IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-50929

Summary Calendar

STEVEN T. WALTNER; SARAH V. WALTNER,

Plaintiffs–Appellants,

v.

AURORA LOAN SERVICES, L.L.C.; MORTGAGE ELECTRONIC 

REGISTRATION SYSTEMS, INCORPORATED; CODILIS & STAWIARSKI, 

P.C.; FEDERAL HOME LOAN MORTGAGE CORPORATION,

Defendants–Appellees.

Appeal from the United States District Court

for the Western District of Texas

USDC No. 1:11-CV-502

Before WIENER, OWEN, and HAYNES, Circuit Judges.

PER CURIAM:*

Plaintiffs–Appellants Steven and Sarah Waltner (the Waltners) brought 

this action following foreclosure on their Texas home. The Waltners appeal 

the district court’s grant of judgment as a matter of law on their promissory 

estoppel claim in favor of Defendants–Appellees Aurora Loan Services, L.L.C. 

(Aurora) and Federal Home Loan Mortgage Corporation (FHLMC). They also 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

December 31, 2013

Lyle W. Cayce

Clerk

 

 Case: 12-50929 Document: 00512485355 Page: 1 Date Filed: 12/31/2013
No. 12-50929

appeal various discovery and evidentiary rulings and pre-trial orders, 

including the district court’s dismissal of their constitutional challenges and 

wrongful foreclosure claim against Aurora, FHLMC, and Defendants–

Appellees Mortgage Electronic Registration Systems, Incorporated (MERS) 

and Codilis & Stawiarski, P.C. (C&S). We affirm the district court’s 

judgments.

I

The undisputed facts are as follows. In 2006, the Waltners purchased a 

home in Georgetown, Texas with a mortgage from Aegis Wholesale 

Corporation (Aegis). MERS was listed as the beneficiary on the Deed of Trust. 

In April 2008, the Waltners encountered financial hardship and sought a loan

modification from Aurora, which had become their loan servicer. While 

modification discussions were still ongoing, the Waltners received a notice of 

default from Aurora in September 2008.

The Waltners subsequently entered into negotiations directly with 

FHLMC, which was authorized to work with the Waltners in modifying their 

loan. In January 2009, the Waltners reached an oral agreement to modify the 

loan to a 447-month fixed-rate loan at an interest rate of 4.375 percent and 

first payment due April 1, 2009. However, in April 2009, the loan modification 

documents received by the Waltners indicated a modification to a 447-month 

fixed-rate loan at 4.5 percent annual interest with first payment due June 1, 

2009. The Waltners rejected the proposed modification as not reflecting the 

earlier oral agreement. The property was foreclosed on and sold to FHLMC on 

June 2, 2009.

The Waltners then brought this action against Aurora and FHLMC for 

promissory estoppel and against all defendants for a declaratory judgment of 

wrongful foreclosure. The complaint also sought a declaratory judgment that 

2

 Case: 12-50929 Document: 00512485355 Page: 2 Date Filed: 12/31/2013
No. 12-50929

sections 51.0001(4)(B) and 51.0075(c) of the Texas Property Code are 

unconstitutional.

The defendants were served on October 31 and November 1, 2011. On 

November 22, 2011, C&S moved to dismiss for failure to state a claim. On 

November 30, 2011, Aurora and MERS filed similar motions to dismiss. On 

December 5, 2011, the Waltners moved for entry of default and default 

judgment against all defendants under Federal Rule of Civil Procedure 55. The 

Clerk of the Court entered default against FHLMC the following day. 

However, the district court subsequently vacated the entry of default against 

FHLMC and denied the Waltners’ motions for entry of default and default 

judgment. The district court then ruled on the defendants’ motions to dismiss, 

including FHLMC’s motion filed December 22, 2011, and granted the motions 

of C&S and MERS in their entirety, and the motions of Aurora and FHLMC in 

part, leaving only the Waltners’ promissory estoppel claim.1

The parties subsequently engaged in contentious discovery, resulting in 

motions by the Waltners to compel production, to strike discovery responses, 

and for sanctions. The district court granted in part and denied in part the 

Waltners’ motions to compel, denied their motion to strike the responses of 

Aurora and FHLMC, granted the motion by Aurora and FHLMC to amend 

their responses, and carried the Waltners’ motion for sanctions until the end 

of trial. Both sides also filed motions for summary judgment, which the district 

court declined to decide.

At trial, the Waltners called only themselves as witnesses. During the 

course of their testimony, they sought to admit various documents, including 

1 In the same order, the district court also denied the Waltners’ objection and motion 

for reconsideration of the district court’s order denying entry of default and default judgment 

against the defendants and the Waltners’ objections and motions to strike the defendants’ 

motions to dismiss.

