Andrea Guajardo v. JP Morgan Chase Bank, N. , 605 F. App'x 240 ( 2015 )


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  •      Case: 13-51025           Document: 00512964518         Page: 1     Date Filed: 03/10/2015
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    No. 13-51025
    United States Court of Appeals
    Fifth Circuit
    FILED
    ANDREA C. GUAJARDO; JUANITA ZEPEDA,                                             March 10, 2015
    Lyle W. Cayce
    Plaintiffs – Appellants,                                           Clerk
    v.
    JP MORGAN CHASE BANK, N.A.; JP MORGAN CHASE BANK
    NATIONAL ASSOCIATION, Successor by Merger to Chase Home Finance,
    L.L.C.; AH4R I TX, L.L.C.,
    Defendants – Appellees.
    Appeal from the United States District Court
    for the Western District of Texas
    USDC No. 5:13-CV-588
    Before DAVIS and ELROD, Circuit Judges.*
    PER CURIAM:**
    We sua sponte withdraw the prior panel opinion, Guajardo v. JP Morgan
    Chase Bank, N.A., No. 13-51025, 
    2015 WL 136403
    (5th Cir. Jan. 12, 2015), and
    substitute the following:
    *   This opinion is being entered by a quorum of this court pursuant to 28 U.S.C. Section
    46(d).
    Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
    **
    be published and is not precedent except under the limited circumstances set forth in 5th Cir.
    R. 47.5.4.
    Case: 13-51025       Document: 00512964518          Page: 2     Date Filed: 03/10/2015
    No. 13-51025
    In this case we address whether the district court erred in dismissing,
    pursuant to Fed. R. Civ. P. 12(b)(6), Plaintiffs’ claims relating to the foreclosure
    of their home. Because Plaintiffs failed to state any valid claim for relief, we
    AFFIRM.
    I.
    According to the Third Amended Complaint, 1 Plaintiffs, Andrea C.
    Guajardo and Juanita Zepeda, purchased a home in San Antonio, Bexar
    County, Texas (Property). JP Morgan Chase Bank, N.A. (JPMC) loaned the
    purchase money to Plaintiffs in exchange for a mortgage note which was
    secured by a deed of trust on the Property. Later, Plaintiffs could no longer
    make their payments on the mortgage. They notified JPMC of their situation,
    and filed an application for a loan modification. JPMC told them on four
    occasions that it would review their application and respond before “any non-
    judicial foreclosure action would be taken.” Plaintiffs never heard back from
    JPMC. JPMC foreclosed on the Property and AH4R I TX, L.L.C. (AH4R)
    purchased it at the non-judicial foreclosure sale. Plaintiffs claim that, because
    they did not discover the foreclosure until after JPMC completed the sale, they
    lost the opportunity to prevent foreclosure.
    Plaintiffs sued Defendants in Texas state court based on various causes
    of action, including breach of contract and wrongful foreclosure. Defendants
    removed the case to federal court based on diversity jurisdiction. The parties
    went through multiple rounds of pleadings during which Plaintiffs tried to
    correct defects identified in JPMC’s motions to dismiss.
    1 Because this appeal addresses the sufficiency of Plaintiffs’ complaint, we must accept
    as true the facts pleaded in the complaint, view them in the light most favorable to Plaintiffs,
    and draw all reasonable inferences in favor of Plaintiffs. Morgan v. Swanson, 
    659 F.3d 359
    ,
    396 (5th Cir. 2011) (en banc).
    2
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    Plaintiffs’ First Amended Complaint alleged causes of action for breach
    of contract, misrepresentation, wrongful foreclosure, violation of the Texas
    Deceptive Trade Practices Act (DTPA), and declaratory judgment.           JPMC
    moved to dismiss Plaintiffs’ claims pursuant to 12(b)(6), arguing that Plaintiffs
    asserted these causes of action without providing facts sufficient to state a
    claim that was plausible on its face.
    Plaintiffs responded by requesting leave to file their Second Amended
    Complaint, which was identical to the First Amended Complaint except for the
    addition of “promissory estoppel and constructive fraud” to the list of claims.
    The district court granted Plaintiffs’ request for leave and accepted the Second
    Amended Complaint, but also simultaneously granted, in part, JPMC’s motion
    to dismiss “because the [second] amended complaint [did] not address the
    issues in the Defendant’s motion to dismiss.” The district court dismissed
    Plaintiffs’ breach of contract claim on the ground that the Second Amended
    Complaint “only allege[s] generally that Chase breached unspecified contract
    provisions by failing to comply with unspecified requirements of [Tex. Bus. &
    Com. Code Ann. §] 51.002.”
    JPMC then filed a motion to dismiss the remaining claims in Plaintiffs’
    Second Amended Complaint. Plaintiffs obtained leave to file a Third Amended
    Complaint. In their Third Amended Complaint, Plaintiffs added allegations
    relating to their fraud claim and specified the notice procedures in § 51.002
    that JPMC allegedly violated. The district court granted JPMC’s motion to
    dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim because the
    “third amended complaint does not address the defects in the Plaintiffs’ second
    amended complaint.” Plaintiffs appealed.
    3
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    II.
    We review a district court’s 12(b)(6) dismissal de novo, applying the same
    standard that the district court applied. Gen. Elec. Capital Corp. v. Posey, 
    415 F.3d 391
    , 395 (5th Cir. 2005). We may affirm the district court’s dismissal “on
    any grounds supported by the record.” City of Clinton v. Pilgrim’s Pride Corp.,
    
