MELINDA HARMON, District Judge.
Pending before the Court in the above referenced cause, removed from state court and alleging wrongful foreclosure, are Defendant Chase Home Finance LLC's ("CHF's") motion to dismiss for failure to state a claim, or alternatively, motion for more definite statement (instrument # 4) and Plaintiffs Lawrence Motten and Donna Evans' request for leave of Court to file amended petition (# 18).
This case arises from a mortgage loan obtained by Plaintiffs, secured by their homestead property at 10002 Williams Field Drive, and serviced by CHF. Plaintiffs ask the Court to invalidate a foreclosure sale and issue a temporary, and ultimately a permanent, injunction barring CHF from proceeding with its wrongful foreclosure on the property and prohibiting Wilmington Trust Company ("Wilmington") from going forward with eviction.
Federal Rule of Civil Procedure 8(a)(2) provides, "A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." When a district court reviews a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), it must construe the complaint in favor of the plaintiff and take all well-pleaded facts as true. Randall D. Wolcott, MD, PA v. Sebelius, 635 F.3d 757, 763 (5th Cir.2011), citing Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.2009).
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, ... a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do ...." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. at 1965, citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) ("[T]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action"). "Twombly jettisoned the minimum notice pleading requirement of Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ["a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief"], and instead required that a complaint allege enough facts to state a claim that is plausible on its face." St. Germain v. Howard, 556 F.3d 261, 263 n. 2 (5th Cir.2009), citing In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007) ("To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead `enough facts to state a claim to relief that is plausible on its face.'"), citing Twombly, 127 S.Ct. at 1974. See also Alpert v. Riley, No. H-04-CV-3774, 2008 WL 304742, *14 (S.D.Tex. Jan. 31, 2008). "`A claim
In Ashcroft v. Iqbal, 129 S.Ct. at 1940, the Supreme Court, applying the Twombly plausibility standard to a Bivens claim of unconstitutional discrimination and a defense of qualified immunity for government official, observed that two principles inform the Twombly opinion: (1) "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions."... Rule 8 "does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions."; and (2) "only a complaint that states a plausible claim for relief survives a motion to dismiss," a determination involving "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." "[T]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice" under Rule 12(b). Iqbal, 129 S.Ct. at 1949. The plaintiff must plead specific facts, not merely conclusory allegations, to avoid dismissal. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000) "Dismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief ...." Rios v. City of Del Rio, Texas, 444 F.3d 417, 421 (5th Cir.2006), cert. denied, 549 U.S. 825, 127 S.Ct. 181, 166 L.Ed.2d 43 (2006).
As noted, on a Rule 12(b)(6) review, although generally the court may not look beyond the pleadings, the Court may examine the complaint, documents attached to the complaint, and documents attached to the motion to dismiss to which the complaint refers and which are central to the plaintiff's claim(s), as well as matters of public record. Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir.2010), citing Collins, 224 F.3d at 498-99; Cinel v. Connick, 15 F.3d 1338, 1341, 1343 n. 6 (5th Cir.1994). See also United States ex rel. Willard v. Humana Health Plan of Tex., Inc., 336 F.3d 375, 379 (5th Cir.2003) ("the court may consider ... matters of which judicial notice may be taken"). Taking judicial notice of public records directly relevant to the issue in dispute is proper on a Rule 12(b)(6) review and does not transform the motion into one for summary judgment. Funk v. Stryker Corp., 631 F.3d 777, 780 (5th Cir.2011).
Dismissal under Federal Rule of Civil Procedure 12(b)(6) is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001), cert. denied sub nom. Cloud v. United States, 536 U.S. 960, 122 S.Ct. 2665, 153 L.Ed.2d 839 (2002), cited for that proposition in Baisden v. I'm Ready Productions, No. Civ. A. H-08-0451, 2008 WL 2118170, *2 (S.D.Tex. May 16, 2008). See also ASARCO LLC v. Americas Min. Corp., 382 B.R. 49, 57 (S.D.Tex.2007) ("Dismissal `can be based either on a lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.'" [citation omitted]), reconsidered in other part, 396 B.R. 278 (S.D.Tex.2008).
