Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-15-40243/USCOURTS-ca5-15-40243-0/pdf.json

Parties Involved:
Zaida Villarreal
Appellant
Wells Fargo Bank, N.A.
Appellee

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-40243

ZAIDA VILLARREAL, 

 Plaintiff–Appellant,

versus

WELLS FARGO BANK, N.A., 

 Defendant–Appellee.

Appeal from the United States District Court 

for the Southern District of Texas

Before JONES and SMITH, Circuit Judges, and FITZWATER, District Judge.*

JERRY E. SMITH, Circuit Judge:

Zaida Villarreal appeals the dismissal of her claims for breach of contract, negligence, wrongful foreclosure, and violations of the Texas Deceptive 

Trade Practices Act (“DTPA”). She also challenges the denial of her motion to 

join a non-diverse defendant. The district court committed no error, and we 

affirm. 

 

* District Judge of the Northern District of Texas, sitting by designation.

United States Court of Appeals

Fifth Circuit

FILED

February 26, 2016

Lyle W. Cayce

Clerk

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I.

Villarreal’s ex-husband, Oscar Ballesteros, borrowed $188,000 with a 

promissory note from Wells Fargo Bank, N.A. (“Wells Fargo”), in March 2007

to purchase a residence at 201 Bales Road. The obligation was secured by a 

deed of trust (“DOT”) that required payment of monthly mortgage installments 

and property insurance and taxes; it authorized Wells Fargo to foreclose upon 

default. Further, the DOT specified that Wells Fargo would send all notices to 

the Bales Road address unless notified by first-class mail to send them elsewhere. Villarreal signed the DOT but not the note. 

Villarreal and Ballesteros were in divorce proceedings when they 

defaulted on the note and DOT; Villarreal was awarded legal possession of the 

house in August 2011, shortly after the default. Villarreal then became the 

sole obligor. She cured the default in late 2011 but was $7,386.61 in default 

by May 2013. Wells Fargo sent statutorily required notices of default, intent 

to accelerate, and acceleration to the Bales residence and Ballesteros’s 

mother’s residence. Villarreal did not cure the default, so Wells Fargo foreclosed in July 2013.

Villarreal sued Wells Fargo and a local employee in Texas state court for 

breach of contract, negligence, wrongful foreclosure, and violations of the 

DTPA. Wells Fargo removed to federal court, contending that the local 

employee had been fraudulently joined to defeat diversity jurisdiction, then 

moved to dismiss Villarreal’s claims. Villarreal voluntarily dismissed the 

employee and moved to amend to expand on her substantive claims against

Wells Fargo and to add a claim against Ballesteros for intentional infliction of 

emotional distress (“IIED”). The district court denied amendment on the 

ground that it would be futile and denied the motion to join Ballesteros.

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II.

We generally review for abuse of discretion the denial of a motion to 

amend. Crostley v. Lamar Cty., Tex., 717 F.3d 410, 420 (5th Cir. 2013). A 

district court may deny a proposed amendment for futility—meaning the 

amended complaint would fail to state a claim upon which relief could be 

granted. Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 872–73 (5th Cir. 

2000). We treat the denial of a motion to amend on such basis as we treat a 

dismissal under Federal Rule of Civil Procedure 12(b)(6) and review it de novo. 

Id. at 873; Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002).

When reviewing a dismissal under Rule 12(b)(6), we must “accept[] as 

true the well-pled factual allegations in the complaint, and construe[] them in 

the light most favorable to the plaintiff.” Taylor, 296 F.3d at 378. Dismissal 

is proper “when a plaintiff fails to allege any set of facts in support of his claim 

which would entitle him to relief,” id., or “if the complaint lacks an allegation 

regarding a required element necessary to obtain relief.”1

A district court is limited to considering the contents of the pleadings 

and the attachments thereto when deciding a motion to dismiss under 

Rule 12(b)(6). FED. R. CIV. P. 12(b)(6); Collins v. Morgan Stanley Dean Witter, 

224 F.3d 496, 498 (5th Cir. 2000). The court may, however, also consider “[d]ocuments that a defendant attaches to a motion to dismiss . . . if they are referred 

to in the plaintiff’s complaint and are central to her claim.” Collins, 224 F.3d

at 498–99 (alteration in original) (quoting Venture Assocs. Corp. v. Zenith Data 

Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). 

