Baldwin v. Mortg. Elec. Registration Sys.

• Court: U.S. District Court — Southern District of Texas
• Writing for the Court: ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE
• Decision Date: 01 March 2021
• Docket Number: CIVIL ACTION NO. 4:19-CV-03921
• Citation: Baldwin v. Mortg. Elec. Registration Sys., CIVIL ACTION NO. 4:19-CV-03921 (S.D. Tex. Mar 01, 2021)
• Parties: CHRISTOPHER BALDWIN, Plaintiff. v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., ET AL., Defendants.

CHRISTOPHER BALDWIN, Plaintiff. v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., ET AL., Defendants.

CIVIL ACTION NO. 4:19-CV-03921

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

March 1, 2021

MEMORANDUM AND RECOMMENDATION

Pending before me is a motion for summary judgment filed by Defendants RoundPoint Mortgage Servicing Corporation ("RoundPoint") and Mortgage Electronic Registration Systems, Inc. ("MERS"). See Dkt. 32. After reviewing the motion for summary judgment, the response, the reply, and the relevant legal authorities, I recommend that the motion for summary judgment be GRANTED. This case should be dismissed.

BACKGROUND

In 2015, Plaintiff Christopher Baldwin ("Baldwin") purchased a home at 3804 Winter Haven Drive, Baytown, Texas 77521 (the "Property"). To acquire the Property, Baldwin signed a promissory note and executed a Deed of Trust (collectively, "the Loan"). RoundPoint is the authorized mortgage loan servicer with respect to the Loan. MERS is the beneficiary of record of the Deed of Trust.

The Deed of Trust required Baldwin to maintain hazard insurance on the Property. Despite this clear and unequivocal contractual obligation, Baldwin did not procure insurance for the Property. As a result, RoundPoint secured flood insurance coverage for the Property with Great American Insurance Company ("Great American"). After doing so, RoundPoint informed Baldwin that any "insurance proceeds we receive from a policy we purchase on your behalf will be applied in accordance with the provisions of your loan and mortgage." Dkt. 32-1 at 18.

As those in the Gulf Coast region are all too well aware, Hurricane Harvey caused unprecedented flooding and heartache in the fall of 2017. Unfortunately, the Property did not escape the storm's wrath. It sustained significant damage. In the aftermath of the hurricane, RoundPoint made a claim under the applicable insurance policy. Great American investigated the loss, identified some covered damages, and issued payment to RoundPoint for $82,227.99.

On June 15, 2018, after Baldwin provided the documentation required for distribution of a portion of the claim proceeds, RoundPoint distributed $40,000 of the claim proceeds to Baldwin and his selected contractor. RoundPoint also informed Baldwin that the next $40,000 of claim proceeds would be distributed to him and his contractor when repairs were certified to be at least 49 percent complete. On September 12, 2018, RoundPoint received an inspection report showing the repairs to be 60 percent complete. That same day, the next $40,000 in claim proceeds were distributed to Baldwin and his contractor. RoundPoint heldthe remaining $2,227.99 in claim proceeds in a restricted escrow account. In June 2019, RoundPoint told Baldwin that it would disburse the remaining $2,227.99 once it received an inspection report showing that repairs were 100 percent complete. To date, Baldwin has not provided RoundPoint with the requested inspection report.

Baldwin originally filed this lawsuit against Great American, RoundPoint, and MERS in Texas state district court. Great American timely removed the case to federal court based on diversity jurisdiction, and I dismissed Great American from the lawsuit shortly thereafter under Federal Rule of Civil Procedure 12(b)(6). Against RoundPoint and MERS, Baldwin has alleged the following causes of action: (1) breach of contract; (2) promissory estoppel/detrimental reliance; (3) common law fraud; (4) violations of Chapter 541 of the Texas Insurance Code; (5) violations of the Texas Deceptive Trade Practices Act ("DTPA"); and (6) breach of fiduciary relationship.

SUMMARY JUDGMENT STANDARD

Rule 56 authorizes summary judgment when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute of material fact is "genuine" if the evidence would allow a reasonable jury to find in favor of the nonmovant. See Rodriguez v. Webb Hosp. Corp., 234 F. Supp. 3d 834, 837 (S.D. Tex. 2017).