3

 

 Case: 12-50929 Document: 00512485355 Page: 3 Date Filed: 12/31/2013
No. 12-50929

a “call sheet” of notes taken by Sarah Waltner during telephone conversations 

with representatives of FHLMC, a Consolidated Notes Log related to the 

Waltners’ loan, a Loss Mitigation Document Order Form sent from Aurora to 

attorney Ruth Ruhl, and a series of e-mails between Ruhl and Aurora, which 

the district court excluded as hearsay. At the close of the Waltners’ case, 

Aurora and FHLMC moved for judgment as a matter of law under Rule 50(a), 

which the district court granted. This appeal followed.

II

The Waltners first challenge the district court’s order denying their 

motion for entry of default and default judgment against the defendants. The 

district court held that the Waltners were not entitled to an entry of default or 

default judgment against Aurora, MERS, or C&S because those defendants 

had filed motions to dismiss prior to the entry of any default judgment, and 

thus were not in default. With respect to FHLMC, the district court held that 

it was not in default because it was a federal institution that had sixty days to 

answer rather than twenty-one. In its order denying the Waltners’ motion for 

reconsideration, the district court also held that even if the untimeliness of the 

motions of Aurora, MERS, and C&S did not preclude entry of default, the 

district court would still not enter default or a default judgment against them 

because the Waltners had failed to show prejudice from the delay. Similarly, 

the district court held that even if FHLMC was not a United States agency, it 

would not enter default judgment against FHLMC for the same reason.

We review the district court’s denial of the Waltners’ motion for entry of 

default and default judgment against the defendants for abuse of discretion.2 

“[A] party is not entitled to a default judgment as a matter of right, even where 

2 Settlement Funding, LLC v. TransAmerica Occidental Life Ins. Co., 555 F.3d 422, 

424 (5th Cir. 2009); Lacy v. Sitel Corp., 227 F.3d 290, 291-92 (5th Cir. 2000). 

4

 

 Case: 12-50929 Document: 00512485355 Page: 4 Date Filed: 12/31/2013
No. 12-50929

the defendant is technically in default.”3 Moreover, “default judgments are a 

drastic remedy, not favored by the Federal Rules and resorted to by courts only 

in extreme situations.”4 Indeed, we have held that when the plaintiff has made 

no showing of prejudice stemming from the defendant’s delay, a default 

judgment “should not be granted on the claim, without more, that the 

defendant ha[s] failed to meet a procedural time requirement.”5

The Waltners do not argue that they were prejudiced by the defendants’ 

delays. Instead, they assert that a showing of prejudice is not required for an 

entry of default or default judgment. In regard to FHLMC in particular, they 

also argue that FHLMC was required to make a showing of good cause in order 

to have the clerk’s entry of default set aside.

First, although a showing of good cause is required under Rule 55(c) to 

set aside an entry of default, an entry of default against a defendant does not 

automatically entitle the plaintiff to a default judgment because the decision 

whether to grant a default judgment remains in the discretion of the district 

court.6 Second, while the Waltners are correct that a showing of prejudice is 

not required for an entry of default or default judgment, the district court may 

still consider the absence of prejudice to the plaintiff in deciding whether to 

exercise its discretion to grant a default judgment.7 Given the lack of prejudice 

to the Waltners from the defendants’ delays, we hold that the district court did 

3 Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (internal quotation marks omitted).

4 Id (internal quotation marks omitted). 

5 Mason & Hanger-Silas Mason Co. v. Metal Trades Council of Amarillo, Tex. & 

Vicinity, AFL-CIO, 726 F.2d 166, 168 (5th Cir. 1984) (per curiam). 

6 FED. R. CIV. P. 55(b)(2); see also Jefferson v. La. Dept. of Pub. Safety & Corr., 401 F. 

App’x 927, 929 (5th Cir. 2010) (per curiam) (unpublished) (“Entering a judgment based on 

the default is at the discretion of the court, which means [plaintiff] was not entitled to a 

default judgment simply because of the earlier entry of a default.”).

