Court Opinion

ID: 4995636
Source: CourtListenerOpinion
Date Created: 2021-09-29 18:00:38.453355+00
Date Added: 2024-06-11T09:15:27.529901
License: Public Domain

Case: 21-60079     Document: 00516034482         Page: 1     Date Filed: 09/29/2021

              United States Court of Appeals
                   for the Fifth Circuit
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit

                                                                               FILED
                                                                       September 29, 2021
                                  No. 21-60079                            Lyle W. Cayce
                                Summary Calendar                               Clerk

   Nicholas E. Herbert; Mary D. McCaleb Herbert,

                                                           Plaintiffs—Appellants,

                                       versus

   CitiMortgage, Incorporated, formerly known as
   CitiFinancial Mortgage Company, Incorporated;
   Citibank, N.A.; Select Portfolio Servicing,
   Incorporated; Towd Point Master Funding Trust 2018-
   PM10; U.S. Bank Trust National Association, as Trustee
   for Towd Point Master Funding Trust 2018-PM10,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                    for the Southern District of Mississippi
                            USDC No. 1:19-CV-646

   Before Smith, Stewart, and Graves, Circuit Judges.
   Per Curiam:*

          *
            Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 21-60079        Document: 00516034482             Page: 2      Date Filed: 09/29/2021

                                        No. 21-60079

           Nicholas E. Herbert and Mary D. McCaleb Herbert (“the Herberts”)
   appeal the district court’s dismissal of their breach of contract claims against
   CitiMortgage, Inc., CitiBank, N.A. (collectively “Citi”), Select Portfolio
   Servicing, Inc. (“SPS”), TOWD Point Master Funding Trust 2018-PM10,
   and U.S. Bank National Association, as Trustee for TOWD Point Master
   Funding Trust 2018-PM10 (collectively “the Trust”). According to the
   Herberts, the district court erred in finding no breach of the settlement
   agreement (hereinafter “the Settlement Agreement”) that they reached with
   Citi, the terms of which govern this appeal. We disagree and AFFIRM.
                                   I. Background
           In 2006, the Herberts refinanced the mortgage on their property in
   Biloxi, Mississippi with Wilmington Finance, Inc., receiving a loan for
   $95,200. Citi purchased the refinanced mortgage later that year, and by 2010
   their loan was in default. In 2016, the Herberts filed suit against Citi in the
   Southern District of Mississippi seeking damages. They asserted claims for
   “breach of contract, fraud, [and] violations of 12 U.S.C.A. §§ 2605 et. seq.”
   arising out of the loan and its servicing. 1 In 2017, the Herberts executed a
   Settlement Agreement with Citi, and the action was dismissed. According to
   the Settlement Agreement, Citi “den[ied] that [the Herberts’] claims ha[d]
   any merit” but still sought to compromise.
           In 2018, the Herberts filed a motion in that case seeking to enforce the
   Settlement Agreement, which was denied since it included third parties who
   were not parties to the original proceeding. In their motion, the Herberts

           1
             The Herberts also filed suit against Citi in the Chancery Court of Harrison
   County, Mississippi, and they filed for Chapter 13 bankruptcy protection in the United
   States Bankruptcy Court for the Southern District of Mississippi. These proceedings are
   mentioned in the Recitals to the Settlement Agreement, but they are not referenced in the
   pleadings.

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Case: 21-60079        Document: 00516034482             Page: 3      Date Filed: 09/29/2021

                                         No. 21-60079

   alleged that Citi improperly initiated foreclosure and sold the underlying note
   and deed to SPS, which assigned the loan to the Trust. They did not
   challenge the district court’s order denying their motion.
           In 2019, the Herberts initiated this separate lawsuit against Citi and its
   successors in the Southern District of Mississippi seeking damages. 2 They
   advanced seven causes of action arising out of the Settlement Agreement and
   the initiation of foreclosure proceedings: (1) breach of contract;
   (2) negligence and/or gross negligence; (3) negligent misrepresentation;
   (4) violation of the Fair Credit Reporting Act (“FCRA”); (5) violation of the
   Fair Debt Collection Practices Act (“FDCPA”); (6) civil conspiracy; and
   (7) negligent infliction of emotional distress. 3 According to the Herberts,
   Citi, SPS, and the Trust breached a contract by attempting to collect on the
   mortgage that the Settlement Agreement had extinguished. The Herberts
   averred that actions taken to breach this contract and collect on the debt
   supported their other claims.
           In 2020, Citi, SPS, and the Trust filed motions to dismiss. They
   argued that the Settlement Agreement did not release or extinguish the
   balance remaining on the Herberts’ mortgage and that there was no breach
   of the Settlement Agreement. The district court granted both motions to
   dismiss with prejudice, concluding that the Settlement Agreement
   authorized these parties to foreclose and did not extinguish the Herberts’
   debt. Having established that the Settlement Agreement did not extinguish

           2
             The Herberts sued Wilmington Finance, Inc. as well, but their claims against the
   company were dismissed separately in December 2020 and they did not appeal this
   dismissal.
           3
             The Herberts added the negligent infliction of emotional distress claim in their
   amended complaint on December 12, 2019 before any answers were filed. They filed their
   first complaint on September 26, 2019.