To defeat a motion for summary judgment, the nonmovant must "present competent summary judgment evidence to support the essential elements of itsclaim." Cephus v. Tex. Health & Hum. Servs. Comm'n, 146 F. Supp. 3d 818, 826 (S.D. Tex. 2015). The nonmovant's "burden will not be satisfied by some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (quotation omitted). Rather, the "nonmovant must identify specific evidence in the record and articulate how that evidence supports that party's claim." Brooks v. Hous. Indep. Sch. Dist., 86 F. Supp. 3d 577, 584 (S.D. Tex. 2015). In ruling on a motion for summary judgment, I must construe "the evidence in the light most favorable to the nonmoving party and draw[] all reasonable inferences in that party's favor." Darden v. Simplicity Fin. Mktg., Inc., No. 4:18-CV-1737, 2019 WL 6119485, at *1 (S.D. Tex. Nov. 19, 2019).

ANALYSIS

A. BREACH OF CONTRACT

To succeed on a breach of contract claim under Texas law, Baldwin must show: "(1) the existence of a valid contract; (2) performance or tendered performance by [Baldwin]; (3) breach of the contract by [Defendants]; and (4) damages sustained by [Baldwin] as a result of the breach." Conn Credit I, L.P. v. TF LoanCo III, L.L.C., 903 F.3d 493, 499-50 (5th Cir. 2018) (quotation omitted).

In cursory fashion, Baldwin's First Amended Complaint asserts that "plaintiff and the defendant had a firm agreement," "plaintiff fulfilled his portion of that agreement," and "defendant has refused to acknowledge the validity of theplaintiff's claim." Dkt. 8 at 5. That's basically it. Nothing more. From reviewing the operative pleading, it's difficult to tell what purported agreement Baldwin refers to or even the identity of the counter party to the alleged agreement. In his summary judgment response, Baldwin asserts that RoundPoint somehow breached the Deed of Trust. Specifically, Baldwin focuses on the following provision from the Deed of Trust:

In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments which are referred to in paragraph 2, or change the amount of such payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.

Dkt. 32-1 at 11. Notably, Baldwin fails to explain how RoundPoint breached this contractual provision. The summary judgment record conclusively establishes that RoundPoint fulfilled its contractual responsibilities. The referenced section of the Deed of Trust gives RoundPoint discretionary authority to disburse funds at various stages of repairs on the Property. The language in the Deed of Trust is plain and unambiguous: "All or any part of the insurance proceeds may be applied by [RoundPoint] at its option . . . to the restoration or repair of the damagedProperty." Id. (emphasis added). As noted, RoundPoint received $82,227.99 in insurance proceeds from Great American and set up a streamlined process to distribute those funds to Baldwin and his contractor. After Baldwin provided RoundPoint with inspection reports demonstrating satisfaction of certain completion milestones, RoundPoint distributed a total of $80,000 to Baldwin—one $40,000 payment made in June 2018 and the other $40,000 payment made in September 2018. RoundPoint is holding another $2,227.99 in a restricted escrow account. RoundPoint informed Baldwin that he would receive the remaining funds when he submitted an inspection report showing that repairs were 100 percent completed. Although Baldwin has known this for more than a year and a half, he still has not supplied RoundPoint with the requested paperwork.

Baldwin's breach of contract claim fails because he has been unable to offer any evidence creating a genuine issue of material fact that RoundPoint breached the Deed of Trust. Based on the record before me, I conclude that RoundPoint has satisfied its obligations under the Deed of Trust. Baldwin's breach of contract claim should be dismissed.

B. PROMISSORY ESTOPPEL

Baldwin also asserts a promissory estoppel claim. "Under Texas law, although promissory estoppel is primarily a defensive theory, it is also available as a cause of action for a promisee who has acted to his detriment in reasonable reliance on an otherwise unenforceable promise." Gordon v. JPMorgan Chase Bank, N.A., 505 F. App'x 361, 365 (5th Cir. 2013) (quotation omitted). Theelements of a promissory estoppel claim are (1) a promise; (2) reasonably foreseeable reliance on that promise by the promisee; and (3) the promisee "materially chang[ing] his position in reliance on the promise" to his detriment. Sandel v. ATP Oil & Gas Corp., 243 S.W.3d 749, 753 (Tex. App.—Houston [14th Dist.] 2007, no pet.). As to the first element, the alleged promise "must be sufficiently specific and definite so that it would be reasonable and justified for the promisee to rely on it as a commitment to future action." Davis v. Tex. Farm Bureau Ins., 470 S.W.3d 97, 108) (Tex. App.—Houston [1st Dist.] 2015, no pet.).

Baldwin's promissory estoppel claim should be...