Judge: Stop the Foreclosure Auction as Bandit Lawyer Delarogue Has a Fake Home Buyer

Larry Preston, now residing in Arizona, transferred his property for a mere $10 according to a General Warranty Deed dated May 8, 2023, assigning it to Gold Coast Equity, LLC.

The recipient, a HAR realtor named Scott McClellan, has a history marked by sanctions. Notably, Gold Coast does not have a realtor license – which is in the name of Networth Realty of Houston, LLC – and the main reason he was sanctioned. This sanctionable conduct appears to have been repeated this case

Despite Erick Delarogue’s knowledge of LIT’s involvement in his ongoing cases, there has been no response to the motion to dismiss from foreclosure mill Locke Lord. Perhaps, Delarogue aims to avoid compounding the evident perjury within his filings.

This foreclosure auction case was initiated on Oct 2, 2023, approximately a year after Judge Rosenthal dismissed Delarogue’s previous case. Gold Coast’s interest in the property has been officially recorded since May of the same year.

Locke Lord, referencing real property records as part of their standard checks, should have been fully aware of Gold Coast’s interest when responding to the filings and motion to dismiss.

However, following a pattern seen in foreclosure mills, they appear to deliberately overlook the fraud on the court by Erick Delarogue due to his role within the court system and legal profession.

Locke Lord, a foreclosure mill, initiates their premature motion to dismiss by asserting that Plaintiff Larry Preston’s previous lawsuit was deemed meritless and dismissed on grounds of motion. The motion insists that Preston’s current lawsuit should likewise be dismissed with prejudice.

The first concern raised is the premature nature of the motion, coupled with the fact that the assigned judge, Andrew Hanen, has not issued a warning to the mill lawyers, a practice observed by Judge Sim Lake in recent foreclosure cases. Judge Lake, in a similar context, explicitly cautioned against multiple dispositive motions from a single party, leading to the withdrawal of such a motion by another foreclosure mill, Mackie Wolf.

The second critical issue highlighted is the alleged frivolity of the case, attributing its initiation not to Larry Preston but to Bandit lawyer Erick Delarue and his alleged co-conspirators, the fake home buyers.

In defiance of the actual circumstances, Locke Lord proceeds to overlook the authentic facts of the case, failing to pursue sanctions or report the Bandit lawyer to the court or the State Bar of Texas — a responsibility mandated by ethical standards.

Perturbingly, this is not an isolated incident, as mill lawyers have a history of shielding their fellow counsel, even those on opposing sides of the bench.

This unsettling pattern only serves to underscore the persistent presence of ochlocracy within the Texas court system.

I.             NATURE AND THE STAGE OF THE PROCEEDING

Plaintiff Larry Preston’s (“Preston”) first lawsuit was adjudged meritless and disposed of on a motion to dismiss.1 This lawsuit, too, should end in a dismissal with prejudice.

On October 2, 2023, Preston filed his second lawsuit against PHH solely to stop a foreclosure sale of real property premised on allegations that PHH failed to provide him with a notice of default, a notice of acceleration, an opportunity to cure, and a notice of sale after finding out he was ineligible for mortgage loan assistance.2

Preston also alleged that PHH did not have standing to foreclose and tortiously interfered with a contract to sell the property for some unidentified date at some unidentified amount.3

PHH removed this suit to this Court on October 11, 2023.4 PHH now moves to dismiss this lawsuit with prejudice because Preston has not set forth any allegations to state a claim upon which relief can be granted.

II.             FACTUAL BACKGROUND5

The Mortgage Loan

On October 16, 1998, Preston obtained a mortgage loan (the “Loan”) from New Century Mortgage Corporation that was secured by real property located at 5709 Langley Road, Houston, Texas 77016-3139 (the “Property”).

