Duque v. Wells Fargo, N.A.

• Decision Date: 03 March 2015
• Docket Number: NO. 01–13–00621–CV,01–13–00621–CV
• Citation: 462 S.W.3d 542
• Parties: Angelica Garza Duque, Appellant v. Wells Fargo, N.A., Appellee
• Court: Texas Court of Appeals

462 S.W.3d 542

Angelica Garza Duque, Appellant
v.
Wells Fargo, N.A., Appellee

NO. 01–13–00621–CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued March 3, 2015

Jack Kitchen, Middagh & Lane, PLLC, Houston, TX, for appellant.

Caren DeLuccio, Derrick B. Carson, Delilah Y. Banks, Locke Lord LLP, Houston, TX, Robert T. Mowrey, Locke Lord LLP, Dallas, TX, for appellee.

Panel consists of Justices Massengale, Brown, and Huddle.

OPINION

Rebeca Huddle, Justice

Angelica Garza Duque sued Wells Fargo, N.A., seeking to enforce a consent judgment to which she is not a party and prevent foreclosure on her home. The parties each filed a traditional motion for summary judgment. The trial court granted Wells Fargo's motion and denied Duque's motion. Duque appeals. We hold that Duque lacks standing to enforce the consent judgment and affirm the judgment of the trial court.

Background

Duque purchased a home in 2006. To do so, she obtained a mortgage loan from World Savings Bank, FSB, and executed a promissory note and deed of trust granting World Savings Bank a security interest in the home. Duque defaulted on the mortgage in 2009. Wells Fargo, which by then had become the successor of World Savings Bank, notified Duque of her default and demanded that she cure.

Duque sued Wells Fargo, alleging fraud, negligent misrepresentation, breach of fiduciary duty, wrongful foreclosure, and slander of title. After Wells Fargo foreclosed, Duque amended her petition to request a declaration that the foreclosure sale was improper and an injunction prohibiting her eviction. Alternatively, she sought actual damages, including damages for loss of the properly and mental anguish.

Duque moved for partial summary judgment on the theory that she was entitled to rescind the foreclosure and Wells Fargo's sale of her home because Wells Fargo violated the consent judgment in U.S. v. Bank of Am. Corp., No. 1:12–CV–00361–RMC (D.D.C. Apr. 4, 2012) (Dkt. No. 14), an action brought by the United States and forty-nine States against Wells Fargo and other national banks. The consent judgment entered by the United States District Court for the District of Columbia requires Wells Fargo to pay various amounts into a variety of escrow funds to resolve then-existing disputes with mortgage borrowers, give relief totaling $3,434,000,000 to borrowers meeting certain financial-eligibility requirements, give refinancing relief totaling $903,000,000 to customers meeting other requirements, and meet various standards regarding processing of loan paperwork, foreclosures, and other transactions.

In her filings below and on appeal, Duque identifies two portions of the consent judgment as particularly relevant to her claims. First, Exhibit A to the consent judgment, captioned “Settlement Term Sheet,” contains provisions governing the sale or transfer of loans from one servicer to another. Among other requirements, any contract for such a transfer or sale “shall designate that borrowers are third party beneficiaries under paragraphs IV.M.1.b and IV.M.1.c” of Exhibit A. Paragraph IV.M.1.b states that a contract for sale or transfer must obligate the successor servicer to accept and continue processing

462 S.W.3d 545

pending loan modification requests. Paragraph IV.M.1.c, in turn, states that a contract for sale or transfer must obligate the successor servicer to honor any trial or permanent loan modification agreements entered into by the prior servicer.

Second, Duque points to Exhibit G to the consent judgment, captioned “State Release.” That exhibit explicitly excludes from the claims released by the state governments “[c]laims and defenses asserted by third parties, including individual mortgage loan borrowers on an individual or class basis,” as well as claims for injunctive or declaratory relief flowing from conduct covered by the consent judgment.

The consent judgment explicitly provides for and limits its own enforcement, subjecting Wells Fargo to periodic reporting, sampling of transactions, and monitoring of compliance. The bank's incorrect servicing of a single mortgage does not give rise to an actionable violation of the consent judgment. Rather, the bank commits a “Potential Violation” only if periodic sampling of multiple loans shows that the bank has exceeded a “Threshold Error Rate” for one or more of several defined metrics. Only if a Potential Violation remains uncured do the parties to the consent judgment, the monitor designated pursuant to the consent judgment, or the monitoring committee have any remedies under the judgment. The consent judgment expressly provides for enforcement by parties to the consent judgment, by the monitor, or by the monitoring committee.

