Appellate Circuit

I Don’t Know Texas Procedure Claims Lyin’ Judge Carl E. Stewart Twice During Opening Oral Argument

Judge Carl Stewart claimed at Oral Argument that he doesn’t claim to be an expert in this Texas foreclosure procedure – at all….verbatim.

On Wednesday, March 10, 2021 an Unpublished Opinion was released. It’s detailed below.

Colbert, et al v. Wells Fargo Bank

FEB 20, 2021

JOLLY, E. GRADY

STEWART, CARL E.

OLDHAM, ANDREW “ANDY” S.

General Docket
United States Court of Appeals for the Fifth Circuit
Court of Appeals Docket #: 20-10394 Docketed: 04/16/2020
Nature of Suit: 4220 Foreclosure
Colbert v. Wells Fargo Bank
Appeal From: Northern District of Texas, Dallas
Fee Status: Fee Paid
Case Type Information:
     1) Private Civil Diversity
     2) Private
     3)
Originating Court Information:
     District: 0539-3 : 3:19-CV-1415
     Originating Judge: Sam R. Cummings, U.S. District Judge
     Date Filed: 06/13/2019
     Date NOA Filed:      Date Rec’d COA:
     04/13/2020      04/13/2020
Prior Cases:
     None
Current Cases:
     None
Panel Assignment:
Panel: EGJ     CES     ASO
Date of Hearing: 12/01/2020      Date of Decision:

 

Harry Colbert
Plaintiff – Appellant
Raffi Melkonian
Direct: 713-572-4321
Email: melkonian@wrightclosebarger.com
Fax: 713-572-4320
[COR LD NTC Retained]
Wright, Close & Barger, L.L.P.
Room 2200
1 Riverway
Houston, TX 77056Rachel Khirallah
Direct: 214-484-4699
Email: rkhirallah@khirallahpllc.com
Fax: 214-540-8619
[COR NTC Retained]
Khirallah, P.L.L.C.
Suite 3400
325 N. Saint Paul Street
Dallas, TX 75201-3818
Carla Taylor
Plaintiff – Appellant
Raffi Melkonian
Direct: 713-572-4321
[COR LD NTC Retained]
(see above)Rachel Khirallah
Direct: 214-484-4699
[COR NTC Retained]
(see above)
v.
Wells Fargo Bank, N.A.
Defendant – Appellee
Thomas F. Loose, Esq.
Direct: 214-740-8000
Email: tloose@lockelord.com
[COR LD NTC Retained]
Locke Lord, L.L.P.
Suite 2800
2200 Ross Avenue
Dallas, TX 75201Matthew Hogan Davis, Attorney
Direct: 214-740-8315
Email: mdavis@lockelord.com
Fax: 214-740-8800
[COR NTC Retained]
Locke Lord, L.L.P.
Suite 2800
2200 Ross Avenue
Dallas, TX 75201Elizabeth Kristin Duffy
Direct: 214-740-8673
Email: eduffy@lockelord.com
Fax: 214-740-8800
[COR NTC Retained]
Locke Lord, L.L.P.
Suite 2800
2200 Ross Avenue
Dallas, TX 75201Robert Thompson Mowrey
Direct: 214-740-8000
Email: rmowrey@lockelord.com
Fax: 214-740-8800
[COR NTC Retained]
Locke Lord, L.L.P.
Suite 2800
2200 Ross Avenue
Dallas, TX 75201

Harry Colbert; Carla Taylor,

Plaintiffs – Appellants

v.

