Opinion
3:11-CV-97-P
10-29-2020
TROY NEAVILLE, Plaintiff, v. WELLS FARGO BANK, N.A. Defendant.
ORDER
Now before the Court is Defendant's Motion for Summary Judgment, filed on July 13, 2012. (Doc. 38.) Plaintiff filed a Response on August 3, 2012. (Doc. 44.) Defendant filed a Reply on August 17, 2012. (Doc. 47.) After reviewing the parties' briefing, the evidence, and the applicable law, the Court GRANTS in part and DENIES in part Defendant's Motion for Summary Judgment.
I. Background
Plaintiff Troy Neaville ("Neaville") entered into a Note and Deed of Trust with Florida Capital Bank, N.A., d/b/a Florida Capital Bank Mortgage ("Florida Capital") on August 22, 2008 in connection with the purchase of a home in Richardson, Texas. The Deed of Trust was recorded in Dallas County on August 28, 2012. In October 2008, Neaville received a letter from the attorneys who prepared the Note and Deed of Trust indicating that Neaville needed to execute a Replacement Note and a Correction Deed of Trust in order to correct a typographical error on the August 22 Note and Deed of Trust. The sole change in the documents consisted of changing the Federal Housing Administration ("FHA") case number on the documents from 491-9272893-703 to 491-9272593-703 so as to reflect the correct FHA case number. Neaville sent in the required materials as requested.
In December 2008, Wells Fargo Bank, N.A. ("Wells Fargo") purchased Neaville's loan from Florida Capital. Florida Capital delivered the Note and Deed of Trust to Wells Fargo, which was endorsed on behalf of Florida Capital. Neaville's monthly mortgage payments under the loan were directly drawn from his bank account, including amounts payable toward taxes and insurance. Neaville's required monthly mortgage charges increased as a result of an escrow shortage from fluctuating taxes and insurance charges, but the monthly direct payments from his bank account did not increase in proportion to the increased costs. Neaville claims that he never received notice of the increase until it was too late to properly cure.
Subsequently, Wells Fargo began sending Neaville letters demanding payment and notifying Neaville of its intention to accelerate the Note. Later, attorneys for Wells Fargo sent a Notice of Acceleration and a Notice of Substitute Trustee Sale via certified mail to Neaville, which set the foreclosure sale of Neaville's home for November 2, 2010.
Once Neaville learned of Wells Fargo's intent to accelerate and possibly foreclose, Neaville contacted Wells Fargo and the parties began working towards a loan modification. Wells Fargo informed Neaville that he qualified for a loan modification, but Neaville and Wells Fargo did not consummate the transaction before Wells Fargo foreclosed on November 2. Neaville made repeated calls and requests for status updates concerning his loan, the pending loan modification process, and requirements to avoid foreclosure, but Neaville's home was sold pursuant to a trustee's sale on November 2. Following the sale, Neaville filed suit in Texas state court alleging several causes of action against Wells Fargo. Wells Fargo removed the case to the Northern District of Texas.
II. Legal Standard & Analysis
A. Summary Judgment Standard
Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the burden of informing the district court of the basis for its belief that there is an absence of a genuine issue for trial and of identifying those portions of the record that demonstrate such absence. See Celotex, 477 U.S. at 323. However, all evidence and reasonable inferences to be drawn there from must be viewed in the light most favorable to the party opposing the motion. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
Once the moving party has made an initial showing, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Fed. R. Civ. P. 56(e); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). The party defending against the motion for summary judgment cannot defeat the motion, unless he provides specific facts demonstrating a genuine issue of material fact, such that a reasonable jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment. See id. at 249-50. In other words, conclusory statements, speculation, and unsubstantiated assertions will not suffice to defeat a motion for summary judgment. See Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc); see also Abbott v. Equity Grp., Inc., 2 F.3d 613, 619 (5th Cir. 1993) ("[U]nsubstantiated assertions are not competent summary judgment evidence." (citing Celotex, 477 U.S. at 324)). Further, a court has no duty to search the record for evidence of genuine issues. Fed. R. Civ. P. 56(c)(1) & (3); see Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). It is the role of the fact finder, however, to weigh conflicting evidence and make credibility determinations. Liberty Lobby, 477 U.S. at 255.
