Madison v. Federal National Mortgage Association et al, No. 4:2013cv03020 - Document 29 (S.D. Tex. 2014)
Court Description: MEMORANDUM AND OPINION GRANTING in part and DENYING in part 22 Amended Motion for Summary Judgment; Granting 23 MOTION for Summary Judgment. Plaintiff's claims against Fannie Mae are DISMISSED WITH PREJUDICE. (Signed by Judge Sim Lake) Parties notified. (wbostic, 4)
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Madison v. Federal National Mortgage Association et al Doc. 29 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION PEARL MADISON, § § § § § § § § § § § § Plaintiff, v. JAMES B. NUTTER & CO., FEDERAL NATIONAL MORTGAGE ASSOCIATION, and E-LOANSTOGO.COM, INC., Defendants. CIVIL ACTION NO. H-13-3020 MEMORANDUM OPINION AND ORDER Plaintiff Pearl Madison brought this action in the lS9th Judicial District Court of Harris County, Texas, where it was filed under Cause No. 2013-551S5. 1 Defendants James B. Nutter & Co. ("Nutter") and Federal National Mortgage Association ("Fannie Mae") timely removed. 2 Pending before the court are James B. Nutter & Co.'s Amended Motion for Summary Judgment ("Nutter MSJ") (Docket Entry No. 22) and Federal National Mortgage Association's Motion for Summary Judgment ("Fannie Mae MSJ") (Docket Entry No. 23). For the reasons 1See Plaintiff's Second Amended Petition and Application for Injunction and Temporary Restraining Order ("Complaint") , Exhibit A.7 to Defendant's Notice of Removal, Docket Entry No. l-S. 2See Defendant's Notice of Removal ("Notice of Removal"), Docket Entry No. 1i Order Denying Plaintiff's Motion to Remand, Docket Entry No. 10. Dockets.Justia.com stated below, Nutter's Motion for Summary Judgment will be granted in part and denied in part, Judgment will be granted, Fannie Mae's Motion for Summary and Fannie Mae will be dismissed from this action. I . Background On December 22, 2006, Madison signed an Adjustable Rate Note, a Home Equity Conversion Loan Agreement, and an Adjustable Rate Deed of Trust ( collectively, the "Mortgage Agreements") in favor of Access Reverse Mortgage and secured by Madison's home in Houston, Texas. 3 Five days later the Mortgage Agreements were transferred to Defendant Nutter.4 In August of 2010 Nutter notified Madison that she was required to have flood insurance on her property and that if she did not purchase such insurance herself, Nutter would do so on her behalf.s Nutter states that Madison did not comply and that Nutter purchased insurance on her behalf in 2010, 2011, and 2012. 6 Nutter claims to have "advised Plaintiff that she 3See Exhibits 1-3 to Nutter MSJ, Docket Entry Nos. 22-3, 22-4, 22-5. 4Corporation Assignment of Deed of Trust, Exhibit 5 to Nutter MSJ, Docket Entry No. 22-7. sComplaint, Exhibit A.7 to Notice of Removal, Docket Entry No. 1-8, p. 14 ~ 15. Neither party has produced a copy of this correspondence. 6Affidavit in Support of Defendant's Judgment, Docket Entry No. 22-2, p. 2 ~ 8. -2- Motion for Summary needed to repay [Nutter] for obtaining the flood insurance on each of these occasions."? On May 17, 2012, Nutter sent Madison a Notice of Intent to Foreclose, stating that Madison was in default because she failed to pay a ~Real result, Estate Taxes and/or homeowners Hazard Insurance."B Madison's loan had been called due and payable, Madison had 30 days to correct the default. 9 As and On December 18, 2012, Nutter filed an application to foreclose on the property. 10 A Default Order Allowing Foreclosure was entered on March 7, 2013. 11 On April 10, 2013, Nutter notified Madison that her property was scheduled for foreclosure sale on May 7, 2013. 12 However, on April 23, 2013, Nutter sent Madison a Repayment Plan Agreement, ~tax which stated that she owed Nutter $3,807.25 for and/or insurance items," but that she could payoff that ?Id. BNotice of Intent Docket Entry No. 22-8. to Foreclose, Exhibit 6 to Nutter MSJ, 9Id. 10Application for Court Order Allowing Foreclosure of a Lien Securing a Reverse Mortgage Loan Under Texas Constitution Article XVI, Section 50(k), Cause No. 2012-73948, in the 333rd Judicial District Court of Harris County, Texas, Exhibit 7 to Nutter MSJ, Docket Entry No. 22-9. 