcy court's annulment of the automatic stay validated the foreclosure sale conducted by Defendant on April 2, 2019, which sale may therefore not serve as a basis for Plaintiff's wrongful foreclosure claim. See Rowe v. Ocwen Fed. Bank & Tr. , 220 B.R. 591, 595 (E.D. Tex. 1997) ("After finding that [plaintiff's] petition was filed in bad faith, the bankruptcy court used its authority under 11 U.S.C. § 362(d) to lift the automatic stay ab initio. By doing so, the court validated the foreclosure sale of [plaintiff's] house."), aff'd sub nom. In re Rowe , 178 F.3d 1290 (5th Cir. 1999). For the foregoing reasons, the Court finds that Plaintiff's claims for wrongful foreclosure should be dismissed.
As a further matter, the Court notes that even if there were a defect in the foreclosure, nowhere in Plaintiff's complaint or response is it alleged that the selling price was grossly inadequate. A claim for wrongful foreclosure "based merely on showing a defect in the foreclosure process" is not enough. Watson v. J.P. Morgan Chase Bank, N.A. , No. 3:19-CV-2612-G, 2020 WL 3036658, at *4 (N.D. Tex. June 5, 2020) (citing Biggers v. BAC Home Loans Servicing, LP , 767 F. Supp. 2d 725, 729 (N.D. Tex. 2011) ). "[I]t is also necessary that there be an inadequate selling price resulting from the defect." Id. Plaintiff's claim for wrongful foreclosure should also be dismissed for Plaintiff's failure to properly plead the required element of inadequate selling price. See Marsh v. U.S. Bank, N.A. , No. SA-17-CV-00847-FB, 2018 WL 1891406, at *6 (W.D. Tex. Feb. 23, 2018) ("Because Plaintiffs have not pleaded any plausible facts that their property was sold for price that could be considered as ‘grossly inadequate’ under these guideposts, their claim for wrongful foreclosure fails as a matter of law."), report and recommendation adopted sub nom. Marsh v. U.S. Bank N.A. as Tr. to LaSalle Bank Nat'l Ass'n , No. CV SA-17-CA-847-FB, 2018 WL 4178337 (W.D. Tex. July 31, 2018), aff'd sub nom. Marsh v. U.S. Bank, N.A. , 775 F. App'x 166 (5th Cir. 2019).
Quiet Title
Defendant again argues that Plaintiff has failed to meet the federal pleading requirements in asserting a quiet title action [Dkt. 17 at 2]. Defendant further asserts that Plaintiff's failure to tender the funds due under the Note at the time of foreclosure, and acknowledgement that Defendant has a lien on the Property, are fatal to his quiet title claim [Dkt. 17 at 2]. Plaintiff contends in his response that he has pleaded "facts sufficient to support this cause of action" and "the claims by the Defendant as to title are invalid and unenforceable" [Dkt. 22 at 8].
In a quiet-title action, a plaintiff must show: "(1) an interest in a specific property; (2) title to the property is affected by a claim by the defendant; and (3) the claim, although facially valid, is invalid or unenforceable." Sivertson v. Citibank, N.A. , 390 F. Supp. 3d 769, 790 (E.D. Tex. 2019) (citing Krishnan v. JP Morgan Chase Bank, N.A. , No. 4:15-CV-00632-RC-KPJ, 2017 WL 6003105, at *4 (E.D. Tex. Oct. 11, 2017) ; Cruz v. CitiMortgage, Inc. , No. 3:11-CV-2871-L, 2012 WL 1836095, at *4 (N.D. Tex. May 21, 2012) ). Texas courts have made clear that "a necessary prerequisite to the ... recovery of title ... is tender of whatever amount is owed on the note." Cook-Bell v. Mortg. Elec. Registration Sys., Inc. , 868 F. Supp. 2d 585, 591 (N.D. Tex. 2012) (citing Fillion v. David Silvers Company , 709 S.W.2d 240, 246 (Tex.App.-Houston [14th Dist.] 1986, writ ref'd n.r.e.) ); Rivera v. First Franklin Fin. Corp. , No. 1:17-CV-1064-RP, 2019 WL 2098089, at *3 (W.D. Tex. Mar. 7, 2019) (same); Beam v. Caliber Home Loans, Inc. , No. 3:19-CV-01201-M-BT, 2020 WL 5868567, at *2 (N.D. Tex. Aug. 27, 2020) ("[T]ender of the amount due under a loan agreement is a requirement to bring a quiet title claim."), report and recommendation adopted as modified sub nom. Beam v. Caliber Home Loans, Inc. , No. 3:19-CV-01201-M-BT, 2020 WL 5848973 (N.D. Tex. Oct. 1, 2020).