Fraud claims must also satisfy the heightened pleading standard set out in Federal Rule of Civil Procedure 9(b): "In allegations alleging fraud ..., a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." A dismissal for failure to plead with particularity as required by this rule is treated the same as a Rule 12(b)(6) dismissal for failure to state a claim. Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir.1996). The Fifth Circuit interprets Rule 9(b) to require "specificity as to the statements (or omissions) considered to be fraudulent, the speaker, when and why the statements were made, and an explanation of why they were fraudulent." Plotkin v. IP Axess, Inc., 407 F.3d 690, 696 (5th Cir.2005).
Because "Rule 9(b) applies by its plain language to all averments of fraud, whether they are part of a claim of fraud or not," it applies to statutory claims based on allegations of fraud. Lone Star Ladies Inv. Club v. Schlotzsky's, Inc., 238 F.3d 363, 368 (5th Cir.2001); Melder v. Morris, 27 F.3d 1097, 1100 n. 6 (5th Cir.1994).
CHF argues that the Plaintiffs' Original Petition and Application for Injunctive Relief (# 1, Ex. A-2) fails to plead a viable cause of action. A plaintiff asserting wrongful foreclosure must show (1) a defect in the foreclosure sale proceedings, (2) a grossly inadequate selling price, and (3) a causal connection between the defect and the grossly inadequate selling price. Sauceda v. GMAC Mortgage Corp., 268 S.W.3d 135, 139 (Tex.App.-Corpus Christi 2008, no pet.), citing Charter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368, 371 (Tex.App.-Houston [14th Dist.] 1989, writ denied). Moreover there must be evidence of an irregularity that "must have caused or contributed to cause the property to be sold for a grossly inadequate price." In re Keener, 268 B.R. 912, 921 (N.D.Tex.2001). The plaintiff challenging a foreclosure sale must plead and ultimately prove any irregularities that rendered the sale invalid. Id. CHF insists that Plaintiffs here fail to assert any facts supporting the elements of a wrongful foreclosure action and provide no facts establishing a causal connection between the defect in the foreclosure proceedings and the grossly inadequate selling price. They also fail to show that the property sold for an inadequate price..
Furthermore Plaintiffs appear to assert a claim for an unspecified violation of the Real Estate Settlement Procedures Act ("RESPA"), codified at 12 U.S.C. sec. 2601, et seq. No provision of the RESPA is
Alternatively, CHF seeks a more definite statement under Federal Rule of Civil Procedure 12(e) (When a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, the party may move for a more definite statement before submitting a responsive pleading).
In their response (# 8) and by motion (# 7) Plaintiffs seek leave to file an amended pleading (which should be titled a "Complaint" in federal court) to cure the defects in their state court Original Petition. Their proposed pleading is filed as # 7-1. The Court notes that in discussing the standard for pleading, Plaintiffs fail to take into account the effect of Twombly and Iqbal on pleading standards under Rule 12(b)(6), which the Court has summarized earlier and which JPMC points out in its reply (# 11). One of the reasons the Court chooses to permit Plaintiffs to amend again is this confusion, especially since this case was removed from state court where it was subject to Texas' more lenient notice pleading.
While CHF's motion to dismiss addressed the Original Petition drafted in state court, in response to Plaintiffs' request for leave to amend with their proposed pleading attached, JPMorgan Chase Bank, National Association ("JPMC"), as successor by merger to CHF, opposes the motion for leave to amend because Plaintiffs waited nearly four months to file it and on the grounds that even the proposed amended petition fails to state a claim that is plausible on its fact and the requested amendment is futile. Plaintiffs attempt in their proposed amended petition to assert causes of action for promissory estoppel, breach of contract, and breach of good faith and fair dealing, but their allegations "are nonsensical, conclusory, and at times incomprehensible."