11Default Order Allowing Foreclosure, Cause No. Exhibit 8 to Nutter MSJ, Docket Entry No. 22-10. 2012-73948, 12Notice of Acceleration and Notice of Trustee's Exhibit 9 to Nutter MSJ, Docket Entry No. 22-11, p. 2. -3- Sale, amount in monthly installments. 13 The Agreement stated that the first payment was due within 30 days. Madison claims that she called Nutter and was told to submit her first payment by May 7, 2013. 14 On or about May 2, obtained a check from her 2013, church Madison signed the agreement, in the amount of the first payment, and mailed them to Nutter, which received them on May 6, 2013. 15 The foreclosure sale took place on May 7, 2013, and Nutter purchased Madison's house from the trustee for $27,000. 16 Nutter transferred the property to Fannie Mae on May 10, 2013. 17 Fannie Mae filed for eviction, 18 Madison failed to appear, and judgment was entered for Fannie Mae on September 10, 2013. 19 final This litigation ensued. 13Repayment Plan Agreement, Exhibit PI to Response to Defendants' Motion for Summary Judgment ("Madison Response"), Docket Entry No. 25-2. 14Complaint, Exhibit A.7 to Notice of Removal, No. 1-8, p. 15 ~ 21. Docket Entry 15See Repayment Plan Agreement, Exhibit PI to Madison Response, Docket Entry No. 25-2, pp. 1-3. 16Trustee's No. 22-12. Deed, Exhibit 10 to Nutter MSJ, Docket Entry 17Special Warranty Deed, Exhibit 11 to Nutter MSJ, Docket Entry No. 22-13. 18Complaint, Exhibit A. 7 to Notice of Removal, No. 1-8, p. 15 ~ 26. Docket Entry 19Final Judgment, Cause No. 1035412, County Civil Court at Law No. Three, Harris County, Texas, Exhibit 11C to Fannie Mae MSJ, Docket Entry No. 23-13. -4- fl;; II i' II. Motions for Summary Judgment Madison's Complaint asserts claims for breach of contract, tortious interference with existing contract, breach of fiduciary duty, fraud, trespass to real property, negligence, misrepresentation, and wrongful foreclosure. 2o negligent Nutter and Fannie Mae have moved for summary judgment on all of Madison's claims. A. Standard of Review Summary judgment is appropriate if the movant establishes that there is no genuine dispute about any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Disputes about material facts are genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2510 (1986) . The moving party is entitled to judgment as a matter of law if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2552 (1986). A party moving for summary judgment "must 'demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant' s case." 37 F.3d 1069, 1075 (5th Cir. 1994) Little v. Liquid Air Corp. , (en banc) (per curiam) 2°Complaint, Exhibit A. 7 to Notice of Removal, No. 1-8, pp. 16-18. -5- (quoting Docket Entry "If the moving party fails to meet Celotex, 106 S. Ct. at 2553). this initial burden, the motion must be denied, regardless of the nonmovant's response." this burden, Id. If, however, the moving party meets "the nonmovant must go beyond the pleadings" and produce evidence that specific facts exist over which there is a genuine 2553-54) issue for trial. Id. (citing Celotex, 106 S. Ct. at The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986) . "In order to avoid summary judgment, the nonmovant must identify specific facts within the record that demonstrate the existence of a genuine issue of material fact." CO, Inc. v. TXU Min. Co., L.P., 565 F.3d 268,273 (5th Cir. 2009) "The party must also articulate the precise manner in which the submitted or (internal identified evidence supports his or her claim." quotation marks and citation omitted) . "When evidence exists in the summary judgment record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, evidence is not properly before the district court." Id. that (same). In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Sanderson Plumbing Prods., Ct. Inc., 120 S. 2097, Reeves v. 2110 (2000). Factual controversies are to be resolved in favor of the nonmovant, -6- "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075. B. Analysis 1. Claims Against Nutter (a) Breach of Contract To prevail on a breach of contract claim under Texas law a plaintiff must prove: (2) performance (1) or the existence of a valid contract; tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to the plaintiff resulting from the breach. 