Nita Page v. JP Morgan Chase Bank, N.A. , 605 F. App'x 272 ( 2015 )

Case: 14-10314 Document: 00512971666 Page: 1 Date Filed: 03/17/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 17, 2015
No. 14-10314
Lyle W. Cayce
Clerk
NITA PAGE, As Adminstratrix The Estate of Jacob Woullard, Deceased,
Plaintiff - Appellant
v.
JP MORGAN CHASE BANK, N.A.,
Defendant - Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:13-CV-407
Before STEWART, Chief Judge, and SOUTHWICK and COSTA, Circuit
Judges.
PER CURIAM:*
Nita Page, as administratrix of the estate of Jacob Woullard (“the
estate”), brought suit against JP Morgan Chase Bank, alleging various Texas
state law claims. The estate appeals the district court’s dismissal of its breach
of contract, Texas Debt Collection Act (“TDCA”), and negligent
misrepresentation claims. We AFFIRM.
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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FACTUAL AND PROCEDURAL BACKGROUND
In June 2007, Jacob Woullard executed a note payable to JP Morgan
Chase in the principal amount of $219,663. The funds enabled him to purchase
property located in Fort Worth, Texas. The note was secured by a deed of trust,
which identified JP Morgan Chase as the lender. Woullard died intestate in
May 2009, and Page became the administratrix of his estate.
In its complaint, the estate alleges that Page began communicating with
JP Morgan Chase about the loan in early 2009, prior to Woullard’s death. Over
time, Page allegedly dealt with the bank on her own behalf regarding
assumption of the loan, and on behalf of the estate regarding a loan
modification.
Page allegedly first contacted JP Morgan Chase in January 2009, prior
to Woullard’s death, to obtain information about assuming Woullard’s loan. In
June, Page received a letter from the bank responding to her inquiry about the
loan-assumption process. On July 13, Page received a letter notifying her that
Woullard’s name had been removed from the account due to his death. Ten
days later, Page received another letter informing her that the inquiry was still
under review. The following day, she received a letter stating that JP Morgan
Chase was unable to remove Woullard’s name completely from the account.
The loan had instead been placed in the name of “The Estate of Jacob
Woullard.” In September 2011, Page and her husband sent the bank several
letters requesting permission to purchase the property from Woullard’s widow.
The complaint does not state whether JP Morgan Chase ever responded to
these inquiries.
Page also began communicating with JP Morgan Chase on behalf of the
estate in early 2009 after the estate fell behind on loan payments, seeking to
modify the loan. On April 20, Page sent the bank a letter regarding a
$14,434.50 shortage in the escrow balance. The complaint alleges that the
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escrow shortage was a result of an increased tax payment made by JP Morgan
Chase in November 2008. Page requested in the April letter that the shortage
be amortized over 36 months instead of 12 months. She sent the same letter
in June 2009 because the bank denied receiving the letter. Also in June, the
JP Morgan Chase Collections Department allegedly authorized a regular
monthly payment of $1,597. When Page attempted to make a payment in that
amount in August, JP Morgan Chase refused to accept it. Instead, it placed
the payment in a “Suspense Fund Account” and notified her that the new
monthly payment would be $3,401.85 to recoup the escrow shortage.
In September 2009, Page again contacted JP Morgan Chase to request
that the escrow shortage be spread over 24 or 36 months “to accommodate her
current living expenses.” In May 2010, Page reiterated the request. In
February 2011, Page received a letter from the bank’s foreclosure counsel
indicating that the accelerated balance was $250,580.76. Another letter
received that same day indicated that the amount due was $25,239.68.
The estate received notice in March 2013 that foreclosure on the property
would occur on May 7, 2013. The estate filed this suit on May 3, 2013 to delay
the foreclosure. The estate alleged breach and anticipatory breach of contract,
unreasonable collection efforts, violations of the TDCA, negligent
misrepresentation, and unjust enrichment.
