Court Opinion

ID: 7805026
Source: CourtListenerOpinion
Date Created: 2022-08-31 00:00:20.30259+00
Date Added: 2024-06-11T16:29:55.980139
License: Public Domain

Case: 22-20005     Document: 00516452752         Page: 1     Date Filed: 08/30/2022

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

                                                                         FILED
                                                                   August 30, 2022
                                  No. 22-20005
                                                                    Lyle W. Cayce
                                                                         Clerk

   Tiffany Nicole Pearson,

                                                           Plaintiff—Appellant,

                                       versus

   Specialized Loan Servicing, L.L.C.,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:20-CV-4044

   Before Jones, Ho, and Wilson, Circuit Judges.
   Per Curiam:*
          Tiffany Nicole Pearson sued Specialized Loan Servicing, LLC (SLS),
   alleging that SLS violated the Texas Debt Collection Act by misstating the
   loan balance and foreclosure status of Pearson’s home in its payoff statement
   mailed to First American Title Guaranty Company. The district court
   granted summary judgment to SLS, and Pearson appeals. We affirm.

          *
            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   opinion should not be published and is not precedent except under the limited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: 22-20005      Document: 00516452752          Page: 2    Date Filed: 08/30/2022

                                    No. 22-20005

                                         I.
          SLS was the mortgage servicer on Pearson’s mortgage.                 On
   December 30, 2019, after Pearson defaulted on that mortgage, SLS sent
   notice to Pearson that it would be pursuing a non-judicial foreclosure on
   Pearson’s property on February 4, 2020. The sale proceeded on that date
   and the property was sold to GAMC, Inc.
          Pearson, purportedly unaware that the foreclosure sale had gone
   forward, contracted with Yuexin Wang to sell Wang the property. Pearson
   and Wang set a proposed closing date of February 17, 2020. First American
   was retained to insure Wang’s title and close the transaction. On February
   10, 2020, First American sent a letter to SLS requesting that SLS provide
   First American a “demand” establishing the “amount necessary to pay
   [Pearson’s loan] obligation in full” through February 17, 2020.
          SLS sent First American a payoff statement the next day. It read:
          THIS STATEMENT REFLECTS THE TOTAL AMOUNT
          DUE UNDER THE TERMS OF THE NOTE/SECURITY
          INSTRUMENT THROUGH THE CLOSING DATE
          WHICH IS 02/04/20 or the date the loan is transferred to a
          new servicer. If this obligation is not paid in full by this date,
          then you should request an updated payoff amount before
          closing.
   The statement provided that, as of February 4, 2020, the “Total Amount
   Due” was $125,448.73; that amount would accrue $23.4824 in interest per
   day should the balance not be paid by that day; and the payoff statement’s
   expiration date was February 4, 2020.
          At their closing on February 17, 2020, Pearson executed a warranty
   deed conveying the property to Wang. When it was later discovered that
   Pearson had no title to convey, First American paid on its insurance policy to
   Wang. First American then sued Pearson in Texas state court. Pearson in

                                          2
Case: 22-20005      Document: 00516452752          Page: 3     Date Filed: 08/30/2022

                                    No. 22-20005

   turn brought a third-party suit against SLS. Relevant to this appeal, Pearson
   alleged that SLS violated the Texas Debt Collection Act by
   “misrepresenting the character, extent, or amount of a consumer debt” in its
   February 11 payoff statement. Tex. Fin. Code § 392.304(a)(8).
          The cases were severed, and SLS removed Pearson’s suit against it
   to federal court. The district court granted summary judgment to SLS,
   concluding    that    SLS’s    payoff     statement   did   not   contain   any
   misrepresentations. Pearson timely appealed.
                                           II.
          We review a district court’s grant of summary judgment de novo.
   Hagen v. Aetna Ins. Co., 808 F.3d 1022, 1026 (5th Cir. 2015). Summary
   judgment is appropriate if the record evidence shows that there is no genuine
   issue of material fact and that the moving party is entitled to judgment as a
   matter of law. Fed. R. Civ. P. 56(a).             Because we have diversity
   jurisdiction over this dispute and the underlying conduct, i.e., the sale of the
   property, occurred in Texas, we apply Texas law. See Erie R.R. Co. v.
   Tompkins, 304 U.S. 64, 78 (1938).
                                           III.
          Pearson challenges three aspects of the payoff statement:            She
   contends that the payoff statement misrepresented (1) the amount owed,
   because the statement listed a closing date of February 4, 2020, rather than
   February 17, 2020; (2) that interest continued accruing after February 4; and
   (3) the foreclosure status of the property, by indicating interest would
   continue to accrue.
          Section 392.304(a)(8) of the Texas Finance Code prohibits a debt
   collector from “misrepresenting the character, extent, or amount of a
   consumer debt.” Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022, 1026