Wells Fargo Bank, N.A.,

Defendant – Appellee

04/16/2020  Open Document
2 pg, 87.24 KB
PRIVATE CIVIL DIVERSITY CASE docketed. NOA filed by Appellants Mr. Harry Colbert and Ms. Carla Taylor [20-10394] (MFY) [Entered: 04/16/2020 03:45 PM]
04/20/2020  Open Document
1 pg, 353.17 KB
APPEARANCE FORM received from Ms. Rachel Khirallah for Mr. Harry Colbert and Ms. Carla Taylor for the court’s review. Lead Counsel? No. [20-10394] (Rachel Khirallah ) [Entered: 04/20/2020 10:45 AM]
04/20/2020 APPEARANCE FORM FILED by Attorney Rachel Khirallah for Appellant Carla Taylor in 20-10394, Attorney Rachel Khirallah for Appellant Harry Colbert in 20-10394 [20-10394] (MVM) [Entered: 04/20/2020 10:55 AM]
04/20/2020  Open Document
1 pg, 140.32 KB
APPEARANCE FORM for the court’s review. Lead Counsel? Yes. [20-10394] (Raffi Melkonian ) [Entered: 04/20/2020 11:56 AM]
04/20/2020 APPEARANCE FORM FILED by Attorney(s) Raffi Melkonian for party(s) Appellant Harry Colbert Appellant Carla Taylor, in case 20-10394 [20-10394] (MVM) [Entered: 04/20/2020 02:54 PM]
04/22/2020  Open Document
4 pg, 106.32 KB
INITIAL CASE CHECK by Attorney Advisor complete, Action: Case OK to Process. [9298411-2] Initial AA Check Due satisfied. [20-10394] (MVM) [Entered: 04/22/2020 08:53 AM]
04/22/2020 ELECTRONIC RECORD ON APPEAL REQUESTED FROM DISTRICT COURT for 3:19-CV-1415. Electronic ROA due on 05/07/2020. [20-10394] (MVM) [Entered: 04/22/2020 08:55 AM]
04/23/2020  Open Document
1 pg, 99.16 KB
TRANSCRIPT ORDER received advising transcript unnecessary for appeal purposes. [20-10394]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: TRANSCRIPT ORDER received from Appellants Mr. Harry Colbert and Ms. Carla Taylor advising transcript unnecessary for appeal purposes. Date of Service: 04/20/2020 via email – Attorney for Appellants: Khirallah, Melkonian; Attorney for Appellee: Mowrey [20-10394] (Raffi Melkonian ) [Entered: 04/23/2020 03:17 PM]
04/28/2020  Open Document
1 pg, 50.22 KB
APPEARANCE FORM for the court’s review. Lead Counsel? No. [20-10394] (Matthew Hogan Davis ) [Entered: 04/28/2020 03:16 PM]
04/29/2020 APPEARANCE FORM FILED by Attorney(s) Matthew Hogan Davis for party(s) Appellee Wells Fargo Bank, N.A., in case 20-10394 [20-10394] (CAS) [Entered: 04/29/2020 09:25 AM]
05/06/2020  Open Document
1 pg, 50.34 KB
APPEARANCE FORM for the court’s review. Lead Counsel? No. [20-10394] (Elizabeth Kristin Duffy ) [Entered: 05/06/2020 05:31 PM]
05/07/2020 ELECTRONIC RECORD ON APPEAL FILED. Exhibits on File in District Court? No. Electronic ROA deadline satisfied. [20-10394] (MRW) [Entered: 05/07/2020 10:55 AM]
05/07/2020  Open Document
4 pg, 128.02 KB
BRIEFING NOTICE ISSUED A/Pet’s Brief Due on 06/16/2020 for Appellants Harry Colbert and Carla Taylor. [20-10394] (MRW) [Entered: 05/07/2020 10:57 AM]
05/07/2020 APPEARANCE FORM FILED by Attorney(s) Elizabeth Kristin Duffy for party(s) Appellee Wells Fargo Bank, N.A., in case 20-10394 [20-10394] (LEF) [Entered: 05/07/2020 03:20 PM]
06/16/2020  Open Document
55 pg, 402.78 KB
APPELLANT’S BRIEF FILED # of Copies Provided: 0.
A/Pet’s Brief deadline satisfied. Appellee’s Brief due on 07/16/2020 for Appellee Wells Fargo Bank, N.A. [20-10394]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: APPELLANT’S BRIEF FILED by Mr. Harry Colbert and Ms. Carla Taylor. Date of service: 06/16/2020 via email – Attorney for Appellees: Davis, Duffy, Mowrey; Attorney for Appellants: Khirallah, Melkonian [20-10394] (Raffi Melkonian ) [Entered: 06/16/2020 07:29 PM]
06/16/2020  Open Document
46 pg, 1018.36 KB
RECORD EXCERPTS FILED. # of Copies Provided: 0 [20-10394] (Raffi Melkonian ) [Entered: 06/16/2020 07:32 PM]
06/25/2020  Open Document
1 pg, 74.6 KB
APPEARANCE FORM for the court’s review. Lead Counsel? No. [20-10394] (Thomas F. Loose ) [Entered: 06/25/2020 03:00 PM]
06/26/2020 APPEARANCE FORM FILED by Attorney(s) Thomas F. Loose for party(s) Appellee Wells Fargo Bank, N.A., in case 20-10394 [20-10394] (MRW) [Entered: 06/26/2020 11:01 AM]
07/15/2020  Open Document
1 pg, 87 KB
APPEARANCE FORM received from Mr. Robert Thompson Mowrey for Wells Fargo Bank, N.A. for the court’s review. Lead Counsel? No. [20-10394] (Robert Thompson Mowrey ) [Entered: 07/15/2020 12:25 PM]
07/15/2020 APPEARANCE FORM FILED by Attorney Robert Thompson Mowrey for Appellee Wells Fargo Bank, N.A. in 20-10394, Attorney Thomas F. Loose for Appellee Wells Fargo Bank, N.A. in 20-10394 [20-10394] (RSM) [Entered: 07/17/2020 03:13 PM]
07/16/2020  Open Document
62 pg, 232.22 KB
APPELLEE’S BRIEF FILED # of Copies Provided: 0. E/Res’s Brief deadline satisfied. Reply Brief due on 08/06/2020 for Appellants Harry Colbert and Carla Taylor [20-10394]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: APPELLEE’S BRIEF FILED by Wells Fargo Bank, N.A.. Date of service: 07/16/2020 via email – Attorney for Appellees: Davis, Duffy, Loose, Mowrey; Attorney for Appellants: Khirallah, Melkonian [20-10394] (Thomas F. Loose ) [Entered: 07/16/2020 05:33 PM]
