Opinion ID: 2731117
Heading Depth: 3
Heading Rank: 1

Heading: Forbearance Agreements

Text: The Langlois assert that Wells Fargo breached the Second and Third Forbearance agreements by failing to fulfill its promise to provide them with a 5 Case: 13-10914 Document: 00512760569 Page: 6 Date Filed: 09/08/2014 No. 13-10914 loan modification at the end of each forbearance period. The district court found that the Langlois could not sustain a claim against Wells Fargo for breach of the forbearance agreements when the Langlois breached the agreements themselves by failing to make all of the scheduled payments. Under Texas law, “[i]t is a well established [sic] rule that a party to a contract who is himself in default cannot maintain a suit for its breach.” Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990) (internal quotation marks and citations omitted). The Langlois concede that they did not make the final payments under the Second and Third Forbearance agreements. Nonetheless, they argue that their failure to make these two payments does not preclude their breach of contract claim because the Wells Fargo representatives told them over the phone that these payments were not required. The Langlois’ arguments are precluded by the statute of frauds. Under Texas Law, the statute of frauds provides that, “[a] loan agreement in which the amount involved in the loan agreement exceeds $50,000 in value is not enforceable unless the agreement is in writing and signed by the party to be bound or by that party’s authorized representative.” Tex. Bus. & Com. Code Ann. § 26.02(b). Since the Langlois owed $232,500 under their original Note, this loan agreement is subject to the statute of frauds. The statute of frauds also requires that any agreement in “which a financial institution loans or delays repayment of” a loan must be in writing. Tex. Bus. & Com. Code Ann. § 26.02(a)(2). Thus, the forbearance agreements are also subject to the statute of frauds because they delayed repayment of the original loan. Accordingly, any alleged verbal modifications to the forbearance agreements are unenforceable under the statute of frauds. See Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233, 239 (5th Cir. 2014) (per curiam) (unpublished) (“The statute of frauds also applies to preclude enforcement of 6 Case: 13-10914 Document: 00512760569 Page: 7 Date Filed: 09/08/2014 No. 13-10914 oral modifications to loan agreements.” (citing Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 256 (5th Cir. 2013))); Bank of Tex., N.A. v. Gaubert, 286 S.W.3d 546, 555–56 (Tex. App. 2009).