7 Mason, 726 F.2d at 168; see also FED. R. CIV. P. 55(b)(2).

5

 

 Case: 12-50929 Document: 00512485355 Page: 5 Date Filed: 12/31/2013
No. 12-50929

not abuse its discretion in denying the Waltners’ motion for entry of default 

and default judgment against the defendants.8 

III

The Waltners’ next contend that the district court erred in granting 

Aurora and FHLMC judgment as a matter of law under Rule 50(a) on the 

Waltners’ promissory estoppel claim. “We review the district court’s grant of 

judgment as a matter of law de novo, applying the same legal standards as the 

district court.”9 Judgment as a matter of law is appropriate when “a party has 

been fully heard on an issue during a jury trial and the court finds that a 

reasonable jury would not have a legally sufficient evidentiary basis to find for 

the party on that issue.”10 In reviewing the district court’s grant of judgment 

as a matter of law, we “consider all of the evidence in the light most favorable 

to the nonmovant, drawing all factual inferences in favor of the non-moving 

party, and leaving credibility determinations, the weighing of evidence, and 

the drawing of legitimate inferences from the facts to the jury.”11 

Under Texas law, a plaintiff must prove four elements in order to prevail 

on a claim of promissory estoppel: “(1) a promise (2) that the promisor should 

have expected would lead the promisee to some definite and substantial injury, 

(3) that such an injury occurred, and (4) that injustice may be remedied only 

8 Because we uphold the district court’s denial on the district court’s alternative 

ground—that it would have denied the Waltners’ motion for default judgment against the 

defendants due to the lack of prejudice to the Waltners even if Aurora, MERS, and C&S were 

in default and FHLMC was not a United States agency for purposes of service of process—

we do not address whether the district court erred in holding that Aurora, MERS, and C&S 

were not in default and that FHLMC is a United States agency for purposes of service of 

process.

9 Gonzalez v. Fresenius Med. Care N. Am., 689 F.3d 470, 474 (5th Cir. 2012).

10 FED. R. CIV. P. 50(a).

11 Gonzalez, 689 F.3d at 474-75 (internal quotation marks omitted).

6

 

 Case: 12-50929 Document: 00512485355 Page: 6 Date Filed: 12/31/2013
No. 12-50929

by enforcing the promise.”12 Damages on a promissory estoppel claim are 

limited to reliance damages.13 In granting judgment as a matter of law, the 

district court held that the Waltners had not provided “any evidence of any 

measure of damages within . . . Texas law for [their] cause of action in the 

record which would allow the jury to do anything but speculate.” We agree.

Reliance damages cover “expenditures made in preparation for 

performance or in performance,” and essentially seek to restore the status quo 

by putting the injured party in the “position . . . he would have been [in] had 

the contract not been formed.”14 They differ from expectation damages, which 

seek to give the injured party the benefit of the bargain by putting him in the 

position he would have been in had the contract as promised been performed.15 

At trial, the evidence presented by the Waltners on damages related to the lost 

use of the property, both as a rental property and a personal use property, loss 

of equity in the house, increase in the loan balance, and negative impact on the 

Waltners’ credit. These are not reliance damages.

First, none is an expenditure in preparation for performance or in 

performance of the alleged promised loan modification. To the extent that the 

Waltners’ argument is that they rejected the loan modification offered in April 

2009 in reliance on the earlier promised modification, their reliance was not 

reasonable—and thus any resulting damages unrecoverable—because they 

knew at that point that Aurora and FHLMC did not intend to perform under 

12 Hartford Fire Ins. Co. v. City of Mont Belvieu, 611 F.3d 289, 295 (5th Cir. 2010) 

(citing Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982)).

13 Fretz Constr. Co. v. S. Nat. Bank of Hous., 626 S.W.2d 478, 483 (Tex. 1981); Allied 

Vista, Inc. v. Holt, 987 S.W.2d 138, 142 (Tex. App.—Houston [14th Dist.] 1999, pet. denied) 

(“[I]n a claim for promissory estoppel, only reliance damages are allowed.”).

14 Bechtel Corp. v. CITGO Prods. Pipeline Co., 271 S.W.3d 898, 926 (Tex. App.—Austin 

2008, no pet.). 

15 Id. at 927.

7

 

 Case: 12-50929 Document: 00512485355 Page: 7 Date Filed: 12/31/2013
No. 12-50929

the original agreement.16 Second, the Waltners offered no explanation as to 

how they would have avoided these consequences had there been no promise 

of a forthcoming loan modification. Absent the promise to modify their loan, 

the Waltners would still have been in default, and there was no evidence at 

trial as to any action the Waltners would have taken to avoid the various 

negative consequences they asserted had they not received the promise to 

modify their loan. Thus, as the district court held, any award of damages by 

the jury would be based on pure speculation. 

The damages claimed by the Waltners, which resulted from their 

continued default and the ultimate foreclosure on the property, are instead 

consequential losses caused by the failure of Aurora and FHLMC to perform 

as promised. However, consequential losses are a form of expectation damages 

and are not recoverable on a claim of promissory estoppel.17 Accordingly, we 

hold that, on the record before us, Aurora and FHLMC were entitled to 

judgment as a matter of law.

