V. Quicken Loans, Inc.

Western District of Texas, txwd-5:2019-cv-00697

Exhibit A - Defendant Quicken Loans Inc.'s First Amended Answer and Affirma

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4 EXHIBIT A Defendant Quicken Loans Inc.'s Unopposed Motion for Leave to Amend Answer and Affirmative Defenses DA 404478.3 4 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION PABLO E. GAY and ANNA J. SUBIA § aka ANNA J. SUBIA-GAY, § § Plaintiffs, § § v. § Case No. SA:19-CV-00697-OLG § QUICKEN LOANS INC., § § Defendant. § § DEFENDANT QUICKEN LOANS INC.'S FIRST AMENDED ANSWER AND AFFIRMATIVE DEFENSES Defendant Quicken Loans Inc. ("Quicken Loans") hereby provides its First Amended Answer and Affirmative Defenses to the claims and allegations of Pablo Gay and Anna Subia-Gay ("Plaintiffs") in the Plaintiff's Original Petition (the "Complaint"). Except as specifically admitted herein, each and every allegation in the Complaint is denied, and Quicken Loans expressly denies that the Complaint states a cognizable claim. Quicken Loans responds to the individually numbered and other paragraphs of the Complaint as follows: In response to the first unnumbered paragraph of the Complaint, Quicken Loans denies all allegations directed to it and states that the remaining allegations are introductory and conclusory in nature and therefore require no response. To the extent the remaining allegations may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. Further answering, Quicken Loans notes that the first unnumbered paragraph of the Complaint refers to an "Application for Temporary Restraining Order, Temporary Injunction, and Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 1 4 Permanent Injunction" that has not been filed in this action since removal to this Court. Moreover, there is no temporary restraining order or preliminary injunction in place. 1. Quicken Loans denies the allegations in paragraph 1. Discovery should be conducted under the Federal Rules of Civil Procedure. 2. Quicken Loans admits the allegations in paragraph 2. 3. In response to paragraph 3, Quicken Loans admits it has done business in the State of Texas and has a registered agent for service of process. Quicken Loans denies the remaining allegations in paragraph 3. 4. Quicken Loans denies the allegations in paragraph 4. This Court has subject matter jurisdiction over the claims at issue in this case. 5. In response to paragraph 5, Quicken Loans admits it has done business in the State of Texas and that this Court has jurisdiction over Quicken Loans. Quicken Loans denies the remaining allegations in paragraph 5. 6. Quicken Loans denies the allegations in paragraph 6. Venue is proper in this Court. 7. In response to paragraph 7, Quicken Loans admits a foreclosure sale was scheduled. Quicken Loans denies the remaining allegations in paragraph 7. 8. Quicken Loans denies the allegations in paragraph 8. Plaintiffs' claims are without merit. 9. In response to paragraph 9, Quicken Loans admits only that it provided a mortgage to Plaintiffs with respect to the property identified in paragraph 9. Quicken Loans denies the remaining allegations in paragraph 9. 10. In response to paragraph 10, Quicken Loans admits only that the mortgage it provided to Plaintiffs was in the original principal amount of $104,250.00. Quicken Loans denies the remaining allegations in paragraph 10. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 2 4 11. In response to paragraph 11, Quicken Loans admits only that Plaintiffs have sought several loan modifications from Quicken Loans, all of which have been properly responded to by Quicken Loans. Quicken Loans denies the remaining allegations in paragraph 11. 12. In response to paragraph 12, Quicken Loans admits only that Plaintiffs are in default under the terms of their mortgage with Quicken Loans, and that foreclosure proceedings have been initiated. Quicken Loans denies the remaining allegations in paragraph 12. 13. Quicken Loans denies the allegations in paragraph 13. Quicken Loans breached no duties to Plaintiffs. 14. Quicken Loans denies the allegations in paragraph 14. Quicken Loans breached no duties to Plaintiffs. 15. Quicken Loans denies the allegations in paragraph 15. Quicken Loans made no misrepresentations to Plaintiffs and breached no duties to Plaintiffs. 16. Quicken Loans denies the allegations in paragraph 16. Quicken Loans performed its duties. 17. Quicken Loans denies the allegations in paragraph 17. Quicken Loans was not negligent and made no misrepresentations to Plaintiffs. 18. Quicken Loans denies the allegations in paragraph 18. Quicken Loans neither breached the loan documents nor violated applicable law. 19. Quicken Loans denies the allegations in paragraph 19. Any damages suffered by Plaintiffs are the consequences of their own actions. 20. Paragraph 20 contains no allegations of fact directed to Quicken Loans requiring a response, and otherwise states conclusions of law to which no response is required. To the extent Paragraph 20 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 3 4 21. Paragraph 21 contains no allegations of fact directed to Quicken Loans requiring a response, and otherwise states conclusions of law to which no response is required. To the extent Paragraph 21 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. 