### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 15

- 20774

LSR CONSULTING, L L C , as Assignee of Vinay K. Karna and Mridula L. Karna , Plaintiff

–

Appellant ,

versus WELLS FARGO BANK, N.A. , Defendant

– Appellee

.

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:14

- CV

- 1337

Before KING , SMITH , and COSTA , Circuit Judges

. JERRY E. SMITH, Circuit Judge : LSR Consulting, LLC (“LSR”), appeals a summary judgment denying its wrongful

- foreclosure claim s and award ing a ttorneys’ fees to Wells Fargo Bank, N.A. (“Wells Fargo”). Finding no error, we affirm. United States Court of Appeals Fifth Circuit 

### FILED August 31, 2016

Lyle W. Cayce Clerk Case: 15-20774 Document: 00513660066 Page: 1 Date Filed: 08/31/2016No. 15

- 207 7 4

2 I. In 2006, Mridula Lal Karna and Viday Karna bought real property on Wichita Street (the “Wichita Property”) and Cleburne Street (the “Cleburne Property”) in Houston

. The original mortgagee of the Wichita Property was Wells Fargo ; the original mortgagee of the Cleburne Property was First National Bank of Arizona and/or Mortgage Electronic Registration Systems, Inc., as its nominee. Wells Fargo was the mortgage servicer for both loans.
The Karnas defaulted , a nd in 2010 Wells Fargo foreclosed

. Before the foreclo sures, the Karnas, through counsel, requested that Wells Fargo verify the debt as to both properties under the Fair Debt Collections Practices Act (“FDCPA”) , 15 U.S.C. § 1692 g
. Wells Fargo responded but , according to LSR , failed to provide accurate and re quired information.
In 2014 , the Karnas assigned their alleged claims against Wells Fargo to their wholly owned company, LSR , agreeing to pay LSR the first $2,000 of any funds it collected from Wells Fargo and permitt ing LSR to retain the funds necessary t o reimburse it for collection expenses , including attorneys’ fees

. Shortly thereafter, LSR sued in state court, and Wells Fargo removed. Wells Fargo and t he district court read LSR ’s complaint as assert ing causes of action for wrongful foreclosure and violation of the FDCPA. 1 After discovery and motion practice, the court granted summary judgment to Wells Fargo and awarded it attorneys’ fees , both of which LSR appeals. 2

1 As noted below, LSR contends, for the first time in its reply brief , that it never claimed violation of § 1692g , even though it alleged a violation of that section in its original complaint : “Although the Karnas specifically requested debt verification pursuant to 15 U.S. C . § 1692g, Wells Fargo failed to provide it

. ”

2 LSR does not appeal the summary judgment on the FDCPA claim s
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3 II. Wells Fargo is entitled to summary judgment on the wrongful

- fore

closure claim because LSR cannot establish an essential element. Under Texas law, a party alleging wrongful foreclosure must prove a defect in the foreclosure

- sale proceedings. 3 Texas requires strict compliance with a deed of trust , 4 including notice conditions, 5 and LSR maintains that Wells Fargo did not notify the Karnas of its intent to accelerate the maturity of the in debted

ness before acceleration and foreclosure as required by the deeds of trust

. 6
The district court concluded that the summary judgment evidence refutes the Karnas ’ allegations of lack of notice. [T] he evidence in the record shows that Defendant served Plaintiff with Notices of Default and Intent to Foreclose for the Cleburne Property via certified mail on August 6, 2009, September 20, 2009, and N ovem ber 14, 2009. Likewise, the evidence in the record shows that Defen

dant served Plaintiff with Notices of Default and Intent to Fore close on the Wichita Property via certified mail on October 18, 2009 and

3 Charter Nat’l Bank

- Hou ston v. Stevens , 781 S.W.2d 368, 371 (Tex. App.

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

4 Univ

. Sav. Ass’n v. Springwoods Shopping Ctr

. , 644 S.W.2d 705, 706 (Tex. 1982) (“Texas courts have consistently held that the terms set out in a deed of trust must b e strictly followed.”).

5 Hous

. First Am

. Sav. v. Musick , 650 S.W.2d 764, 768 (Tex. 1983) (“Compliance with the notice condition contained in the deed of trust and as prescribed by law is a prerequisite to the right of the trustee to make the sale.”)