    632 F.3d 148
    , 153 (5th Cir. 2010). When ruling on a motion to dismiss, we
    must accept as true a plaintiff’s factual allegations. Bell Atl. Corp. v. Twombly,
    
    550 U.S. 544
    , 555 (2007). To overcome a motion to dismiss, a plaintiff must
    plead facts sufficient to state a “legally cognizable claim that is plausible” on
    its face. Lone Star Fund V (U.S.), L.P., v. Barclay’s Bank PLC, 
    594 F.3d 383
    ,
    387 (5th Cir. 2010). “When there are well-pleaded factual allegations, a court
    should assume their veracity and then determine whether they plausibly give
    rise to an entitlement to relief.” Ashcroft v. Iqbal, 
    556 U.S. 662
    , 679 (2009).
    The federal pleadings standard requires a “short and plain statement of the
    claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8; 
    Id. at 677–78.
    The standard does not require detailed factual allegations, but where
    a complaint lacks allegations that can plausibly support the required elements
    of claim, it should be dismissed. Blackburn v. City of Marshall, 
    42 F.3d 925
    ,
    931 (5th Cir. 1995).
    III.
    Plaintiffs’ Third Amended Complaint includes the following claims:
    breach of contract, 2 wrongful foreclosure, negligent misrepresentation, fraud,
    promissory estoppel, constructive fraud, violation of the DTPA, declaratory
    2 The district court dismissed, with prejudice, Plaintiffs’ breach of contract claim based
    on the allegations in the Second Amended Complaint. As explained below, our analysis of
    this particular claim turns on the allegations in the Second Amended Complaint.
    4
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    judgment, and trespass to try title. The district court dismissed all claims. For
    the reasons discussed in detail below, we affirm the district court’s judgment.
    A.
    “[T]he essential elements of a breach of contract action are: (1) the
    existence of a valid contract; (2) performance or tendered performance by the
    plaintiff; (3) breach of the contract by the defendant; and (4) damages
    sustained by the plaintiff as a result of the breach.” Smith Int’l, Inc. v. Egle
    Group, LLC, 
    490 F.3d 380
    , 387 (5th Cir. 2007) (citing Valero Mktg. & Supply
    Co. v. Kalama Int’l, 
    51 S.W.3d 345
    , 351 (Tex. App.—Houston [1st Dist.] 2001,
    no pet.)). In their Second Amended Complaint, Plaintiffs alleged that they
    entered into a mortgage agreement with JPMC and executed a deed of trust in
    favor of JPMC. They generally claimed that JPMC breached the terms of the
    mortgage agreement and deed of trust but did not specify which provisions or
    obligations.     Plaintiffs also claimed that JPMC breached the mortgage
    agreement and deed of trust by violating Tex. Prop. Code Ann. § 51.002, which
    these documents allegedly incorporated by reference. However, Plaintiffs did
    not identify which provision of the mortgage agreement or deed of trust
    incorporated this obligation or the manner in which JPMC violated § 51.002.
    The district court dismissed the breach of contract claim in the Second
    Amended Complaint because Plaintiffs “only allege generally that [JPMC]
    breached unspecified contract provisions by failing to comply with unspecified
    requirements of § 51.002.” We agree. 3 Plaintiffs failed to allege the manner in
    3 Furthermore, to the extent that Plaintiffs allege that JPMC breached any agreement
    (or modification) formed by JPMC’s alleged oral promise, such a claim is barred by the statute
    of frauds. See Tex. Bus. & Com. Code Ann. § 26.02(a)(2) (requiring a writing for loan
    agreements involving loans of $50,000 or more); see also Martins v. BAC Home Loans
    Servicing, L.P., 
    722 F.3d 249
    , 256 (5th Cir. 2013) (holding that the statute of frauds applies
    to oral modifications to loan agreements). JPMC’s alleged promise to delay foreclosure was
    never reduced to writing.
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    which JPMC breached the mortgage agreement or “identify which provision of
    the deed of trust [JPMC] allegedly breached.” Williams v. Wells Fargo Bank,
    N.A., 560 F. App’x 233, 238 (5th Cir. 2014) (dismissing a breach of contract
    claim on this basis). Plaintiffs’ complaint contains only a general allegation
    and lacks the “further factual enhancement” needed to state a plausible breach
    of contract claim and put JPMC on notice as to the nature of the claim. See
    
