IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-20363

JP MORGAN CHASE BANK, N.A.,

Plaintiff - Appellee

v.

CLASSIC HOME FINANCIAL, INCORPORATED,

Defendant - Appellant

Appeal from the United States District Court

for the Southern District of Texas

U.S.D.C. No. 4:10-CV-1358

Before BARKSDALE, PRADO, and HAYNES, Circuit Judges.

PER CURIAM:*

Classic Home Financial, Inc. (“Classic”) appeals the district court’s grant 

of summary judgment in favor of JPMorgan Chase Bank, N.A. (“JPMC”) on 

JPMC’s claims for breach of contract, breach of warranties, representations, 

and covenants, and breach of indemnification. Classic also appeals the district 

court’s grant of JPMC’s motion to strike Classic’s demand for a jury trial. We 

AFFIRM.

* 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 9, 2013

Lyle W. Cayce

Clerk

 

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I. Background

JPMC and Classic executed a Correspondent Origination and Sales 

Agreement (the “Agreement”) for the “origination, sale, and transfer of 

conventional, FHA or VA residential mortgage loans.” Pursuant to the 

Agreement, Classic represented and warranted that (i) all of the loans 

purchased by JPMC were “insurable by private mortgage insurers” and “an 

appropriate certificate or other evidence of such insurance will be issued by the 

insurer,” and (ii) the appraisal prepared in connection with the mortgaged 

property securing each loan provided an accurate estimate of the bona fide 

market value of that property. 

The Agreement obligated Classic to repurchase any loan sold to JPMC 

at an agreed-upon repurchase price if: (i) Classic breached any of its 

representations and warranties under the Agreement and failed to timely cure 

the breach; or (ii) JPMC repurchased any loan that it had conveyed, 

transferred, or assigned to a third party due to defects in the loan. The 

Agreement also stated that Classic would indemnify JPMC for any breach 

made by Classic. In addition, the Agreement provided that the enumerated 

remedies—repurchase and indemnification—were “in addition to and not to 

the exclusion of any and all rights and remedies available to [JPMC] at law or 

in equity including specific performance.” Finally, the Agreement contained a 

provision waiving both parties’ right to a jury trial for any action arising from 

the Agreement.

JPMC purchased a number of mortgage loans from Classic under the 

Agreement, including two loans—“Loan E” and “Loan F”—that are the subject 

of this appeal. For Loan E, JPMC obtained mortgage insurance from PMI 

Mortgage Insurance Co. (“PMI”). After completing a review of Loan E, PMI 

rescinded the insurance policy, determining that the property appraisal did not 

accurately reflect the value of the mortgaged property. JPMC conducted a 

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review of Loan E and, after concuring with PMI’s findings, demanded that 

Classic repurchase Loan E, but Classic failed to respond. JPMC subsequently 

foreclosed and sold the property securing Loan E and then requested that 

Classic compensate JPMC for the difference between Loan E’s repurchase price

and the amount obtained through liquidation, a sum sometimes referred to as 

the “make whole” amount. Classic failed to respond.

After purchasing Loan F from Classic, JPMC sold it to the Federal Home 

Loan Mortgage Corporation (“Freddie Mac”). Freddie Mac later requested that 

JPMC repurchase the loan after it concluded that certain borrower information

was false. JPMC conducted a review of Loan F and, after concurring with 

Freddie Mac’s findings, repurchased the loan. It demanded that Classic 

repurchase Loan F, but Classic failed to respond. After filing this action, JPMC 

foreclosed and sold the property securing Loan F; it then requested that Classic 

compensate JPMC for the “make whole” amount. 

JPMC sued Classic as to seven mortgage loans, including Loan E and 

Loan F, that it purchased from Classic. After Classic answered and requested 

a jury trial, JPMC moved for summary judgment and moved to strike Classic’s 

jury trial demand. The district court granted summary judgment in favor of 

JPMC on six of the seven mortgage loans, including Loan E and Loan F, and 

granted JPMC’s motion to strike Classic’s demand for a jury trial.1 Classic 

appeals the grant of summary judgment as to Loan E and Loan F and the grant 

of JPMC’s motion to strike Classic’s demand for a jury trial.

1 JPMC thereafter dismissed its claims with respect to the seventh loan.

3

 

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II. Standard of Review

We review a district court’s award of summary judgment de novo, 

applying the same standard as the district court. Trinity Universal Ins. Co. v. 

Emp’rs Mut. Cas. Co., 592 F.3d 687, 690 (5th Cir. 2010). Summary judgment 

is appropriate when “there is no genuine dispute as to any material fact and 

the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

The evidence must be viewed in the light most favorable to the non-moving 

party. United Fire & Cas. Co. v. Hixson Bros. Inc., 453 F.3d 283, 285 (5th Cir. 

2006). We review rulings on evidentiary objections for abuse of discretion. See 

McIntosh v. Partridge, 540 F.3d 315, 320 (5th Cir. 2008).

