DeFranceschi v. Wells Fargo Bank, N.A.

• Decision Date: 31 August 2011
• Docket Number: Action No. 4:10–CV–455–Y.
• Parties: Robert DeFRANCESCHI and Elena Riedo v. WELLS FARGO BANK, N.A., and U.S. Bank National Association, as Trustee for the Banc of America Funding 2007–6 Trust.
• Court: U.S. District Court — Northern District of Texas

837 F.Supp.2d 616

Robert DeFRANCESCHI and Elena Riedo

v.WELLS FARGO BANK, N.A., and U.S. Bank National Association, as Trustee for the Banc of America Funding 2007–6 Trust.

Action No. 4:10–CV–455–Y.

United States District Court,

N.D. Texas,

Fort Worth Division.

Aug. 31, 2011.

Jack B. Peacock, Jr., Cynthia K. Shanklin, David M. Vereeke, Dolores G. Gagnon, Gagnon Peacock Shanklin & Vereeke PC, Dallas, TX, for Robert DeFranceschi and Elena Riedo.

Richard A. Illmer, Kevin L. Koronka, Brown McCarroll LLP, Dallas, TX, for Wells Fargo Bank, N.A., and U.S. Bank National Association, as Trustee for the Banc of America Funding 2007-6 Trust.

ORDER GRANTING MOTIONS FOR SUMMARY JUDGMENT, DENYING MOTION TO STRIKE, AND OVERRULING OBJECTIONS

TERRY R. MEANS, District Judge.

Pending before the Court are Defendants' Motion for Summary Judgment (doc. 16), filed March 24; Motion to Strike (doc. 26), filed April 28; and Supplemental Motion for Summary Judgment (doc. 30), filed June 13. Also pending are Plaintiffs' Objections (docs. 19, 32) to Defendants' summary judgment evidence, filed April 14 and July 5. The Court GRANTS the summary judgment motions, DENIES the motion to strike, and OVERRULES the objections.

I. BACKGROUND ¹

On January 23, 2007, plaintiffs Robert DeFranceschi and Elena Riedo (collectively, “Plaintiffs”) bought property located at 629/631 Melbourne Road, Hurst, Texas (“the property”). Plaintiffs executed a note in the amount of $127,500, with American Brokers Conduit (“ABC”) listed as the lender. (Pls.' App. 9.) Plaintiffs also executed a deed of trust granting ABC a security interest in the property as the lender. (Pl.'s App. 11–12.) In the deed of trust, ABC simultaneously assigned its security interest in the property to Mortgage Electronic Registration Systems, Inc. (“MERS”), as ABC's nominee:

The beneficiary of this Security Instrument is MERS (solely as nominee for [ABC] and [ABC's] successors and assigns) and the successors and assigns of MERS. This Security Instrument secures to [ABC or any holder of the note who is entitled to receive payments under the note]: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of [Plaintiffs'] covenants and agreements under the Security Instrument and the Note.

(Pl.'s App. 12.) On March 8, 2007, ABC endorsed and assigned the note to defendant U.S. Bank National Association, as trustee for the Banc of America funding 2007–6 trust (“US Bank”).² (Defs.' Supp. App. 29, 31–32.)

In March 2009, Plaintiffs fell behind on their payments. (Defs.' App. 2.) ³ On April 2, U.S. Bank appointed defendant Wells Fargo Bank, N.A. (“Wells Fargo”),⁴ to act as servicer of the note. (Defs.' Supp. App. 2.) Also during April, Defendants allegedly began charging Plaintiffs' account for force-placed insurance ⁵ (even though Plaintiffs already had insurance), but never fully refunded to Plaintiffs the insurance charges they paid. (Pls.' App. 2.) On April 9, Wells Fargo, as servicer of the note, informed Plaintiffs that the note was in default and that it, on U.S. Bank's behalf, intended to accelerate the note. (Defs.' App. 23–24.) On May 10, Wells Fargo accelerated the note and notified Plaintiffs of its intent to foreclose on the property on June 1. On June 4, MERS, as ABC's nominee, assigned its interest in the deed of trust to U.S. Bank. (Am. Compl. 3; Defs.' App. 21–22.) Plaintiffs allege that [MERS's] “assignment of the deed of trust also contained language that the assignment also transferred any and all notes described in the deed of trust.” (Am. Compl. 3.) Indeed, MERS's recorded assignment is entitled “ASSIGNMENT OF NOTE AND DEED OF TRUST.” (Defs.' App. 21.)

Also in June, Plaintiffs contacted America's Servicing Company (“ASC”) ⁶ to ask for a loan modification and provided their financial information. (Pls.' App. 2.) Wells Fargo pre-approved a modification at that time (“the first modification”). (Pls.' App. 2.) On July 7, Plaintiffs received a notice that the property was scheduled to be sold August 4. (Pls.' App. 3.) Plaintiffs then contacted Wells Fargo about the first modification and were told it was still under review and to make no payments on the loan. (Pls.' App. 3.) In late July, Wells Fargo requested additional information needed to process the first modification request, which Plaintiffs sent. (Pls.' App. 3; Am. Compl. 4.) Wells Fargo postponed the foreclosure sale and rescheduled it for September 1. (Pls.' App. 3.)