07/30/2020  Open Document
6 pg, 115.84 KB
UNOPPOSED MOTION to extend time to file reply brief until 08/26/2020 [9367034-2]. Date of service: 07/30/2020 [20-10394]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: UNOPPOSED LEVEL 1 EXTENSION REQUESTED by Appellants Mr. Harry Colbert and Ms. Carla Taylor for filing Appellant’s Reply Brief until 08/26/2020 [20-10394] (Raffi Melkonian ) [Entered: 07/30/2020 11:42 AM]
07/31/2020  Open Document
1 pg, 84.1 KB
CLERK ORDER granting in part Motion to extend time to file reply brief filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert [9367034-2] Reply Brief deadline updated to 08/20/2020 for Appellants Harry Colbert and Carla Taylor [20-10394] (MVM) [Entered: 07/31/2020 08:03 AM]
08/20/2020  Open Document
37 pg, 349.04 KB
APPELLANT’S REPLY BRIEF FILED # of Copies Provided: 0.
Reply Brief deadline satisfied [20-10394]
REVIEWED AND/OR EDITED – The original text prior to review appeared as follows: APPELLANT’S REPLY BRIEF FILED by Mr. Harry Colbert and Ms. Carla Taylor. Date of service: 08/20/2020 via email – Attorney for Appellees: Davis, Duffy, Loose, Mowrey; Attorney for Appellants: Khirallah, Melkonian [20-10394] (Raffi Melkonian ) [Entered: 08/20/2020 04:24 PM]
09/21/2020  Open Document
1 pg, 100.87 KB
PAPER COPIES REQUESTED for the Appellant Brief filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert in 20-10394 [9335348-2], Record Excerpts filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert in 20-10394 [9335349-2], Appellant Reply Brief filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert in 20-10394 [9382646-2]. Paper Copies of Brief due on 09/28/2020 for Appellants Harry Colbert and Carla Taylor.. Paper Copies of Record Excerpts due on 09/28/2020 for Appellants Harry Colbert and Carla Taylor. [20-10394] (MVM) [Entered: 09/21/2020 11:56 AM]
09/21/2020  Open Document
1 pg, 91.13 KB
PAPER COPIES REQUESTED for the Appellee Brief filed by Appellee Wells Fargo Bank, N.A. in 20-10394 [9357581-2]. Paper Copies of Brief due on 09/28/2020 for Appellee Wells Fargo Bank, N.A.. [20-10394] (MVM) [Entered: 09/21/2020 12:05 PM]
09/23/2020 Paper copies of Appellee Brief filed by Appellee Wells Fargo Bank, N.A. in 20-10394 received. Paper copies match electronic version of document? Yes # of Copies Provided: 7. Paper Copies of Brief due deadline satisfied. [20-10394] (MVM) [Entered: 09/23/2020 02:40 PM]
09/25/2020 Paper copies of Appellant Reply Brief filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert in 20-10394 received. Paper copies match electronic version of document? Yes # of Copies Provided: 7. Paper Copies of Brief due deadline satisfied. [20-10394] (RAJ) [Entered: 09/25/2020 03:04 PM]
09/25/2020 Paper copies of Appellant Brief filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert in 20-10394 received. Paper copies match electronic version of document? Yes # of Copies Provided: 7. [20-10394] (RAJ) [Entered: 09/25/2020 03:12 PM]
09/25/2020 Paper copies of Record Excerpts filed by Appellants Ms. Carla Taylor and Mr. Harry Colbert in 20-10394 received. Paper copies match electronic version of document? Yes # of Copies Provided: 4. Paper Copies of Record Excerpts due deadline satisfied. [20-10394] (RAJ) [Entered: 09/25/2020 03:16 PM]
10/06/2020  Open Document
1 pg, 84.16 KB
CASE TENTATIVELY calendared for oral argument for the week of 11/30/2020. [20-10394] (PFT) [Entered: 10/06/2020 11:27 AM]
10/19/2020 CASE CALENDARED for oral argument on Tuesday, 12/01/2020 in New Orleans in the En Banc Courtroom — PM session. In accordance with our policy, lead counsel only will receive via email at a later date a copy of the court’s docket and an acknowledgment form. All other counsel of record should monitor the court’s website for the posting of the oral argument calendars.. [20-10394] (SME) [Entered: 10/19/2020 12:47 PM]
11/17/2020 Oral argument moved from 1:00 pm docket to 9:30 a.m. docket on 12/1/20. [20-10394] (SME) [Entered: 11/17/2020 03:18 PM]
12/01/2020  Open Document
1 pg, 132.42 KB
SUPPLEMENTAL AUTHORITIES (FRAP 28j) FILED by Appellants Mr. Harry Colbert and Ms. Carla Taylor Date of Service: 12/01/2020 via email – Attorney for Appellees: Davis, Duffy, Loose, Mowrey; Attorney for Appellants: Khirallah, Melkonian [20-10394] (Raffi Melkonian ) [Entered: 12/01/2020 11:41 AM]
12/01/2020 ORAL ARGUMENT HEARD before Judges Jolly, Stewart, Oldham. Arguing Person Information Updated for: Thomas F. Loose arguing for Appellee N.A. Wells Fargo Bank; Arguing Person Information Updated for: Raffi Melkonian arguing for Appellant Harry Colbert [20-10394] (SME) [Entered: 12/01/2020 03:19 PM]

