Court Opinion

ID: 866640
Source: CourtListenerOpinion
Date Created: 2013-05-04 00:00:13.945156+00
Date Added: 2024-06-11T09:11:57.212871
License: Public Domain

Case: 12-10861       Document: 00512229412         Page: 1     Date Filed: 05/03/2013

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                            May 3, 2013
                                     No. 12-10861
                                   Summary Calendar                        Lyle W. Cayce
                                                                                Clerk

TOMMY JAMES; SHERRY AIRHART,

               Plaintiffs - Appellants

v.

WELLS FARGO BANK, N. A.,

               Defendant - Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 5:12-CV-042-C

Before SMITH, PRADO, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellants Tommy James and Sherry Airhart bring this suit
against Defendant-Appellee Wells Fargo Bank, N.A. (“Wells Fargo”) alleging
various causes of action arising from events leading up to and including the
foreclosure of their home. The district court granted Wells Fargo’s motion to
dismiss, and 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
    Case: 12-10861     Document: 00512229412      Page: 2    Date Filed: 05/03/2013

                                  No. 12-10861

                        FACTS AND PROCEEDINGS
       Sherry Airhart obtained a mortgage loan to purchase a home in Lubbock,
Texas (the “Property”). During the relevant time period, the loan was owned by
Federal Home Loan Mortgage Corporation (“Freddie Mac”) and serviced by Wells
Fargo.    In September 2009, having fallen into default on her payment
obligations, Airhart and her husband, Tommy James, sought to modify the loan
under the Home Affordable Modification Program (“HAMP”).               While their
application was pending, Wells Fargo advised plaintiffs that they would be
accepted into the program; that they could make lower payments over the next
four months; and that no foreclosure proceedings would occur while the
application process was underway. In February 2010, Wells Fargo informed
plaintiffs that their HAMP loan modification application had been denied, and
refunded the four payments plaintiffs made while the application was pending.
Four months later, the Property was purchased at a foreclosure sale by Freddie
Mac.
       After months of negotiations, plaintiffs, Wells Fargo, and Freddie Mac
entered into a written rescission and reinstatement agreement (the “Rescission
Agreement”), whereby the parties agreed to return to the status quo existing
immediately prior to the foreclosure sale. Specifically, in exchange for plaintiffs’
promise to pay the amounts past due under the loan, Wells Fargo and Freddie
Mac agreed to rescind the foreclosure sale, convey the Property to plaintiffs, and
reinstate the loan. During the foregoing course of events, plaintiffs never lost
possession of the Property.
       Despite entering into the Rescission Agreement, plaintiffs filed suit
against Wells Fargo in Texas state court, and Wells Fargo timely removed the
case, on diversity grounds, to the United States District Court for the Northern
District of Texas. Wells Fargo filed a motion to dismiss, which the district court
granted. Plaintiffs timely appealed.

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                                   No. 12-10861

                           STANDARD OF REVIEW
      We review de novo a district court’s dismissal for failure to state a claim
under Rule 12(b)(6). Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU
Corp., 565 F.3d 200, 206 (5th Cir. 2009). To avoid dismissal under Rule 12(b)(6),
“a complaint must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
      “A dismissal for failure to state fraud with particularity as required by
Rule 9(b) is a dismissal on the pleadings for failure to state a claim, and is also
reviewed de novo.” Flaherty, 565 F.3d at 206. To avoid dismissal under Rule
9(b), a complaint must “specify the statements contended to be fraudulent,
identify the speaker, state when and where the statements were made, and
explain why the statements were fraudulent.” Id. at 207.
                                  DISCUSSION
      The first amended complaint asserts state-law claims for wrongful
foreclosure, violation of the Texas Deceptive Trade Practices Act (“TDTPA”),
breach of contract, fraud, negligent misrepresentation, and negligent
undertaking. In a thorough and well-reasoned opinion, the district court granted
defendant’s motion to dismiss, concluding that the first amended complaint
failed to state a viable claim for relief.
I.    Wrongful Foreclosure
      The district court held, and we agree, that plaintiffs fail to state a viable
claim for wrongful foreclosure because they never lost possession of the Property.
Motten v. Chase Home Fin., 831 F. Supp. 2d 988, 1007–08 (S.D. Tex. 2011)
(“[B]ecause recovery is premised upon one’s lack of possession of real property,
individuals never losing possession of the property cannot recover on a theory
of wrongful foreclosure. As such, courts in Texas do not recognize an action for
attempted wrongful foreclosure.”); Peterson v. Black, 980 S.W.2d 818, 823 (Tex.
Ct. App. 1998) (“Recovery [for wrongful foreclosure] is conditioned on the