                                            3
Case: 22-20005     Document: 00516452752            Page: 4   Date Filed: 08/30/2022

                                     No. 22-20005

   (5th Cir. 2014). A misrepresentation is “an affirmative statement that was
   false or misleading.” Id. (quoting Verdin v. Fed. Nat’l Mortg. Ass’n, 540 F.
   App’x 253, 257 (5th Cir. 2013) (per curiam)) (emphasis omitted). To prevail,
   Pearson must show that SLS “made a misrepresentation that led her to be
   unaware (1) that she had a mortgage debt, (2) of the specific amount she
   owed, or (3) that she had defaulted.” Rucker v. Bank of Am., N.A., 806 F.3d
   828, 832 (5th Cir. 2015) (citing Miller v. BAC Home Loans Servicing, L.P., 726
   F.3d 717, 723 (5th Cir. 2013)).
          Pearson contends that because the payoff statement calculated the
   loan payoff amount as of February 4, 2020, rather than February 17, 2020, as
   First American requested, SLS falsely represented that there was still a
   mortgage owed on the property. Texas law requires a payoff statement to
   “(1) state the proposed closing date for the sale and conveyance of the real
   property securing the home loan . . . and (2) provide a payoff amount that is
   valid through that date.” Tex. Fin. Code § 343.106(d). True enough,
   SLS’s payoff statement calculated the loan balance using the date of
   February 4, 2020 (the day the property was sold via foreclosure sale). But
   that error does not rise to an actionable misrepresentation under
   § 392.304(a)(8). While the date on the payoff statement may have been
   incorrect, nothing else was. The loan information in the payoff statement
   was not false or misleading: SLS accurately provided the loan balance
   through February 4, specified the per diem interest rate, and explicitly stated
   that the payoff statement expired on February 4.
          Pearson counters that even if the payoff statement contained
   “technically truthful statement[s],” it was nevertheless misleading because
   First American did not request “pre-foreclosure information” but rather
   asked for the payoff amount as of February 17, 2020. She reasons that SLS’s
   decision to send pre-foreclosure information without explanation was

                                          4
Case: 22-20005      Document: 00516452752          Page: 5    Date Filed: 08/30/2022

                                    No. 22-20005

   misleading because the statement should have reported that there was no
   payoff balance after the February 4 foreclosure sale.
          Perhaps such an explanation would have helped Pearson understand
   the property’s foreclosure status before she executed a warranty deed in
   favor of Wang. But, as a threshold matter, Pearson had received notice, as early
   as December 30, 2019, that her property was in foreclosure and was set to be
   sold on February 4, 2020. Nothing in the record indicates that she did not
   receive the notice, or had reason to believe that the foreclosure sale did not
   proceed, or took any action before or after the February 4 sale date to
   determine the status of her property.
          Beyond that, just because the payoff statement might have been
   clearer does not mean it included actionable misrepresentations. Even when
   a lender’s “statements about [the] [p]laintiffs’ foreclosure and acceleration
   status were confusing,” we have found no violation of § 392.304(a)(8) when
   the statements “did not lead [p]laintiffs ‘to be unaware (1) that [they] had a
   mortgage debt, (2) of the specific amount [they] owed, or (3) that [they] had
   defaulted.’” Colbert v. Wells Fargo Bank, N.A., 850 F. App’x 870, 873 (5th
   Cir. 2021) (per curiam) (alteration in original) (quoting Rucker, 806 F.3d at
   832); see also Douglas v. Wells Fargo Bank, N.A., 992 F.3d 367, 374–75 (5th
   Cir. 2021). This situation is similar. Given that the payoff statement did not
   use the proposed closing date requested by First American, it may have
   caused some confusion.       Nevertheless, as discussed above, the payoff
   statement was otherwise accurate. Pearson’s assertion that SLS should have
   told her that a payoff was unnecessary, or that her property had already been
   sold, is unavailing.
          Pearson’s arguments related to the payoff statement’s stipulations
   regarding accrual of per diem interest fare no better. The payoff statement
   provided that “[f]unds received after the expiration date[, February 4, 2020,]

                                           5
Case: 22-20005     Document: 00516452752          Page: 6    Date Filed: 08/30/2022

                                   No. 22-20005

   w[ould] accrue interest per diem in the amount of $23.4824.” This was a
   misrepresentation, she posits, because there should have been no interest to
   accrue given that the loan balance was zero after foreclosure. Or, the
   statement’s language misleadingly indicated that foreclosure had not yet
   occurred. But a payoff statement is required to demonstrate the payoff
   amount valid through closing, not after. Tex. Fin. Code § 343.106(d).
   This one did so. The payoff and per diem interest provisions accurately
   reflected what the payor would owe through a closing date of February 4,
   2020, and thereafter if payoff was delayed. The statement did not misstate
   the amount or character of the debt or the status of foreclosure. See Colbert,
   850 F. App’x at 873; cf. Rucker, 806 F.3d at 832.
                                       IV.
          Because SLS provided a payoff statement valid through February 4,
   2020—the date that the property was sold via foreclosure sale—as opposed
   to February 17, 2020—the proposed closing date requested by First
   American—SLS did not comply with § 343.106(d). But that noncompliance
   in itself does not give rise to any actionable misrepresentation under
   § 392.304(a)(8), because nothing in the payoff statement was false or
   misleading. The district court’s judgment is
                                                                 AFFIRMED.

                                         6