B. Breach of Contract & Anticipatory Breach
Wells Fargo moves the Court for summary judgment on Neaville's claims of breach of contract and anticipatory breach. Under Texas law, a plaintiff must show the following elements for a breach of contract claim: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of contract by the defendant; and (4) damages sustained as a result of the breach. SLT Dealer Group, Ltd. v. AmeriCredit Fin. Servs., Inc., 336 S.W.3d 822, 828 (Tex. App.—Houston [1st Dist.] 2011, no pet.); see B&W Sup. v. Beckman, 305 S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied); City of The Colony v. North Tex. Mun. Water Dist., 272 S.W.3d 699, 739 (Tex. App.—Fort Worth 2008, pet. dism'd).
An anticipatory breach is "the repudiation of a contract before the time of performance has arrived [which] amounts to a tender of breach of the entire contract and allows the injured party to immediately pursue an action for damages." Murray v. Crest Const., Inc., 900 S.W.2d 342, 344 (Tex. 1995) (per curiam) (citing Pollack v. Pollack, 46 S.W.2d 292, 293 (Tex. Com. App. 1932)); see Tips v. Hartland Developers, Inc., 961 S.W.2d 618, 623 (Tex. App.-San Antonio 1998, no pet.) (party injured by anticipatory breach of another may elect to sue for damages under the contract).
Possession and Ownership of the Note
Wells Fargo argues that it was the holder and owner of both the note and deed of trust pursuant to which it foreclosed upon Neaville's property. (Doc. 38 at 17.) The parties do not dispute that on August 22, 2008 Neaville entered into a loan agreement with Florida Capital Bank, pursuant to which Neaville signed a note and deed of trust. The parties also do not dispute that Florida Capital sold the note and deed of trust to Wells Fargo.
Neaville contends that sale of the Note and Deed of Trust to Wells Fargo was improper. (Doc. 44 at 14.) According to Neaville, execution of new loan documents, including a Replacement Note and Correction Deed of Trust, in which the FHA case number was corrected served to void the previous loan documents and previous Deed of Trust. (Id. at 15.) However, an alteration of an instrument, to have effect, must be material. Reagan v. City Nat. Bank, N.A., 714 S.W.2d 425, 429 (Tex. App.—Eastland 1986). Furthermore, both fraudulent intent and materiality of alteration must be established before discharge from a note is permitted on grounds of alteration. Lawler v. F.D.I.C., 538 S.W.2d 245, 247 (Tex. Civ. App.—Beaumont 1976). The parties do not dispute the fact that the only change made to either the Note or the Deed of Trust was correction of a single digit in order to reflect the correct FHA case number on the corresponding documents. Accordingly, the Court finds that this did not amount to a material alteration. See Jackson v. Brackins, 409 S.W.2d 482 (Tex. Civ. App.—Houston 1966) (where grantee the day after receiving deed had her lawyer change her name from married name to maiden name in conveyance, the change in name did not preclude the grantee from becoming an owner under deed).
When a mortgage note is transferred, the mortgage or deed of trust is also automatically transferred to the note holder by virtue of the common-law rule that "the mortgage follows the note." J.W.D., Inc. v. Federal Ins. Co., 806 S.W.2d 327, 329-30 (Tex. App.—Austin 1991, no writ) (mortgage on real estate is said to "follow" promissory note it secures). The facts are not in dispute that Wells Fargo purchased the Note from Florida Capital. Accordingly, the Court finds that Wells Fargo held and owned the Note and Deed of Trust as a matter of law.
Authority to Foreclose
According to Neaville, Wells Fargo had no authority to foreclose upon his property because the original note between Neaville and Florida Capital "was superseded by the execution of the replacement note and Correction Deed of Trust" and therefore "there is no evidence that Wells Fargo had the authority to foreclose. (Doc. 44 at 16.) As discussed above, the Court finds that the Original Note and Deed of Trust were not superseded, that the August 22 Note and Deed of Trust remained effective. In the absence of any other summary judgment evidence demonstrating that Wells Fargo had no authority to foreclose, Neaville's claim that Wells Fargo lacked authority to foreclose fails as a matter of law.