IV

Related to the Waltners’ argument that the district court erred in 

granting Aurora and FHLMC judgment as a matter of law are challenges to 

the district court’s denial of the Waltners’ motion for summary judgment and 

to the court’s discovery and evidentiary rulings. With respect to the Waltners’ 

motion for summary judgment, “[o]nce trial began, the summary judgment 

motion[] effectively became moot.”18 “Because a trial followed the denial of 

16 See Conner v. Lavaca Hosp. Dist., 267 F.3d 426, 436 (5th Cir. 2001) (holding that 

there could be no reasonable reliance on original contract following its repudiation).

17 Bechtel Corp., 271 S.W.3d at 928 (“Such [consequential] damages are in the nature 

of expectancy damages: they place [plaintiff] in the position it claims it would have been had 

the promises been kept. Such damages are not recoverable through promissory estoppel.”).

18 Wells v. Hico Indep. Sch. Dist., 736 F.2d 243, 251 n.9 (5th Cir. 1984).

8

 

 Case: 12-50929 Document: 00512485355 Page: 8 Date Filed: 12/31/2013
No. 12-50929

summary judgment, we lack jurisdiction to consider the denial of summary 

judgment.”19 We review the district court’s discovery and evidentiary rulings 

for abuse of discretion.20 “Control of discovery is committed to the sound 

discretion of the trial court and its discovery rulings will be reversed only 

where they are arbitrary or clearly unreasonable.”21 We “will reverse a 

judgment on the basis of an evidentiary ruling only where the challenged 

ruling affects a substantial right of a party.”22 

A

The Waltners challenge the district court’s grant of the motion by Aurora 

and FHLMC to amend their responses and concurrent denial of the Waltners’ 

motions to strike the defendants’ deficient discovery responses, and the district 

court’s failure to consider the Waltners’ motion for sanctions, including its 

refusal to deem the unsigned discovery responses of Aurora and FHLMC to the 

Waltners’ requests for admissions as admitted by operation of law. However, 

while the Waltners assert that these discovery rulings allowed the “dilatory 

tactics” of Aurora and FHLMC to go largely unchecked and left the Waltners 

with inadequate discovery, they make no specific arguments as to the arbitrary 

nature or clear unreasonableness of any of the district court’s individual

discovery rulings. Accordingly, these claims are waived for inadequate 

briefing.23

Even if the Waltners’ challenges to the district court’s discovery rulings 

were not waived, a review of the district court’s decisions indicates that they 

19 Brown v. Slenker, 220 F.3d 411, 421 n.9 (5th Cir. 2000).

20 Gomez v. St. Jude Med. Daig Div. Inc., 442 F.3d 919, 927 (5th Cir. 2006).

21 Mayo v. Tri-Bell Indus., Inc., 787 F.2d 1007, 1012 (5th Cir. 1986).

22 Washington v. Dep’t of Transp., 8 F.3d 296, 299 (5th Cir. 1993).

23 See Young v. Repine (In re Repine), 536 F.3d 512, 518 n.5 (5th Cir. 2008).

9

 

 Case: 12-50929 Document: 00512485355 Page: 9 Date Filed: 12/31/2013
No. 12-50929

were neither arbitrary nor clearly unreasonable. The grounds for the 

Waltners’ motion to strike the defendants’ discovery responses were that they 

were unsigned and/or unsworn. While Federal Rule of Civil Procedure 26(g)(2) 

provides that the court “must strike” unsigned discovery responses “unless a 

signature is promptly supplied after the omission is called to the attorney’s or 

party’s attention,”24 the district court found that Aurora and FHLMC had 

“promptly corrected [the technical deficiencies] when the matter was brought 

to their attention.” Additionally, the district court found that the Waltners had 

suffered no prejudice from the technical deficiencies in the discovery responses. 

Denying the Waltners’ motion to strike the technically deficient responses of 

Aurora and FHLMC and allowing them to amend their responses to correct 

those deficiencies, which did not prejudice the Waltners, is neither arbitrary 

nor clearly unreasonable, and is not an abuse of discretion.25

Relatedly, the Waltners’ challenge to the district court’s decision not to 

deem admitted the deficient discovery responses of Aurora and FHLMC also 

fails. The Waltners argue that the responses should have been deemed 

admitted under Federal Rules of Civil Procedure 36(a) and 37(a)(4).26 

However, Rule 36(b) provides that a matter deemed admitted under subsection 

(a) is not established if the court permits the admission to be amended, which 

it may do if it “would promote the presentation of the merits” and if “it would 

[not] prejudice the requesting party in maintaining or defending the action on 

24 FED. R. CIV. P. 26(g)(2).

25 See Coco v. United States, 569 F.2d 367, 372 (5th Cir. 1978) (holding that district 

court did not abuse its discretion in denying a motion to strike when movant failed to show 

prejudice).