Before  Jolly, Stewart, and Oldham, Circuit Judges. Per Curiam:*

Harry Colbert and Carla Taylor (“Plaintiffs”) had a home mortgage loan with Wells Fargo. They defaulted on their loan, and Wells Fargo foreclosed on their home and sold it in a non-judicial foreclosure sale. They filed suit against Wells Fargo, asserting Texas Debt Collection Act claims, tort claims, and breach of contract claims.

The district court dismissed all claims under Federal Rule of Civil Procedure 12(b)(6). We AFFIRM IN PART and REVERSE AND REMAND IN PART.

* Pursuant to 5th Circuit Rule 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.

FACTS AND PROCEDURAL HISTORY

In December 2008, Plaintiffs purchased a home in Duncanville, Texas. They took out a mortgage on the home, which Wells Fargo serviced and eventually purchased. They made regular payments on the loan for several years until Taylor became sick with cancer and they fell behind.

In May 2018, Wells Fargo sent Plaintiffs a notice of default and notice of intent to accelerate. They responded by making several payments on their account. In September 2018, Wells Fargo sent Plaintiffs an account statement explaining that the bank “ha[d] not made the first notice of filing required by applicable law for the foreclosure process.” Wells Fargo sent similar notices through December 2018, all representing that their loan was not yet in foreclosure.

On January 11, 2019, Wells Fargo sent Plaintiffs a notice of acceleration. On January 16, 2019, Wells Fargo sent Plaintiffs an account statement indicating that it would accept payment for less than the full balance of the loan and noting that a failure to pay could result in acceleration of the loan. Wells Fargo foreclosed on their loan shortly thereafter.

As of January 16, 2019, Plaintiffs owed Wells Fargo $152,486.63. Wells Fargo sold Plaintiffs’ home for $155,000, more than the amount Plaintiffs owed. Wells Fargo did not give Plaintiffs the surplus money or explain if Plaintiffs owed any additional fees.