    Iqbal, 556 U.S. at 678
    (citing 
    Twombly, 550 U.S. at 557
    ); see also 
    Twombly, 550 U.S. at 555
    (“Factual allegations must be enough to raise a right to relief above
    the speculative level.”).
    The fact that the district court gave Plaintiffs’ leave to file their Third
    Amended Complaint, in which Plaintiffs again included their breach of
    contract claim, has no effect on the district court’s earlier dismissal order. “As
    a general proposition, dismissal of a complaint for failure to state a claim
    operates as an adjudication on the merits absent the court's specification to the
    contrary, and is therefore with prejudice.” Williams v. Dallas Cnty. Comm'rs,
    
    689 F.2d 1212
    , 1215 (5th Cir. 1982); see, e.g., Fernandez-Montes v. Allied Pilots
    Ass'n, 
    987 F.2d 278
    , 288 n.8 (5th Cir. 1993) (“[I]t is well established that a
    dismissal is presumed to be with prejudice unless the order explicitly states
    otherwise.”); Hines v. Delta Air Lines, Inc., 
    461 F.2d 576
    , 579 n.12 (5th Cir.
    1972) (citing the presumption in Fed. R. Civ. P. 41(b) that an involuntary
    dismissal is presumed to be an adjudication on the merits). Even ignoring this
    general presumption, the district court specifically indicated in its second
    dismissal order that its earlier dismissal was with prejudice. In the second
    dismissal order, the district court explained that “[o]n September 12, 2013, the
    Court entered an order dismissing the Plaintiffs’ breach of contract claim with
    prejudice. [JPMC] has filed a motion to dismiss the remaining claims, arguing
    that they also fail as a matter of law.” Based on the general presumption and
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    the district court’s description of its own order, we look to the Second Amended
    Complaint in analyzing Plaintiffs’ claim for breach of contract and agree with
    the district court that their allegations are inadequate.
    B.
    Under Texas law, a claim for wrongful foreclosure generally requires: (1)
    “a defect in the foreclosure sale proceedings;” (2) “a grossly inadequate selling
    price;” and (3) “a causal connection between the defect and grossly inadequate
    selling price.” Miller v. BAC Home Loans Servicing, L.P., 
    726 F.3d 717
    , 726
    (5th Cir. 2013) (citing Sauceda v. GMAC Mortg. Corp., 
    268 S.W.3d 135
    , 139
    (Tex. App.—Corpus Christi 2008, no pet.)).                  In their Third Amended
    Complaint, Plaintiffs allege that JPMC failed to comply with the notice
    procedures required for a foreclosure sale, 4 that, as a result, they lost the
    opportunity to obtain cash or to find a buyer for the Property before JPMC
    foreclosed, and that the Property sold for a grossly inadequate selling price.
    The district court dismissed the claim for failure to adequately allege a grossly
    inadequate selling price.
    We agree with the district court that Plaintiffs’ wrongful foreclosure
    claim should be dismissed, but for a different reason—Plaintiff’s abandoned
    the claim on appeal. In challenging the district court’s dismissal, Plaintiffs did
    not argue that their wrongful foreclosure claim should survive because they
    adequately pleaded a grossly inadequate sales price.                   See Thompson v.
    Deutsche Bank Nat. Trust Co., 
    775 F.3d 298
    , 304 (5th Cir. 2014) (citing Cinel
    v. Connick, 
    15 F.3d 1338
    , 1345 (5th Cir.1994) (“An appellant abandons all
    issues not raised and argued in its initial brief on appeal.”)). They only argued
    4Tex. Prop. Code Ann. § 51.002(b) requires the creditor to serve each debtor of record
    with written notice of a foreclosure sale at least twenty-one days in advance.
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    that the claim should survive because they need not plead that element at all.
    However, our precedent requires this element in all but a specific category of
    cases that does not include the instant case. See 
    Miller, 726 F.3d at 727
    (discussing an exception where a plaintiff alleges that the mortgagee
    “deliberately ‘chilled’ the bidding at the foreclosure sale”).
    C.
    Plaintiffs alleged that JPMC misrepresented that it would review and
    respond to their application for a loan modification before foreclosing on the
    Property.      Relying    on   this   allegation,    Plaintiffs   claim   negligent
    misrepresentation, fraud, and constructive fraud. The district court dismissed
    all three claims because they rest on a misrepresentation regarding future
    conduct, not existing fact. We affirm as to all three claims.
    1.
    A claim for negligent misrepresentation requires Plaintiffs to show that:
    (1) JPMC, in the course of its business, supplied to Plaintiffs false information
    for guidance in a business transaction; (2) JPMC did not exercise reasonable
    care or competence in obtaining or communicating the information; (3)
    Plaintiffs justifiably relied on the information; and (4) JPMC’s negligent
    misrepresentation proximately caused Plaintiffs to suffer pecuniary loss. See
    First Nat’l Bank of Durant v. Trans Terra Corp. Int’l, 
    142 F.3d 802
    , 809 (5th
    Cir. 1998) (citing Fed. Land Bank Ass'n of Tyler v. Sloane, 
    825 S.W.2d 439
    , 442
    (Tex. 1991)). However, “the misrepresentation at issue must be one of existing
    fact.” BCY Water Supply Corp. v. Residential Inv., Inc., 
    170 S.W.3d 596
    , 603
    (Tex. App.—Tyler 2005, pet. denied) (emphasis added). A misrepresentation
    regarding future conduct cannot support the claim. See Clardy Mfg. Co. v.
    Marine Midland Bus. Loans Inc., 
    88 F.3d 347
    , 357 (5th Cir. 1996) (citing
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    Airborne Freight Corp., Inc. v. C.R. Lee Enterprises, 