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                                    No. 21-60079

   the debt, it held that there was no breach of duty owed and no claims plausibly
   pled. The Herberts now appeal the dismissal of their breach of contract
   claims.
                          II. Standard of Review
          This court reviews dismissals under Rule 12(b)(6) de novo. Canada v.
   United States, 950 F.3d 299, 305 (5th Cir. 2020). We generally limit our
   review to the complaint and its proper attachments, but we may rely on
   documents incorporated into the complaint by reference. Dorsey v. Portfolio
   Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008) (citing Tellabs, Inc. v. Makor
   Issues & Rights, Ltd., 551 U.S. 308 (2007)).
          Under Rule 12(b)(6), a complaint must be dismissed if it “fail[s] to
   state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To
   avoid dismissal, a complaint must “state a claim to relief that is plausible on
   its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic
   Corp. v. Twombly, 550 U.S. 554, 570 (2007)). Although we assume the truth
   of well-pled factual allegations in a complaint, “[t]hreadbare recitals of the
   elements of a cause of action, supported by mere conclusory statements, do
   not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).
                                III. Discussion
          To state a claim for breach of contract in Mississippi, a plaintiff must
   allege “(1) the existence of a valid and binding contract, and (2) a showing
   that the defendant has broken, or breached[,] it.” MultiPlan, Inc. v. Holland,
   937 F.3d 487, 497 (5th Cir. 2019) (citing Maness v. K&A Enters. of Miss.,
   250 So. 3d 402, 414 (Miss. 2018)). Courts “first look to the express wording
   of the contract itself, looking at the contract as a whole, to the exclusion of
   extrinsic or parol evidence.” Cherokee Ins. Co. v. Babin, 37 So. 3d 45, 48
   (Miss. 2010). “When a contract is unambiguous, determining its meaning is
   a question of law for the court to decide, and the contract must be enforced

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                                     No. 21-60079

   as written.” Edwards Fam. P’ship, L.P. v. Dickson, 821 F.3d 614, 617 n.3 (5th
   Cir. 2016) (quoting Miss. Transp. Comm’n v. Ronald Adams Contractor, Inc.,
   753 So. 2d 1077, 1087 (Miss. 2000)). “Language that might be susceptible of
   being construed to conflict must, if possible, be harmonized to effectuate the
   parties’ intent.” AT&T Corp. v. Miss. Dep’t of Info. Tech. Servs., 298 So. 3d
   938, 955 (Miss. 2020), reh’g denied (July 30, 2020). “The mere fact that the
   parties disagree about the meaning of a provision of a contract does not make
   the contract ambiguous as a matter of law.” Sledge v. Grenfell Sledge &
   Stevens, PLLC, 263 So. 3d 655, 664 (Miss. 2018).
          Our review of the record indicates that the district court correctly
   determined “the Settlement Agreement is clear and unambiguous and does
   not support [the Herberts’] interpretation.” The Herberts argue that the
   Settlement Agreement “was to be ‘effective as a full and final accord and
   release of each and every matter between the parties,’” and that it
   extinguished any outstanding debt owed by the Herberts on the underlying
   mortgage. However, the matters referred to in the Settlement Agreement are
   evidently the underlying litigations between the parties and the bankruptcy
   action, none of which involved claims extinguishing the balance of the
   Herberts’ debt.
          Moreover, as observed by the district court, Section 2.C of the
   Settlement Agreement provided Citi with the authority to foreclose “at [its]
   discretion” and “if necessary,” and “[f]oreclosure would not be necessary
   or appropriate, and would not have been contemplated by the Agreement,
   had the debt been extinguished.” No provision in the Settlement Agreement
   required Citi to act by foreclosing or accepting a deed at a specific time.
          The Herberts point to language from the district court’s dismissal of
   the original federal litigation that stated “[i]f any party fails to consummate
   the [S]ettlement [A]greement within thirty (30) days, any aggrieved party

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                                     No. 21-60079

   may move to reopen the case for enforcement of the [S]ettlement
   [A]greement.” However, Citi’s failure to foreclose or accept a deed in lieu of
   foreclosure within 30 days did not breach the Settlement Agreement because
   Citi was not required to foreclose or accept a deed at all. The initiation of the
   foreclosure, the timing of the foreclosure, and the issuance of notices related
   to the foreclosure were all compliant with the Settlement Agreement. Thus,
   we agree with the district court that there was no breach of the Settlement
   Agreement and that no breach of contract was plausibly pled.
            Finally, we note that the Herberts appear to reference tortious breach
   of contract in their breach of contract argument. Although it is not entirely
   clear whether they intended to state claims for breach of the duty of good
   faith and fair dealing, to the extent that they did, the claims were inadequately
   briefed and therefore waived. See United States v. Martinez, 263 F.3d 436, 438
   (5th Cir. 2001) (“[A] defendant waives an issue if he fails to adequately brief
   it.”).
            Regardless, even if the Herberts had stated such claims, they would
   have failed. As they acknowledge, claims for breach of the duty of good faith
   and fair dealing require “some conscious wrongdoing because of dishonest
   purpose or moral obliquity.” See Univ. of S. Miss. v. Williams, 891 So. 2d 160,
   170–71 (Miss. 2004). Moreover, “[a] party has not breached the implied
   covenant of good faith and fair dealing when the party only took actions duly
   authorized by contract.” Gulf Coast Hospice LLC v. LHC Grp. Inc., 273 So. 3d
   721, 745 (Miss. 2019). Here, the actions of Citi, SPS, and the Trust did not
   reflect any conscious wrongdoing and were authorized by the Settlement
   Agreement. They had the option to foreclose and they exercised it. In
   addition, not only was sending foreclosure correspondence authorized, but
   refraining from sending such correspondence could have conferred liability.
   See Miss. Code Ann. §§ 81-18-55; 89-1-59. Thus, claims for breach of the
   duty of good faith and fair dealing would not have been facially plausible.

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                             No. 21-60079

                          IV. Conclusion
         For the foregoing reasons, we AFFIRM the district court’s
   judgment.

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