JPMC contends that Plaintiffs provide no facts in support of their claims of promissory estoppel and breach of good faith and fair dealing. Furthermore, Plaintiffs cannot recover for a promise under
As for Plaintiffs' breach of contract claim, to state such a claim Plaintiffs must allege (1) the existence of a valid contract, (2) performance by Plaintiffs, (3) breach by Defendants, and (4) damages resulting from the breach. Acad. of Skills & Knowledge, Inc. v. Charter Schs., USA, Inc., 260 S.W.3d 529, 536 (Tex.App.-Tyler 2008, pet. denied). JPMC charges that "Plaintiffs do not expressly allege a cause of action for breach of contract, and it is unclear whether Plaintiffs attempt to assert such a claim." JPMC insists that the allegations are "convoluted and incomprehensible" to the point that Defendant cannot determine that any support any of the elements of breach of contract and they should be dismissed as conclusory and not plausible on their face.
In the section titled "Fraud," Plaintiffs fail to identify any facts supporting the elements of such a cause of action, i.e., (1) Defendant made a representation to Plaintiffs, (2) the representation was material, (3) the representation was false, (4) Defendant made the representation with knowledge that it was false or made it recklessly, as a positive assertion without knowledge of its truth, (5) Defendant made the representation with the intent that Plaintiffs would act upon it, (6) Plaintiffs relied on the representation, and (7) the representation caused Plaintiffs injury. Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex.2009). Instead Plaintiffs spend most of the section addressing usury law, which does not provide a cause of action for Plaintiffs because here it is preempted by federal law. 12 U.S.C. Sec. 1735f-7a.
Plaintiffs' claim of violation of the RESPA is conclusory and is not plausible on its face. Plaintiffs concede that JPMC "responded to all complaint [sic]," but complain that JPMC "refused to stop debt collection efforts and foreclosure efforts
Plaintiffs also allege a failure to give "proper written notice of the loan transference from Washington Mutual to Chase as per her contract and section 6 of RESPA," 12 U.S.C. sec. 2605. JPMC argues that RESPA does not require any such notice. Furthermore Plaintiffs' allegations are not factual, but consist only of conclusory statements, and fail to state a claim to relief that is plausible on its face. Thus amendment is futile.
Plaintiffs seem to assert that Defendant violated Housing & Urban Development ("HUD") regulations, 24 C.F.R. §§ 203.605 and 24 C.F.R. 203.606 by their conclusory statement, devoid of facts or identification of the allegedly wrongful conduct: "Defendant has wholly failed to comply with the foregoing Code." Plaintiffs also state that they sought modification of the loan, indicating that JPMC did attempt loss mitigation. The claim is also fatally deficient and amendment is futile, argues JPMC.
The only statement under the section titled "Wrongful Foreclosure Proceedings" is "Plaintiff incorporates the foregoing facts and allegations, with the same force and effect, as it fully set forth above and other acts." There is no claim, and amendment is futile, insists JPMC.
Plaintiffs also attempt to assert causes of action for negligence and/or gross negligence, but the allegations are conclusory and lack any legal or factual basis. They fail to specify any recognized legal duty that Defendant breached, and they repetitively assert that Plaintiffs trusted JPMC. Alleged trust does not create a duty.
They also cite Article 16, Section 50(a)(6)(B) of the Texas Constitution and assert that Defendant violated this "statutory provision." Article 16, Section 50(a)(6)(B) of the Texas Constitution has no relevance to the facts of this case and does not create a duty owed to Plaintiffs by JPMC.
Plaintiffs' second claim for fraud is also fatally deficient because it does not allege any facts nor identify any wrongful conduct by JPMC. It is composed of conclusory statements that loosely track the elements of a claim for fraud. JPMC could not determine from the "incoherent, conclusory allegations any wrongdoing by JPMC."