    847 S.W.2d 289
    , 298 (Tex.
    App.—El Paso 1992, writ denied)).
    For example, in BCY a water supply company’s employee represented
    that there would be no problem getting water service for a certain piece of
    property that the plaintiff planned to 
    purchase. 170 S.W.3d at 599
    . In Maddox
    v. Vantage Energy, LLC, an oil and gas company promised to give individual
    land owners an opportunity to accept a pre-existing deal it had with a land-
    owners association. 
    361 S.W.3d 752
    , 761 (Tex. App.—Fort Worth 2012, pet.
    denied). In both of these cases, the Texas Court of Appeals held that the
    plaintiffs’ negligent misrepresentation claims failed as a matter of law because
    any alleged misrepresentation regarded future conduct, not an existing fact.
    Our court, following Texas law, has done the same. Verdin v. Fed. Nat’l Mortg.
    Ass'n, 
    540 F. App'x 253
    , 255 (5th Cir. 2013) (holding that a mortgagee telling
    a mortgagor “not to worry about the foreclosure” is a promise of future conduct
    and is “not actionable under Texas law.”).
    Similarly, Plaintiffs in this case allege that JPMC promised to delay
    foreclosure until it considered and responded to Plaintiffs’ application for a
    loan modification. As the district court correctly noted, this is no more than a
    promise of future conduct and, therefore, Plaintiffs have failed to state a claim
    for negligent misrepresentation.
    2.
    A valid claim for fraud requires Plaintiffs to show that: (1) JPMC made
    a representation to them in the course of business; (2) the representation was
    false; (3) JPMC knew the representation was false or made the representation
    recklessly; (4) JPMC intended for the Plaintiffs to rely on the representation;
    (5) Plaintiffs did rely on the representation; and (6) Plaintiffs suffered injury
    as a result. E.g., Massey v. EMC Mortg. Corp., 546 F. App’x 477, 481 (5th Cir.
    9
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    2013); 
    Clardy, 88 F.3d at 359
    (5th Cir. 1996); see also In re First Merit Bank,
    N.A., 
    52 S.W.3d 749
    , 758 (Tex. 2001).
    Like the negligent misrepresentation claims, the district court dismissed
    Plaintiffs’ fraud claim for failure to allege a misrepresentation of existing fact.
    Fraud claims based on promises of future conduct may proceed, but they
    require further allegations. See 
    Clardy, 88 F.3d at 360
    (noting that promises
    of future conduct can support a fraud claim “‘only when made with the
    intention, design and purpose of deceiving’”) (quoting Airborne 
    Freight, 847 S.W.2d at 294
    ).      In addition to the above elements, a plaintiff must also
    establish that the defendant intended not to perform at the time it made the
    promise at issue. See Schindler v. Austwell Farmers Coop., 
    841 S.W.2d 853
    ,
    854 (Tex. 1992). While the Federal Rules of Civil Procedure require a plaintiff
    to plead with specificity the circumstances constituting fraud, “conditions of a
    person’s mind” may be alleged generally. Fed. R. Civ. P. 9(b); Flaherty &
    Crumrine Preferred Income Fund, Inc. v. TXU Corp., 
    565 F.3d 200
    , 206 (5th
    Cir. 2009). In describing the circumstances of the fraud, a plaintiff must set
    out the allegedly fraudulent statements, when and where the statements were
    made, and why they were fraudulent.            See 
    Flaherty, 565 F.3d at 206
    (interpreting Rule 9(b) to require these allegations). However, “[f]ailure to
    perform, standing alone, is no evidence of the[] intent not to perform when the
    promise was made.” Spoljaric v. Percival Tours, Inc., 
    708 S.W.2d 432
    , 435 (Tex.
    1986); see, e.g., 
    Clardy, 88 F.3d at 360
    (ruling against a plaintiff on a motion
    for summary judgment).
    In their Third Amended Complaint, Plaintiffs alleged that a
    representative from JPMC orally promised them by phone (on four occasions,
    the latest being in August 2012) that their “application would be reviewed and
    told the Plaintiffs that they would receive an answer and respond to the
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    Plaintiffs before any non-judicial foreclosure action would be taken.” Plaintiffs
    further alleged that JPMC expected that Plaintiffs’ would rely upon this
    promise and knew that such reliance would lead to injury. However, Plaintiffs
    did not specifically allege that JPMC did not intend to perform the promise at
    the time it was made, much less the facts necessary to generally support such
    an allegation. See 
    Clardy, 88 F.3d at 360
    ; see also Pollett v. Aurora Loan
    Services, 455 F. App’x 413, 415 (5th Cir. 2011) (affirming the dismissal of a
    debtor’s fraud claim against a lender for failure to plead the claim with
    specificity). Accordingly, the district court did not err in dismissing Plaintiffs’
    fraud claim.
    3.
    Plaintiffs also alleged constructive fraud.            The district court, again,
    dismissed the claim for failure to allege misrepresentation of an existing fact.
    We affirm, but for alternative reasons.
    Constructive fraud is the breach of a legal or equitable duty that the law
    declares fraudulent because it violates a fiduciary relationship. 5 Hubbard v.
    Shankle, 
    138 S.W.3d 474
    , 483 (Tex. App.—Fort Worth 2004, pet. denied). It
    differs from the normal fraud claim in that it does not require the intent to
    defraud. 
    Id. It centers
    on conduct that, at the very least, tends to deceive and
    5 A fiduciary relationship is not required in all constructive fraud cases. See Vickery
    v. Vickery, 
    999 S.W.2d 342
    , 377 (Tex. 1999) (“Constructive fraud is most frequently found in
    a breach of a fiduciary or confidential relationship.”) (emphasis added); see also In re Soza,
    