Violations of the Fair Housing Act and HUD Regulations
The parties do not dispute that Neaville has no private right of action for alleged noncompliance with U.S. Department of Housing and Urban Development ("HUD") regulations. (Docs. 38 at 20 & 44 at 16.) However, Neaville claims that HUD regulations were incorporated by reference into the Deed of Trust. (Doc. 44 at 17.) In support of this proposition, Neaville cites to the following provisions contained in the Deed of Trust:
1. The Replacement Note is identified in the top right corner as FHA Case No. 491-9272593-703. (Doc. 45-1 at 8.)
2. The Note refers to the "Secretary", meaning the Secretary of Housing and Urban Development. (Id. at 8-9.)
3. The Correction Deed of Trust contains an identical FHA case number and references to the "Secretary." (Id. at 11-17.)
4. The Correction Deed of Trust is "Governed by federal law and the law of the jurisdiction in which the Property is located." (Id. at 15.)
Neaville also argues that the Note's default provision is limited by HUD regulations, citing to the following language:
If Borrower defaults...then Lender may, except as limited by regulations of the Secretary...require immediate payment in full...This Note does not authorize acceleration when not permitted by HUD regulations. (Id. at 9.)
Similar terms appear in the Deed of Trust. (Id. at 14.) According to Wells Fargo, there is no private right of action available to a mortgagor for a mortgagee's noncompliance with HUD regulations. Furthermore, Wells Fargo argues that the HUD regulations "are not incorporated into the Note or Deed of Trust. (Doc. 38 at 23.) The Court agrees. As courts have observed, the regulations promulgated under the National Housing Act govern relations between the mortgagee and the government, and give the mortgagor no claim for duty owed or for the mortgagee's failure to follow said regulations. Roberts v. Cameron-Brown Co., 556 F.2d 356, 360-61 (5th Cir. 1977); Leggette v. Wash. Mut. Bank, FA, 2005 U.S. Dist. LEXIS 24405, 2005 WL 2679699, *5 (N.D. Tex. 2005) (finding no private right of action notwithstanding referenced HUD regulations in the Note and Deed of Trust). The Court cannot identify any other terms in either the Note or Deed of Trust which specifically incorporate HUD regulations as controlling upon the agreement between Neaville and Wells Fargo. To the extent that Neaville alleges breach of contract based upon violations of HUD regulations, such claim is barred as a matter of law.
Waiver of Right to Accelerate and Foreclose
Neaville contends that Wells Fargo waived its right to accelerate and foreclose because Wells Fargo "acted inconsistently with its default powers and the 'no waiver' provision" and also "did not move to foreclose diligently." (Doc. 44 at 22.) Waiver involves the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right. See Tenneco Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996). "Under Texas law, the elements of waiver are (1) an existing right, benefit, or advantage; (2) actual or constructive knowledge of its existence; and (3) actual intent to relinquish that right." GP Plastics Corp. v. Interboro Packaging Corp., 108 Fed. Appx. 832, 836 (5th Cir. 2004). Waiver becomes a question of law when the facts and circumstances are admitted or clearly established. Jernigan v. Langley, 111 S.W.3d 153, 156-57 (Tex. 2003). Waiver is largely a matter of intent. Ustanik v. Nortex Found. Designs, Inc., 320 S.W.3d 409, 413 (Tex. App.-Waco 2010, pet. denied).
Intent must be clearly demonstrated by the surrounding facts and circumstances for implied waiver to be found through a party's actions. Id. (citing Jernigan, 111 S.W.3d at 156). Waiver of a right cannot be found if the party against whom waiver is sought says or does nothing inconsistent with its intent to rely on such right. Id. (citing Jernigan, 111 S.W.3d at 156; Palladian Bldg. Co. v. Nortex Found. Designs, Inc., 165 S.W.3d 430, 434 (Tex. App.-Fort Worth 2005, no pet.)).
In support of his waiver argument, Neaville provides evidence that Wells Fargo recommended that Neaville seek a loan modification while simultaneously failing to promptly cooperate, provide prompt requests for paperwork, or communicate with Neaville during the modification process. (Doc. 45-1 at 3-4, 21, 23, 25.) According to Neaville, "there is no conduct more inconsistent with loan acceleration and no-waiver clauses." (Doc. 45 at 23.) Neaville's only supporting case on this issue found conduct inconsistent with the right to declare a default where a commercial lender waited four years to declare a default. U.S. Bank, Nat. Ass'n v. Kobernick, 454 Fed. Appx. 307, 315 (5th Cir. 2011). No such four year period exists in this case.