Finally, we review for abuse of discretion the district court’s decision 

 

1 Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 384 

(5th Cir. 2009) (quoting Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995)).

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whether to allow joinder of a non-diverse, non-indispensible party. Priester v. 

JP Morgan Chase Bank, N.A., 708 F.3d 667, 672, 679 (5th Cir. 2013). “A district court abuses its discretion if it: (1) relies on clearly erroneous factual findings; (2) relies on erroneous conclusions of law; or (3) misapplies the law to the 

facts.” Id. at 672 (quoting In re Volkswagen of Am., Inc., 545 F.3d 304, 310 (5th 

Cir. 2008) (en banc)). 

A.

Under Texas law, a plaintiff alleging a breach of contract must show

“(1) the existence of a valid contract; (2) performance or tendered performance 

by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to 

the plaintiff resulting from that breach.” Wright v. Christian & Smith, 

950 S.W.2d 411, 412 (Tex. App.—Houston [1st Dist.] 1997, no writ). Villarreal 

urged that Wells Fargo breached its contract by failing to send notices to her 

new residence at 100 East Yuma Avenue and to make automatic withdrawals 

from her checking account for mortgage payments. But a plaintiff must allege 

her own performance, because “a party to a contract who is [herself] in default 

cannot maintain a suit for its breach.” Dobbins v. Redden, 785 S.W.2d 377, 

378 (Tex. 1990). 

At no point did Villarreal plead facts supporting the second element of 

her breach-of-contract claim—that she performed under the contracts. In fact, 

the notices that Wells Fargo sent to the Bales residence—and attached to its 

motion to dismiss—revealed that Villarreal was in default by over $7,300. 

Because Villarreal failed to allege any facts showing her own performance and

did not refute the facts in documents referred to in her complaint, central to 

her claims, and attached to the motion to dismiss, the dismissal of the breachof-contract claim was proper.

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B.

Under Texas law, a negligence claim “has three elements: 1) a legal duty; 

2) breach of that duty; and 3) damages proximately resulting from the breach.” 

Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998). Contractual relationships may create duties under contract and tort law, but “if the defendant’s 

conduct . . . would give rise to liability only because it breaches the parties’ 

agreement, the plaintiff’s claim ordinarily sounds only in contract.”2 

Villarreal’s negligence claim relies on the same conduct that gave rise to 

her breach-of-contract claim. She alleges Wells Fargo negligently failed to 

make automatic withdrawals from her checking account to pay her mortgage 

and negligently failed to send statutorily required notices to the Yuma residence. She never, however, asserts that either of those duties would exist but 

for the contract between her and Wells Fargo. Thus, any damages stemming 

from an alleged violation of those solely contractual duties are not redressable 

in tort, so the dismissal of the negligence claim was proper. 

C.

A wrongful-foreclosure claim under Texas law has three elements: “(i) ‘a 

defect in the foreclosure sale proceedings’; (ii) ‘a grossly inadequate selling 

price’; and (iii) ‘a causal connection between the defect and the grossly inadequate selling price.’”3 The plaintiff must allege a grossly inadequate selling 

price in “all but a specific category of cases” where the plaintiff alleges that the 

 

2 Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991); Ortega v. City Nat’l 

Bank, 97 S.W.3d 765, 777 (Tex. App.—Corpus Christi 2003, no pet.) (“Where the only duty 

between parties arises from a contract, a breach of this duty will ordinarily sound only in 

contract, not in tort.”).

3 Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013) (quoting 

Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, 

no pet.)).

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defendant deliberately chilled the bidding at the foreclosure sale.4

Villarreal alleges that Wells Fargo’s failure to send the statutorily 

required notices to the Yuma residence was the relevant defect in the foreclosure proceedings. She never alleges, however, that Wells Fargo disposed of 

the house at a “grossly inadequate selling price,” nor does she allege that Wells 

Fargo fraudulently chilled the bidding at the foreclosure sale. Thus, the

wrongful-foreclosure claim was properly dismissed.5 

D.