    542 F.3d 1060
    , 1076 (5th Cir. 2008) (surveying Texas cases involving constructive fraud
    claims). However, in cases lacking a fiduciary relationship, the constructive fraud claim is
    supported by particularly egregious facts. See, e.g., Klein v. Sporting Goods, Inc., 
    772 S.W.2d 173
    , 174 (Tex. App.—Houston [14th Dist.] 1989, writ denied) (involving a store owner of an
    insolvent company who incorporated a second company to buy the assets of the first and avoid
    paying unsecured creditors). Here, Plaintiffs allege nothing more than unfulfilled statements
    made during negotiations between a debtor and lender. These facts are not egregious enough
    to eliminate the need to establish the existence of a fiduciary duty.
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    thus breaches a legal or equitable duty that the law considers important. In
    re Soza, 
    542 F.3d 1060
    , 1072 (5th Cir. 2008). The fiduciary duty “may arise
    from a moral, social, domestic or purely personal relationship of trust and
    confidence,” but that relationship must exist before and apart from the
    agreement that forms the basis of the suit. 
    Id. Moreover, “a
    fiduciary
    relationship is an extraordinary one and will not be created lightly.” Manon v.
    Solis, 
    142 S.W.3d 380
    , 390 (Tex. App.—Houston [14th Dist.] 2004, pet. denied).
    “Mere subjective trust, without more, does not indicate that the person places
    confidence in another in the sense demanded by a fiduciary relationship,
    especially in the context of arm's length dealing.” 
    Id. “[T]he relationship
    between a borrower and its lender generally does not create a fiduciary duty
    or impose a duty of good faith and fair dealing.” Baskin v. Mortgage & Trust,
    Inc., 
    837 S.W.2d 743
    , 747 (Tex. App.—Houston [14th Dist.] 1992, writ denied).
    Plaintiffs failed to allege the existence of a fiduciary relationship, much
    less any facts that would support the existence of a fiduciary relationship.
    They allege no facts showing a relationship that pre-existed the loan or that
    JPMC formed a relationship of trust and confidence as opposed to one created
    for an arm’s length transaction. See Castillo v. First City Bancorporation of
    Texas, Inc., 
    43 F.3d 953
    , 960 (5th Cir. 1994) (holding that a broker-client
    relationship with antagonistic interests does not create fiduciary duties).
    Forming a debtor-lender relationship does not create fiduciary duties. See
    