Wells Fargo responded to Duque's motion for summary judgment and filed a cross-motion for summary judgment, arguing that Duque lacked standing to enforce the consent judgment and that Duque's remaining claims were time-barred.

The trial court held an oral hearing at which Duque abandoned all of her claims that do not depend on alleged violations of the consent judgment. The trial court then granted Wells Fargo's motion and denied Duque's motion.

Duque challenges the summary judgment on appeal. She argues that, as a mortgage borrower, she is an entitled to enforce the consent judgment either as an explicit or implicit third-party beneficiary of the consent judgment.

Discussion

A. Standard of Review

We review a trial court's decision to grant or to deny a motion for summary judgment de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm'n, 253 S.W.3d 184, 192 (Tex.2007). “When both sides move for summary judgment, as they did here, and the trial court grants one motion and denies the other, reviewing courts consider both sides' summary-judgment evidence, determine all questions presented, and render the judgment the trial court should have rendered.” Gilbert Tex. Constr., Inc. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 124 (Tex.2010) (citing Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 415–16 (Tex.2000) ). When a trial court grants summary judgment to a defendant and the plaintiff appeals, the plaintiff abandons any claims that she does not brief on appeal, and we will review the summary judgment only with respect to those claims that she asserts in her brief.See, e.g., Pat Baker Co., Inc. v. Wilson, 971 S.W.2d 447, 450 (Tex.1998) ; Vawter v. Garvey, 786 S.W.2d 263, 264 (Tex.1990) ; Allright, Inc. v. Pearson, 735 S.W.2d 240, 240 (Tex.1987).

B. Applicable Law

The National Mortgage Settlement, a series of consent judgments between governments and national banks, including the

462 S.W.3d 546

one at issue, spawned a wave of claims by homeowners facing foreclosure and seeking to enforce the component judgments. The many courts that have considered homeowner claims based on the National Mortgage Settlement—including federal courts resolving disputes from Texas—have universally rejected them, primarily on grounds that the homeowners lacked standing to enforce the consent judgment.¹ For the reasons that follow, we reach the same conclusion.

“Standing is a constitutional prerequisite to suit.” City of Houston v. Williams, 353 S.W.3d 128, 145 (Tex.2011) (citing Williams v. Lara, 52 S.W.3d 171, 178 (Tex.2001) ). “Whether a party has standing to maintain a suit is a question of law, which we review de novo.” Hobbs v. Van Stavern, 249 S.W.3d 1, 3 (Tex.App.–Houston [1st Dist.] 2006, pet. denied) (citing Tex. Dep't of Tra ns p. v. City of Sunset Valley, 146 S.W.3d 637, 646 (Tex.2004) ). The absence of subject-matter jurisdiction may be raised by a traditional motion for summary judgment. See Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex.2000) ; Green Tree Servicing, LLC v. Woods, 388 S.W.3d 785, 793 (Tex.App.–Houston [1st Dist.] 2012, no pet).

In general, federal law presumes that third parties do not have standing to enforce federal consent judgments. A well-settled line of United States Supreme Court authority establishes that “a consent decree is not enforceable directly or in collateral proceedings by those who are not parties to it even though they were intended to be benefited by it.” Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750, 95 S.Ct. 1917, 1932, 44 L.Ed.2d 539 (1975) (citing United States v. Armour & Co., 402 U.S. 673, 91 S.Ct. 1752, 29 L.Ed.2d 256 (1971), and Buckeye Coal & R. Co. v. Hocking Valley Co., 269 U.S. 42, 46 S.Ct. 61, 70 L.Ed. 155 (1925) ). Some federal circuit courts have interpreted this “seemingly sweeping prohibition” on suits by non-parties to a consent decree as meaning merely that incidental third-party beneficiaries may not enforce a consent decree. Beckett v. Air Line Pilots Ass'n, 995 F.2d 280, 288 (D.C.Cir.1993) ; see also Hook v. Ariz. Dep't of Corr., 972 F.2d 1012, 1015 (9th Cir.1992) ; Berger v. Heckler, 771 F.2d 1556, 1565 (2d Cir.1985). State courts generally “may not decline to recognize or enforce federal law.” The Chair King, Inc. v. GTE Mobilnet of Houston, Inc., 184 S.W.3d 707, 712 (Tex.2006) (citing Howlett v. Rose, 496 U.S. 356, 371, 110 S.Ct. 2430, 110 L.Ed.2d 332 (1990) ). Moreover,...