Preston executed a Deed of Trust at the same he obtained the Loan.6 Following a series of assignments, the Loan was eventually

signed to The Bank of New York Mellon f/k/a The Bank of New York as Successor in Interest to JPMorgan Chase Bank, N.A., as Trustee for C-Bass Mortgage Loan Asset-Backed Certificates, Series 2005-RP2 at c/o Ocwen Loan Servicing, LLC (“Trustee Bank”).7

Preston alleges that PHH is currently the mortgage servicer for the Loan.8

Preston’s Default on the Loan and the Foreclosure Sale

Preston eventually defaulted on the Loan.9

Specifically, Preston alleges that he “began to have financial troubles” and that “his loan was too far delinquent to qualify for any type of assistance.” 10

PHH noticed the Property for a foreclosure sale scheduled on October 3, 2023.11

On the eve of the sale, Preston filed his Original Petition, Application for Injunctive Relief, and Request for Disclosures (the “Complaint”).12

In the Complaint, Preston alleges that he sought mortgage assistance from PHH after he defaulted on the Loan.13

Preston further alleges that he attempted to sell the Property after PHH informed him that he was ineligible for mortgage loan assistance due to the loan’s severe delinquency.14

Preston contends that he eventually found an investor to purchase the Property and produced “proof of funds and [a] sales contract” to PHH “to get the foreclosure sale postponed.”15

He argues that PHH is

wrongfully attempting to sell the Property because

(1) PHH never provided him with a notice of default, a notice of acceleration, an opportunity to cure, or a notice of the October 3, 2023 foreclosure sale;

(2) the chain of title from the original lender is broken16;

and

(3) PHH engaged in a “calculated and fraudulent business practice” as a means to foreclose on the Property.17

In connection with these allegations, Preston asserts claims for breach of contract, violations of the Texas Property Code, attempted wrongful foreclosure, tortious interference with a contract, and declaratory judgment.18

He seeks unspecified actual and exemplary damages, attorneys’ fees, declaratory and injunctive relief, and court costs.19

On October 2, 2023, the state court entered an ex parte temporary restraining order, precluding the October 3, 2023 foreclosure sale.20

On October 11, 2023, PHH answered in state court and removed the suit to this Court.21

III.                   STATEMENT OF THE ISSUES

1.                  Whether Preston’s declaratory-judgment claim relating to his attack of the assignments fails as a matter of law, given that Preston lacks standing to challenge the assignments of the Deed of Trust and because there is no requirement that a mortgagee also be the note holder.

2.                  Whether Preston’s declaratory-judgment claim relating to PHH’s authority to foreclose on the Property fails as a matter of law, given that the Loan documents are valid and Preston does not dispute defaulting on the Loan.

3.                  Whether Preston’s declaratory-judgment claim relating to the notices fails as a matter of law, given that

(a) the Texas Property Code does not provide Preston with a private right of action,

(b) Preston has not pled any factual support for a wrongful-foreclosure claim,

(c) a claim for attempted wrongful foreclosure is not cognizable under Texas law,

and

(d) Section 5.065 of the Texas Property Code is inapplicable to the facts here.

4.                  Whether Preston’s declaratory-judgment claim relating to quiet-title relief fail as a matter of law, given that he has not alleged an independent quiet-title claim or that he has tendered or offered to tender the full amount owed on the Loan.

5.                  Whether Preston’s declaratory-judgment claim based on fraud fails as a matter of law, given that (a) Preston fails to meet the heightened pleading standard under Rule 9(b); (b) Preston fails to allege facts to support any essential elements of his fraud claim; and (c) Preston’s fraud claim premised on a contractual undertaking is barred by the economic loss rule.

6.                  Whether the breach-of-contract claim fails as a matter of law because Preston has not (a) alleged that PHH breached any contract or contractual provision, or (b) alleged the essential elements of causation or damages to support his claim.

7.                  Whether Preston’s claim for tortious interference with an existing contract fails as a matter of law, given that Preston has not alleged any facts demonstrating a willful and intentional act of interference by PHH when PHH has only exercised an existing right to foreclose following a default, causation, or actual damages.

8.                  Whether the Court should deny Preston’s entitlement to declaratory and injunctive relief, damages (actual and exemplary), attorney’s fees, and other relief since Preston has not presented any viable claim for relief.

IV.                  SUMMARY OF ARGUMENTS

The Court should dismiss all claims asserted against PHH because Preston fails to state a claim for relief for all his claims.

First, Preston lacks standing to challenge any assignments from the original lender to Trustee Bank.

PHH is authorized to foreclose on the Property, considering Trustee Bank is the statutory mortgagee and Preston does not dispute defaulting on the Loan.

Preston’s declaratory-judgment claim relating to notices fail because the Texas Property Code does not provide Preston with a private right of action, the statute he cites is inapplicable, and he has not pled any factual support for a wrongful-foreclosure claim.

In addition, Texas law does not recognize claims for attempted wrongful foreclosure.