22. In response to paragraph 22, Quicken Loans admits the Deed of Trust gives the borrower a right to reinstate after acceleration if the borrower meets certain conditions. Plaintiffs failed to meet those conditions. Quicken Loans denies the remaining allegations in paragraph 22. 23. Quicken Loans denies the allegations in paragraph 23. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with the Deed of Trust and applicable law. 24. Quicken Loans denies the allegations in paragraph 24. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with the Deed of Trust and applicable law. 25. Paragraph 25 contains no allegations of fact directed to Quicken Loans requiring a response, and otherwise states conclusions of law to which no response is required. To the extent Paragraph 25 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. 26. Quicken Loans denies the allegations in paragraph 26. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with applicable law. 27. Quicken Loans denies the allegations in paragraph 27. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with the Deed of Trust and applicable law. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 4 4 28. Quicken Loans denies the allegations in paragraph 28. Quicken Loans has at all times complied with the Deed of Trust and applicable law. 29. Quicken Loans denies the allegations in paragraph 29. Quicken Loans has at all times complied with the Deed of Trust and applicable law. 30. Quicken Loans denies the allegations in paragraph 30. Quicken Loans has at all times complied with the Deed of Trust and applicable law, and any damages suffered by Plaintiffs are the consequences of their own actions. 31. Paragraph 31 contains no allegations of fact directed to Quicken Loans requiring a response, and otherwise states conclusions of law to which no response is required. To the extent Paragraph 31 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. 32. Quicken Loans denies the allegations in paragraph 32. Plaintiffs have no legal or contractual basis to recover attorney's fees from Quicken Loans. Quicken Loans will be seeking recovery of its attorney's fees against Plaintiffs under the loan documents, state law, and/or federal law, including but not limited to Fed. R. Civ. P. 11 and 28 U.S.C. § 1927. 33. Paragraph 33 contains no allegations of fact directed to Quicken Loans requiring a response, and otherwise states conclusions of law to which no response is required. To the extent Paragraph 33 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. Furthermore, a request for disclosure is a form of written discovery under the Texas Rules of Civil Procedure that is not available under the Federal Rules of Civil Procedure. Quicken Loans Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 5 4 objects to this discovery request and expressly reserves all specific objections and other rights under the Federal Rules of Civil Procedure. 34. Paragraph 34 contains no allegations of fact directed to Quicken Loans requiring a response, and otherwise states conclusions of law to which no response is required. To the extent Paragraph 34 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. 35. Quicken Loans denies the allegations in paragraph 35. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with the Deed of Trust and applicable law. 36. Quicken Loans denies the allegations in paragraph 36. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with the Deed of Trust and applicable law. 37. Quicken Loans denies the allegations in paragraph 37. Quicken Loans was within its rights in seeking foreclosure and has at all times complied with the Deed of Trust and applicable law. 38. Quicken Loans denies the allegations in paragraph 38. Plaintiffs' claims are without merit. 39. Quicken Loans denies the allegations in paragraph 39. Quicken Loans was within its rights in seeking foreclosure, Quicken Loans has at all times complied with the Deed of Trust and applicable law, and any harm suffered by Plaintiffs is the consequence of their own actions. 40. Quicken Loans lacks knowledge or information sufficient to form a belief about the truth of the allegations in paragraph 40 and, therefore, denies those allegations. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 6 4 41. Quicken Loans denies the allegations in paragraph 41. Quicken Loans was within its rights in seeking foreclosure, Quicken Loans has at all times complied with the Deed of Trust and applicable law, and any harm suffered by Plaintiffs is the consequence of their own actions. Therefore, the public interest would not be served by issuance of an injunction in this Court. 42. Quicken Loans lacks knowledge or information sufficient to form a belief about the truth of the allegations in paragraph 42 and, therefore, denies those allegations. If Plaintiffs are required to post a bond, however, the amount of the bond should be no less than the total amount owed to Quicken Loans. 