343 F.3d 540, Huston & 544-45 Assocs., (5th Cir. 2003) 84 S.W.3d 345, 2002, pet. denied)) Lewis v. Bank of America NA, 353 (citing Palmer v. (Tex. Espey App.-Corpus Christi "[A] party to a contract may not bring a suit for the contract's breach if that party, itself, is in default." Ybarra v. Wells Fargo Bank, N.A., No. 13-50881, 2014 WL 3562759, at *2 (5th Cir. July 21, 2014 ) (citing Dobbins v. Redden, 785 S. W. 2d 377, 378 (Tex. 1990)). Nutter argues contract action performed her that because Madison "[t]here obligations cannot is under maintain no the a evidence Mortgage breach that of [she] Documents. ,,21 Specifically, Nutter argues that Madison did not procure flood insurance required. as It further argues 21Nutter MSJ, Docket Entry No. 22, p. 7 -7- ~ that 20. "there is no evidence that [Nutter] breached any provisions of the Mortgage Documents" because Nutter properly notified Madison of her default prior to foreclosure. 22 As a threshold matter, it is not entirely clear from the summary judgment evidence and briefing when Madison was required to obtain flood insurance, the extent of her compl iance with that requirement, and whether, under the Mortgage Agreements, she was required to repay Nutter for that Mortgage Agreements specify that insurance upon demand. Madison insurance on the secured property. 23 an unsigned, appears to maintain flood However, Madison has provided unauthenticated Flood Insurance Certification that to pertain to her Mortgage Agreements and states that "FLOOD INSURANCE IS NOT REQUIRED. ,,24 that is The she procured 3/18/2013. 25 flood insurance She has also provided evidence for the period 3/18/2012 However, she does not appear to contest the fact that Nutter purchased flood insurance on her behalf and that she did not pay Nutter for that insurance prior to May of 2013. not resolve these issues on summary judgment, The court need however, because Nutter has not met its burden with respect to Madison's claim that 22Id. , 21. 23See, e. g., Adj ustable Rate Deed of Trust, Exhibit 3 to Nutter MSJ, Docket Entry No. 22-5, p. 2 , 2. 24Flood Insurance Certification, Response, Docket Entry No. 25-8. Exhibit P6 to Madison 25See Flood Policy Declarations, Response, Docket Entry No. 25-11. Exhibit P9 to Madison -8- i: Nutter agreed not to foreclose if Madison made monthly payments to reimburse Nutter for the insurance it purchased. Nutter does not dispute the existence of the Repayment Plan Agreement. In its Answer Nutter stated that "the correspondence," i.e., the Agreement, "speaks for itself and no further response is required. ,,26 However, Nutter's Motion for Summary Judgment neither acknowledges the Repayment Plan Agreement nor offers any reason why it would not be an enforceable contract obligating Nutter not to foreclose absent a breach of that Agreement. 27 dispute Madison's performance under the Nor does Nutter Agreement, Nutter's foreclosure in spite of the Agreement, or harm to Madison resulting from that foreclosure. In her Response Madison has provided a Repayment Plan Agreement. 28 states at the top, signed copy of the The Agreement, dated April 23, 2013, "THIS REPAYMENT PLAN AGREEMENT REPLACES ANY PREVIOUS REPAYMENT PLAN AGREEMENT YOU HAVE RECEIVE [D] ." In the Agreement Madison acknowledges that she failed to make payments of 26See Answer to Plaintiff's Second Amended Petition and Application for Injunction and Temporary Restraining Order, Docket Entry No.6, p. 3 ~~ 18, 19, 20, 23. 