Opinion ID: 1037562
Heading Depth: 2
Heading Rank: 3

Heading: Promissory Estoppel Claims Against BAC

Text: The Millers allege that they would have borrowed other funds, or liquidated property, to cure their default but for their detrimental reliance on repeated assurances from BAC’s agents that (i) a loan modification application was forthcoming; (ii) it would not be necessary to cure their default in the interim; and (iii) the foreclosure sale would be delayed pending disposition of their application. Adopting the magistrate judge’s recommendation, the district court dismissed these claims for common law promissory estoppel as barred by Texas’s statute of frauds. On appeal, the Millers focus their challenge on a question of civil procedure. They contend that the district court erred in ruling on the statute of frauds because the statute of frauds is an affirmative defense that BAC never 12 Case: 12-41273 Document: 00512339912 Page: 13 Date Filed: 08/13/2013 No. 12-41273 pled in an answer but, rather, raised only in its Rule 12(b)(6) motion.7 We conclude that the district court’s dismissal was not error. “[W]hen a successful affirmative defense appears on the face of the pleadings, dismissal under Rule 12(b)(6) may be appropriate.” Kansa Reins. Co. v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994) (citation omitted); see also Fisher v. Halliburton, 667 F.3d 602, 608-09 (5th Cir. 2012) (citing Kansa, 20 F.3d at 1366, and noting that a claim may properly be subject to a Rule 12(b)(6) motion where the complaint itself establishes the applicability of an affirmative defense). It is well-settled in Texas that agreements pertaining to loans in excess of $50,000 must be in writing, including modifications of those agreements. See Tex. Bus. & Com. Code § 26.02. Here, the entirety of the Millers’ allegations against BAC concern oral promises by either Ms. Masters or unnamed call center representatives. Importantly, the Millers do not allege that BAC promised to sign a prepared document that comports with Texas’s statute of frauds, which would have memorialized those promises. This omission is fatal to the Millers’ promissory estoppel claims. See Martins v. BAC Home Loans Servicing, L.P., ___ F.3d ___, 2013 WL 3213633, at  (5th Cir. June 26, 2013) (collecting citations and holding that promissory estoppel only overcomes Texas’s statute of frauds where the alleged oral agreement to modify a loan is accompanied by the lender’s or its agent’s promise to sign a written agreement validating the oral agreement that itself satisfies the statute of frauds).8 7 Unlike NDE, BAC did not file an answer to either of the Millers’ complaints. 8 Garcia v. Karam, 276 S.W.2d 255 (Tex. 1955), which the Millers cite in their opening brief, did not implicate promissory estoppel and did not arise in the home loan modification context. Garcia therefore is not inconsistent with Martins. 13 Case: 12-41273 Document: 00512339912 Page: 14 Date Filed: 08/13/2013 No. 12-41273 For these reasons, BAC was permitted to raise the statute of frauds as a defense in its Rule 12(b)(6) motion. The district court did not err in dismissing the Millers’ promissory estoppel claims on that basis. D. Wrongful Foreclosure Claims Against BAC and NDE The Millers argue that the district court erred in dismissing their common law wrongful foreclosure claims against BAC and NDE. Under Texas law, a wrongful foreclosure claim ordinarily requires a showing of (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.” Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App. 2008) (citing Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex. App. 1989)). The district court adopted the magistrate judge’s finding that the Millers had satisfied the first element of a wrongful foreclosure claim, but had not alleged facts satisfying the second and third elements. On appeal, the Millers do not dispute the magistrate judge’s finding. Instead, the Millers argue that they are entitled to a less stringent standard because they are not attacking the validity of the foreclosure sale but, rather, are seeking only compensatory damages arising from the sale. The Millers are correct that the above three-part standard—in particular the requirement to show a grossly inadequate selling price—does not apply to all wrongful foreclosure claims under Texas law. However, the cases on which the Millers rely establish only a particularized exception whereby the plaintiffmortgagor may avoid showing a grossly inadequate selling price if he or she alleges that the defendant-mortgagee (lender) deliberately “chilled” the bidding at the foreclosure sale. See, e.g., Charter Nat’l Bank, 781 S.W.2d at 371 (holding that a mortgagor is not required “to prove a grossly inadequate selling price in a situation where the bidding at a non-judicial foreclosure sale was deliberately ‘chilled’ by the affirmative acts of a mortgagee and the injured mortgagor seeks 14 Case: 12-41273 Document: 00512339912 Page: 15 Date Filed: 08/13/2013 No. 12-41273 a recovery of damages rather than a setting aside of the sale itself” (emphasis omitted)). The cases do not stand for the Millers’ broader proposition that mortgagors are entitled to a less stringent standard simply by pleading that they confirm the foreclosure sale and seek only damages arising from that sale. Here, the Millers never alleged that BAC and NDE interfered with the bidding process of the foreclosure sale. The only defects they alleged were vague failures to comply with Texas statutory requirements in effecting the sale, and that BAC had agreed to postpone foreclosure. See, e.g., Am. Compl. ¶¶ 32-33, 6568. Thus, the “chilled bidding” exception does not apply. Because the 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. E. Request for an Accounting and Distribution from NDE Finally, the Millers argue on appeal that the district court erred in denying their motion to alter or amend the judgment pursuant to Rule 59(e). In that motion, the Millers had contended to the district court that its Rule 12(b)(6) dismissal of their claims had not contained any discussion of their request for an accounting from NDE, and that NDE had not moved to dismiss their claims on any basis. In light of our holding reversing the district court’s dismissal of the Millers’ TDCA claims under § 392.304(a)(14), we also reverse the district court’s dismissal of the Millers’ request for an accounting from NDE.