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disturbance of the mortgagor’s possession based on the theory that the mortgagee
must have committed a wrong similar to the conversion of personal property.”).
II.     TDTPA
        The district court held, and we agree, that plaintiffs’ TDTPA claim fails as
a matter of law because plaintiffs are not “consumers” within the meaning of the
Act, and they did not seek or acquire “goods or services” as defined by the Act.
See Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 160 (Tex. Ct. App. 2007) (“[A]
person cannot qualify as a consumer if the underlying transaction is a pure loan
because money is considered neither a good nor a service.”); Montalvo v. Bank
of Am. Corp., 864 F. Supp. 2d 567, 595 (W.D. Tex. 2012) (“Texas federal courts
have recently addressed DTPA claims like [plaintiff]’s claim and concluded that
a person seeking a loan modification under the HAMP using a loan servicer is
not a consumer under the DTPA.”) (collecting cases).
III.    Breach of Contract and Promissory Estoppel
        The district court held, and we agree, that the plaintiffs’ breach of contract
claim fails as a matter of law because the parties’ oral agreement to enter into
loan modification proceedings never ripened into an enforceable contract due to
plaintiffs’ lack of consideration, Arthur J. Gallagher & Co. v. Dieterich, 270
S.W.3d 695, 702 (Tex. Ct. App. 2008) (“When a party agrees to do no more than
that which he is already bound to do under an existing contract, the
consideration is not sufficient to support a modification.”), and the putative oral
contract to delay repayment of the $234,800 loan is barred by the statute of
frauds, see Tex. Bus. & Com. Code § 26.02(b) (“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.”); Kiper v. BAC Home Loans
Servicing, LP, 884 F. Supp. 2d 561, 571 (S.D. Tex. 2012) (“The statute of frauds
bars and makes unenforceable oral modifications to a loan agreement under §
26.02 unless they fall within an exception to the statute of frauds or do not

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materially alter the obligations imposed by the original contract.”) (internal
quotation marks omitted).
       Plaintiffs’ promissory estoppel claim is similarly barred by the statute of
frauds because there is no allegation that there was an existing written
agreement relating to defendant’s acceptance of lower payments and delay in
foreclosure that defendant promised to sign. Sullivan v. Leor Energy, LLC, 600
F.3d 542, 549 (5th Cir. 2010) (“Under Texas law, promissory estoppel requires
that ‘the agreement that is the subject of the promise must comply with the
statute of frauds. That is, the agreement must be in writing at the time of the
oral promise to sign it.’ ”) (quoting Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429,
438 (Tex. Ct. App. 2002)).
IV.    Fraud
       The district court held, and we agree, that plaintiffs’ claim for fraud fails
to meet the strictures of Federal Rule of Civil Procedure 9(b) because plaintiffs
do not state the identity of any speaker alleged to have made fraudulent
statements, nor do they allege where and when such statements were made. See
Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 564–65 (5th Cir.
2002) (“This Court interprets Rule 9(b) strictly, requiring a plaintiff pleading
fraud to specify the statements contended to be fraudulent, identify the speaker,
state when and where the statements were made, and explain why the
statements were fraudulent.”) (internal quotation marks and citations omitted).
Given that plaintiffs did not cure this deficiency after having been granted leave
to amend their complaint, dismissal was appropriate. See United States ex rel.
Hebert v. Dizney, 295 F. App’x 717, 724–25 (5th Cir. 2008).
V.     Negligent Misrepresentation
       The district court held, and we agree, that plaintiffs’ claim for negligent
misrepresentation fails as a matter of law because the statements at
issue—alleged promises that plaintiffs would be found eligible for HAMP and the
foreclosure sale would be postponed—are representations as to conditional

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future events and promises of future conduct, not statements of existing fact,
and “under Texas law, promises of future action are not actionable as a
negligent-misrepresentation tort.” See De Franceschi v. BAC Home Loans
Servicing, L.P., 477 F. App’x 200, 205 (5th Cir. 2012) (citing Scherer v. Angell,
253 S.W.3d 777, 781 (Tex. Ct. App. 2007)).
VI.    Negligent Undertaking
       The district court held, and we agree, that plaintiffs’ claim for negligent
undertaking fails as a matter of law because plaintiffs allege no physical harm
resulting from Wells Fargo’s voluntary undertaking of services. See Torrington
Co. v. Stutzman, 46 S.W.3d 829, 838 (Tex. 2000) (“One who undertakes,
gratuitously or for consideration, to render services to another which he should
recognize as necessary for the protection of the other’s person or things, is
subject to liability to the other for physical harm resulting from his failure to
exercise reasonable care to perform his undertaking, if (a) his failure to exercise
such care increases the risk of such harm, or (b) the harm is suffered because of
the other’s reliance upon the undertaking.” (quoting Restatement (Second) of
Torts § 323 (1965))) (emphasis added); see also Vodicka v. Lahr, No. 03-10-00126-
CV, 2012 WL 2075713, at *6 (Tex. Ct. App. Jun. 6, 2012) (holding that plaintiffs
failed to state a claim for negligent undertaking because that tort requires proof
of “physical harm resulting from failure to exercise reasonable care in rendering
services to another,” and plaintiffs had alleged only economic harm).
                                CONCLUSION
       For the foregoing reasons, we conclude that the district court properly
dismissed plaintiffs’ first amended complaint. AFFIRMED.

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