Wells Fargo responds by pointing to the plain no-waiver language of the Deed of Trust, which states that "if circumstances occur that would permit Lender to require immediate payment in full, but Lender does not require such payments, Lender does not waive its rights with respect to subsequent events." (Doc. 42 at 21.) Wells Fargo also points to the following language contained in the Note:
This written loan agreement represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten agreements between the parties. (Id. at 13.)
Wells Fargo points to this contract term in support of its proposition that "subsequent oral discussions with customer service representatives do not constitute waiver." (Doc. 47 at 9.) In this case, the terms of the Deed of Trust and Note expressly preclude any such alleged waiver on the part of Wells Fargo. The plain terms of the Deed of Trust and Note make clear that Wells Fargo's forbearance from immediate foreclosure and resulting loan modification discussions did not constitute a waiver of Wells Fargo's rights concerning Neaville's payment deficiencies. Since the facts and circumstances are admitted or clearly established, the Court finds that Wells Fargo did not waive its right to accelerate or foreclose as a matter of law. Finding no waiver, and after reviewing the briefing, the evidence, and the applicable law, the Court grants Wells Fargo's Motion as to Neaville's breach of contract claims.
C. Texas Property Code Notice Requirements
Neaville claims that Wells Fargo failed to provide "the statutorily and contractually required notices and the opportunity to cure and the right to reinstate the note. (Doc. 44 at 24.) Wells Fargo claims in response that "the undisputed facts show that Wells Fargo provided Neaville with every opportunity to cure and reinstate as required by the Texas Property Code. (Doc. 38 at 26.) Texas Property Code Section 51.002 requires that a debtor receive both a notice of sale and a notice of default with an opportunity to cure. Tex. Prop. Code § 51.002(b), (d). The notice of default must provide the debtor at least 20 days to cure the default before a notice of sale can be given. Id. at § 51.002(d). The notice of sale must be provided at least 21 days before the date of the sale. Id. at § 51.002(b).
Neaville complains that "the letters of acceleration do not state the amount necessary to cure the default." (Id.) Neaville then references the letter of acceleration, dated September 20, 2010. (Doc. 42 at 70.) Notwithstanding Neaville's contention, the evidence is clear that Wells Fargo informed Neaville in that same acceleration letter that "The amount of the Debt as of the date of this notice...is $145,196.89." (Id.) Neaville has not presented any other competent summary judgment evidence tending to show that Wells Fargo did not comply with applicable notice requirements, did not provide opportunities to cure, or did not provide the right to reinstate the Note. In the absence of such evidence, the Court finds that summary judgment is appropriate as to Neaville's claims arising under the Texas Property Code.
Neaville renews his argument that Wells Fargo was not the owner of the Note and Deed of Trust in support of the notice requirements violation by Wells Fargo. Neaville's claims on this ground fail for the same reasons as those listed in other portions of this Order.
D. Unreasonable Collection Efforts
Wells Fargo moves the Court for summary judgment as to Neaville's claim of unreasonable debt collection. (Doc. 38 at 28.) According to Wells Fargo, "the facts surrounding Neaville's laissez-faire personal business practices do not constitute wonton, malicious, or intentional harassment on the part of Wells Fargo" as necessary to sustain a claim of unreasonable debt collection. (Id. at 29.) Neaville responds by arguing that several instances demonstrate how "Wells Fargo exceeded the bounds of reason." (Doc. 44 at 27.) Neaville presents evidence that he asked Wells Fargo employees why he had not received a phone call about his note, only to find that Wells Fargo claimed not to have his phone number. (Doc. 45-1 at 2.) Neaville's affidavit further outlines that he informed Wells Fargo that he had the same telephone number for six years and it was the same number as contained in the mortgage information. (Id.) Other evidence indicates that Wells Fargo assured Neaville that he qualified for a loan modification, yet he never received one. (Id. at 3.) Neaville did not timely receive loan modification materials which Wells Fargo advised him to complete and promised to send, notwithstanding Neaville's repeated requests for their delivery. (Id. at 3-4.) Neaville also presents evidence that he unsuccessfully attempted to contact Wells Fargo regarding the status of his loan and foreclosure proceedings. (Id.)