26 See FED. R. CIV. P. 36(a)(3) (“A matter is admitted unless, within 30 days after being 

served, the party to whom the request is directed serves on the requesting party a written 

answer or objection addressed to the matter and signed by the party or its attorney.”); FED.

R. CIV. P. 37(a)(4) (“[A]n evasive or incomplete disclosure, answer, or response must be 

treated as a failure to disclose, answer, or respond.”).

10

 

 Case: 12-50929 Document: 00512485355 Page: 10 Date Filed: 12/31/2013
No. 12-50929

the merits.”27 Because the district court properly permitted Aurora and 

FHLMC to amend their discovery responses, the responses are not admitted 

under Rule 36(a) and the district court did not abuse its discretion in not 

deeming their responses admitted and declining to rule on the Waltners’ 

motion for sanctions until the end of the case.

B

The Waltners’ evidentiary challenges are myriad. They contest the 

exclusion as hearsay of Sarah Waltner’s “call sheet,” the Consolidated Notes 

Log, the Loss Mitigation Document Order Form, and a series of e-mails 

between Ruhl and Aurora. They also challenge the admission of defense 

exhibits of the Note on the Waltners’ loan and the Deed of Trust. However, 

none of this evidence goes to the Waltners’ failure to show reliance damages. 

Thus, even if the district court abused its discretion in excluding the Waltners’ 

various exhibits and in admitting the defendants’ exhibits, Aurora and 

FHLMC would still be entitled to judgment as a matter of law because the 

Waltners failed to establish any reliance damages from the non-performance 

of the defendants’ promise. Therefore, we hold that the Waltners are not 

entitled to reversal of the judgment against them on the basis of any of the 

challenged evidentiary rulings.

V

The Waltners additionally contest the district court’s dismissal of their 

constitutional challenges to sections 51.0001(4)(B) and 51.0075(c) of the Texas 

Property Code as well as their wrongful foreclosure claim. We review the 

district court’s grant of a motion to dismiss de novo.28 We will “affirm the 

district court’s grant of a motion to dismiss ‘when the plaintiff has not alleged 

27 FED. R. CIV. P. 36(b).

28 Raj v. La. State Univ., 714 F.3d 322, 329-30 (5th Cir. 2013).

11

 

 Case: 12-50929 Document: 00512485355 Page: 11 Date Filed: 12/31/2013
No. 12-50929

enough facts to state a claim to relief that is plausible on its face or has failed 

to raise its right to relief above the speculative level, on the assumption that 

all the allegations in the complaint are true (even if doubtful in fact).’”29

With regard to their constitutional challenge, the Waltners cite no legal 

authority for the proposition that sections 51.0001(4)(B) and 51.0075(c) are

unconstitutional and assert simply that they are “obnoxious to the Texas and 

U.S. Constitutions.” They do not identify the constitutional provisions that 

sections 51.0001(4)(B) and 51.0075(c) allegedly violate or explain how their 

complaint adequately stated plausible claims regarding such violations. Given 

the lack of argument on this issue, it is waived.30

With respect to the Waltners’ dismissed wrongful foreclosure claim, 

Texas law requires that a plaintiff bringing a wrongful foreclosure claim show 

that there was (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.31 The latter two elements need not be 

shown if the borrower instead establishes that the lender deliberately chilled 

the bidding at the foreclosure sale.32

The Waltners’ complaint fails to allege facts supporting either a grossly 

inadequate selling price or the deliberate chilling of bidding at the foreclosure 

sale. Instead, the Waltners’ claim is that the defendants proceeded with the 

foreclosure sale without authority and on the basis of various 

29 Id. at 330 (quoting Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012)).

30 See Young v. Repine (In re Repine), 536 F.3d 512, 518 n.5 (5th Cir. 2008).

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

Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, no 

pet.).

32 Id. at 727; Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex. App.—

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

12

 

 Case: 12-50929 Document: 00512485355 Page: 12 Date Filed: 12/31/2013
No. 12-50929

misrepresentations. As the district court correctly recognized, while such 

facts, if established as true, might provide the basis for a meritorious breach of 

a contract claim, they do not state a claim for wrongful foreclosure. 

Accordingly, the district court did not err in dismissing the Waltners’ wrongful 

foreclosure claim.

* * *

For the foregoing reasons, the judgments of the district court are 

AFFIRMED.

13

 Case: 12-50929 Document: 00512485355 Page: 13 Date Filed: 12/31/2013