Plaintiffs sued Wells Fargo asserting various causes of action under the Texas Debt Collection Act and Texas common law. Wells Fargo moved to dismiss all claims under Rule 12(b)(6). The district court granted the motion to dismiss. The court also quashed Plaintiffs’ request to subpoena a Wells Fargo employee. This appeal follows.

STANDARD OF REVIEW

This court reviews de novo a motion to dismiss for failure to state a claim under Rule 12(b)(6). In re Katrina Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). In considering a motion to dismiss, courts accept facts as true but not legal conclusions. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007).

DISCUSSION

Plaintiffs appeal the district court’s dismissal of the following claims: misrepresentation under TDCA section 392.304(a)(8); false representation under TDCA section 392.304(a)(19); improper fee collection under TDCA section 392.303(a)(2); breach of contract; negligent misrepresentation; negligence; and fraud. Plaintiffs also appeal the district court’s order quashing their subpoena of a Wells Fargo employee.

Misrepresentation and False Representation under TDCA sections 304(a)(8) and 392.304(a)(19)

Plaintiffs argue that Wells Fargo’s monthly statements from May to December 2018 indicated that their home was not yet in foreclosure. Since that information was false, they argue that Wells Fargo misrepresented information about their loan in violation of the TDCA. They assert the same argument for Wells Fargo’s January 2019 statement indicating that their loan was not yet accelerated.1

They argue that the district court erred in dismissing their complaint based on these allegations. We disagree.

1 Plaintiffs’ January 2019 monthly statement said that their loan would be accelerated unless they paid $8,288.26.

“[A] debt collector may not use a fraudulent, deceptive, or misleading representation that . . . misrepresent[s] the character, extent, or amount of a consumer debt.” TEX. FIN. CODE § 392.304(a)(8). Debt collectors are also prohibited from “using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer.” Id.

  • 392.304(a)(19).

Wells Fargo’s statements about Plaintiffs’ foreclosure and acceleration status were confusing, but none of the statements suffice to state a claim under section 392.304(a)(8) because the statements did not lead Plaintiffs “to be unaware (1) that [they] had a mortgage debt, (2) of the specific amount [they] owed, or (3) that [they] had defaulted.” Rucker v. Bank of America, N.A., 806 F.3d 828, 832 (5th Cir. 2015). Though Wells Fargo’s January 2019 statement requested payment for less than the full balance of Plaintiffs’ loan, Plaintiffs were not misled as to the overall balance they owed Wells Fargo.

Plaintiffs also fail to state a claim under Texas Financial Code section 392.304(a)(19). They marshal the same facts as above, arguing that even if Wells Fargo’s statements are not included under section 392.304(a)(8), the statements are actionable as false representations under section 392.304(a)(19). However, misrepresentations that are actionable under the TDCA must be affirmative statements that are false or misleading. Chavez v. Wells Fargo Bank, N.A., 578 F. App’x 345, 348 (5th Cir. 2014). Plaintiffs’ claim for misrepresentation under section 392.304(a)(19) hinges on a sentence in their January 2019 statement that reads “[f]ailure to bring your loan current may result in fees, the acceleration of your repayment terms (or request for repayment of your balance in full), or the possibility of loss of your home through foreclosure.” This sentence falls short of being an affirmative statement that their home was not foreclosed and that their debt was not accelerated.2

Statements that create misrepresentations only through inference or deduction are not affirmative misstatements. See Chavez, 578 F. App’x at 348 (dismissing claim under section 392.304(a)(19) based on statement from which the plaintiff could infer that he was qualified for loan modification).

A statement about Wells Fargo’s possible future actions regarding Plaintiffs’ loan is not an affirmative representation about the current state of the loan, even though Plaintiffs could infer information from the statement.

We therefore affirm the district court’s dismissal of Plaintiffs’ claims under Texas Financial Code section 392.304(a)(8) and section 392.304(a)(19).

Improper Fees under TDCA section 303(a)(2)

Plaintiffs next argue that the district court erred in dismissing their claim under Texas Financial Code section 392.303(a)(2).

Wells Fargo sold Plaintiffs’ home and appears to have received more money from the sale than was owed by Plaintiffs. Wells Fargo did not turn over any excess funds nor explain what additional fees Plaintiffs owed. We disagree with the district court’s dismissal of Plaintiffs’ claim at this stage.