43. Quicken Loans denies the allegations in paragraph 43. Plaintiffs are not entitled to any injunctive relief. 44. Paragraph 44 contains no allegations of fact directed to Quicken Loans requiring a response. To the extent Paragraph 44 may be construed to contain allegations of fact directed to Quicken Loans requiring a response, Quicken Loans denies those allegations. 45. Quicken Loans denies the allegations in paragraph 45. Quicken Loans was within its rights in seeking foreclosure, Quicken Loans has at all times complied with the Deed of Trust and applicable law, any harm suffered by Plaintiffs is the consequence of their own actions, and Plaintiffs are not entitled to any injunctive relief in this Court. 46. Quicken Loans denies the allegations in paragraph 46. Quicken Loans was within its rights in seeking foreclosure, Quicken Loans has at all times complied with the Deed of Trust and applicable law, any harm suffered by Plaintiffs is the consequence of their own actions, and Plaintiffs are not entitled to any injunctive relief in this Court. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 7 4 47. Quicken Loans denies the allegations in paragraph 47. Quicken Loans was within its rights in seeking foreclosure, Quicken Loans has at all times complied with the Deed of Trust and applicable law, any harm suffered by Plaintiffs is the consequence of their own actions, and Plaintiffs are not entitled to any injunctive relief in this Court. In response to the unnumbered paragraph following paragraph 47 that begins with the word "WHEREFORE," Quicken Loans denies that Plaintiff is entitled to any relief in this lawsuit. AFFIRMATIVE DEFENSES FIRST DEFENSE The Complaint fails to state a claim upon which relief may be granted. SECOND DEFENSE Plaintiffs lack standing to pursue the claims in the Complaint because Plaintiffs have suffered no cognizable injury fairly traceable to the challenged conduct. THIRD DEFENSE Some or all of the relief Plaintiffs seek is not available as a matter of law. FOURTH DEFENSE Plaintiffs' injuries were caused by Plaintiffs' own negligence. FIFTH DEFENSE Plaintiffs' claims are barred by equitable estoppel. SIXTH DEFENSE Plaintiffs' claims are barred because of Plaintiffs' prior material breach of the loan documents. SEVENTH DEFENSE Plaintiffs' claims are barred because of Plaintiffs' failure to perform conditions precedent. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 8 4 EIGHTH DEFENSE Plaintiffs' claims are barred because of Plaintiffs' unclean hands. NINTH DEFENSE Plaintiffs' claims against Quicken Loans fail because Plaintiffs had the opportunity to remedy their breach of the loan documents by complying with Tex. Prop. Code Ann. § 51.002(d), but Plaintiffs have failed to do so. TENTH DEFENSE Plaintiffs' claims are barred by justification because Quicken Loans was exercising (1) its own legal rights; or (2) a good-faith claim to a colorable legal right. ELEVENTH DEFENSE Plaintiffs' claims are barred by the economic loss rule. Under Texas law, the economic loss rule "generally precludes recovery in tort for economic losses resulting from the failure of a party to perform under a contract."1 Thus, tort damages are generally not recoverable if the defendant's conduct "would give rise to liability only because it breaches the parties' agreement." 2 Tort damages are recoverable, however, if the defendant's conduct "would give rise to liability independent of the fact that a contract exists between the parties." 3 "The nature of the injury most often determines which duty or duties are breached. When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone." 4 Here, Plaintiffs' claims for negligence and violation of the Texas Property Code arise under the purported duties that Quicken Loans allegedly owes to Plaintiffs pursuant to the loan 1 Lamar Homes, Inc. v. Mid–Continent Cas. Co., 242 S.W.3d 1, 12 (Tex. 2007). 2 Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991). 3 Id. 4 Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986); see also DeLanney, 809 S.W.2d at 494. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 9 4 documents. Further, Plaintiff has failed to allege any other relationship exists that would give rise to duties outside of the loan documents. Therefore, Plaintiffs' claims for negligence and violation of the Texas Property Code are barred by the economic-loss rule. TWELFTH DEFENSE Plaintiffs' claims are barred because Plaintiffs failed to mitigate their damages. Pursuant to Tex. Prop. Code Ann. § 51.002(d), Plaintiffs had the ability to mitigate their damages by curing the default. However, Plaintiffs failed to do so. THIRTEENTH DEFENSE Plaintiffs' claims are barred by the two-dismissal rule in Rule 41(a)(1)(B). This is the third case involving the very same property located at 10143 Silverbrook Place, San Antonio, Texas 78254, filed by Plaintiffs against Quicken Loans to stop a valid and properly-noticed trustee's sale. All three cases were initially filed by Plaintiffs in Civil District Courts of Bexar County, Texas, and removed by Quicken Loans to this Court. The first case was assigned Case No. 5:18-cv-00410- OLG (the "First Action"); the second case was assigned Case No. 5:19-cv-00387-OLG (the "Second Action"); and this third case is assigned Case No. 5:19-cv-00697-OLG (the "Instant Action"). On January 3, 2019, Plaintiffs filed their Notice of Voluntary Dismissal in the First Action.5 On May 31, 2019, Plaintiffs filed their Notice of Voluntary Dismissal in the Second Action.6 The very same day Plaintiffs voluntarily dismissed the Second Action, Plaintiffs filed the Instant Action. The effect of Plaintiffs' dismissal of the Second Action is determined by Rule 41(a)(1)(B)'s two-dismissal rule, which applies on its face to these facts: "Unless the notice or stipulation states 5 Case No. 5:18-cv-00410-OLG, Doc. 14. 