Court Opinion

ID: 816389
Source: CourtListenerOpinion
Date Created: 2013-01-31 00:29:22.721914+00
Date Added: 2024-06-11T10:37:01.125081
License: Public Domain

Case: 12-10307       Document: 00512130211         Page: 1     Date Filed: 01/30/2013

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

                                                                            FILED
                                                                         January 30, 2013

                                      No. 12-10307                         Lyle W. Cayce
                                                                                Clerk

WATER DYNAMICS, LIMITED;
A.C.A.R. INDUSTRIES, L.L.C.;
RALPH TORREZ, JR.;
ANITA T. TORREZ;
LEONA ESQUIBEL GRIJALVA,

                                                  Plaintiffs - Appellants

v.

HSBC BANK USA, NATIONAL ASSOCIATION,
As Successor Trustee to Bank of America, N.A.,
Successor by Merger to Lasalle Bank National Association,
as the Same May Be Amended from Time to Time,
for the Benefit of the SBA and the Holders of the
Business Loan Express SBA Loan-Backed Notes, Series 20,

                                                  Defendant - Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:11-CV-614

Before DAVIS, JONES and SMITH, Circuit Judges.
PER CURIAM:*

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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: 12-10307      Document: 00512130211     Page: 2    Date Filed: 01/30/2013

                                  No. 12-10307
        The court has carefully considered this appeal in light of the briefs and
pertinent portions of the record. Appellants here challenge the district court’s
Rule 12(b)(6) dismissal of their claims against a lender, HSBC Bank USA, which
foreclosed on a car wash property and is attempting to foreclose on one of the
guarantors’ homes put up as collateral. We review the dismissal de novo, taking
the facts in the light most favorable to the plaintiffs. In re Katrina Canal
Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). Finding no reversible error
of fact or law, we affirm essentially for the reasons stated in the district court’s
thorough opinion, and here need only summarize the essential failings of the
Appellants’ position.
   1. Wrongful Foreclosure Claim
        Appellants had to allege a defect in the foreclosure proceedings; a grossly
inadequate foreclosure sale price for the car wash property; and a causal
connection between the defect and the inadequate price. Sauceda v. GMAC
Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008). The defect
they allege is that the offering of their property at auction was not announced,
preventing their third party purchaser from coming forward to buy the property
and pay off their loan. Assuming the truth of this allegation, Appellants still
have failed to allege that the ultimate sale price was grossly inadequate. Texas
cases establish that a foreclosure price exceeding 50% is not grossly inadequate.
See Terra XXI, Ltd. v. Harmon, 279 S.W.3d 781, 788 (Tex. App.—Amarillo 2007);
Richardson v. Kent, 47 S.W.2d 420, 425 (Tex. Civ. App.—Dallas 1932). The sale
price here was about 52% of Appellants’ proffered value.             This court is
Erie-bound to follow uniform Texas law.

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    Case: 12-10307     Document: 00512130211      Page: 3   Date Filed: 01/30/2013

                                  No. 12-10307
   2. Breach of Contract Claim
        Appellants allege breach of their contractual arrangements by the
lender’s above-noted conduct at the foreclosure auction, by its failure to observe
an oral modification of the payment terms, and by its not providing a payoff
statement when they requested one, as required by Texas Business & Commerce
Code § 9.210. Two unassailable defenses plague this claim. First, Appellants
never acknowledge that Water Dynamics’ initial (and never cured) contract
breach provoked their problems, and a party in default cannot assert a claim for
breach against the other party. Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex.
1990). Second, their alleged oral modifications of various agreements are
unenforceable, contrary to the Texas statute of frauds, TEX. BUS. & COM. CODE
ANN. § 26.02(a)(2) & (b) (West 2012), and cannot form the basis of contract
breach claims.
   3. Waiver Claim
        Waiver is the “intentional relinquishment of a known right or
intentional conduct inconsistent with claiming that right.” G.H. Bass & Co. v.
Dalsan Props.—Abilene, 885 S.W.2d 572, 577 (Tex. App.—Dallas 1994) (citing
Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987)). Intent
is the key to waiver. Id. Appellants’ “waiver” claims, as argued in their
appellate brief, are simply reformulated contract breach claims: (1) the oral
indication that lesser monthly payments would be accepted by the lender;
(2) failing to provide a payoff statement when requested; and (3) failing to
foreclose on the property properly. Allegations of “inconsistent and inequitable
conduct” that allegedly violated the note, deed of trust, and oral modification, do
not suffice to show an intentional waiver by the lender, especially in the face of
the deed of trust’s anti-waiver provision. The cases cited by Appellants are fully

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    Case: 12-10307     Document: 00512130211     Page: 4   Date Filed: 01/30/2013

                                 No. 12-10307
distinguishable, not least because of the absence of such a provision. Moreover,
in Longview Sav. & Loan Ass’n v. Nabours, 673 S.W.2d 357 (Tex.
App.—Texarkana 1984), aff’d on other grounds, 700 S.W.2d 901 (Tex. 1985),
there was a pattern of companywide routine non-enforcement of notices. In
Trickey v. Gumm, 632 S.W.2d 167 (Tex. App.—Waco 1982), the lender accepted
a past due interest payment after sending a notice of default and apparently
represented that the interest payment would prevent any acceleration.
   4. Anticipatory Repudiation Claim
        Anticipatory breach requires Appellants to plead that the defendant
absolutely repudiated the contract; lacked just excuse for the repudiation; and
damaged them. Gonzalez v. Denning, 394 F.3d 388, 394 (5th Cir. 2004). In lieu
of repudiation, they allege no more in their appellate brief than the same deed
of trust breaches already discussed. There is no legal basis to collapse these two
claims, nor is there any basis to infer from the lender’s conduct a positive and
unequivocal repudiation of the contract. In addition, this claim cannot excuse
the consequences of Appellants’ prior breach.
   5. Unreasonable Collection Efforts Claim
        Appellants’ allegations may demonstrate a failure to communicate
between themselves and the lender, but they fall far short of satisfying the
current Texas standard requiring “a course of harassment that was willful,
wanton, malicious, and intended to inflict mental anguish and bodily harm.”
See, e.g., EMC Mortg. Corp. v. Jones, 252 S.W.3d 857, 868 (Tex. App.—Dallas
2008) (quoting Montgomery Ward & Co. v. Brewer, 416 S.W.2d 837, 844 (Tex.
Civ. App.—Waco 1967)).      This is the standard for claims of unreasonable
collection efforts. Appellants’ brief fails to mention it, but this standard was
cited with approval in a case in which their counsel participated,

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    Case: 12-10307   Document: 00512130211     Page: 5   Date Filed: 01/30/2013

                                No. 12-10307
De Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x 200, 204–05
(5th Cir. 2012). Although we are not bound by unpublished Fifth Circuit
opinions issued on or after January 1, 1996, we endeavor to apply our case law
consistently. Appellants have shown no reason to deviate from this standard.
          The district court’s judgment is AFFIRMED.

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