JP Morgan Chase removed the case to the United States District Court
for the Northern District of Texas. The estate was granted leave to file an
amended complaint. After the amended complaint was filed, JP Morgan Chase
filed a motion to dismiss. The motion was granted in November 2013. On
appeal, the estate challenges the district court’s dismissal of its breach of
contract, TDCA, and negligent misrepresentation claims.
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DISCUSSION
We review the grant of a motion to dismiss for failure to state a claim
under Rule 12(b)(6) de novo. In re Katrina Canal Breaches Litig., 495 F.3d 191,
205 (5th Cir. 2007). To survive a Rule 12(b)(6) motion to dismiss, a plaintiff
must plead “enough facts to state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has “facial
plausibility” when the well-pleaded facts “allow[] the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
“A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the
elements of a cause of action will not do.’” Id. (quoting Twombly, 550 U.S. at
555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Id. (quoting Twombly, 550 U.S. at 557). At the
motion to dismiss stage, a court may only consider “the facts stated in the
complaint and the documents either attached to or incorporated in the
complaint.” Wilson v. Birnberg, 667 F.3d 591, 600 (5th Cir. 2012) (citation and
quotation marks omitted).
I. Breach of Contract
The estate makes two breach of contract arguments: (1) JP Morgan
Chase breached the governing law provision found in paragraph 16 of the deed
of trust, and (2) the bank waived the right to accelerate and foreclose on the
mortgage.
Under Texas law, the elements of a breach of contract claim are: “(1) a
valid contract, (2) the plaintiff performed or tendered performance[,] (3) the
defendant breached the contract, and (4) the plaintiff was damaged as a result
of the breach.” Doss v. Homecomings Fin. Network, Inc., 210 S.W.3d 706, 713
(Tex. App.–Corpus Christi/Edinburg 2006, pet. denied).
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A. Provision on Governing Law
The estate argues that JP Morgan Chase breached paragraph 16 of the
deed of trust. That paragraph provides:
16. Governing Law; Severability; Rules of Construction. This
Security Instrument shall be governed by federal law and the law
of the jurisdiction in which the Property is located. All rights and
obligations contained in this Security Instrument are subject to
any requirements and limitations of Applicable Law. Applicable
Law might explicitly or implicitly allow the parties to agree by
contract or it might be silent, but such silence shall not be
construed as a prohibition against agreement by contract. In the
event that any provision or clause of this Security Instrument or
the Note conflicts with Applicable Law, such conflict shall not
affect other provisions of this Security Instrument or the Note
which can be given effect without the conflicting provision . . . .
In the complaint, the estate alleged that “[b]ecause paragraph 16 of the
deed of trust requires that the instrument comply with federal and state law,
any violations of state law, including the Texas Property Code, and federal law,
are also breaches of the Deed of Trust contract.” The district court dismissed
this claim, explaining that paragraph 16 “merely sets forth the law that
governs the parties’ deed of trust” and does not, as the estate asserts, make all
violations of state or federal law breaches of contract.
Though this court has not addressed such a claim, it is clear that
paragraph 16 identifies the law that governs the parties’ agreement but does
not provide that violation of any such law is a breach of contract. Regardless,
the estate has not identified which laws were violated or how it sustained
damages. Both are necessary elements of a breach of contract claim. See Doss,
210 S.W.3d at 713.
B. Waiver
The estate next argues that JP Morgan Chase’s attempt to foreclose
constituted a breach of contract because the bank waived the right to
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accelerate and foreclose by accepting the estate’s $1,597 payment in June 2009.
The district court held that the waiver argument was precluded by the estate’s
failure to show an intentional relinquishment of the right to foreclose, andthe
unambiguous anti-waiver provisions in the note and deed of trust.
“Waiver involves the intentional relinquishment of a known right or
intentional conduct inconsistent with claiming that right.” Stephens v. LPP
Mortgage, Ltd., 316 S.W.3d 742, 748 (Tex. App.–Austin 2010, pet. denied).
