Colbert v. Fed. Nat'l Mortg. Ass'n, CIVIL ACTION NO. H-12-2827
| Decision Date | 08 February 2013 |
| Docket Number | CIVIL ACTION NO. H-12-2827 |
| Parties | LEONARD COLBERT and LUCILLE ALLEN, Plaintiffs, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, a/k/a Fannie Mae, and BANK OF AMERICA, N.A., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Plaintiffs Leonard Colbert and Lucille Allen (collectively, "Plaintiffs") brought this action against Defendants Federal National Mortgage Association ("Fannie Mae") and Bank of America, N.A. ("Bank of America") (collectively, "Defendants") in the 281st Judicial District Court of Harris County, Texas, where it was filed under Cause No. 2 012-47110. Defendants timely removed the action to this court. Pending before the court is Defendants' Motion to Dismiss ("Motion to Dismiss") (Docket Entry No. 4). For the reasons explained below the court will grant the Motion to Dismiss.
In 2 007 Plaintiffs financed the purchase of a home with a mortgage loan.1 Plaintiffs defaulted on their mortgage obligation sometime after April 2011.2 Plaintiffs allege that in July 2011 Bank of America provided them with an application for a loan modification under the federal government's Home Affordable Mortgage Program ("HAMP").3 Plaintiffs allege that they completed the HAMP application and that Bank of America then requested more information from Plaintiffs.4 Plaintiffs allege that they provided the requested information to Bank of America but never received any notification of approval or denial for the program.5
Plaintiffs allege that prior to November 1, 2011, they "received a letter about their home going up for auction."6 Bank of America conducted a foreclosure sale on November 1, 2011.7 Plaintiffs allege, however, that "[i]n reliance on Defendant's representations, Plaintiffs understood that the November 1, 2 011 foreclosure would not occur since they were still in the process of applying for a modification."8 Plaintiffs further allege that " [h] ad Plaintiffs known that Defendant's representations were false and misleading, Plaintiffs would have made a larger payment to Defendant or would have filed for bankruptcy protection prior to the foreclosure date."9 Plaintiffs contend that Defendants "intentionally misrepresented [their] intentions to Plaintiffs in order to prevent Plaintiffs from seeking relief through bankruptcy or other options prior to foreclosure."10
Plaintiffs filed their Original Petition in state court on August 16, 2012, bringing claims for (1) common law fraud; (2) wrongful foreclosure due to fraud; (3) wrongful foreclosure due to failure to properly notice; (4) slander of title; (5) promissoryestoppel; and (6) unreasonable collection.11 Plaintiffs also seek an accounting and injunctive relief.12
On September 20, 2012, Defendants removed the action based on diversity jurisdiction under 28 U.S.C. § 1332.13 Defendants filed the pending Motion to Dismiss on September 26, 2 012, arguing that Plaintiffs failed to state any claims for which relief may be granted.14 Plaintiffs responded on October 18, 2012,15 and Defendants replied on November 21, 2012.16
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief may be granted tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert. denied sub nom Cloud v. United States, 122 S. Ct. 2665 (2002). The court mustaccept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in the plaintiff's favor. Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004). Under Federal Rule of Civil Procedure 8(a) a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Twombly, 127 S. Ct. at 1966) . Because jurisdiction is based on diversity Texas substantive law applies. See PPI Tech. Servs., L.P. v. Liberty Mut. Ins. Co., 701 F.3d 1070, 1074 (5th Cir. 2012).
When considering a motion to dismiss, district courts are "limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)).
Federal Rule of Civil Procedure 9(b) imposes a heightened level of pleading for fraud claims. A party bringing a fraud claim "must state with particularity the circumstances constituting fraud or mistake." FED. R. CIV. P. 9(b). The plaintiff must therefore "'specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.'" Sullivan v. Leor Energy, LLC, 600 F.3d 542, 551 (5th Cir. 2010) (quoting ABC Arbitrage v. Tchuruk, 291 F.3d 336, 350 (5th Cir. 2002)). A dismissal for failure to comply with Rule 9(b) is a dismissal on the pleadings for failure to state a claim. United States ex rel. Russell v. Epic Healthcare Mgmt. Grp., 193 F.3d 304, 308 (5th Cir. 1999).
In Count One of their Original Petition Plaintiffs allege that Defendants committed common law fraud to obtain title to Plaintiffs' home.17 Plaintiffs do not allege any facts in Count 1; instead Plaintiffs point to the facts stated in the "Factual Background" section of the Original Petition to bolster their fraud claim.18 Plaintiffs allege that Bank of America mailed "the packet for HAMP" to Plaintiffs and later "requested more information" fromPlaintiffs.19 Plaintiffs also allege that after "receiv[ing] a letter about their home going up for auction" Plaintiffs "understood that because they were in the process of being reviewed for the modification program they would be okay."20 The Original Petition does not include any other allegations relating to a potential fraud used to obtain title to the Plaintiffs' home. Defendants contend that Plaintiffs' allegations do not satisfy the heightened pleading requirements of Rule 9(b) and are insufficient to state a plausible claim for fraud under Texas law.21 The court agrees.
When viewed as a whole Plaintiffs' allegations do not comply with Rule 9(b) because the allegations do not include the statements contended to be fraudulent, the time any such statements were made, or why such statements were fraudulent. See Sullivan, 600 F.3d at 551. While Plaintiffs allege that Defendants made misrepresentations on which Plaintiffs relied, Plaintiffs do not describe any misrepresentations with particularity. In fact according to the Original Petition the only representations that were made prior to foreclosure were the mailing of the HAMP packet, the requests for information concerning HAMP, and the letter regarding the auction of Plaintiffs' home.22 For purposes of Rule9(b) the Original Petition lacks adequate description of these alleged misrepresentations.
Plaintiffs also allege that "[t]hey were even still receiving letters in March and April 2012 as if they were still in the modification review process."23 In their Response Plaintiffs argue that the reference to these letters brings the Original Petition into compliance with Rule 9(b).24 But Plaintiffs do not describe in the Original Petition why the statements made in these letters were fraudulent. Furthermore Plaintiffs allege that Defendants committed fraud "to obtain title to Plaintiffs' home."25 Because the letters are from March 26, 2012, and April 4 , 2012 , 26 any representations therein could not have been made prior to the time Defendants obtained title to the home at foreclosure on November 1, 2011. See Grant v. U.S. Dep't of Veterans' Affairs, 827 F. Supp. 418, 422 (S.D. Tex. 1993) ().
Moreover even if Plaintiffs' fraud claims did satisfy Rule 9(b) the allegations are insufficient to survive a motion to dismiss under Twombly and Iqbal. To prevail on a fraud claim underTexas law a plaintiff must prove that: (1) the defendant made a material representation that was false; (2) the defendant knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth; (3) the defendant intended to induce the plaintiff to act upon the representation; (4) the plaintiff actually and justifiably relied upon the representation; and (5) the plaintiff thereby suffered an injury. Ernst & Young, L.L.P. v. Pacific Mut. Life. Ins. Co., 51 S.W.2d 573, 577 (Tex. 2001).
Here, Plaintiffs fail to allege sufficient facts showing that Defendants made a material representation that was false. Even if the court were to accept Plaintiffs' contention that Defendants falsely represented that foreclosure would not occur, Plaintiffs' claim would still warrant dismissal. "A statement of future performance cannot serve as the basis for fraud unless there was no intention of performing the promise at the time it was made." Hall v. Douglas, 380...
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