Finally, Preston has not asserted an independent quiet-title claim.

Nor has he alleged that he has tendered, or offered to tender, the full amount owed on the Note.

Moreover, PHH is authorized to foreclose on the Property.

Preston is not entitled to a declaratory judgment relating to quiet-title relief because has not alleged either an independent quiet-title claim or that he has tendered or offered to tender the full amount owed on the Loan.

Second, Preston’s declaratory-judgment claim based on fraud allegations fails to meet the heightened pleading standard under Rule 9(b), and is devoid of allegations to support any essential elements of fraud.

The economic loss rule bars such claim because Preston’s allegations only concern contractual undertakings under the Loan.

Third, the Complaint merely contains a general, conclusory statement that PHH tortiously interfered with Preston’s alleged sales contract with “Seller” by enforcing its foreclosure rights, which is insufficient to plead a cause of action for a tortious-interference claim.

Fourth, Preston’s requests for declaratory and injunctive relief, attorney’s fees, and damages all fail because Preston has not pled any viable claims that would allow for recovery.

Because Preston has not alleged any viable claims, the Court should dismiss all of Preston’s claims with prejudice.

V.            ARGUMENTS AND AUTHORITIES

A.                 PRESTON’S DECLARATORY-JUDGMENT CLAIM FAILS AS A MATTER OF LAW

1.      Preston lacks standing to challenge any assignments

Preston contends that the “alleged assignment of the Deed of Trust does not meet the requisites of a valid assignment and, therefore, the chain of title is broken from the original lender.”22

Preston, however, lacks standing to challenge the assignments because Preston was neither a party nor a third-party beneficiary to the assignments.

Unless they become a party, agent, or assignee of a party, or a third- party beneficiary of the agreement.

See, e.g., Reinagel v. Deutsche Bank Nat’l Tr. Co., 735 F.3d 220, 228 (5th Cir. 2013).

Here, the various assignments that all beneficial interests under the Deed of Trust were eventually assigned to Trustee.23

These assignments were recorded in official public records.24

And Preston was not a third-party beneficiary or a party to either assignment.25

Consequently, Preston is not entitled to challenge the assignments because he lacks standing to do so.

2.      PHH is authorized to foreclose on the Property as the servicer

But even if Preston had standing to attack the assignments (which he does not), the publicly recorded assignments confirm that that both PHH is authorized to foreclose on the Property because PHH is the mortgage servicer, and Preston admits to defaulting on the Loan.26

PHH has standing to foreclose as the mortgage servicer of the Loan.

“The Texas Property Code provides that a ‘mortgage servicer’ may administer a foreclosure on behalf of a mortgagee if ‘the mortgage servicer and the mortgagee have entered into an agreement granting the current mortgage servicer authority to service the mortgage,’ proper notice is given, and notice discloses that the mortgage servicer represents the mortgagee.”

Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 255 (5th Cir. 2013) (quoting TEX. PROP. CODE § 51.0025).

In addition, there’s no requirement that a mortgagee also be the note holder.

Harris Cnty. Tex. v. MERSCORP Inc., 791 F.3d 545, 555 (5th Cir. 2015)

(“[I]f the note is assigned, then the new noteholder has the right to foreclose on the property identified in the deed of trust that secures the note, whether or not the

noteholder also possesses or is assigned the deed of trust.

The beneficiary of the deed of trust likewise has the right to foreclose”).

Here, Preston does not dispute that PHH is the mortgage servicer of the Loan.27

Nor does he dispute that Trustee Bank is the mortgagee.28 Hence, PHH is authorized to foreclose on the Property.

3.      Preston’s claim relating to the default and foreclosure notices fail as a matter of law

Premised on his declaratory-judgment request that PHH allegedly lacks standing to foreclose on the Property, Preston seeks a declaratory judgment that “any and all notices sent by Defendant regarding default or foreclosure be declared invalid.”29

Because PHH has standing, Preston’s requested relief likewise fails.

Moreover, Texas Property Code Section 51.002(d) requires only that a 20-day notice to cure be provided to debtors for real property used as the debtor’s residence.

TEX. PROP. CODE § 51.002(d).

But Texas Property Code Section 51.002 does not provide a private right of action. Carey v. Wells Fargo, No. CV H-15-1666, 2016 WL 4246997, at *2–3 (S.D. Tex. Aug. 11, 2016)

(“Section 51.002 of the Texas Property Code, however, does not provide Plaintiffs with a private right of action.”).