    Baskin, 837 S.W.2d at 747
    . Therefore, we agree with the district court’s
    dismissal of the constructive fraud claim.
    D.
    Plaintiffs seek a reliance remedy against JPMC based on the doctrine of
    promissory estoppel. A cause of action for promissory estoppel requires: (1) a
    promise by the defendant; (2) foreseeable and actual reliance on the promise
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    by the plaintiff to his detriment; and (3) that enforcement of the promise be
    necessary to avoid an injustice. See “Moore” Burger, Inc. v. Phillips Petroleum
    Co., 
    492 S.W.2d 934
    , 937 (Tex. 1972); Ford v. City State Bank of Palacios, 
    44 S.W.3d 121
    , 139 (Tex. App.—Corpus Christi 2001, no pet.). “To support a
    finding of promissory estoppel, the asserted promise must be sufficiently
    specific and definite that it would be reasonable and justified for the promisee
    to rely upon it as a commitment to future action.” Comiskey v. FH Partners,
    LLC, 
    373 S.W.3d 620
    , 635 (Tex. App.—Houston [14th Dist.] 2012, pet. denied)
    (internal quotation marks omitted). One federal court applying Texas law has
    held “that a promise that [a plaintiff’s] loan modification was ‘under
    consideration’ would not trigger the promissory estoppel doctrine.” Stolts v.
    Wells Fargo Bank, NA, No. 1:13-CV-19, 
    2014 WL 3545464
    , at *3 n.4 (S.D. Tex.
    Jan. 16, 2014) (citing Addicks Servs., Inc. v. GGP–Bridgeland, LP, 
    596 F.3d 286
    , 300 (5th Cir. 2010)). According to the Third Amended Complaint, JPMC
    promised not only that it would consider Plaintiffs’ application, but that “there
    would be no non-judicial foreclosure until the loan modification process was
    completed and they were given a response and answer.”           This additional
    representation makes JPMC’s promise sufficiently definite to support a
    plausible claim for promissory estoppel.
    However, following our precedent, where a defendant has a valid,
    affirmative defense made plain on the face of the pleadings, the district court
    may dismiss on this basis. See Kansa Reins. Co. v. Cong. Mortg. Corp. of Tex.,
    