27While the section of Madison's Complaint titled "Plaintiff's Claim for Breach of Contract" refers only to the "reverse mortgage agreement," seven out of fourteen paragraphs of the "Facts" section relate to the Repayment Plan Agreement. See Complaint, Exhibit A. 7 to Notice of Removal, Docket Entry No. 1-8, pp. 3-5. Nutter had fair notice of the nature of Madison's claim. 28Repayment Plan Agreement, Docket Entry No. 25-2. Exhibit P1 to Madison Response, -9- "taxes and/or insurance premiums" as required in her reverse mortgage agreement and that Nutter advanced $3,807.25 to cover those payments. Madison agrees to make monthly payments to Nutter in the amount of $317.27 for twelve months, with the first payment being due 30 days after "the date set forth above." The Agreement states that Nutter must receive a signed copy of the Agreement before it can accept payments, and the Agreement specifies that it may be mailed to "the address set forth above." bears Madison's signature, dated May 2, 2013. The Agreement Madison has provided a Domestic Return Receipt showing that she mailed the Agreement -and a check for $317.27 to the address set forth Agreement and that they were delivered on May 6, 2013. 29 judicial foreclosure sale was held on May 7, purchased the property from the trustee for 2013, the A non- and Nutter $27,000. 30 returned Madison's check, uncashed, on July 2, 2013, in Nutter "due to the status of the loan. ,,31 Although the Repayment Plan Agreement does not specifically state that Nutter may not foreclose so long as Madison makes payments under the Agreement, it is reasonably susceptible to that interpretation. For example, while the Agreement states that 29Id. 30Trustee's No. 22-12. Deed, Exhibit 10 to Nutter MSJ, Docket Entry 31Letter from James B. Nutter & Company Insurance Department to Greater M[t]. Carmel Baptist Church, Exhibit P2 to Madison Response, Docket Entry No. 25-3. -10- Madison will "remain in default until such time that the terms of the repayment agreement are satisfied in full," it also states that Nutter may foreclose should Madison "fail to comply with the terms of this repayment plan agreement," or "if there is any other default under the terms of [the] reverse mortgage agreement. ,,32 Drawing all inferences in favor of the nonmovant, the court concludes that a reasonable jury could find for Madison. Nutter is not entitled to summary judgment on Madison's breach of contract claim. (b) Fraud The elements of a cause of action for fraud under Texas law are (1) a material misrepresentation that either known to be false knowledge of its truth, reI ied upon, Meadows, and (6) made or was asserted (4) was intended to be relied upon, caused inj ury . 877 S.W.2d 281, performance when (2) was false, constitutes 282 (Tex. Sears, 1994). an actionable Roebuck & (3) was without (5) was Co. v. "A promise of future misrepresentation if the promise was made with no intention of performing at the time it was made." Formosa Contractors, Inc., Plastics Corp. USA v. 960 S.W.2d 41, 48 Presidio (Tex. 1998). Engineers and "However, the mere failure to perform a contract is not evidence of fraud." rd. To prevail, a plaintiff must present evidence that the defendant 32Repayment Plan Agreement, Exhibit PI to Madison Response, Docket Entry No. 25-2 (emphasis added) -11- "made representations with the intent intention of performing as represented." Again ignoring the factual basis to deceive and with no Id. of Madison's complaint, Nutter argues that "Plaintiff has not alleged any of the underlying facts required to support a cause of action for fraud, elements themselves. ,,33 should give claim.,,34 [Nutter] only the Nutter asserts that "Plaintiff's Complaint fair notice of the essence of plaintiff's The essence of Madison's claim is clear from the factual basis of the complaint: Madison alleges that Nutter told her she could satisfy her obligations by making monthly payments, that a Nutter representative told Madison to make the first payment by May 7, 2013, that Madison sent her first month's payment, Nutter received it on May 6, 2013, that and that Nutter nevertheless foreclosed on Madison's house on May 7, 2013. Nevertheless, judgment. Madison has not met her burden on summary Madison argues that because the foreclosure sale was scheduled for May 7, 2013, Nutter had to know at the time it sent the April 23, 2013, letter that the proposed 30-day deadline to respond extended beyond the date of the foreclosure sale. 35 That is to say, Nutter represented that Madison had 30 days to respond, Nutter knew this representation to be false 33Nutter MSJ, Docket Entry No. 22, p. 9 34Id. ~ ~ and intended that 27. 