Nor, argues JPMC, are Plaintiffs entitled to injunctive relief under Texas law. Under Texas law, a request for injunctive relief without a cause of action supporting entry of a judgment is fatally defective and does not state a claim. Butnaru, 84 S.W.3d at 210.
In sum because Plaintiffs' motion is untimely and because their proposed amended petition fails to state any cause of action that is plausible on its face, but instead is devoid of factual allegations to support their claims, and is nonsensical and conclusory, amendment is futile and the motion for leave to amend should be denied.
Despite Defendants' insistence to the contrary, the proposed amended pleading does set forth some facts, though very few. It states that on or about November 24,
Plaintiffs then retained an attorney who sent a QWR demanding verification of the Plaintiffs' alleged debt, pursuant to 12 U.S.C. Sec. 2605(e) of RESPA, and requesting a review and evaluation of their payment history, the balances on the debt that Plaintiffs allegedly owed, the interest rate that CHF charged Plaintiffs, and the insurance escrow impounds held or paid, in which Plaintiffs identified some discrepancies from taxes that escalated the monthly note payment from $1,450.00 to $2,200.00. (Copy attached as Exhibit B). CHF sent a partial response to the QWR, with a payment history of plaintiffs accounts, but none of the other information they had requested. Plaintiffs' attorney then entered into communications with CHF's Home Lending executive Office between January and March of 2010; he was ultimately directed to the Loss Mitigation Department around March 29, 2010 (copy attached as Exhibit C). Defendants sent Plaintiffs a Foreclosure Notice, posting their house for foreclosure on Tuesday, April 6, 2010. Plaintiffs and their attorney claim they did not receive that Notice and that the Foreclosure sale was finalized on that date without any notice to Plaintiffs or their attorney. They received an April 12, 2010 "Notice to Vacate" the property, followed by service on them of an Original Petition for Forcible Detainer by Defendant Wilmington on or about July 22, 1010. The eviction was heard in Justice Court Precinct Four, Position Two, Harris County, Texas around April 3, 2010, with judgment in favor of Fannie Mae. Plaintiffs appealed the Eviction with an accelerated trial date of October 18, 2010 (copy of pleadings attached as Exhibit E). Thus Plaintiffs filed the instant action against Defendants for Defendants' wrongful action. Plaintiffs assert they are harmed because their homestead is being taken and they will lose all of the money they have invested in the property over approximately six years without having a fair opportunity to protect it and without an adequate remedy at law, so they seek injunctive relief.
The proposed amended pleading states that this action is to stop Defendants from benefitting from the wrongful foreclosure of Plaintiffs' homestead at 10002 Williams Field Drive, Houston, Texas 77064, to maintain the status quo with Plaintiffs' remaining in the home, which is currently in their possession, to compensate Plaintiffs for emotional distress and economic loss caused by the Defendants' actions, and to punish Defendants CHF (servicer of Plaintiffs' mortgage loan), JPMC (mortgagor), and Wilmington Trust Company (Trustee of Plaintiffs' home) with punitive damages for their intentional wrongful actions or inactions.
The Court finds the pleading in the proposed amended petition is substantially deficient and fails to satisfy Rules 8, 12(b)(6), and 9(b), as indicated below.
Regarding the RESPA claim, as best the Court understands the amended pleading, Plaintiffs assert that the RESPA violations include failure to give Plaintiffs written notice before Washington Mutual transferred their loan to Chase; the servicer's failure to respond timely to their QWR, complaining about the amount owed on their debt; the retaliatory actions of Washington Mutual, Chase and Chase Finance Agents and/or Representative; Defendants' wrongful denial of Plaintiffs' HAMP application; wrongful, malicious, intentional foreclosure on Plaintiffs' home with out proper notice to the parties, without allowing the Plaintiffs to exercise their right to make good on the debt and keep their home, and Defendants' refusal to stop debt collection efforts. They seek rescission. These conclusory allegations need to be linked to identified provisions of RESPA and supported by factual allegations to meet the standard for a plausible claim if they are to survive.