Consequently, courts have construed claims for violation of Section 51.002 as claims for wrongful foreclosure.

See Carey, 2016 WL 4246997, at *3; Ashton v. BAC Home Loan Servicing, L.P., No. 4:13-cv-810, 2013 WL 3807756, at *2 (S.D. Tex. Jul. 19, 2013).

However, any wrongful-foreclosure claim made by Preston here also fails because there has been no foreclosure.

See Martins, 722 F.3d at 253–56 (listing elements).

If the Court interprets Preston’s Texas Property Code violation claim as a wrongful-foreclosure claim, then that claim, too, fails because Texas law does not recognize a cause of action for an attempted wrongful foreclosure.

See Iroh v. Bank of Am., N A, No. 4:15-CV-1601, 2015 WL 9243826, at *4 (S.D. Tex. Dec. 17, 2015)

(“Claims for attempted wrongful foreclosure, however, are simply not cognizable under Texas law.”) (emphasis in original).

Here, Preston has not alleged, and cannot allege, that a foreclosure sale has taken place because it did not.30

Notably, Preston alleges that he still resides at the Property.31

Because the foreclosure sale did not occur, Preston cannot state a wrongful-foreclosure claim as a matter of law.

4.      Preston cannot recover quiet title because he has not alleged that he has tendered or offered to tender the full amount owed on the Loan

Preston asks this Court to quiet title to the Property in his name and issue a judgment that PHH has no interest in the Property.32 However, Preston has not asserted an independent quiet- title claim.33

“A suit to clear or quiet title—also known as a suit to remove cloud from title—relies on the invalidity of the defendant’s claim to the property.”

Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App.—Houston [1st Dist.] 2012, pet. denied).

To prevail here, Preston must meet his burden of furnishing the “proof necessary to establish superior equity and right to relief.”

Ocwen Loan Servicing, LLC v. Gonzalez Fin. Holdings, Inc., 77 F. Supp. 3d 584, 588 (S.D. Tex. 2015), aff’d sub nom. Ocwen Loan Servicing, L.L.C. v. Moss, 628 F. App’x 327 (5th Cir. 2016).

Preston can only recover on a quiet-title claim by establishing the strength of his own title; attacking the weakness of PHH’s title will not suffice.

Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.—Corpus Christi 2001, no pet.).

Preston makes these extraordinary requests for relief despite the fact that Preston has not alleged that he has tendered, or offered to tender, the full amount owed on the Loan.34

Texas state and federal courts have made clear that a “necessary prerequisite to the . . . recovery of title . . . is tender of whatever amount is owed on the note.”

See Willoughby v. Jones, 251 S.W.2d 508, 510 (Tex. 1952); see also Campo v. Bank of Am., N.A., No. CV H-15-1091, 2016 WL 1162199, at *5 (S.D. Tex. Mar. 24, 2016), aff’d, 678 F. App’x 227 (5th Cir. 2017) (mem. op.).

Because Preston does not allege that he tendered, or ever attempted to tender, the full amount owed on the Loan, Preston has no basis for seeking entry of an order quieting title to the Property in his name.

B.                 PRESTON’S DECLARATORY-JUDGMENT CLAIM BASED ON FRAUD CLAIM AS A MATTER OF LAW

Preston arguably asserts a declaratory-judgment claim based on fraud because he alleges that PHH “falsely and fraudulently prepared documents required for Defendant to foreclose as a calculated and fraudulent business practice.”35

To state a common-law fraud claim, Preston must allege that

(1) PHH made a material misrepresentation,

(2) PHH’s representation was false,

(3) PHH made the representation with the intent that Preston would act on that representation or intended to induce his reliance on the representation,

(4) Preston actively and justifiably relied on PHH’s representation,

and

(5) Preston suffered an injury resulting from his reliance on the PHH’s representation.

See Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 212 (5th Cir. 2009).

1.      Preston’s fraud claim lacks any factual support for essential elements that meet Rule 9(b)

Preston has failed to meet the heightened pleading standard under Rule 9(b) applicable to his claim.

Rule 9(b) requires Preston to plead the fraud claim with particularity. See FED R. CIV.

P. 9(b).

To meet the heightened-pleading standard under Rule 9(b), Preston must “specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.”

Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997).