. 6 De eds of Trust ¶ 22: Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 unless Applicable Law provides otherwise). T he notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or befor e the date specified in the notice will result in acceleration of the sums secured by this Security Instrument and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court a ction to assert the non

- existence of a default or any other defense of Borrower to acceleration and sale. Case: 15-20774 Document: 00513660066 Page: 3 Date Filed: 08/31/2016No. 15

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4 November 15, 2009. Additionally, the record contains prima facie evi

dence of Defendant’s service via the affidavit of Matthew Cunningham of National Default Exchange, LP on May 4, 2010 for the Wichita Prop

erty, and the affidavit of Mikey Wilkinson of Brice, Vander Linder & Wernick, P.C. on May 6, 2010 for the Cleburne Property. As such, the Court finds no genuine issue of material fact as to whether Defendant served Plaintiff with the required Notices of Default and Intent to Fore

close documents prior to accelerating Plaintiff’s indebtedness and pro ceed ing with a foreclosure sale. LSR Consulting, LLC v. Wells Fargo Bank, N.A. (S.D. Tex. Aug. 20, 2 015) (cita

tions omitted).
LSR , however, disputes the admissibility of the evidence that the district court relied on in concluding that Wells Fargo n otified the Karnas of its intent to accelerate. T he Notices of Default and Intent to Foreclose (the “notices”) , LSR maintains, are inadmissible because they are not self

- authenticating and were not authenticated by any witness testimony attached to the motion s for summary judgment

. 7 T hey are also irrelevant, because what matters is wheth

er the notices were sent , and there is al legedly no summary judgment evi dence that the y were. LSR regards the declarations authen ti cating the notices as inadmissible because, contrary to Local Rule 7.7 and the trial court’s Rule 4.K, they were not filed with or attached to the motions for sum mary judgment. 8

7 Wells Fargo apparently intended , but failed , to attach declarations authenticating the notices to its motion s for summary judgment, which were filed on March 10 and 18, 2015 , respectively

. On March 26, 2015, Wells Fargo filed declarations by Michael Burns and Becky Howell

. Burns’ s declaration purported to authenticate the notices for the Cleburne Property ; Howell’s declaration purported to authenti cate certain documents related to the Wichita Prop erty but not the notices. O n April 16, 2015, Wells Fargo filed declarations by Andrea Kruse authenticat ing the notices for both p ropert ies

. L SR u r g ed that all of th o se declarations were inadmissible . In deciding the motions for summary judgment, t he district court relied on the declarations by Burns and Howell but not the late

- filed declarations by Kruse.

8 S.D. Tex. Civ. R. 7.7 (“If a motion or response requires consideration of facts not appear ing of record, proof by affidavit or other documentary evidence must be filed with the motion or response.”); Rule 4.K (“All exhibits (contract, leases, affidavits, etc.) referred to in briefs must be attached to the brief.”)

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5 And it urges the inadmissibility of the affidavits by Cunningham and Wilkin

son because their statements regarding notice were conclus ional and based on information and belief rather than personal knowledge.
LSR’s objections are without me rit

. First, it is not dispositive whether the notices in their current form are admissible in evidence

. A t the summary judg ment stage, materials cited to support or dispute a fact need only be capa ble of being “ presented in a form that would be admissible in evidence.” F ED

. R. C IV

. P. 56(c)(2). T he various declarations filed by Wells Fargo demon strate that t he notices can be presented in a form admissible in evidence

. So the dis trict court properly considered the notices. Second, the court did not err in relying on the affidavits by Cunningham and Wilkinson. Although LSR objects that the affidavits were not based on
per sonal knowledge , they contain sufficiently specific statements for the dis

trict court to infer th at the affiant s had personal knowledge of the facts at

tested therein. LSR also objects that the affidavits’ statements about the mailing of the notice s “have a conclusory character” and that “ bald assertions of ultimate facts are ordinarily insufficient to support summary judgment

. ” Gossett v. Du

- Ra

- Kel Corp. , 569 F.2d 869, 872 (5th Cir. 1978) (emphasis added)

. Even if true, LSR’s a ver ments do not suffice to disqualify the affidavits, because the affidavits’ statements do not stand alone. Wells Fargo provided supporting documentation. Third, we reject LSR’s assertion that the Karnas’ testimony of non receipt of the notices creates a fact issue requiring trial

. Paragraph fifteen of the deeds of trust requires only constructive notice : “ A n y notice to Borrower in connection with [the deeds of trust] shall be deemed to have been given to Borrower when mailed by first class mail . . . .” Th at paragraph is thus akin to S ection 51.002(e) of the Texas Property Code, which defines service of Case: 15-20774 Document: 00513660066 Page: 5 Date Filed: 08/31/2016No. 15

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6 cert ain foreclosure

- related notices to be “complete when the notice is deposited in the United States mail, postage prepaid and addressed to the debtor at the debtor’s last known address.” In interpreting S ection 51.002(e), Texas courts have recognized that th e dispositive inquiry “is not receipt of notice, but, rather, service of notice.” 9 For that reason, they have held there to be no genuine dispute as to the sending of notice s required under S ection 51.002 when the sole contravening evidence is the homeown er’s affidavit asserting non

- receipt. Adebo , 2008 WL 2209703, at *4. LSR points out that in Sauceda v. GMAC Mortgage Corp. , 268 S.W.3d 135, 140 (Tex. App.