To state a claim for promissory estoppel a plaintiff must plead (a) a promise, (b) foreseeability of reliance by the promisor, (c) substantial and reasonable reliance by the promisee to its detriment, and (d) enforcement of the promise is necessary to avoid injustice. Sipco Servs. Marine v. Wyatt Field Serv. Co., 857 S.W.2d 602, 605 (Tex.App.-Houston [1st Dist.] 1993, no writ). To show detrimental reliance, a plaintiff must show that he materially changed his position in reliance on the promise. English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983). Promissory estoppel does not apply to a promise covered by a valid contract between the parties, but it does apply to a promise
Plaintiffs' breach of contract claims are similarly vague. To state a claim for an enforceable contract, a plaintiff must allege (1) an offer, (2) acceptance of the offer, (3) mutual assent or "meeting of the minds" about the subject matter and the essential terms of the contract, and (4) consideration or mutuality of obligations. Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 635 (Tex.2007). Whether the parties have formed a contract is determined by the objective standard of what the parties said and how they acted, not by their subjective state of mind. Texas Disposal Systems Landfill, Inc. v. Waste Management Holdings, Inc., 219 S.W.3d 563, 589 (Tex.App.-Austin 2007); Fiess v. State Farm Lloyds, 202 S.W.3d 744, 746 (Tex. 2006) ("[T]he parties' intent is governed by what they said, not by what they intended to say but did not [emphasis in the original]."). Plaintiffs also allege that Defendants are in breach of their contractual agreement with the Plaintiffs by not complying with RESPA Servicing of the Plaintiffs' loan and loan modification, as outlined in the Deed of Trust in accordance with the State of Texas Constitution. Chase breached promises to service and process Plaintiffs' Application for a HAMP modification, to respond to Plaintiffs' questions on the accounting of all payments received on Plaintiffs' account and of insurance payments on their account, and the offsetting of ad valorem payments to Plaintiffs account, and to correct complaints where applicable. Plaintiffs fail to specify what parties entered into what contracts, whether they were valid contracts, what the key terms of each were, and what and how they were breached. They fail to provide the loan documents that were breached and to indicate which provisions were breached. See, e.g., Chapa v. Chase Home Finance LLC, Civ. A. No. C-10-359, 2010 WL 5186785, *5 (S.D.Tex. Dec.
The Court agrees with Defendants that Plaintiffs' fourth claim for breach of good faith and fair dealing is not cognizable in the context of mortgager and mortgagee. "A claim for a breach of duty of good faith and fair dealing is a tort action that arises from an underlying contract." Cole v. Hall, 864 S.W.2d 563, 568 (Tex.App.-Dallas 1993, writ dism'd). Initially whether such a duty exists is a question of law for the court. Id. It does not exist in all contractual relationships. Chapa, 2010 WL 5186785, *6; Great Am. Ins. Co. v. North Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 418 (Tex.1995); English, 660 S.W.2d at 522. The duty of good faith and fair dealing is imposed only where there is a "`special relationship of trust and confidence' between the parties, marked by shared trust or an imbalance in bargaining power.'" Chapa, 2010 WL 5186785, *6, citing Smith v. Nat'l City Mortg., 2010 U.S. Dist. LEXIS 86221, *36, 2010 WL 3338537, *12 (W.D.Tex. Aug. 23, 2010), quoting Federal Deposit Ins. Corp. v. Coleman, 795 S.W.2d 706, 708-09 (Tex. 1990). "`The relationship of mortgagor and mortgagee ordinarily does not involve a duty of good faith.'" Chapa, 2010 WL 5186785, *6, quoting Coleman, 795 S.W.2d at 709. Nor does the relationship between a creditor and a guarantor, or between a lender and a borrower, support a duty of good faith. Id.; Cole, 864 S.W.2d at 572. Plaintiffs have not alleged any facts that would demonstrate a special relationship with Defendants that would give rise to a duty of good faith here.