“The elements of waiver include (1) an existing right, benefit, or advantage
held by a party, (2) the party’s actual knowledge of its existence, and (3) the
party’s actual intent to relinquish the right, or intentional conduct inconsistent
with the right.” Id. at 748–49. Under Texas law, “[w]aiver is largely a matter
of intent.” Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). Waiver
requires either a party’s actual intent to relinquish a known right or
intentional conduct inconsistent with the right. Stephens, 316 S.W.3d at 749.
The necessary intent may be implied, but “for implied waiver to be found
through a party’s actions, intent must be clearly demonstrated by the
surrounding facts and circumstances.” Jernigan, 111 S.W.3d at 156.
The estate has not alleged conduct that clearly demonstrates an intent
to waive the right to accelerate and foreclose. This is particularly true in light
of the anti-waiver provisions in the note and deed of trust. Another panel of
the court dealt with a similar argument that a creditor had waived the right to
foreclose by accepting payments following default. Thomas v. EMC Mortg.
Corp., 499 F. App’x 337, 341 (5th Cir. 2012). Applying Texas law, the court
relied on the anti-waiver provisions in both the promissory note and the
repayment plan to reject the argument. Id. The court also held that the
plaintiffs failed to establish that the defendants manifested an actual intent to
relinquish their rights. Id. In another appeal, the court recently applied Texas
law to hold that the defendant’s alleged conduct did “not suffice to show an
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intentional waiver by the lender, especially in the face of the deed of trust’s
anti-waiver provision.” Water Dynamics, Ltd. v. HSBC Bank USA, Nat. Ass’n,
509 F. App’x 367, 369 (5th Cir. 2013). We find the reasoning in both of these
unpublished opinions to be persuasive.
The anti-waiver provisions in the note and deed of trust create a
presumption that JP Morgan Chase did not intend to relinquish the right to
foreclose. This conclusion is consistent with Texas state court decisions, which
have held that a non-waiver clause provides persuasive evidence that a party
did not intend to relinquish a known right. See Straus v. Kirby Court Corp.,
909 S.W.2d 105, 109 (Tex. App.–Houston [14th Dist.] 1995, pet. denied).
The estate devotes significant attention to its argument that the district
court erred in relying on the non-waiver clause. In a non-precedential decision,
this court determined that a bank’s anti-waiver clause was waived by the
bank’s repeated intentional conduct over the course of several years. U.S.
Bank, Nat. Ass’n v. Kobernick, 454 F. App’x 307, 315 (5th Cir. 2011). We
explained that the bank could not rely on the anti-waiver provision when it
had intentionally refunded the borrower’s tax escrow payments for such a
lengthy period of time. Id. Even were it binding, Kobernick would not compel
a finding of waiver here. Unlike the long-term inconsistent actions in
Kobernick, JP Morgan Chase allegedly accepted only one partial payment
following default. There is not allegation of conduct here that manifests an
intentional relinquishment of the right to foreclose.
II. Texas Debt Collection Act
The estate next argues that JP Morgan Chase violated the TDCA. In its
complaint, the estate alleged that the bank violated the TDCA by (1) using a
deceptive means to collect a debt in violation of Section 392.304(a)(19) of the
Texas Finance Code; (2) attempting to collect charges incidental to the
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obligation in violation of Section 392.303(a)(2) of the Texas Finance Code; and
(3) foreclosing when the law prohibits it in violation of Section 392.301(a)(8) of
the Texas Finance Code. In support of its claims, the estate alleged the bank
imposed unauthorized charges, such as penalties on Plaintiff’s
mortgage account thus using a deceptive means to collect a debt
and attempting to collect incidental charges because Defendant
should not have declared Plaintiff in default. Defendant forced
Plaintiff to incur additional penalties as they waited to hear from
Defendant about a solution. These accumulated to such an amount
that Plaintiff’s home was forced into foreclosure. These charges
were unauthorized and attempting to collect them violated the
Texas Finance Code. Additionally, this conduct was deceptive.