Failure to provide information is itself not considered a collection effort for purposes of common law unreasonable debt collection. See Narvaez v. Wilshire Credit Corp., 757 F.Supp.2d 621, 636 (N.D. Tex. 2010). In addition, unreasonable debt collection is an intentional tort. See Pullins v. Credit Exchange of Dallas, 538 S.W.2d 681, 683 (Tex. Civ. App.—Waco 1976). Conduct giving rise to the tort of unreasonable collection involves efforts that amount to a course of harassment that was willful, wanton, malicious, and intended to inflict mental anguish and bodily harm. Montgomery Ward & Co. v. Brewer, 416 S.W.2d 837, 844 (Tex. Civ. App.-Waco 1967). Neaville disagrees with Wells Fargo's use of the standard described in Montgomery Ward, cited above. Instead, Neaville argues that the correct standard is properly understood by the Court in the Lathram case. Employee Fin. Co. v. Lathram, 363 S.W.2d 899, 901 (Tex. Civ. App.-Fort Worth 1962), rev'd on other grounds, 369 S.W.2d 927 (Tex. 1963). The Court does not agree. In a recent opinion, the Fifth Circuit upheld summary judgment in favor of the defendant on a claim of unreasonable collection efforts where the district court applied the standard requiring a showing of wonton, malicious, or intentional harassment. De Francheschi v. BAC Home Loans Servicing, L.P., Case No. 11-10860, 2012 WL 1758597, at *3 (5th Cir. May 17, 2012) (unpublished).
"Texas courts have found debt collection efforts tortious when lenders attempted to collect debts they were not owed." Narvaez, 757 F.Supp.2d at 635 (citations omitted). Where, as in Neaville's case however, a debt is owed to the lender, a claim for unreasonable debt collection efforts cannot survive when the lender simply tries to recover the debt. Defranceschi, 2011 WL 3875338, at *6. In light of the stringent standard for unreasonable debt collection, the Court finds no evidence in the record demonstrating wanton or malicious harassment. Accordingly, summary judgment is proper as to Neaville's claim for unreasonable debt collection.
E. Texas Debt Collection Practices Act ("DCPA")
1. § 392.301(a)(8)
Subsection 392.301(a) (8) of the Texas Finance Code prohibits debt collectors from "threatening to take an action prohibited by law." Tex. Fin. Code § 392.301(a)(8). Neaville argues that Wells Fargo violated the statute because it foreclosed on Neaville's property and "was prohibited by law from foreclosing...because its rights to accelerate and foreclose had not matured because Wells Fargo did not comply with the Deed of Trust...and violated HUD regulations. (Doc. 44 at 29.) As discussed above, Neaville has failed to provide sufficient summary judgment evidence that he did not receive proper notice or that Wells Fargo otherwise lacked authority to foreclose. Therefore, Neaville has failed to show that the Wells Fargo threatened to foreclose without proper authority under the law. Accordingly, Summary Judgment as to Neaville's claim for violation of § 392.301(a) (8) under the DCPA is proper.
2. § 392.303(a)(2)
Subsection 392.303(a) (2) of the Texas Finance Code prohibits debt collectors from "collecting or attempting to collect interest or a charge, fee, or expense incidental to the [debt] obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer." Tex. Fin. Code § 392.303(a) (2). Neaville claims that Wells Fargo charged "late fees, inspection fees, foreclosure and bankruptcy expenses and statutory expenses." (Doc. 44 at 30.) Neaville claims that "[b]ecause Wells Fargo was not the owner or holder of the Replacement Note, Wells Fargo was not allowed to charge Plaintiff fees incidental to the obligation." (Id.) As noted above, the Court finds that Wells Fargo was the holder of the Note, and Neaville's claim under § 392.303(a)(2) fails as a matter of law.
3. § 392.304(a)(8), (19)
Subsection 392.304(a) (8) of the Texas Finance Code prohibits a debt collector from "misrepresenting the character, extent, or amount of a consumer debt." Tex. Fin. Code § 392.304(a)(8). Subsection 392.304(a)(19) operates effectively as a "catch-all" provision, prohibiting a debt collector from "using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer." Tex. Fin. Code § 392.304(a) (19). In order for a statement by a party to constitute a misrepresentation under the DCPA, a defendant must have made a false or misleading assertion. Reynolds v. Sw. Bell. Tel., L.P., 2006 WL 1791606, at *7 (Tex. App.-Fort Worth June 29, 2006, pet. denied).
