Suarez v. U.S. Bank, NA, As Trustee

Western District of Texas, txwd-5:2019-cv-00704

MOTION to Dismiss Pursuant to Federal Rule 12(b)(6), by U.S. Bank, NA, as Trustee. Motions referred to Judge Elizabeth S. Chestney.

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION FELIX ROBERT SUAREZ, § § Plaintiff, § § v. § § Civil Action No. 5:19-cv-704-FB-ESC U.S. BANK TRUST NATIONAL § ASSOCIATION, AS TRUSTEE OF CVI § LCF MORTGAGE LOAN TRUST I, § § Defendant. § DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) AND BRIEF IN SUPPORT COMES NOW, Defendant U.S. Bank Trust National Association, as Trustee of CVI LCF Mortgage Loan Trust I ("U.S. Bank" or "Defendant") in the above styled action files this Motion to Dismiss Pursuant to the Federal Rules of Civil Procedure 12(b)(6) and Brief in Support and respectfully states as follows: I. INTRODUCTION On or about May 31, 2019, Plaintiff filed Plaintiff's Original Petition, Application for Temporary Restraining Order, Temporary Injunction, Permanent Injunction, and Request for Disclosures (hereafter "Petition"). The allegations in the Petition relate to foreclosure proceedings on the real property located at 1252 Clower Street, San Antonio, Texas 78201 (the "Subject Property"). The current action is Plaintiff's second lawsuit Plaintiff has filed against Defendant in the last year to stop foreclosure of the Subject Property. The first lawsuit was dismissed on April 12, 2019 when Court granted Defendant's uncontested Motion to Dismiss Pursuant to Federal DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 1 of 7 MWZM# 18-000111-505 Rule of Civil Procedure 12(b)(6)1. (See Suarez v. U.S. Bank, No. 5:18-cv-8749-OLG (W.D. Tex. Apr. 12, 2019) at ECF No. 16.) The facts in Plaintiff's current Petition are sparse and the Petition itself is replete with conclusory, inconsistent, and incomplete allegations. (See generally, Petition.) From what the undersigned can make of the allegations, Plaintiff alleges the following facts to support his allegations: (1) Defendant failed to use reasonable care in communication to Plaintiff the options of loss mitigation; (2) Defendant avoided and evaded Plaintiff's inquiries about an appeal of his loss mitigation application; (3) Defendant posted the Subject Property for foreclosure without offering more than one loan workout alternative or replying to Plaintiff's inquiries regarding an appeal of the denial of a HAMP modification In the Petition in the current action; (4) Plaintiff raised issues regarding his loan, payment history, and pending loan workout alternatives; and (5) Defendant failed to make unspecified reasonable efforts and inform Plaintiff of any assistance option before accelerating the loan and proceeding with foreclosure. For these alleged wrongs, Plaintiff asserts claims for: (1) negligence; (2) violations of the Texas Property Code § 51.002; and (3) breach of contract. (See Petition at ¶¶ 9-30.) Plaintiff's claims should be dismissed with prejudice. As shown below, Plaintiff's negligence claim is barred by the economic loss doctrine, Plaintiff's Texas Property Code Section 51.002 ("Section 51.002") claim fails because no foreclosure sale has occurred, and Defendant's 1 In the prior suit, Plaintiff failed to either respond to Defendant's Motion to Dismiss or make any objections to the Magistrate Judge's Report and Recommendation to grant the Motion to Dismiss. DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 2 of 7 MWZM# 18-000111-505 breach of contract claim fails because Plaintiff fails to allege facts to establish a breach occurred or that the alleged breached caused Plaintiff to suffer any actual damages. II. STANDARD UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6). Federal Rule of Civil Procedure 12(b)(6) provides for dismissal for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). The Supreme Court of the United States clarified the Rule 8 pleading requirements when it expressly rejected the oft-cited "no set of facts" language of Conley v. Gibson, 355 U.S. 41 (1957). See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 (2007) ("The [no set of facts] phrase is best forgotten as an incomplete, negative gloss on an accepted pleading standard."). The Court later confirmed that the Twombly pleading standard applied to all civil actions. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1953 (U.S. 2009). In order to survive a motion to dismiss, a complaint must plead sufficient facts to "state a claim to relief that is plausible on its face." Id. at 1949. The Court has explained that a claim has facial plausibility when the plaintiff "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1955. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (internal citations omitted). III. ARGUMENT AND AUTHORITIES A. Plaintiff's Negligence claim is barred by the economic loss doctrine. The economic loss doctrine precludes a plaintiff from recovering economic losses in tort cases when the loss is subject to contract claims. Tarrant Co. Hosp. Dist. v. G.E. Automation Servs., 156 S.W.3d 885, 895 (Tex. App.—Fort Worth 2005, no pet.) (citing Jim Walter Homes, DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 3 of 7 MWZM# 18-000111-505 Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986)). The economic loss doctrine is not an affirmative defense, but is a court-adopted rule to determine whether a party may recover in tort when the party's damages result from a contract with the defendant. Tarrant Co. Hosp. Dist., 156 S.W.3d at 895. If the injury is purely economic and the subject of a contract, the action may only sound in contract. Narvaez v. Wilshire Credit Corp., 757 F.Supp.2d 621, 634 (N.D. Tex. 2010); see also Polinard v. Homecomings Financial Network, Inc., No. SA-06-CA-1130 FB (NN), 2008 WL 557960, at *4 (W.D. Tex., Feb. 27, 2008) (allegations of breach of duty that relate to payments on the loan contract fail to raise a cause of action for negligence as a matter of law). To overcome the economic loss doctrine, a plaintiff must "establish that he suffered an injury that is distinct, separate, and independent from the economic losses recoverable under a breach of contract claim. Smith v. JPMorgan Chase Bank, N.A., 519 F. App'x 861, 865 (5th Cir. 2013). Here, Plaintiff's claim for negligence arises under the purported duties that Defendant allegedly owes to Plaintiff pursuant to the mortgage contract. (See Petition at ¶13) (alleging the duties violated are HUD regulations that are incorporated in the deed of trust). Further, Plaintiff has failed to allege any other relationship exists that would give rise to duties outside of the Note or Deed of Trust. (See generally, id.) Therefore, claims are barred by the economic loss doctrine and can sound only in contract. Webber v. M.W. Kellogg Co., 720 S.W.2d 124, 129 (Tex. App.— Houston [14th Dist.] 1986, writ ref'd n.r.e.). B. Plaintiff's Violations of Section 51.002 the Texas Property Code claim fails. The elements of a wrongful foreclosure claim are "(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." Biggers v. BAC Home Loans Servicing, LP, 767 F.Supp.2d 725, 729 (N.D. Tex. 2011)(Fitzwater, J.)(citing Sauceda v. GMAC Mortg. Corp., 268 DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 4 of 7 MWZM# 18-000111-505 S.W.3d 135, 139 (Tex.App. 2008, no pet.)). Texas law does not recognize a cause of action for attempted wrongful foreclosure. Foster v. Deutsche Bank Nat'l Tr. Co., 848 F.3d 403, 407 (5th Cir. 2017). Likewise, claims relating to a specific foreclosure sale date that had passed, including statutory notice violations of Section 51.002, become moot and should be dismissed. See Wright v. First Nat'l Bank of Bastrop, No. 03-12-00594-CV, 2013 Tex. App. LEXIS 4911, *9 (Tex. App—Austin Apr. 19, 2013, no pet.) (finding claims relating to a specific foreclosure sale date that had passed to be moot); Denley v. Vericrest Financial, Inc., No. H-12-992, 2012 U.S. Dist. LEXIS 86060, 2012 WL 2368325, at *3 (S.D. Tex. June 21, 