    20 F.3d 1362
    , 1366 (5th Cir. 1994) (citation omitted) (“[W]hen a successful
    affirmative defense appears on the face of the pleadings, dismissal under Rule
    12(b)(6) may be appropriate.”). Where a contract claim (as here) is barred by
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    the statute of frauds, 6 an alternative claim of promissory estoppel requires the
    plaintiff to show not only that the defendant made a promise upon which he
    relied, but also “that the [defendant] promised to sign a written document
    complying with the statute of frauds.”              
    Martins, 722 F.3d at 256
    –57 (citing
    Carpenter v. Phelps, 
    391 S.W.3d 143
    (Tex.App.—Houston [1st Dist.] 2011, no
    pet.); Ford v. City State Bank of Palacios, 
    44 S.W.3d 121
    , 139 (Tex.App.—
    Corpus Christi 2001, no pet.); Beta Drilling, Inc. v. Durkee, 
    821 S.W.2d 739
    ,
    741 (Tex.App.—Houston 1992, writ denied)).
    Plaintiffs failed to allege this additional promise. The complaint alleges
    that JPMC orally promised it would consider Plaintiffs’ application before
    foreclosing, but never alleges that JPMC said it would put that promise in
    writing. Accordingly, because JPMC raised its statute of frauds defense in its
    motion to dismiss, the district court did not err in dismissing Plaintiffs’
    promissory estoppel claim.
    E.
    Plaintiffs also allege that JPMC violated the DTPA. The district court
    dismissed this claim on the basis that Plaintiffs are not “consumers” within the
    meaning of the Act and thus have no basis for a DTPA claim.
    6 Promises or commitments to loan money or delay repayment of money as to a loan
    agreement exceeding $50,000 in value are not enforceable unless they comply with the
    statute of frauds. Tex. Bus. & Com. Code Ann. § 26.02(a)(2); see also 
    Martins, 722 F.3d at 256
    (holding that the statute of frauds also applies to oral modifications to loan agreements).
    Moreover, any agreement that, by its own terms, cannot be performed within one year from
    the date it is made must also comply with the statute of frauds. Tex. Bus. & Com. Code Ann.
    § 26.01(a); see also Baisden v. I'm Ready Productions, Inc., 
    693 F.3d 491
    , 503 (5th Cir. 2012)
    (citing Abatement Inc. v. Williams, 
    324 S.W.3d 858
    , 860 (Tex.App.—Houston [14th Dist.]
    2010, pet. denied). Where the agreement is for a loan, “[t]he possibility of prepayment within
    one year alone is not enough to take the loan agreement out of [the] statute of frauds.”
    Schuhart v. Chase Home Fin., L.L.C., No. C-05-385, 
    2006 WL 1897263
    , at *2 (S.D. Tex. July
    10, 2006) (citing Mann v. NCNB Texas Nat. Bank, 
    854 S.W.2d 664
    , 668 (Tex. App.—Dallas
    1992, no writ)). The loan at issue here, under either basis, is subject to the statute of frauds.
    14
    Case: 13-51025     Document: 00512964518      Page: 15   Date Filed: 03/10/2015
    No. 13-51025
    To succeed on a DTPA claim, Plaintiffs must show: (1) they are
    consumers who sought or acquired, by purchase or lease, goods or services from
    JPMC; (2) JPMC can be sued under the DTPA; (3) JPMC committed an act in
    violation of the DTPA; and (4) JPMC’s purported action was a producing cause
    of Plaintiffs’ damages. See Tex. Bus. & Com. Code Ann. §§ 17.41–.63; see also
    In re Frazin, 
    732 F.3d 313
    , 323 (5th Cir. 2013); Doe v. Boys Clubs of Greater
    Dallas, Inc., 
    907 S.W.2d 472
    , 478 (Tex. 1995).
    The DTPA provides a private cause of action only for “consumers,”