On August 21, Plaintiffs received a letter from Wells Fargo stating that the first modification request continued to be under review. On August 28, Wells Fargo notified Plaintiffs that they had been approved for a loan modification and that they must make three payments of $1,287.34 in October, November, and December. Wells Fargo told Plaintiffs that they would receive more information about the first modification in the mail. (Pls.' App. 4.) The foreclosure sale was postponed until October 6, and then postponed again until November 3. (Pls.' App. 4.)

In October, when Plaintiffs did not receive the promised information, they contacted Wells Fargo. Wells Fargo told Plaintiffs that they had mailed the information and that Wells Fargo had closed Plaintiffs' first modification application on October 13 because Plaintiffs had not made the October payment. Wells Fargo told Plaintiffs that they could not then make the October payment to reinstate the first modification. (Pls.' App. 4.) Later that month, Plaintiffs received notice that the foreclosure sale had been moved to December 1. On November 30, Plaintiffs called Wells Fargo “to verify our account status” and, from that conversation, believed that “the foreclosure sale was ... put on hold.” (Pls.' App. 5.)

On January 12, 2010, Plaintiffs called Wells Fargo to update their financial information to qualify for another loan modification (“the second modification”). Once again, Wells Fargo preapproved the second modification and told Plaintiffs that they needed to make three payments in February, March, and April. As before, Wells Fargo promised to mail Plaintiffs more specific information about the second modification. (Pls.' App. 5.) This time, Plaintiffs received the second modification information and returned the required signed documents to Wells Fargo on January 30. Plaintiffs made the February payment under the second modification.

On March 27, Plaintiffs received a letter from Wells Fargo stating that the second modification was not possible because their monthly income was too high. (Pls.' App. 5.) On April 10, Plaintiffs called Wells Fargo to point out Wells Fargo's alleged error in calculating Plaintiffs' income. Wells Fargo told Plaintiffs to apply a third time for a loan modification. (Pls.' App. 5.) Wells Fargo told Plaintiffs at that time that their income, which was the same income reported for the first and second modifications, would not qualify Plaintiffs for a third modification. (Pls.' App. 5–6.)

On April 2, Plaintiffs received a notice of default. (Pls.' App. 6.) On May 10, Wells Fargo, on behalf of U.S. Bank, accelerated the note and notified Plaintiffs that a foreclosure sale would occur on June 1. (Defs.' App. 26.) On May 28, Plaintiffs filed a verified petition in a state court raising wrongful-foreclosure claims. The state court entered a temporary restraining order preventing the foreclosure. Defendants removed the suit to this Court based on diversity jurisdiction. See28 U.S.C. § 1332. Plaintiffs filed an amended complaint against Defendants and raised the following claims: (1) breach and anticipatory breach of contract, (2) violations of the Texas Finance Code, (3) unreasonable collection efforts, (4) negligent misrepresentation, and (5) gross negligence. Plaintiffs seek a declaration that Defendants are not authorized to foreclose on the property and that the acceleration of the note was unlawful. Defendants seek judgment as a matter of law.

II. SUMMARY–JUDGMENT STANDARD OF REVIEW

Summary judgment is appropriate when the movant establishes “that 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 is considered genuine if it is real and substantial as opposed to merely formal or a sham. See Bazan v. Hidalgo Cnty., 246 F.3d 481, 489 (5th Cir.2001). A material fact is one that could affect the outcome of the suit under governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

To show that a particular fact is or cannot be genuinely in dispute, a party must support the assertion either by (1) citing to particular parts of materials in the record, such as depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers, or other materials, (2) showing that the materials cited do not establish the absence or presence of a genuine dispute, or (3) showing that the adverse party cannot produce admissible evidence to support the fact. SeeFed.R.Civ.P. 56(c)(1). The Court only is required to consider the materials cited by the parties, but may consider other materials in the record. See id. 56(c)(3). The Court views the considered materials in the light most favorable to the nonmovant, drawing all reasonable inferences in the nonmovant's favor. See Sanders–Burns v. City of Plano, 594 F.3d 366, 380 (5th Cir.2010). But if the evidence is merely colorable or is not significantly probative, summary judgment may be granted. See Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505.

III. DISCUSSION

A. Breach of Contract and Anticipatory Breach

In their amended complaint, Plaintiffs allege that Defendants breached the deed-of-trust contract by (1) failing to accept any payments or reinstate the account through Plaintiffs' attempted payment of the arrearage amounts during Defendants' review of Plaintiffs' loan-modification requests ...