III. Discussion

Classic argues that the district court erred in granting summary 

judgment to JPMC on Loan E and Loan F because it contends that the 

Agreement limits JPMC to two remedies—repurchase or indemnification—

and neither are available here.2 Importantly, however, the Agreement 

specifically provided that repurchase and indemnification were “in addition to 

and not to the exclusion of any and all rights and remedies available to [JPMC] 

at law or in equity including specific performance.” JPMC was therefore 

entitled to seek compensatory damages. See Totaro, Duffy, Cannova & Co., 

L.L.C. v. Lane, Middleton & Co., L.L.C., 921 A.2d 1100, 1107 (N.J. 2007)3

(“Compensatory damages put the innocent party into the position he or she 

2 Specifically, Classic argues that repurchase is not available because JPMC waived 

its right to this remedy when it elected to foreclose and sell the properties securing Loan E 

and Loan F. Further, Classic contends that indemnification is not applicable here because

JPMC is seeking to recover for its own losses and not for the losses of a third party for which 

it is liable.

3 The Agreement provided that its terms and their interpretation would be governed 

by the laws of the State of New Jersey without giving effect to its principles of conflicts of 

law.

4

 

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would have achieved had the contract been completed. . . . Most often, courts 

award compensatory damages in a breach of contract action.”).

Classic further argues that JPMC’s recovery of compensatory damages 

on Loan E and Loan F is barred by the “election of remedies” doctrine because 

JPMC chose to foreclose and sell the properties securing Loan E and Loan F. 

“[E]lection of remedies . . . is an affirmative defense that must be pleaded.” 

Jones v. Roadway Express, Inc., 936 F.2d 789, 790 (5th Cir. 1991) (internal 

quotation marks and citation omitted); see Levy v. Mass. Accident Co., 11 A.2d 

79, 81–82 (N.J. 1940) (election of remedies is an affirmative defense); see also

Fed. R. Civ. P. 8(c) (affirmative defenses must be pleaded). Failure to plead an 

affirmative defense generally results in its waiver. See EEOC v. Serv. Temps 

Inc., 679 F.3d 323, 334 n.30 (5th Cir. 2012); Vanhoy v. United States, 514 F.3d 

447, 450 (5th Cir. 2008). Classic failed to plead “election of remedies” and it 

has therefore waived this affirmative defense; accordingly, we need not decide 

whether such a defense would have merit under these facts.

Finally, Classic argues that JPMC did not sustain its burden of proof to 

establish that Classic breached the Agreement with respect to Loan E. In 

support of its motion for summary judgment, JPMC relied on two documents: 

(1) a letter from PMI rescinding the mortgage insurance for Loan E (the “PMI 

Letter”), and (2) JPMC’s internal underwriting review of Loan E (the 

“Underwriting Revew”) with an attached declaration of a business records 

custodian.

In the PMI Letter, PMI stated that it was rescinding the mortgage 

insurance policy for Loan E, because, inter alia, Loan E’s property appraisal 

did not accurately reflect the value of the mortgaged property securing the 

loan. Although Classic argued that this document contained hearsay, the 

district court considered the PMI Letter not for the truth of the matters 

asserted therein, but as evidence that JPMC had received notice both that the 

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mortgage insurance policy was rescinded and that PMI had asserted that the 

loan file on Loan E contained a number of misrepresentations. See Snyder v. 

Whittaker Corp., 839 F.2d 1085, 1090 (5th Cir. 1988) (“[A] statement does not 

fall under the hearsay rule if it was offered, not to prove the truth of the matter 

asserted, but to prove that the statement was made.”); see also Fed. R. Evid.

801(c)(2).

In the Underwriting Review, JPMC similarly concluded that Loan E’s 

property appraisal did not accurately reflect the value of the mortgaged 

property securing the loan. The district court held that the Underwriting 

Review was admissible as a business record. See Fed. R. Evid. 803(6). Classic

contends that the Underwriting Review is inadmissible double hearsay

because it completely relied on findings contained in the PMI Letter, an 

unattached review appraisal conducted on JPMC’s behalf, and an unattached

retroactive appraisal conducted on PMI’s behalf. See Fed. R. Evid. 805; Wilson 

v. Zapata Off-Shore Co., 939 F.2d 260, 271 (5th Cir. 1991) (“Double hearsay in 

the context of a business record exists when the record is prepared by an 

employee with information supplied by another person.”). 

However, the Underwriting Review makes clear that, while it addressed 

the findings contained in the unattached appraisals and the PMI Letter, JPMC

separately conducted its own fraud investigation and made independent 

findings that did not rely on those documents. This investigation found that 

the original appraisal had relied on comparable home sales from a different 

neighborhood than the neighborhood where the mortgaged property securing 

Loan E was located. It also found that the original appraisal had concluded 

that the mortgaged property securing Loan E had increased $200,000 in value 

in the span of one month due solely to “cosmetic updates and appliances” and 

“TLC.” Based on these red flags, it concluded: “Value is not supported.” The 

district court did not abuse its discretion, therefore, in overruling Classic’s 

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“double hearsay objection” to admitting these statements from the independent 

findings of JPMC’s fraud investigation under the business records exception. 

See United States v. Gurr, 471 F.3d 144, 152 (D.C. Cir. 2006) (analyzing specific 

statements within a report for double hearsay, while finding that “most of the 

report appears to be admissible as . . . course-of-business observations under

the exception of Fed. R. Evid. 803(6)”).4

AFFIRMED.

4 Because we affirm the district court’s grant of summary judgment in favor of JPMC, 

we conclude that the challenge to the district court’s striking of the jury demand is moot. 

Additionally, in its brief, Classic argued that the award of attorney’s fees “should be 

reconsidered” “pending the outcome of this appeal.” Because we affirm in full and Classic 

makes no other challenge to the fee award, we conclude that Classic is not entitled to relief 

on this issue.

7

 

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