Bassett v. PHH Mortg. Corp.

• Docket Number: 4:23-cv-02952
• Decision Date: 27 June 2024
• Citation: Bassett v. PHH Mortg. Corp., 4:23-cv-02952 (S.D. Tex. Jun 27, 2024)
• Parties: Michelle Bassett, Plaintiff, v. PHH Mortgage Corporation, Defendant.
• Court: U.S. District Court — Southern District of Texas

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Michelle Bassett, Plaintiff, v. PHH Mortgage Corporation, Defendant.

No. 4:23-cv-02952

United States District Court, S.D. Texas, Houston Division

June 27, 2024

MEMORANDUM AND RECOMMENDATION

TVONNE Y. HO UNITED STATES MAGISTRATE JUDGE.

In this mortgage dispute, Defendant PHH Mortgage Corporation (“PHH”) has filed a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c), seeking dismissal of Plaintiff Michelle Bassett's claims. Dkt. 7. The case was referred to the undersigned judge. Dkt. 15. After carefully reviewing the motion, Bassett's response, Dkt. 10 PHH's reply, Dkt. 13, and the applicable law, it is recommended that PHH's motion for judgment on the pleadings (Dkt. 7) be granted.

Background

This foreclosure dispute concerns property located at 3227 Ewing Street, Houston, TX 77004 (the “Property”). Dkt 1-1 at 13. Bassett purchased the Property in 2006, executing a promissory note and deed of trust in favor of Harbourton Mortgage Investment Corp. Id. at 7; see also Dkt. 7-1 at 2 (DX-A promissory note); Dkt. 7-2 at 2 (DX-B, deed of trust). The deed of trust was recorded in the real property records of Harris County, Texas, where the Property is located.^[1] See Dkt. 7-1 at 12; Dkt. 7-2 at 2. The note and deed of trust were subsequently assigned to Ocwen Loan Servicing, LLC and, ultimately, to PHH. Dkt. 1-1 at 7.

Bassett entered a loan modification program in September 2014, and again in November 2018 after Hurricane Harvey. See id. She timely made payments under these programs. Id. But after the loan's transfer to PHH in May 2019, Bassett began to experience “change[s] in her escrow account and monthly mortgage payments,” prompting her to retain counsel to reconcile the issues. Id. In 2020, Bassett sought judicial intervention but the parties jointly dismissed the suit during the COVID-19 pandemic. Id. at 8.

Around December 2022, PHH approved Bassett for its mortgage assistance program. Id. As part of this program, Basset entered a trial period plan (“TPP”) agreement that required her to make monthly payments of $3,439.76 by the first day of February, March, and April 2023. Id.; see also Id. at 20 (PX-A, TPP agreement). As the agreement states, successful completion of her payment obligations under the TPP would entitle Bassett to a permanent modification of her loan. See id. at 21. On the other hand, the agreement warned Bassett explicitly that PHH would revoke the offer if she failed to timely make the first of those TPP payments. See id. In that instance, “foreclosure proceedings may continue and a foreclosure sale may occur.” Id.

Although Bassett claimed she made those payments, id. at 8, 19, the documents she attached as proof of “the three (3) months of payments” reflect that she submitted payments-not in February or March-but in April, May, and June 2023. See id. at 23-26 (April 30, 2023); id. at 27-29 (April 1, 2023); id. at 30 (May 1, 2023); id. at 22, 31 (June 14, 2023). Bassett asserts that she encountered processing errors that led PHH to reject her payments because sums she transferred through PHH's authorized payment portal, Money Gram, were split rather than transferred in a single lump sum. See id. at 8-9. But she also attached and incorporated by reference several documents indicating that those payments were rejected because the amount she submitted failed to “cure [her] default.” See id. at 8 (incorporating PX-C); id. at 32-33 (PX-C, rejecting April and May payments because “[a]mount does not cure default”).

PHH scheduled the Property for a foreclosure sale on July 5, 2023. Id. at 9. Bassett responded by filing suit in state court on July 3, 2023. Id. at 5. The state court granted Bassett's application for a temporary restraining order to halt the foreclosure sale. Id. at 40-41. The parties agree that no foreclosure sale has occurred. See id. at 11 (Bassett); see also Dkt. 7 at 13 (PHH).

In addition to injunctive and declaratory relief, Bassett asserts claims for breach of contract, breach of the duty of good faith and fair dealing, and under the Real Estate Settlement Procedures Act (“REPSA”), and Section 51.002 of the Texas Property Code. See id. at 5-15. On August 10, 2023, PHH removed the case to this Court. Dkt. 1. PHH then moved for judgment on the pleadings under Fed.R.Civ.P. 12(c). Dkt. 7. Bassett responded, Dkt. 10, and PHH replied, Dkt. 13. The motion is ripe for resolution.