“In debt collection, a debt collector may not use unfair or unconscionable means . . . [including] collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless expressly authorized by the agreement creating the obligation.” TEX. FIN. CODE § 392.303(a)(2).

2 The same statement told Plaintiffs that Wells Fargo had made the first filing in the foreclosure process.

When Wells Fargo sold Plaintiffs’ home, it received $155,000 at the foreclosure sale. According to the January 2019 statement, Plaintiffs owed Wells Fargo $152,486.63 in unpaid principal balance, unpaid advance balance, repayment of escrow, unpaid late charges, and unpaid interest.

If the foreclosure sale happened on January 16, Wells Fargo would have owed Plaintiffs $2,513.37 from the foreclosure sale.3

In reality, the foreclosure sale occurred on February 5, 2019. While Plaintiffs may have accrued more debt and fees through February 5, (thereby reducing the amount Wells Fargo owed them from the foreclosure sale), we cannot conclude that Wells Fargo owes Plaintiffs none of the proceeds from the sale.

If Plaintiffs were owed even one dollar from the foreclosure sale, Wells Fargo may have violated section 392.303(a)(2) by collecting a charge, fee, or expense not authorized by their agreement.

Wells Fargo’s only response is that Plaintiffs’ allegations on this claim are conclusory. Given that Plaintiffs’ Second Amended Complaint includes their January 2019 statement showing that they owe Wells Fargo less than $155,000, we disagree.

Even though the January 2019 statement is an exhibit to the complaint, “a district court [reviewing a motion to dismiss] must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference.” Funk v.Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (internal quotation and citation omitted).

We therefore reverse and remand so that the district court can determine if Wells Fargo owes Plaintiffs any money from the foreclosure sale.

3 This amount may be lower if the mortgage contract authorizes Wells Fargo to charge Plaintiffs additional fees related to foreclosure.

Breach of Contract Claim

Plaintiffs’ third argument is that the district court erred by dismissing their breach of contract claim. Plaintiffs assert that Wells Fargo breached the mortgage contract by giving improper notice of acceleration before foreclosing on their home or by abandoning its acceleration and then improperly foreclosing on their home. Assuming that improper acceleration is actionable as a breach of contract, we disagree with Plaintiffs’ arguments that Wells Fargo’s acceleration was improper.

Plaintiffs first assert that Wells Fargo breached the mortgage contract by foreclosing on their home without providing proper notice of acceleration. Under Texas law, a lender may not foreclose on a debt without providing both a notice of intent to accelerate and a notice of acceleration. See Ogden v. Gibraltar Sav. Ass’n, 640 S.W.2d 232, 234 (Tex. 1982). Even if a lender accelerates a note with a “clear and unequivocal” notice, Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 893 (Tex. 1991), acceleration can be abandoned by a party’s actions. Boren v. United States Nat’l Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015).

Wells Fargo sent Plaintiffs all the required notices before foreclosing on their home. It sent the notice of default and notice of intent to accelerate on May 11, 2018. It sent notices of acceleration and notice of foreclosure sale on January 11, 2019. It foreclosed on Plaintiffs’ home on February 5, 2019.

Plaintiffs argue that the notice was improper because it lacked certain features, including a title and a signature from Wells Fargo. However, the notice clearly stated that it was the notice of acceleration and that Wells Fargo had elected to accelerate Plaintiffs’ debt. It was “clear and unequivocal” under Shumway, so the notice was proper.

Plaintiffs next argue that Wells Fargo breached the mortgage contract by abandoning acceleration and then foreclosing on their home. Wells Fargo sent a notice of acceleration on January 11, but it sent a statement requesting payment for less than the full amount of the accelerated loan on January 16.

Plaintiffs argue that the January monthly statement abandoned Wells Fargo’s right of acceleration because a lender may waive its earlier acceleration by “requesting payment on less than the full amount of the loan.” Boren, 807 F.3d at 106.

Abandonment is viewed through the lens of traditional principles of waiver. Id. at 105. Waiver of a right requires “actual intent to relinquish the right, or intentional conduct inconsistent with the right.” Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). Waiver can be express or implied from “conduct inconsistent with a claim to the right.” G.T. Leach Builders, LLC v. Sapphire V.P, LP, 458 S.W.3d 502, 511 (Tex. 2015). “Waiver by implication only occurs when conclusive evidence shows the party unequivocally manifests its intention to no longer assert its right.” Verdin v. Fed. Nat’l Mortg. Ass’n, 540 F. App’x 253, 256 (5th Cir. 2013); see also G.H. Bass & Co. v. Dalsan Props.-Abilene, 885 S.W.2d 572, 577 (Tex. App. —Dallas 1994, no writ) (“[I]t is the burden of the party who is to benefit by a showing of waiver to produce conclusive evidence that the opposite party [unequivocally] manifested its intent to no longer assert its claim.” (quotation omitted)).