2012) (dismissing claims for violations of notice provisions of Section 51.002 because no foreclosure occurred). Plaintiff's Section 51.002 claims are based upon a foreclosure sale date of June 4, 2019. (See Petition at ¶7.) However, this foreclosure sale date passed without a foreclosure taking place. As a result, Plaintiff's claim based upon Section 51.002 is moot and should be dismissed. C. Plaintiff's Breach of Contract claim fails. In order to establish a claim for breach of contract, a plaintiff must establish: (1) the existence of a valid, enforceable contract; (2) the plaintiff performed or tendered performance; (3) defendant breached the contract; and (4) defendant's breach caused plaintiffs' damages. Valero Mktg. & Supply Co. v. Kalama Int'l, 51 S.W.3d 345, 351 (Tex. App.-Houston [1st Dist.] 2001, no pet.). Plaintiff's breach of contract claim is based upon alleged violations of HUD regulations 24 CFR 203.604(b), 24 CFR 203.605, and 24 CFR 203.501 for failure to make reasonable efforts and failing to inform Plaintiff of any assistance option before accelerating the loan. (See Petition at ¶27.) Plaintiff alleges that the breach has caused him to suffer harm by incurring additional charges on his loan balance and escrow account. (See id. at ¶30.) DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 5 of 7 MWZM# 18-000111-505 Plaintiff's allegations fail to state a claim for breach of contract. First, Plaintiff's allegations fail to include any facts showing how Defendant's actions failed to comply with the above requirements—he merely concludes that they were. (See id.) Further, Plaintiff's allegations fail to establish how the claimed damages (charges on his loan balance and escrow account) could have possibly resulted from Defendant's alleged breach of the contract. (See id.) As a result, plaintiff has failed to state a claim for breach of contract and it must be dismissed. Martone v. Robb, 902 F.3d 519, 523 (5th Cir. 2018) (to state a plausible claim for relief, a plaintiff must allege facts demonstrating each element of a cause of action). D. Plaintiff is not entitled to injunctive relief because Plaintiffs' substantive claims are without merit. In their Petition, Plaintiffs claim they are entitled to Injunctive Relief. (See Petition at ¶¶ 35-47.) The law is clear that injunctive relief is an equitable remedy, not a cause of action, and should be dismissed when no substantive legal claims are pled. Barcenas v. Fed. Home Loan Mortg. Corp., No. H-12-2466, 2013 U.S. Dist. LEXIS 9405, 2013 WL 286250, at *9 (S.D.Tex. Jan. 24, 2013) (citations omitted); Jackson v. Fed. Home Loan Mortg. Corp., No. 4:11-CV-507- A, 2011 U.S. Dist. LEXIS 98779, 2011 WL 3874860, at *3 (N.D.Tex. Sept. 1, 2011) (where Plaintiff's substantive claims are subject to dismissal on the merits, he cannot establish any likelihood of success on the merits warranting injunctive relief). As argued above, Plaintiff's claims in their entirety are without merit. (See Petition.). Therefore, Plaintiff's requests for injunctive relief should be denied and dismissed. WHEREFORE, PREMISES CONSIDERED, Defendant prays that Plaintiffs' Petition be dismissed with prejudice and that Defendant be awarded all other relief to which it may be entitled. DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 6 of 7 MWZM# 18-000111-505 Respectfully submitted, By: /s/ Philip W. Danaher MARK D. CRONENWETT Texas Bar No. 00787303 PHILIP W. DANAHER Texas Bar No. 24078395 MACKIE WOLF ZIENTZ & MANN, P. C. 14160 North Dallas Parkway, Suite 900 Dallas, TX 75254 (214) 635-2650 (214) 635-2686 (Fax) ATTORNEYS FOR DEFENDANTS CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing instrument was served via ECF Notification on this 24th day of June, 2019, upon the following: Robert C. Newark, III 1341 W. Mockingbird lane, Suite 600W Dallas, TX 75247 Counsel for Plaintiff /s/ Philip W. Danaher PHILIP W. DANAHER DEFENDANT'S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) Page 7 of 7 MWZM# 18-000111-505