The district court dismissed the estate’s TDCA claims, explaining that
the estate admitted that the note was in default. Therefore, the estate failed
to allege any facts suggesting that any of the charges made to its account were
not authorized by the loan documents as a result of the default.
The estate does not dispute the district court’s conclusion regarding
unauthorized charges. Instead, it asserts that the district court ignored
allegations its additional contentions that JP Morgan Chase foreclosed on the
property after telling Page it would not, and did so while Page was disputing
the amount owed, in violation of Section 392.301(a)(8); told Page that if the
estate made payments of $1,597.00 per month, it would be eligible for a loan
modification, thus violating Section 392.304(a)(19); and violated Section
392.304(a)(8) by representing to Page that she needed to submit certain
documents for a loan modification – then denied receiving the documents after
she submitted them.
The conduct alleged in the complaint only relates to unauthorized
charges. The three allegations that the estate raises on appeal were never
mentioned in the complaint and appear in the record for the first time in the
estate’s response to the bank’s motion to dismiss. Accordingly, the district
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court correctly concluded that the allegations in the complaint were limited to
unauthorized charges.
The estate does not argue the district court erred in holding the estate
failed to allege any facts suggesting that charges made to the account were not
authorized by the loan documents as a result of the default. Therefore, we do
not consider the estate’s TDCA claims any further.
III. Negligent Misrepresentation
Finally, the estate argues that the district court erred in dismissing its
negligent misrepresentation claim. To state a claim for negligent
misrepresentation, a plaintiff must allege: “(1) the defendant made a
representation in the course of its business or in a transaction in which it had
an interest, (2) the defendant supplied 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 suffered pecuniary loss by justifiably relying on the representation.”
Henning v. OneWest Bank FSB, 405 S.W.3d 950, 965 (Tex. App.–Dallas 2013,
no pet.) (citation omitted).
In its complaint, the estate alleged that JP Morgan Chase
misrepresented the status of the loan and the loan modification process. The
estate specifically alleged:
Here, Defendant represented, numerous times, an inaccurate
assessment of Plaintiffs’ account. Plaintiff trusted Defendant’s
specialists, to guide them through this process. Defendant
misrepresented the loan modification process. Plaintiff justifiably
relied on these representations, and as a result, Plaintiff sustained
damages, including but not limited to court costs, economic
damages, and damages for mental anguish and emotional distress.
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The district court dismissed the claim, explaining that the estate failed
to “identify any specific misrepresentation or explain how such representation
was false.” The court further held that the estate’s claim was precluded by the
economic-loss rule.
The estate now claims that the district court erred in holding that it
failed to identify any specific misrepresentation. It contends that the
complaint alleged that JP Morgan Chase contacted Page and offered an
assumption program to prevent foreclosure, told her the estate would be
eligible for a loan modification if it made payments of $1,597 per month, and
denied having received the estate’s documentation for a loan modification. JP
Morgan Chase asserts that the estate is improperly relying on allegations that
were not contained in the complaint, and that only appeared in the response
to the motion to dismiss and in the estate’s appellate brief.
JP Morgan Chase is correct that these allegations were not in the
complaint. The estate never alleged that the bank offered the assumption
program as a means of preventing foreclosure or said that it would be eligible
for a loan modification by making a reduced payment. Instead, it merely
alleged that the estate repeatedly requested such accommodations; it did not
allege the bank ever responded or accepted.
Even had the estate pled the allegations that it raises on appeal, they
each concern a promise of future action. Under Texas law, “the
misrepresentation at issue [in a negligent misrepresentation case] 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). “A promise to do or refrain from
doing an act in the future is not actionable because it does not concern an
existing fact.” Id.
AFFIRMED.
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