Plaintiffs argue that Wells Fargo’s January 2019 monthly statement abandoned acceleration by requesting payment for less than the full amount of the loan. But the request for payment must have demonstrated an “unequivocal manifestation” of Wells Fargo’s intent to no longer accelerate the loan.

Wells Fargo’s request for a lesser amount was a reinstatement amount that Plaintiffs could pay to avoid acceleration, and it did not evidence a clear intent to abandon acceleration. See Lyons v. Select Portfolio Servicing, Inc., 748 F. App’x 610, 611–12 (5th Cir. 2019) (finding that a post-acceleration notice informing a mortgagor of the amount owed to return a loan to good standing did not manifest intent to abandon acceleration).

Wells Fargo’s notice of acceleration was proper, and no subsequent notice manifested intent to abandon acceleration, so we affirm the district court’s dismissal of Plaintiffs’ breach of contract claim.

Negligent Misrepresentation Claim

Plaintiffs’ fourth argument is that the district court improperly dismissed their claim for negligent misrepresentation. We disagree.

To demonstrate a case of negligent misrepresentation, a plaintiff must plead the following:

    • the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplies “false information” for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation.

Fed. Land Bank Assoc. of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991).

Plaintiffs failed to allege sufficient facts to meet the second prong of a negligent misrepresentation claim, that Wells Fargo supplied false information for guidance in their business. Texas courts require false information to be for guidance in another’s business. See id. Plaintiffs do not allege such facts, and their argument that negligent misrepresentation claims are permitted between lenders and mortgagors is inapposite. We therefore affirm the district court’s dismissal of Plaintiffs’ negligent misrepresentation claim.

Negligence Claim

Plaintiffs’ fifth argument is that the district court erred by dismissing their negligence claim on the ground that it was barred by the economic loss rule. We disagree.

Plaintiffs asserted a negligence claim based on Wells Fargo’s alleged duties to correct its misleading statements about their loan and to use reasonable care when providing information to them. See Hurd v. BAC Home Loans Servicing, LP, 880 F.Supp.2d 747, 763 (N.D. Tex. 2012) (duty to correct prior misleading statements); Sloane, 825 S.W.2d at 442 (duty to use reasonable care in providing information).

Even if we assume that Wells Fargo owed Plaintiffs these duties and breached them, Plaintiffs’ claims are still unsuccessful because they are barred by the economic loss rule.

The economic loss rule “precludes recovery in tort when the loss complained of is the subject matter of a contract between the parties.” Ibe v. Jones, 836 F.3d 516, 526 (5th Cir. 2016).

To determine whether the economic loss rule bars a tort claim, courts look to “the source of the defendant’s duty to act (whether it arose solely out of the contract or from some common-law duty) and the nature of the remedy sought by the plaintiff.” Id. (quoting Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 13 (Tex. 1996)).

First, we consider the nature of the remedy Plaintiffs seek.

Plaintiffs’ Second Amended Complaint requests damages for the loss of their home equity, moving expenses, storage expenses, and mental anguish. Mental anguish damages are not recoverable in contract law, but merely pleading non-economic damages is generally insufficient to avoid the economic loss rule. See Johnson v. Wells Fargo Bank, N.A., 999 F.Supp.2d 919, 931 (N.D. Tex. 2014) (“Plaintiff alleges emotional distress and mental anguish damages for her negligence claim. But, in the absence of any pleaded special relationship with Defendants or other extraordinary circumstances, Plaintiff has not pleaded a plausible basis to recover emotional distress or mental anguish damages.”). Instead, the analysis turns on whether Plaintiffs have alleged a basis to recover non-economic damages independent of the contract. Id.

We next consider the source of Wells Fargo’s alleged duties to determine whether Plaintiffs have a non-contractual basis for seeking non- economic damages.

The source of any duty owed by Wells Fargo is its mortgage contract with Plaintiffs. The duty to correct misleading statements and duty to use reasonable care in communicating information are directly related to the contract. These duties do not arise from a separate common- law duty and “would [not] give rise to liability independent of the fact that a contract exists between the parties.” Sw. Bell. Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991).