Neaville argues that Wells Fargo "further used false representations and deceptive means to collect the debt foreclosure." (Doc. 44 at 30.) Neaville has provided evidence that Wells Fargo misled him by informing him that he qualified for a loan modification. (Doc. 45-1 at 3.) Other evidence suggests that Wells Fargo instructed Neaville to apply for a loan modification to stop the foreclosure sale. (Id.) According to Neaville, Wells Fargo delayed sending the loan modification paperwork and proved elusive upon requests for clarification of the modification's status and the necessary steps to avoid foreclosure. (Id. at 3-4.) Neaville's affidavit indicates that he mailed the loan modification paperwork to Wells Fargo on October 29, 2010, but was informed on November 2 that the paperwork was not properly signed and dated, a requirement which no Wells Fargo employee had previously instructed Neaville to complete. (Id. at 4, 25.) Neaville then claims to have re-submitted the required corrections, and called Wells Fargo repeatedly until November 17, only to discover that his home had been sold on November 2, the same date Wells Fargo instructed Neaville to re-submit his loan modification documents. (Id. at 4, 21.) Other evidence suggests that Wells Fargo sent Neaville a letter on January 3, 2011, months after his home had been sold, offering Neaville alternative options to avoid foreclosure. (Id. at 19-20.)
Based on Neaville's affidavit and the letters from Wells Fargo, there is sufficient evidence to create a genuine issue of material fact as to whether Wells Fargo misled Neaville in violation of the DCPA. Accordingly, Wells Fargo's Motion for Summary Judgment on Neaville's claims under § 392.304(a)(8) & (19) of the Deceptive Collection Practices Act is denied.
F. Negligent Misrepresentation
The elements of negligent misrepresentation are (1) the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplies "false information" for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation. Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n. 24 (Tex. 2002); Horizon Shipbuilding, Inc. v. Blyn II Holding, LLC, 324 S.W.3d 840, 850 (Tex. App.-Houston [14th Dist.] 2010, no pet.). The false information complained of in a negligent misrepresentation claim "must be a misstatement of an existing fact rather than a promise of future conduct." Scherer v. Angell, 253 S.W.3d 777, 781 (Tex. App.—Amarillo 2007, no pet.) (citing Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 379 (Tex. App.—Houston [1st Dist.] 2007, no pet.)); see also C.E. Barker, Inc. v. FirstCapital Bank, 2005 WL 1177910, at *4 (Tex. App.—Corpus Christi 2005, pet. denied).
Wells Fargo claims it made no misrepresentations to Neaville. (Doc. 38 at 30.) Specifically, Wells Fargo claims that it fully and correctly informed Neaville of his status "every step of the way." (Id.) Wells Fargo also claims that Neaville's negligent misrepresentation claim is barred by a two-year statute of limitations. (Id. at 31) Even assuming, as Wells Fargo argues, that a two-year statute of limitations applies to negligent misrepresentation, Neaville has produced summary judgment evidence that Wells Fargo made misrepresentations within the alleged period of limitations.
Wells Fargo also claims it owed no duty to Neaville. (Doc. 38 at 31.) It is well settled that a bank has a duty to use reasonable care when it provides information to customers. Fed. Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (citing Cook Consultants, Inc. v. Larson, 677 S.W.2d 718 (Tex.App.—Dallas 1984), rev'd on other grounds, 690 S.W.2d 567 (Tex. 1985), on remand, 700 S.W.2d 231, 234 (Tex.App.—Dallas 1985, writ ref'd n.r.e.); Traylor v. Gray, 547 S.W.2d 644, 656 (Tex.Civ.App.—Corpus Christi 1977, writ ref'd n.r.e.); Rosenthal v. Blum, 529 S.W.2d 102, 104-05 (Tex.Civ.App.—Waco 1975, writ ref'd n.r.e.)). --------
Neaville's claims and evidence relating to negligent misrepresentation arise from the parties' discussion of the loan modification. According to Neaville, certain alleged misrepresentations which arose during the loan modification process are actionable. (Doc. 44 at 34.) For example, Neaville presents evidence that Wells Fargo advised him to apply for a loan modification to prevent foreclosure, but then failed to send the loan modification packet it promised to send. (Doc. 45 at 3-4.) Other evidence establishes that on November 2, 2010 Wells Fargo instructed Neaville to continue to call in because his modification paperwork was still being reviewed, despite the fact that Wells Fargo foreclosed on Neaville's home the same day. (Id. at 4.) In addition, Neaville has provided evidence that he spoke with a Wells Fargo representative about one week after November 2, 2010 and was informed that his case "was being reviewed by...superiors." (Id.)