Different than Plaintiff's breach of contract claim, Plaintiff's failure to cure the default by tendering the amount due and owing under the Note bars Plaintiff's quiet title claim in the instant suit. See Halton v. Select Portfolio Servicing, Inc. , No. 3:18-CV-00822-G (BT), 2019 WL 1243923, at *6 (N.D. Tex. Mar. 3, 2019) ("Halton fails to allege facts demonstrating that she tendered the amount owed on the Note.... Therefore, Halton's quiet title and trespass to try title claims should be dismissed."), report and recommendation adopted , No. 3:18-CV-0822-G (BT), 2019 WL 1243143 (N.D. Tex. Mar. 18, 2019) ; Logan v. Carrington Mortg. Servs., LLC , No. CV H-18-3743, 2020 WL 853857, at *6 (S.D. Tex. Jan. 14, 2020) ("Plaintiffs’ failed attempt to pay makes summary judgment appropriate on Plaintiffs’ suit to quiet title."), report and recommendation adopted , No. CV H-18-3743, 2020 WL 837594 (S.D. Tex. Feb. 20, 2020) ; Rivera , 2019 WL 2098089, at *3 ("Plaintiffs do not allege that they are current in their mortgage payments, that they have tendered the balance due under the Loan, or that they are able to tender the balance owed under the Loan. Without these allegations, Plaintiffs fail to show that they are entitled to rescind First Franklin's sale of the Property to PNC.") (citing Fillion , 709 S.W.2d at 246 ). For Plaintiff's failure to tender the amount due under the Note, the Court finds that Plaintiff's claim for quiet title should be dismissed.
Plaintiff's claim for quiet title should alternatively be dismissed for failure to establish that he had a superior interest to the Deed of Trust. In a quiet title action, the plaintiff must prove and recover on the strength of its own title, not the weakness of its adversary's. Saddle Blanket 1316 Land Tr. v. The Bank of New York Mellon , No. 4:15-CV-401-A, 2015 WL 7736239, at *3 (N.D. Tex. Nov. 30, 2015). The plaintiff has the burden of supplying the proof necessary to establish his superior equity and right to relief. Wagner v. CitiMortgage, Inc. , 995 F. Supp. 2d 621, 626 (N.D. Tex. 2014). Here however, Plaintiff fails to allege facts that establish he has a superior title to Defendant and the Deed of Trust. See Nicobar, Inc. v. JPMorgan Chase Bank, N.A. , No. 4:15-CV-1151, 2015 WL 4545639, at *4 (S.D. Tex. July 28, 2015) ("Here, the plaintiff's claim to quiet title fails to allege any facts establishing the superiority of its title in relation to the defendant's Deed of Trust."). Plaintiff pleads only that "Plaintiff was and is the rightful owner of the Property" and "Plaintiff purchase[d] the Property by executing a Note, secured" [Dkt. 3 at 2]. None of the facts plead by Plaintiff allege that his interest is superior to the Deed of Trust. For this additional reason, Plaintiff's claim for quiet title should be dismissed. Attorney's Fees
Plaintiff has failed to plead any actual damages, and has also failed to state any viable claim, making him ineligible for an award of attorney's fees. See Hollenshead v. Bank of Am., N.A. , No. 4:18-CV-00724-ALM-CAN, 2020 WL 4615096, at *18 (E.D. Tex. May 19, 2020) ("Plaintiff's request for attorney's fees is barred because Plaintiff has not pleaded any viable causes of action or provided any other authority that would allow for recovery of attorney's fees.") (citing Billiter v. Cent. Mortg. Co. , No. CIV.A. H-14-663, 2015 WL 867443, at *7 (S.D. Tex. Feb. 17, 2015) ), report and recommendation adopted , No. 4:18-CV-724, 2020 WL 3496335 (E.D. Tex. June 29, 2020). Thus, his request for attorneys’ fees should be dismissed.