In other words, Preston must specify the “who, what, when, where, and how” of the alleged fraud.

Id. at 179.

Here, Preston has failed to allege any facts that could plausibly establish a fraud claim under Rule 9(b).

He has not clearly pled any allegations to support any of the essential elements of fraud.36

Preston has not alleged that PHH made a material misrepresentation or that such representation was false. Rather, he alleges that “made, presented, or used” “fraudulent court records or fraudulent liens” against the Property.37

However, these allegations, even if true, insufficiently allege a common-law fraud claim under Rule 9(b).

Furthermore, Preston has not alleged that PHH knew the alleged representation was false or that they made the representation recklessly with knowledge of its falsity.38

Furthermore, Preston has not alleged that any such representation was made with the intention that he act or otherwise rely on it.39

And, finally, Preston has not alleged that he justifiably relied on such representation or that such representation caused him to suffer any damages.40

Because Preston has not pled any facts that would allow this Court to draw a reasonable inference that PHH is liable for any alleged misconduct, the Court should dismiss Preston’s common-law fraud claim.

See Shushany v. Allwaste, Inc., 992 F.2d 517, 520 (5th Cir. 1993)

(affirming dismissal with prejudice of a fraud claim for failure to meet Rule 9(b) requirements).

2.      Preston’s fraud claim is barred by the economic loss rule

Texas courts consistently prohibit tort claims under the economic loss rule if the parties’ relationship and attendant duties arise from a contract.

See, e.g., Quintanilla v. K–Bin, Inc., 993 F. Supp. 560, 563 (S.D. Tex. 1998).

The economic loss rule bars the recovery of damages in tort where the plaintiff does not suffer an injury that is independent and separate from the economic losses recoverable under a breach of contract claim.

See Narvaez v. Wilshire Credit Corp., 757 F. Supp. 2d 621, 634 (N.D. Tex. 2010).

A party can state a tort claim related to a contractual setting when “the duty allegedly breached is independent of the contractual undertaking and the harm suffered is not merely the economic loss of a contractual benefit.”

Chapman Custom Homes, Inc. v. Dall. Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014) (emphasis added).

As pled, Preston’s dispute is contractual based on Preston’s dispute to prevent PHH from enforcing its foreclosure rights under the terms of the Deed of Trust.41

Preston does not (and cannot) identify a duty owed to him outside the contractual undertakings provided by the terms of the Loan.

Under Texas law, there is no special duty relationship between a mortgagor and mortgagee that gives rise to a standalone duty of good faith and fair dealing.

UMLIC VP LLC v. T & M Sales & Envtl. Sys., Inc., 176 S.W.3d 595, 613–15 (Tex. App.—Corpus Christi 2005, pet. denied).

Further, Preston has not alleged that he has sustained an injury arising from liability independent from the fact a contract exists between the Preston and PHH.

See Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991).

Consequently, the economic loss rule bars Preston’s fraud claim.

See Daryani v. Wells Fargo Bank, N.A., No. 4:10–CV–05181, 2012 WL 3527924, at *3 (S.D. Tex. Aug. 13, 2012).

C. PRESTON’S BREACH-OF-CONTRACT CLAIM FAILS AS A MATTER OF LAW

Preston vaguely alleges that PHH breached a contract.42

To prevail on a breach-of- contract claim  in Texas, Preston must show:

(1) the existence of a valid contract;

(2) performance or tendered Preston by Preston;

(3) that PHH breached the contract;

and

(4) damages sustained by Preston as a result of the breach.

Smith Inter., Inc. v. Egle Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007).

1.      Preston has not alleged that PHH breached any contract or contractual provision

Preston has not identified any specific contract or provision of a contract that was allegedly breached in support of his breach-of-contract claim.43 He only lodges a conclusory allegation that PHH “breached the contract” without any further detail.

See Sandhar v. Grewal, No. H-08-2348, 2009 WL 175073, at *4 (S.D. Tex. Jan. 23, 2009)

(stating that plaintiff must plead “the provisions of the contract allegedly breached” to survive a motion to dismiss).

Rather, Preston seems to casually suggest that the Note and Deed of Trust form the basis of his breach-of-contract claim, but fails to assert any allegations which expressly identify the contracts at issue, or the provisions breached.

Therefore, the breach-of-contract claim fails as a matter of law and must be dismissed for these reasons alone.