Plaintiffs rely on Shellnut v. Wells Fargo Bank, N.A., for the proposition that the economic loss rule does not prevent borrowers from recovering mental anguish damages from lenders. 2017 WL 1538166 at *12 (Tex. App.—Fort Worth Apr. 27, 2017, pet. denied). In Shellnut, the Texas Court of Appeals at Fort Worth reversed a grant of summary judgment in favor of the borrower, rejecting the trial court’s application of the economic loss rule to the borrower’s fraud and negligent misrepresentation claims. Id. But Shellnut too requires the alleged tort to be “independent of the contractual undertaking” to avoid the economic loss rule. Id. at *11.

Plaintiffs’ claims are not independent of the contract and no separate common-law duty exists as a basis for their negligence claim and pursuit of non-economic damages. We therefore affirm the district court’s dismissal of Plaintiffs’ negligence claim.

Fraud Claim

Plaintiffs’ sixth argument is that the district court erred in dismissing their fraud claim. We disagree.

The district court dismissed Plaintiffs’ fraud claim under Rule 12(b)(6), concluding that they failed to plead fraud with particularity as required by Rule 9(b). In Texas fraud cases, plaintiffs must plead that:

(1) the defendant made a material representation, (2) the representation was false, (3) the speaker knew the representation was false or made it with reckless disregard for its truth, (4) the speaker made the representation with the intent to defraud, (5) the plaintiff relied on the representation, and (6) the reliance caused the plaintiff an injury.

Hall v. Douglas, 380 S.W.3d 860, 870 (Tex. App.—Dallas 2012, no pet.).

Plaintiffs failed to sufficiently allege that Wells Fargo made any material representations or that the representations were made with the intent to defraud. We therefore affirm the district court’s dismissal of Plaintiffs’ fraud claim.

Quashing Plaintiffs’ Subpoena of Wells Fargo Employees

Plaintiffs last argue that the district court erred in quashing a subpoena and preventing Plaintiffs from deposing various Wells Fargo employees. We disagree.

Plaintiffs claim their subpoena and discovery requests were reasonable because they simply sought information from Wells Fargo employees assumed to have knowledge about their mortgage. But Plaintiffs’ justification for the subpoena and the discovery requests is speculative at best. And given the district court’s broad discretion over discovery matters, we affirm its reasonable order denying Plaintiffs’ request.

CONCLUSION

For all of these reasons, we AFFIRM the district court’s dismissal of Plaintiffs’ claims under TDCA sections 392.304(a)(8) and 392.304(a)(19).

We also AFFIRM the dismissal of their breach of contract, negligent misrepresentation, negligence, and fraud claims.

We AFFIRM the district court’s discovery order.

We REVERSE and REMAND the dismissal of Plaintiffs’ TDCA section 392.303(a)(2) claim.

“Under Texas law, a wrongful foreclosure claim ordinarily requires a showing of (i) “a defect in the foreclosure sale proceedings”; (ii) “a grossly inadequate selling price”; and (iii) “a causal connection between the defect and the grossly inadequate selling price.”” Miller v. Bac Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013)

“We REVERSE the district court’s dismissal of the Millers’ TDCA claims under § 392.304(a)(14) as well as the district court’s denial of the Millers’ request for an accounting from NDE. ” Miller v. Bac Home Loans Servicing, L.P., 726 F.3d 717, 727 (5th Cir. 2013)

REPLY BRIEF

Relying on the Words of Judge Willett and joined by Judge Elrod, the Citizens Take Action…

We urge litigants and our judicial colleagues to zealously guard the public’s right of access to judicial records—their judicial records—so “that justice may not be done in a corner”.

Lone Star Representing Elder Citizen Jacqueline Halliburton in Foreclosure Action Against PHH and Ocwen

Halliburton is a 73-year-old woman who is being subjected to Ocwen’s known mortgage servicing abuses and attempts to fraudulently foreclose.

Owen’s Easter Basket of Omissions and Whiteouts re Ocwen Loan Servicing et al.

The Burkes filed their Petition for Rehearing en banc to allow all the active judges who are not recused and able to participate, an opportunity to cast their Vote.

I Don’t Know Texas Procedure Claims Lyin’ Judge Carl E. Stewart Twice During Opening Oral Argument
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Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

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