— Corpus Christi 2008, no pet.), the court held that the home owner’s testimony of non

- receipt created a fact issue as to whether he was served with the statutorily required notice

. 10 Unlike here and in Ad e b o , how

ever, in Sauceda the mortgage servicer provided no supporting documentation showing that it had served notice

. 11 Applying the reasoning in Adebo to the notice and service provisions under the instant deeds of trust, we can only conclude that t he Karnas’ self

-

9 Adebo v. Litton Loan Servicing, L. P. , 2008 WL 2209703, at *4 (Tex. App.

— Houston [ 1st Dist. ] 2008, no pet.) (mem. op.) ; see also WMC Mortg

. Corp. v. Moss , 2011 WL 2089777, at *7 (Tex. App.

— Houston [1st Dist.] 2011, no pet.) (“The purpose of notice under Section 51.002 is to provide a minimum level of protection to the debtor, and actual receipt of the notice is not necessary.”); Onuwuteaka v. Cohen , 846 S.W.2d 889, 892 (Tex. A pp.

— Houston [1st Dist.] 1993, writ den ied) (“The general purpose of [S ection 51.002] is to provide a mini

mum level of protection for the debtor, and it provides for only constructive notice of the fore

closure.” (emphasis added)).

10 In addition, LSR cites Coleman v. Wells Fargo Bank , No. 09

- 03

- 598 CV, 2004 WL 2750240 (Tex. App.

— Beaumont 2004, no pet. ) (per curiam) (mem. op.), holding that by filing two affidavits averring non

- receipt of the notice required by Section 51.002(d), the home

owner had raised a question of material fact defeating summary judgment. The Coleman court, how ever, ignored Section 51.002(e). So it is not directly relevant.

11 The record in Saucedo contained two notices sent by the mortgage servicer and received by the homeowner, but t h o se notices failed to comply with all the statutory require

ments or the notice requirements in the deed of trust. Case: 15-20774 Document: 00513660066 Page: 6 Date Filed: 08/31/2016No. 15

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7 serving protestations of non

- receipt of notice do not create a genuine dispute as to whether Wells Fargo mailed notices of intent to ac celerate. We thus affirm summary judgment on the wrongful

- foreclosure claims.

III. Under the F DCPA , a court may award the defen dant attorneys’ fees upon “a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment.” 15 U.S.C. § 1692k(a)(3). The district court made the requisite factual finding. But LSR contends that, as a matte r of law, the evidence is insufficient to support that finding. The court did not abuse its discretion in finding that LSR brought its FDCPA claim in bad faith and for the purpose of harassment. 12 The provision that LSR alleges Wells Fargo violated applies only to debt collectors. But t he plain language of the FDCPA makes clear that a debt collector does not include entities such as Wells Fargo , which do not have as their principal purpose “the collection of any debts” and which do not “regularly collect[] or attempt[] to collect, directly or indirectly, debts owed or due or asserted to be owed or due another

. ” 15 U.S.C. § 1692a(6). “ T he legislative history

. . . indicates conclu

sively that a debt collector does not include . . . a mortgage servicing com pany . . . .” 13 LSR sued Wells Fargo just days before the four

- year statute of limi

tations was set to expire with respect to the properties and has also sued numerous other lenders in connection with four other properties under the same theory , likewise j ust days before the running of limitations. LSR, moreover, is merely the assignee of claims with regard to the properties. The

12 See Perry v. Stewart Title Co. , 756 F.2d 1197, 1211 (5th Cir.), modified on other grounds , 761 F.2d 237 (5th Cir. 1985) (reviewing § 1692k(a)(3) attorneys’ fee determination for an abuse of discretion).

13 Id. at 1208. Case: 15-20774 Document: 00513660066 Page: 7 Date Filed: 08/31/2016No. 15

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8 orig inal holders of the claims are LSR’s principals, the Karnas , who, it could be infer red , assigned their claim solely to lim it their personal liability , should Wells Fargo refuse to settle . Under these circumstances, there is no abuse of discretion in imposing attorneys’ fees

. In its reply brief, LSR says that Wells Fargo is not entitled to attorneys’ fees under § 1692k because it never asserted a claim against Wells Fargo under the FDCPA. Because LSR failed to raise th at argument in its initial brief on appeal, it has been waived. See Flex Frac Logistics, L.L.C. v. N.L.R.B. , 746 F.3d 205, 208 (5th Cir. 2014).
AF FIRMED. Case: 15-20774 Document: 00513660066 Page: 8 Date Filed: 08/31/2016