28. 35Madison Response, Docket Entry No. 25, pp. 7-8. -12- Madison rely on it, and Madison did rely on it, to her detriment. However, according to her Complaint, Madison did not rely on the 30-day deadline. She allegedly called Nutter and was told that she had until May 7, 2013, to send in her check. 36 Madison apparently relied on this latter representation and sent her check on or about May 2, 2013. 37 Apart from inferences based on the respective dates of the letter and scheduled foreclosure sale, Madison offers no evidence of Nutter's intent at the time of the Agreement. that the Agreement bound Nutter not to foreclose, Nutter nevertheless did so gives claim. But it does not, inference that Nutter rise to a by itself, intended to the fact that breach of contract give rise to a deceive intention of performing as represented. Assuming reasonable Madison and had no Madison therefore has not met her burden on summary judgment. (c) Remaining Claims Nutter argues that there is insufficient evidence to raise a fact issue on Madison's remaining claims. Having reviewed Madison's brief in response and the evidence attached thereto, the court agrees. Madison's claim for tortious interference with existing contract fails because "a party cannot tortiously interfere with 36See Complaint, Exhibit A. 7 to Notice of Removal, Docket Entry No. 1-8, p. 4 ~ 21. 37See Repayment Plan Agreement, Exhibit P1 to Madison Response, Docket Entry No. 25-2, pp. 2-3. -13- 1 its own contract. H 1995). Holloway v. Skinner, 898 S.W.2d 793, 796 (Tex. To the extent that her reply brief appears to reformulate the tortious interference claim as one for constructive eviction, 38 this claim fails as Nutter was not Madison's landlord. See Holmes v. P.K. Pipe & Tubing, Inc., 856 S.W.2d 530, 539 (Tex. App.-Houston [1st Dist.] 1993, no writ.) . Madison's claim for breach of fiduciary duty fails because "Texas courts have held that the relationship between a borrower and lender is not a fiduciary one. H Williams v. Countrywide Home Loans, Inc., 504 F. Supp. 2d 176, 192 (S.D. Tex. 2007), aff'd, 269 F. App' x 523 ( 5 t h Ci r . 2008). Madison's contention that "[t]he court in Home Loan 39 made clear the fact that a claim for breach of duty under an applicable standard of care proves the Plaintiff was foreseeable to injuryH does not illuminate a fiduciary relationship in this case. Madison's claim for negligent misrepresentation fails because "' [a] promise to act or not in the future cannot form the basis of a negligent misrepresentation claim.'H Bancroft Life & Cas. ICC, Ltd. v. GRBR Ventures, L.P., No. H-12-2252, 2014 WL 1322984 (S.D. Tex. Mar. 31, 2014) (quoting Roof Sys., Inc. v. Johns Manville Corp., 130 S.W.3d 430,439 (Tex. App.-Houston [14th Dist.] 2004, no 38See Madison Response, Docket Entry No. 25, p. 4 (listing two of the four elements of a constructive eviction claim under the heading "Tortious Interference H). 39Madison has not provided a citation for this case. -14- to Madison's argument that "there is no evidence. pet. ) ) . suggest that defendants knew proper remediation procedures, or if initiating foreclosure proceedings regardless of payment or rejection of payment would be sufficient"40 has no bearing on the alleged misrepresentation. Madison's claim for trespass to real property fails because she has not land." 267, "entered [Madison's] See Texas Woman's Univ. v. The Methodist Hosp., 221 S.W.3d (Tex. 286 Furthermore, longer alleged or shown that Nutter [1st Dist.] 2006, no pet.). as of the date of the foreclosure sale, Madison no "own [ed] property." App.