Plaintiff further requests an opportunity to amend any claims which the Court finds should be dismissed [Dkt. 22 at 8]. The sum total of Plaintiff's request is "Plaintiff would also request leave to amend any other cause of action which the Court determines should be dismissed." While leave to amend should be freely given, Plaintiff was provided an opportunity to amend upon removal [Dkt. 6]; Plaintiff elected not to file an amended complaint in response to the Court's Order and Advisory or in response to Defendant's Motion. Moreover, at this juncture, the deadline for filing amended pleadings under the scheduling order has passed [Dkt. 12]. Furthermore, Plaintiff has failed to provide any particular grounds for amendment. See Fed. R. Civ. P. 7(b)(1), 15(a) ; see also U.S. ex rel. Willard v. Humana Health Plan of Tex. Inc. , 336 F.3d 375, 387 (5th Cir. 2003). "A bare request in an opposition to a motion to dismiss—without any indication of the particular grounds on which the amendment is sought ... does not constitute a motion within the contemplation of Rule 15(a)." Willard , 336 F.3d at 387 (quoting Confederate Mem'l Ass'n, Inc. v. Hines , 995 F.2d 295, 299 (D.C. Cir. 1993) ). Because Plaintiff's request lacks particularity regarding the basis on which leave should be granted, nor has he attached a proposed amended complaint, the Court finds that such request for leave to amend should be denied. See Husk v. Deutsche Bank Nat. Tr. Co. , No. CIV.A. H-12-1630, 2013 WL 960679, at *6 (S.D. Tex. Mar. 12, 2013) (denying request for leave to amend included in response to motion for judgment on the pleadings where plaintiff "has neither shown how an amended complaint would be successful nor attached a proposed amended complaints"); Prutzman v. Wells Fargo Bank, N.A. , No. CIV.A. H-12-3565, 2013 WL 4063309, at *5 (S.D. Tex. Aug. 12, 2013) ("[Plaintiff's] request for leave to amend [contained in his response to defendant's motion for judgment on the pleadings] lacks particularity regarding the basis for which leave should be granted" and plaintiff failed to attach a proposed amended complaint.).
CONCLUSION AND RECOMMENDATION
For the foregoing reasons, the Court recommends that Defendant's Motion for Judgment on Pleadings be GRANTED [Dkt. 17]. The Court recommends that Plaintiffs’ claims be DISMISSED WITH PREJUDICE .
Within fourteen (14) days after service of the magistrate judge's report, any party must serve and file specific written objections to the findings and recommendations of the magistrate judge. 28 U.S.C. § 636(b)(1)(C). In order to be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the magistrate judge's report and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific.
Failure to file specific, written objections will bar the party from appealing the unobjected-to factual findings and legal conclusions of the magistrate judge that are accepted by the district court, except upon grounds of plain error, provided that the party has been served with notice that such consequences will result from a failure to object. See Douglass v. United Services Automobile Ass'n , 79 F.3d 1415, 1417 (5th Cir. 1996) (en banc), superseded by statute on other grounds , 28 U.S.C. § 636(b)(1) (extending the time to file objections from ten to fourteen days).