Plaintiff's bare-bones, conclusory claim that Defendants violated the Texas Constitution fails to meet the standard for a plausible claim under Rule 12(b)(6). It may be related to Plaintiffs' usury charge under the Texas Finance Code sec. 32.001, discussed infra. Contracts for usurious interest are prohibited by the Texas Constitution, article XVI, section 11 and the Texas Finance Code Annotated section 302.09(b). Sturm v. Muens, 224 S.W.3d 758, 761 (Tex.App.-Houston [14th Dist.] 2007). Nevertheless Plaintiffs must address the preemption issue under the DIDMCA identified in footnote 1 of this opinion and order.
Plaintiffs' conclusory assertion that Defendants breached warranties is similarly bare of any facts.
Relating to Plaintiffs' claims of fraud and violations of the Texas Finance Code sec. 202.001, and without satisfying the elements for a valid contract set out by the Court supra, Plaintiffs assert that Washington Mutual made a gratuitous promise to Plaintiffs and "misrepresented to Plaintiffs in the truth and lending statement, that Plaintiffs' interest rate would be below ten percent, but the interest on the loan of money or extension of credit
Plaintiffs' claim for breach of HUD regulations, citing 24 C.F.R. section 203.605 ("Loss Mitigation Performance"), 203.501 ("Loss Mitigation"), 203.606 ("Pre-foreclosure review"), asserts that Chase and Chase Finance failed to conduct a Loss Mitigation Evaluation and did not provide Plaintiffs with the required thirty-day notice before any foreclosure proceedings in violation of HUD regulations. The Court notes that a number of courts have held that there is no private cause of action for violation of HUD regulations. See, e.g., Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705, 922 A.2d 538, 543-44 (2007) (citing authority across the country rejecting argument that a violation of the HUD regulations creates a private cause of action); Baker v. Countrywide Home Loans, Inc., 3:08-CV-0916-B, 2009 WL 1810336, *3 (N.D.Tex. June 24, 2009) ("Because the aim of the [Federal Housing Act] and the HUD regulations is to govern the relationship between mortgagees and the government, courts have recognized that violations of such provisions fail to give rise to a private cause of action" for wrongful foreclosure.) (and cases cited therein). An exception has been recognized where the HUD regulations are incorporated into a contract between mortgagee and the government so that it permits a basis for a breach of contract claim. Baker, 2009 WL 1810336 at *5 (A "failure to comply with regulations made part of the parties' agreement may give rise to liability on a contract theory because the parties incorporated the terms into their contract. Indeed, courts have recognized that claims for failure to comply with HUD regulations... are best classified as a breach of contract."), citing Buis v. Wells Fargo Bank, N.A., 401 F.Supp.2d 612, 616 (N.D.Tex.2005). Plaintiffs have conclusorily asserted that paragraph 9(d) of the Deed of Trust incorporates the rules and regulations of the Secretary of HUD, but have not indicated which ones and have not provided a copy of that document. Nor have they provided factual support for their bare-bones allegation that the three cited HUD regulations were violated by Defendants; indeed, a pointed out by JPMC they seem to contradict that allegation.
For their negligence claim, Plaintiffs must allege (1) the existence of a legal duty, breach of that duty, and damages proximately caused by the breach. Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex.1998). Without citing any authority,
As a matter of law, Plaintiffs have not identified a legally cognizable duty owed by Defendants to Plaintiffs under the law, nor shown with supporting facts a breach of that duty and damages caused by the breach in their dispute. Thus they have failed to state a negligence claim.