A claim under the DTPA has three elements: “(1) the plaintiff is a consumer, (2) the defendant engaged in false, misleading, or deceptive acts, and 

(3) these acts constituted a producing cause of the consumer’s damages.” Doe 

v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 478 (Tex. 1995) (citing 

TEX. BUS. & COM. CODE § 17.50(a)(1)). To qualify as a consumer, the plaintiff 

“must have sought or acquired goods or services by purchase or lease,” and 

those “goods or services . . . must form the basis of the complaint.” Melody 

Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 351–52 (Tex. 1987). “[T]he key 

principle in determining consumer status is that the goods or services 

purchased must be an objective of the transaction, not merely incidental to it.”6 

In Maginn, the court refused to find that the plaintiff was a consumer 

 

4 Guajardo v. JP Morgan Chase Bank, N.A., 605 F. App’x 240, 245 (5th Cir. 2015) (per 

curiam) (citing Miller, 726 F.3d at 727); see also Martins v. BAC Home Loans Servicing, L.P., 

722 F.3d 249, 256 (5th Cir. 2013); Campbell v. Bravo Credit, 2015 WL 502234, at *4 (S.D. 

Tex. Feb. 5, 2015); Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex. App.—

Houston [14th Dist.] 1989, writ denied).

5 See Miller, 726 F.3d at 727 (“Because the [chilled-bidding] exception does not apply, 

and because the Millers do not dispute their failure to have alleged a grossly inadequate 

selling price, we affirm the district court’s dismissal of their wrongful foreclosure claims.”).

6 Maginn v. Norwest Mortg., Inc., 919 S.W.2d 164, 166 (Tex. App.—Austin 1996, no 

writ) (quoting First State Bank v. Keilman, 851 S.W.2d 914, 929 (Tex. App.—Austin 1993, 

writ denied)).

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when he sought credit checks and mortgage-closing assistance (“ancillary 

banking services”) that were “typically incidental to the loan itself” and that 

“served no purpose apart from facilitating [the] mortgage loan.” Id. at 166–67. 

Villarreal bases her DTPA claims on Wells Fargo’s failure to make automatic 

withdrawals to pay the loan. Those “services” cannot form the basis of a DTPA 

claim because they are “incidental to the loan” and would “serve[] no purpose 

apart from facilitating [the] mortgage loan.” Id. Thus, the dismissal of the 

DTPA claim was proper. 

III.

“The district court, when confronted with an amendment to add a 

nondiverse nonindispensible party, should use its discretion in deciding 

whether to allow that party to be added.” Hensgens v. Deere & Co., 833 F.2d 

1179, 1182 (5th Cir. 1987). The court should “scrutinize that amendment more 

closely than an ordinary amendment” and “consider a number of factors to 

balance the defendant’s interests in maintaining the federal forum with the 

competing interests of not having parallel lawsuits.” Id. “[T]he court should 

consider the extent to which the purpose of the amendment is to defeat federal 

jurisdiction, whether plaintiff has been dilatory in asking for amendment, 

whether plaintiff will be significantly injured if amendment is not allowed, and 

any other factors bearing on the equities.” Id. 

The district court concluded that Villarreal’s purpose was to defeat diversity jurisdiction because she sought to add Ballesteros only after she had voluntarily dismissed her claims against Wells Fargo’s local employee. Additionally, the court considered that Villarreal knew of any claims she may have had 

against Ballesteros long before she sought to join him. The court found that 

Villarreal had been dilatory because more than two months passed between 

the filing of her original complaint and her attempt to join Ballesteros, against 

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whom she would have known she had an IIED claim at least as early as when

she filed her complaint.7 The court concluded that Villarreal would not be significantly injured because she could pursue her unrelated IIED claim against 

Ballesteros in state court, and she did not challenge that finding. Finally, the 

court noted that interactions between Villarreal and Ballesteros may still be 

governed by their existing divorce decree. In short, “[t]he court [] applied the 

correct legal standard, and its findings of fact were not clearly erroneous[, and 

so i]t did not abuse its discretion . . . .” Priester, 708 F.3d at 679.

AFFIRMED.

 

7 See Gallegos v. Safeco Ins. Co. of Ind., 2009 WL 4730570, at *4 (S.D. Tex. Dec. 7, 

2009) (listing additional cases in which courts found two-month delay to be dilatory).

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