2.      Preston has not alleged the essential elements of causation or damages to support his claim

Even if the Court liberally construes the Complaint, Preston fails to adequately allege causation and damages to show that PHH breached Paragraph 14 of the Deed of Trust by not sending him any default or foreclosure notices, which allegedly caused him to incur unspecified damages.44

Damages is an essential element of a breach-of-contract claim, and Preston has to

allege that PHH’s alleged breach caused Preston to incur damages.

Southwell v. Univ. of the Incarnate Word, 974 S.W.2d 351, 354–55 (Tex. App.—San Antonio 1998, pet. denied).

This requires that Preston shows both causation and injury.

To show causation, Preston must first plead that the alleged injury was “the natural, probable, and foreseeable consequence of the defendant’s conduct.”

Mead v. Johnson Grp., 615 S.W.2d 685, 687 (Tex. 1981) (citation omitted).

“The absence of this causal connection between the alleged breach and the alleged damages will preclude recovery.”

Prudential Secs., Inc. v. Haughland, 973 S.W.2d 394, 397 (Tex. App.—El Paso 1998, pet. denied) (citation omitted).

Here, Preston fails to allege that he suffered any compensable injury, much less that any alleged injury was the natural, probable, and foreseeable consequence of PHH’s conduct.45

Absent such allegations, Preston fails to sufficiently plead causation or damages. And he suffered no injuries due to the state court’s entry of the temporary restraining order.46

D.                 PRESTON’S TEXAS PROPERTY CODE VIOLATION CLAIM FAIL AS A MATTER OF LAW

Preston asserts that PHH violated Section 5.065 of the Texas Property Code by failing to provide him with “proper and timely notice of default, the opportunity to cure the default, notice of intent to accelerate the debt, notice of acceleration, and notice of foreclosure sale.”47

Although PHH disputes this allegation, Section 5.065 does not apply to the Loan.

Under Section 5.065, “a purchaser in default under an executory contract for the conveyance of real property” may avoid the enforcement of a seller’s remedy under by Section 5.064.

TEX. PROP. CODE § 5.065.

This section “was enacted to protect purchasers who execute

a contract for deed.”

Gilliam v. JPMorgan Chase Bank, N.A., No. H-18-2698, 2019 WL 2648017, at *6 (S.D. Tex. June 27, 2019) (mem. op.) (internal quotation and citation omitted).

This case involves a mortgage loan, not an executory contract.48

Thus, Section 5.065 is irrelevant and inapplicable because Preston has not alleged that he executed any executory contract for the conveyance of the Property or any other real property.49

Nevertheless, as explained in great detail supra in Section V(A)(3), Section 51.002 of the Texas Property Code does not provide a private right of action.

Carey, 2016 WL 4246997, at *2–3; Gamble v. Carrington Mortg. Servs., LLC, No. CV H-23-184, 2023 WL 2503537, at *2 (S.D. Tex. Mar. 14, 2023) (mem. op.).

Consequently, the Court should summarily dismiss this claim with prejudice.

E.                 PRESTON’S TORTIOUS INTERFERENCE WITH CONTRACT CLAIM FAILS AS A MATTER OF LAW

Preston contends that PHH is liable for tortiously interfering with an “existing sales contract . . . between [Preston] and Seller for which [PHH] has knowledge and yet is willfully foreclosing on the Property, thereby preventing the sales contract from being able to be completed.”50

Preston appears to suggest that PHH allegedly interfered with some purported sales contract when it enforced its foreclosure rights. However, such act is not tortious.51

Under Texas law, the elements of tortious interference with contract are

(1) a contract subject to interference;

(2) a willful and intentional act of interference

(3) that was a proximate cause of the plaintiff’s damages;

and

(4) actual damage.

See Nix v. MLB, 62 F.4th 920, 934 (5th Cir. 2023), cert. denied sub nom. Nix v. MLB, No. 22-7810, 2023 WL 6378365 (U.S. Oct. 2, 2023).

“[A] breach must result from the defendant’s conduct in order for the plaintiff to prevail.”

WickFire, L.L.C. v. Laura Woodruff; TriMax Media, L.L.C., 989 F.3d 343, 353 (5th Cir. 2021).

Here, Preston’s allegations are insufficient to state a claim for tortious interference with an existing contract for several reasons.