As a final matter, Plaintiffs are claiming wrongful foreclosure even though that cause of action is not listed among the twelve causes of action discussed previously. Under Texas law, to state a claim for wrongful foreclosure a plaintiff must allege (1) a defect in the foreclosure sale proceedings, (2) a grossly inadequate selling price, and (3) a causal connection between the defect and the grossly inadequate selling price. Sauceda, 268 S.W.3d at 139. As defects Plaintiffs here claim they did not receive notice of the foreclosure and that Defendants foreclosed on their home on April 6, 2010 without allowing them to exercise their right to make good on the debt and keep it and failure to conduct a loss mitigation analysis. It is unclear from the amended petition whether Plaintiffs are still in possession of their home or whether they have been evicted following appeal of the forcible detainer judgment in favor of Fannie Mae. In Baker v. Countrywide Home Loans, Inc., No. 3:08-CV-0916-B, 2009 WL 1810336, *4 (N.D. Tex. June 24, 2009), the court recognized that the measure of damages for wrongful foreclosure is lost equity (i.e., the difference between the value of the property at the date of foreclosure and the remaining balance due on the indebtedness), which is based on "a tort theory of recovery to compensate the aggrieved for his lost possession of the property." Therefore, "[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." Id. See also, e.g., Sander v. Citimortgage, Inc., Civ. A. No. 4:09CV566, 2011 WL 1790732, *2 (E.D.Tex. Mar. 24, 2001) ("Recovery [for wrongful foreclosure] is premised upon loss of possession of real property, and individuals never losing possession of that property cannot recover on a theory of wrongful foreclosure."); Smith v. J.P. Morgan Chase Bank N/A, Civ. A. No. H-10-3730, 2010 WL 4622209, *2 (S.D.Tex. Nov. 4, 2010) ("Under Texas law, even if a mortgage holder wrongfully attempts foreclosure, there is no claim for wrongful foreclosure if the mortgagor does not lose possession of the home"; "[b]ecause recovery is based on the lack of possession of real property, individuals never losing possession cannot recover on a theory of wrongful foreclosure."); Peterson v. Black, 980 S.W.2d 818, 823 (Tex.App.-San Antonio 1998) ("Recovery for wrongful foreclosure is conditioned on the disturbance of the
After reviewing Plaintiffs' Amended Petition (# 7-1), for reasons indicated above, the Court agrees with JPMC that the proposed pleading does not satisfy the requirements of Rules 8, 9(b) and 12(b)(6). Nevertheless, the Court finds that JPMC has failed to show that amendment is necessarily futile except as to Plaintiffs' claims for breach of duty of good faith and fair dealing, which is not cognizable in the relationship between the parties here, promissory estoppel if the alleged promise also falls under a contract, and retaliation under RESPA. Thus the Court will permit Plaintiffs one more opportunity to state a claim that satisfies the standards of Rules 8, 12(b)(6), and 9(b) in accord with the Court's discussion here. Therefore the Court
ORDERS that CHF's (and now JPMC's) motion for more definite statement (# 4) and Plaintiffs' motion for leave to amend (# 7) are GRANTED, although the Court also
ORDERS that the proposed Amended Petition (# 7-1) is STRICKEN. Plaintiffs shall file an Amended Complaint within three weeks of entry of this order. Defendants' current motion to dismiss (#4) is MOOT.
Section 501(a)(1) of the Depository Institutions Deregulation and Monetary Control Act ("DIDMCA"), 12 U.S.C. § 1735f-7a, preempts state usury laws to the extent that those laws "expressly limit[] the rate or amount of interest" that a borrower may be charged. See, e.g., Wolfert v. Transamerica Home First, Inc., 439 F.3d 165, 175 (2d Cir.2006), citing Brown v. Investors Mortgage Co., 121 F.3d 472, 475-76 (9th Cir.1997); Smith v. Fidelity Consumer Discount Co., 898 F.2d 907 (3d Cir.1990); In re Lawson Square, Inc., 816 F.2d 1236 (8th Cir.1987). Plaintiffs should investigate the relevance of this statute to their usury claims before re-pleading.
Thrash, 433 B.R. at 596.