Upon review of the record it is clear that a fact question exists on the negligent misrepresentation claim. Accordingly, the Court therefore denies Wells Fargo's motion for summary judgment as to the negligent misrepresentation claim.
G. Deceptive Trade Practices Act
The parties do not dispute that Neaville is not a "consumer" for purposes of the Texas Deceptive Trade Practices Act ("DTPA"). The parties also do not dispute that Neaville has no independent cause of action under the DTPA. Section 392.404 of the Texas Finance Code includes a tie-in provision that states any violation under the Texas Debt Collection Practices Act will also constitute a deceptive trade practice actionable under the DTPA. Neaville argues he is thus entitled to damages under the DTPA for any violations that may be proven under the Debt Collection Practices Act. (Doc. 44 at 35.) Wells Fargo responds by asserting that Neaville lacks standing under the DTPA due to his lack of consumer status. (Doc. 38 at 32.) Thus the key issue in resolving the DTPA claim is whether Neaville may recover damages under the DTPA via that statute's "tie-in" provision despite the fact that Neaville is not a consumer under the DTPA.
The Fifth Circuit decided this issue in Cushman v. GC Services, L.P., 397 Fed. Appx. 24, 27-29 (5th Cir. 2010). The Fifth Circuit in Cushing held that "a claimant under the DTPA must still have 'consumer' status in order to have standing." Id. Accordingly, Neaville may not recover damages under the DTPA due to his lack of consumer status. See Marketic v. U.S. Bank Nat'l Assoc., 436 F.Supp.2d 842, 854-55 (N.D. Tex. 2006) (holding that tie in provisions do not exempt claimants from showing that they qualify as a consumer); Eads v. Wolpoff & Abramson, LLP, 538 F.Supp.2d 981, 989 (W.D. Tex. 2008) (holding that a DTPA claimant using the DCPA "tie-in" statute must still prove consumer status in order to have standing). The Court therefore grants Wells Fargo's motion for summary judgment as to any DTPA claims or assertion of damages under the DTPA.
H. Suit to Quiet Title and Trespass to Try Title
Trespass to try title and suit to quiet title are two distinct causes of action. Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.-Corpus Christi 2001). Trespass to try title is a statutory cause of action that is the method used for determining title to real property. Tex. Prop. Code § 22.001. A suit to quiet title is an equitable action that clears invalid charges against the title. Fricks, 45 S.W.3d at 327. To prevail on a trespass to try title action, a plaintiff must prove title to the property by: "(1) proving a regular chain of conveyances from the sovereign, (2) establishing superior title out of a common source, (3) proving title by limitations, or (4) proving title by prior possession coupled with proof that possession was not abandoned." Caress v. Lira, 330 S.W.3d 363, 364 (Tex. App.-San Antonio 2010) (citations omitted). To prevail on a suit to quiet title action, a plaintiff must prove the strength of their own title, not the weaknesses of their adversary's title. Fricks, 45 S.W.3d at 327.
Neaville's only foundations for the suit to quiet title and trespass to try title claims are that Wells Fargo did not own the note and that Wells Fargo improperly foreclosed because it did not own the note and did not give Neaville an opportunity to cure. As discussed above, these arguments will not withstand summary judgment. The Court therefore grants Wells Fargo's Motion with respect to the suit to quiet title and the trespass to try title claims.
I. Exemplary Damages & Malice
Wells Fargo argues that there is no evidence in the record demonstrating that it acted with malice, as required for exemplary damages. (Doc. 38 at 34.) Neaville responds by arguing that he has demonstrated "conduct establishing a pattern of extreme behavior that was not only unreasonable, but rising to the level of malice." (Doc. 44 at 39.) This conclusory statement, without any specific facts or evidence provided in support, is insufficient to defeat a motion for summary judgment. The Court does not find any evidence in the record to support a claim of malicious conduct on the part of Wells Fargo. The Court therefore grants summary judgment with respect to exemplary damages and malice.
III. Conclusion
For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendant's Motion for Summary Judgment.
IT IS SO ORDERED.
Signed this 29th day of October, 2012.
/s/_________
JORGE A. SOLIS
UNITED STATES DISTRICT JUDGE