While Preston alleges in a formulaic manner that he “provided proof of funds and [a] sales contract” to PHH, he has not alleged any facts that would support that conclusory allegation.52

In particular, Preston has not alleged that the sale to the third party would occur prior to the foreclosure sale.53

Nor has he alleged that the amount of the sale would be sufficient to fully pay off the Loan.54

In other words, Preston fails to allege facts describing how PHH allegedly unlawfully interfered with the purported sales contract, how any alleged act of interference was willful and intentional, how that act proximately caused him damage, and the actual damage or loss suffered.

Caine v. Wells Fargo Bank, N.A., No. CV H-17-2046, 2018 WL 3195102, at *6 (S.D. Tex. June 8, 2018), report and recommendation adopted, No. 4:17-CV-02046, 2018 WL 3159783 (S.D. Tex. June 28, 2018).

Preston also fails to allege that PHH’s knowing, willful, and intentional acts of interference induced “Seller” to breach its obligations.

See Amigo Broad., LP v. Spanish Broad. Sys., Inc., 521 F.3d 472, 493 (5th Cir. 2008)

(“Merely entering into a contract with a party with the knowledge of that party’s contractual obligations to someone else is not the same as inducing a breach.”).

Furthermore, Preston fails to allege facts showing that the alleged willful and intentional acts of interference caused injury or actual damage or loss.

See M-I LLC v. Stelly, 733 F. Supp. 2d

759, 775 (S.D. Tex. 2010).

Indeed, Preston has not suffered any damage because the state court entered an ex parte temporary restraining order, thwarting the foreclosure sale.55

Finally, there is no liability for tortious interference with an existing contract when the alleged tortfeasor’s conduct was engaged in pursuant to a legal right, even if the elements of the torts are otherwise satisfied.

Wardlaw v. Inland Container Corp., 76 F.3d 1372, 1378–79 (5th Cir. 1996).

Here, PHH was justified in “post[ing] the Property foreclosure” because Preston defaulted on the Loan.56 Indeed, Preston alleges that he “began to have financial troubles” and that “his loan was too far delinquent to qualify for any type of assistance.”57

According to the Deed of Trust, Preston promised to “promptly pay when due the principal of and interest on the debt evidenced by the Note and any prepayment and late charges due under the Note.”58

By virtue of executing the Deed of Trust, Preston consented to foreclosure as a remedy in the event of any default.59

Accordingly, Preston’s tortious-interference claim fails any interference by PHH with any purported sales contract between Preston and an unidentified “Seller” was justified, given that PHH merely acted in good faith to exercise its contractual rights to foreclose on the Property.

Pers. Preference Video, Inc. v. Home Box Office, Inc., 986 F.2d 110, 115 (5th Cir. 1993).

Therefore, Preston’s tort claim fails as a matter of law, and the Court should dismiss it with prejudice.60

F.                 PRESTON IS NOT ENTITLED TO DECLARATORY OR INJUNCTIVE RELIEF

The Court should deny Preston’s request for declaratory relief.

A request for declaratory relief is remedial in nature and dependent upon the assertion of viable causes of action.

See Sid

Richardson Carbon & Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d 746, n.3 (5th Cir. 1996); Cook v. Wells Fargo Bank, N.A., No. 3:10-CV-592-D, 2010 WL 2772445, at *4 (N.D. Tex. July 12, 2010).

Because he has not asserted any viable claims in this lawsuit as a matter of law, Preston is not entitled to declaratory or injunctive relief.

G.                 PRESTON’S REQUESTS FOR ATTORNEY’S FEES AND DAMAGES SHOULD BE DENIED

Preston’s requests for attorney’s fees and actual and exemplary damages should also be denied because Preston has not alleged that he suffered any damages as a result of PHH’s alleged conduct.61

Nor has he pled any viable causes of action that would allow for recovery of attorney’s fees.

MAG DS Corp. v. King Aerospace Com. Corp., Inc., No. 3:19-CV-01378-E, 2021 WL 2255900, at *6 (N.D. Tex. June 3, 2021); Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).

Because Preston has established no viable causes of action and is not entitled to recover damages, he cannot recover attorney’s fees.

VI.                  CONCLUSION

Put simply, Preston cannot meet his burden to obtain the relief he seeks because all his claims fail as a matter of law.

Accordingly, PHH respectfully requests that the Court grant the Motion and dismiss Preston’s claims against PHH with prejudice.

PHH additionally requests such other and further relief to which it is entitled.