-Houston or ha [d] See id. a lawful right to possess [the] real Madison's argument that Nutter "unlawfully entered the property by placing the home in foreclosure sale[] and then buying it, in an attempt to strip Plaintiff of title,,41 is unavailing. Madison's claim for negligence also fails. " [T]here is little guiding authority to enlighten [the] court as to whether there is a recognized duty to conform to a certain standard of conduct that might: (a) be owed from a mortgage lender or servicer to its borrower; and (b) give rise to a negligence claim," In re Thrash, 433 B.R. 585, 596 (Bankr. N.D. Tex. 2010). The one case cited by Madison did not resolve the issue. However, the court in See id. Thrash found that the plaintiffs' claims failed because, like here, 40Madison Response, Docket Entry No. 25, p. 12. 4lId. at 11. -15- they "put forth no other suffered summary Id. at 598. evidence of any damages and harm economic alleged than anguish/ anxiety. ,,42 judgment mental " [C] ase law in Texas clearly does not allow a claim for negligence to proceed where there is only a claim of mere economic damages and/or mental anguish." Id. at 600. Madison nevertheless argues that "[t]he servicer has liability if he does not exercise reasonable care after giving Plaintiff notice on foreclosure sale proceedings intent. ,,43 The court is not persuaded. Finally, because a Madison's claim wrongful foreclosure fails she has not pleaded or shown "a causal connection between defect in the foreclosure inadequate selling price." 455 F. for App'x 413, 415 sale proceedings and [a] grossly See Pollett v. Aurora Loan Services, (5th Cir. 2011) (citing Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.-Corpus Christi 2008, no pet.). property Madison's was made factually incorrect. $27,000. 45 for assertion a that total the "sale consideration of of Plaintiff's $10.00,,44 is Nutter purchased the house at foreclosure for Even if this were shown to be "grossly inadequate," 42See Damages for Plaintiff, Complaint, Exhibit A.7 to Notice of Removal, Docket Entry No. 1-8, p. 18 ~ 59. 43Madison Response, Docket Entry No. 25, p. 11. 44Id. at 16. 45Trustee's No. 23-11. Deed, Exhibit 10 -16- to Nutter MSJ, Docket Entry Madison has not shown any causal connection between the price and a defect in the proceedings. 2. Claims Against Fannie Mae With the exception of her claim for trespass to real property, Madison has not alleged facts implicating Fannie Mae in any of her "To recover damages claims. plaintiff must prove that right to possess plaintiff's real plaintiff. II trespass to real property, property, (2) entry was the defendant entered the physical, intentional, of law. and the defendant's trespass caused injury to the Texas Woman's Univ., 221 S.W.3d at 286. has legal title to Madison's property and a final possession. 46 a (1) the plaintiff owns or has a lawful land and the voluntary, and (3) for Fannie Mae judgment for As such, Madison's trespass claim fails as a matter Fannie Mae is entitled to summary judgment on all of Madison's claims. III. Conclusions and Order For the reasons explained above, Madison has raised a triable issue the court concludes that of fact on her breach of contract claim against Nutter, but that the remainder of her clams against Nutter Accordingly, and Fannie Mae fail as a matter of law. James B. Nutter & Co.'s Amended Motion for Summary 46See Special Warranty Deed, Exhibit 11 to Fannie Mae MSJ, Docket Entry No. 23-12; Final Judgment, Exhibit Il-B to Fannie Mae MSJ, Docket Entry No. 23-13. -17- Judgment PART, (Docket Entry No. and Federal Summary Judgment 22) National is GRANTED IN PART and DENIED IN Mortgage (Docket Entry No. 23) Association's is GRANTED. Motion for Plaintiff's claims against Fannie Mae are DISMISSED WITH PREJUDICE. SIGNED at Houston, Texas, this 22nd day of December, 2014 . ., SIM LAKE UNITED STATES DISTRICT JUDGE -18-
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