    meaning those who purchase a good or service. See Brittan Commc’ns Int’l
    Corp. v. Sw. Bell Tel. Co., 
    313 F.3d 899
    , 907 (5th Cir. 2002); see also Riverside
    Nat’l Bank v. Lewis, 
    603 S.W.2d 169
    , 173 (Tex. 1980) (citing Tex. Bus. & Com.
    Code Ann. § 17.45(4)). “Generally, a person cannot qualify as a consumer if
    the underlying transaction is a pure loan because money is considered neither
    a good nor a service.” Fix v. Flagstar Bank, FSB, 
    242 S.W.3d 147
    , 160 (Tex.
    App.—Fort Worth 2007, pet. denied) (citing 
    Riverside, 603 S.W.2d at 173
    –74).
    We have dismissed DTPA claims based on nearly identical facts. In
    Miller, the plaintiffs based their claim on their lender’s promises and conduct
    during attempts to modify their original purchase-money 
    mortgage. 726 F.3d at 725
    . We held that since the claim rested on promises and conduct related
    to a loan modification, not the original loan used to purchase the plaintiffs’
    house, the complaint was based on a “pure loan transaction” and the plaintiffs
    did not qualify as consumers. 
    Id. (citing Ford,
    44 S.W.3d at 133); see also Ayers
    v. Aurora Loan Servs., LLC, 
    787 F. Supp. 2d 451
    , 455 (E.D. Tex. 2011) (“[A]
    modification of an existing loan . . . is analogous to refinancing services.
    Refinancing is simply an extension of credit that does not qualify Plaintiff as a
    consumer.”). Miller is directly on point and the district court did not err in
    dismissing this claim.
    15
    Case: 13-51025     Document: 00512964518      Page: 16    Date Filed: 03/10/2015
    No. 13-51025
    F.
    The district court dismissed Plaintiffs’ remaining claims for declaratory
    judgment and trespass to try title on the ground that “[a]ll of Plaintiffs’
    substantive claims fail as a matter of law. Because their actions for declaratory
    judgment and in trespass to try title are based on those claims, they also fail
    as a matter of law.” We agree.
    Under federal statute, federal courts have authority to grant declaratory
    relief so long as a justiciable controversy exists as to the rights of the parties
    and a declaration is capable of resolving the controversy. 28 U.S.C. § 2201; see
    Bauer v. Texas, 
    341 F.3d 352
    , 357–58 (5th Cir. 2003) (holding that the test for
    an “actual controversy” is nearly identical to the test for Article III standing).
    As discussed above, Plaintiffs have failed to state any other valid claim for
    relief. Because a declaratory judgment is “remedial in nature,” where all of a
    plaintiff’s causes of action are dismissed, a related declaratory judgment claim
    should also be dismissed. See, e.g., Williams v. Wells Fargo Bank, N.A., 560 F.
    App’x 233, 243 (5th Cir. 2014).
    Similarly, a trespass to try title claim requires a plaintiff to prove a basis
    for his right to title. Martin v. Amerman, 
    133 S.W.3d 262
    , 265 (Tex. 2004).
    Here, any purported right of Plaintiffs to title in the Property is based on the
    failed claims already discussed above, so this claim should also be dismissed.
    See, e.g., Singha v. BAC Home Loans Servicing, L.P., 564 F. App’x 65, 72 (5th
    Cir. 2014); Williams, 560 F. App’x at 242–43.
    IV.
    For the foregoing reasons, we AFFIRM.
    16
    

Document Info

Docket Number: 13-51025

Citation Numbers: 605 F. App'x 240

Filed Date: 3/10/2015

Precedential Status: Non-Precedential

Modified Date: 1/13/2023

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