6 Case No. 5:19-cv-00387-OLG, Doc. 4. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 10 4 otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits."7 By Rule 41(a)(1)(B)'s plain language, Plaintiffs' Notice of Voluntary Dismissal in the Second Action operated as a dismissal with prejudice. 8 As such, Plaintiffs could not bring further claims based on the same facts against Quicken Loans. 9 FOURTEENTH DEFENSE For the reasons stated in the preceding paragraph, Plaintiffs' claims are barred by res judicata. In all three lawsuits, Plaintiffs asserted causes of action against Quicken Loans for allegedly breaching the contract between Quicken Loans and Plaintiffs. Under Rule 41(a)(1)(b), "if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits." 10 Two actions are based on the "same claim" if they are "based on the same transaction." This standard derives from the common law of res judicata as set forth in the Second Restatement of Judgments, which provides that a claim includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.11 For these purposes, "transaction" is defined pragmatically to include facts "related in time, space, origin, or motivation."12 It is well-settled that a single transaction may give rise to 7 Fed. R. Civ. P. 41(a)(1)(B). 8 See 9 Wright & Miller, Federal Practice and Procedure § 2368 (3d ed). 9 Yesh Music v. Lakewood Church, 727 F.3d 356, 363 (5th Cir. 2013) ("[T]he well-known legal consequence of two voluntary dismissals is an inability to re-file the complaint."); Commercial Space Mgmt. Co. v. Boeing Co., 193 F.3d 1074, 1076 (9th Cir. 1999) ("a voluntary dismissal of a second action operates as a dismissal on the merits if the plaintiff has previously dismissed an action involving the same claims."). 10 Fed. R. Civ. P. 41(a)(1)(B). 11 Restatement Second, Judgments § 24(1). 12 Id. § 24(2). Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 11 4 multiple legal theories, and that the mere presence of "a number of different legal theories casting liability on an actor. . . does not create multiple transactions and hence multiple claims." 13 Here, the crux of all three actions are Plaintiffs' bogus allegations that Quicken Loans breached its contract with Plaintiffs. Accordingly, the series of connected transaction arising from the contract is the common nucleus of facts that underlies the First Action, Second Action, and Instant Action. Consequently, because of Plaintiffs' prior voluntary dismissals of the First Action and Second Action, Plaintiffs' claims asserted against Quicken Loans in the Instant Action are barred under res judicata principles. RESERVATION OF RIGHTS Quicken Loans expressly reserves its right to amend this Answer and Affirmative Defenses, including, but not limited to, by asserting additional defenses or making additional claims or counterclaims for further relief, as discovery in this action shall warrant, or in the event of any future change in the nature or scope of this lawsuit. REQUEST FOR ATTORNEY'S FEES Quicken Loans requests an award of its attorney's fees against Plaintiffs under the loan documents, state law, and/or federal law, including but not limited to Fed. R. Civ. P. 11 and 28 U.S.C. § 1927. PRAYER FOR RELIEF WHEREFORE, having fully answered the Complaint, Quicken Loans prays for relief as follows: A. That Plaintiffs take nothing by way of the Complaint; 13 Id. § 24(2), cmt b. Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 12 4 B. That the Complaint be dismissed in its entirety with prejudice, and that judgment be entered in favor of Quicken Loans; C. That Quicken Loans be awarded its costs and expenses of suit incurred herein, including reasonable costs and attorneys' fees; and D. For such other and further relief as this Court deems just and proper. Respectfully submitted, By: /s/ Jacob Sparks Jacob Sparks Texas Bar No. 24066126 SPENCER FANE LLP 5700 Granite Parkway, Suite 650 Plano, Texas 75024 Tel: (214) 750-3624 Fax: (214) 750-3612 Email: JSparks@SpencerFane.com ATTORNEYS FOR QUICKEN LOANS INC. CERTIFICATE OF SERVICE I hereby certify that on December 6, 2019, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following: Robert Clarence Newark, III Newark Law Offices 1341 W. Mockingbird Lane Ste 600W Dallas, TX 75246 866-230-7236 Fax: 888-316-3398 Email: office@newarkfirm.com By: /s/ Jacob Sparks Jacob Sparks Defendant Quicken Loans Inc.'s First Amended Answer and Affirmative Defenses Page 13