Legal standard

A party may move for judgment on the pleadings “[a]fter the pleadings are closed-but early enough not to delay trial.” Fed.R.Civ.P. 12(c). “The standard for deciding a Rule 12(c) motion is the same standard used for deciding motions to dismiss pursuant to Rule 12(b)(6).” Q Clothier New Orleans, L.L.C. v. Twin City Fire Ins. Co., 29 F.4th 252, 256 (5th Cir. 2022).

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). That is, “the complaint (1) on its face (2) must contain enough factual matter (taken as true) (3) to raise a reasonable hope or expectation (4) that discovery will reveal relevant evidence of each element of a claim.” See Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (footnotes omitted).

When resolving a Rule 12(c) motion, a court can consider: “(a) documents attached to the complaint or identified as central to the claims made therein; (b) documents attached to the motion to dismiss that are referenced in the complaint; and (c) documents that are subject to judicial notice as public record.” Sparks v. Texas Dep't of Transp., 144 F.Supp.3d 902, 903 (S.D. Tex. 2015) (citing Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011); Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 313 (5th Cir. 2002); Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). “A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.” Fed.R.Civ.P. 10(c).

Analysis

PHH seeks judgment on the pleadings for all of Bassett's claims: breach of contract, breach of the duty of good faith and fair dealing, violations of the Real Estate Settlement Procedures Act (“RESPA”) and Texas Property Code and declaratory and injunctive relief. See Dkt. 7. As explained below, none of Bassett's allegations state a plausible claim for relief.

I. Bassett's breach-of-contract claim is barred because she failed to perform her obligations under the TPP.

PHH's central contention is that Bassett did not make her monthly payments as required under the TPP. See Dkt. 7 at 4-6. From there, PHH asserts that Bassett is barred from claiming that PHH breached the TPP. Id.

In response, Bassett maintains that her payments were rejected, and PHH failed to assist her attempts to rectify the issue. See Dkt. 10 at 1-2. But the documents Bassett attached and incorporated in her pleading, ostensibly to support her breach-of-contract claim, confirm that she failed to fulfill her own contractual obligations.

To prevail on her claim, Bassett must show, among other things, that she tendered performance of her own obligations under the contract. This is because “a party to a contract who is [herself] in default cannot maintain a suit for its breach.” Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 767 (5th Cir. 2016) (quoting Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990)).

The only contracts identified in Bassett's pleading that PHH allegedly breached are the TPP and, relatedly, the promissory note. See Dkt. 1-1 at 8-9. As its moniker indicates, the TPP (Trial Period Plan) temporarily modified Bassett's payment obligations under the promissory note. See id. at 20; Dkt. 7-1 at 2-5. Under the TPP, Bassett was required to make three payments of $3,439.76 by the first day of February, March, and April 2023. Dkt. 1-1 at 20. So long as the Property was clear of other encumbrances, Bassett's timely completion of those payments would entitle her to a permanent loan modification. See id. at 21. If she missed even a single payment, however, the TPP would “be revoked and foreclosure proceedings may continue and a foreclosure sale may occur.” Id.

Bassett asserts that she “made the requested payments” and she “initiated her performance by making payments in February, 2023.” Dkt. 1-1 at 8-9; see also id. at 19 (Bassett's affidavit asserting “I made the required payments between February, 2023 through April, 2023”). She also maintains that PHH refused her payments because they were broken up in smaller tranches, failed to help her address the issue, and then improperly sought to foreclose. See id. at 8-9. But she submitted and explicitly incorporated certain exhibits that show a very different chain of events. See id. at 8 (incorporating Dkt. 1-1 at 22-31 (PX-B), 32-34 (PX-C)). “In case of a conflict between the allegations in a complaint and the exhibits attached to the complaint, the exhibits control.” Stockwell v. Kanan, 442 Fed.Appx. 911, 913 (5th Cir. 2011) (per curiam) (citing United States ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 377 (5th Cir. 2004); Simmons v. Peavy-Welsh Lumber Co., 113 F.2d 812, 813 (5th Cir. 1940)).

As PHH correctly contends, Bassett's own exhibits show that she missed payments in February and March 2023. See Dkt 7 at 5. Bassett's payment records, which purport to show her “three (3) months of payments,” see Dkt. 1-1 at 8, reflect that she made those payments only in April, May, and June 2023, see id. at 23-31. This is reinforced by PHH's letters stating that Bassett's April 30, 2023 and May 6, 2023 payments were rejected, not because they were split into multiple sums, as she maintains, see Dkt. 1-1 at 8-9, but because the amounts...