Garcia v. Universal Mortg. Corp.

Decision Date03 May 2013
Docket NumberCivil Action No. 3:12-CV-2460-L
PartiesRAUL GARCIA and ALEXANDRIA GARCIA, Plaintiffs, v. UNIVERSAL MORTGAGE CORPORATION, et al., Defendants.
CourtU.S. District Court — Northern District of Texas
MEMORANDUM OPINION AND ORDER

Before the court is Defendants' Motion to Dismiss Plaintiffs' Original Petition, filed September 7, 2012. No response to the motion was filed by Plaintiffs. After careful consideration of the motion, pleadings, record, and applicable law, the court grants Defendants' Motion to Dismiss Plaintiffs' Original Petition.

I. Background

This case concerns a mortgage foreclosure dispute. On October 28, 2005, Plaintiffs Raul Garcia and Alexandria Garcia ("Plaintiffs") obtained a mortgage loan (the "Loan") to purchase property located at 14121 South Pass Road, Balch Springs, Dallas County, Texas (the "Property"). The mortgage was secured by a deed of trust ("Deed of Trust") in favor of Universal Mortgage Corporation ("Universal").

Plaintiffs originally filed this action on June 29, 2012 in the 116th Judicial District Court of Dallas County, Texas, asserting claims against Universal;1 Capital Title of Texas ("Capital");2 Federal National Mortgage Association ("Fannie Mae"); U.S. Bank National Association ("U.S. Bank"); U.S. Bank Home Mortgage;3 and various unknown entities identified as Does 1 through 50. In Plaintiffs' Original Petition (the "Petition"), Plaintiffs allege causes of action for breach of good faith and fair dealing; breach of fiduciary duty; violation of the Truth in Lending Act, 15 U.S.C. §§ 1601, et. seq. ("TILA"); violation of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601, et. seq. ("RESPA"); unfair and deceptive business act practices; fraud; and unconscionability arising from the underwriting, origination and servicing of Plaintiffs' loan and initiation of foreclosure proceedings against the Property. Plaintiffs also seek rescission of the loan on the Property; declaratory relief declaring that Defendants lack authority to foreclose the Property because U.S. Bank is not the owner of the note securing the deed of trust; compensatory, special, general, treble, and punitive damages; restitution; and attorney's fees and court costs.

Defendants U.S. Bank and Fannie Mae (collectively "Defendants") removed this action to federal court on July 20, 2012, on the basis of diversity and federal question jurisdiction. On September 7, 2012, Defendants moved to dismiss Plaintiffs' claims under Rule 12(b)(6) of theFederal Rules of Civil Procedure. As noted above, Plaintiffs did not file a response to Defendants' motion to dismiss. On December 4, 2012, Defendants filed a Notice of Non-filing, requesting that the motion to dismiss be submitted to the court as unopposed and that the court grant the motion. Plaintiffs did not file a response to Defendants' notice.

II. Standard for Rule 12(b)(6) - Failure to State a Claim

To defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008); Guidry v. American Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007). A claim meets the plausibility test "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). While a complaint need not contain detailed factual allegations, it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). The "[f]actual allegations of [a complaint] must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (quotation marks, citations, and footnote omitted). When the allegations of the pleading do not allow the court to infer more than the mere possibility of wrongdoing, they fall short of showing that the pleader is entitled to relief. Iqbal, 556 U.S. at 679.

In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mutual Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007); Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In ruling on such a motion, the court cannot look beyond the pleadings. Id.; Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000). The pleadings include the complaint and any documents attached to it. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000). Likewise, "'[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claims.'" Id. (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)).

The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid claim when it is viewed in the light most favorable to the plaintiff. Great Plains Trust Co. v. Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th Cir. 2002). While well-pleaded facts of a complaint are to be accepted as true, legal conclusions are not "entitled to the assumption of truth." Iqbal, 556 U.S. at 679 (citation omitted). Further, a court is not to strain to find inferences favorable to the plaintiff and is not to accept conclusory allegations, unwarranted deductions, or legal conclusions. R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (citations omitted). The court does not evaluate the plaintiff's likelihood of success; instead, it only determines whether the plaintiff has pleaded a legally cognizable claim. United States ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004). Stated another way, when a court deals with a Rule 12(b)(6) motion, its task is to test the sufficiency of the allegations contained in the pleadings to determine whetherthey are adequate enough to state a claim upon which relief can be granted. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977); Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996), rev'd on other grounds, 113 F.3d 1412 (5th Cir. 1997) (en banc). Accordingly, denial of a 12(b)(6) motion has no bearing on whether a plaintiff ultimately establishes the necessary proof to prevail on a claim that withstands a 12(b)(6) challenge. Adams, 556 F.2d at 293.

A statute of limitations may warrant dismissal of a claim pursuant to Rule 12(b)(6) when it is apparent from a plaintiff's pleadings that the claim is time-barred and the pleadings fail to raise some ground for tolling the statute. Jones v. Alcoa, 339 F.3d 359, 366 (5th Cir. 2003) (citation omitted).

III. Analysis
A. Breach of the Duty of Good Faith and Fair Dealing

Plaintiffs' Petition asserts claims against Defendants and others for "the contractual breach of [the] implied covenant of good faith and fair dealing." Pls.' Original Pet. ¶ 44. According to Plaintiffs, Defendants breached this duty by: (1) withholding numerous disclosures; (2) withholding notices in regard to underwriting standards, the use of "GDW Cost of Savings"as the index for the basis of this loan, and failing to disclose when negative credit scores were disseminated; and (3) wilfully placing Plaintiffs in a loan that they did not qualify for and could not afford. Id. This claim appears to be based on general allegations in the beginning of the Petition that Universal did not comply with various laws and standards in entering the mortgage transaction and that the loan was underwritten without proper due diligence by Universal. See id. ¶¶ 19, 20. Defendants respond that there is no implied duty of good faith and fair dealing between a mortgagor and mortgagee recognized under Texas law, and as such their claims for breach of the duty of good faith and fairdealing fail as a matter of law and must be dismissed. Defs.' Mot. to Dismiss Pls.' Orig. Pet. 10-11. The court agrees.

In Texas, absent a special relationship, there is no duty of good faith or fair dealing unless it is expressly created by contract. See UMLIC VP LLC v. T & M Sales and Envtl. Sys., Inc., 176 S.W.3d 595, 612 (Tex. App. Corpus Christi 2005, pet. denied) ("[A]bsent a 'special relationship,' any duty to act in good faith is contractual in nature and its breach does not amount to an independent tort.") (citations omitted). Under Texas law, "[t]he relationship of mortgagor and mortgagee ordinarily does not involve a duty of good faith" because "Texas courts have found no special relationship between a mortgagor and a mortgagee . . . that would impose an independent common law duty of good faith and fair dealing." Id. (citations omitted); see also Federal Deposit Ins. Corp. v. Coleman, 795 S.W.2d 706, 709-10 (Tex. 1990).

Plaintiffs style their claim in the Petition as that for "Contractual Breach of Implied Covenant of Good Faith and Fair Dealing." Plaintiffs appear to conflate a contractual duty of good faith and fair dealing with an implied duty of good faith and fair dealing. Although Plaintiffs allege in the Petition that the "terms of the loan imposed upon Defendants a duty of good faith and fair dealing," they point to no specific provision in the loan documents imposing a contractual duty of good faith and fair dealing upon Defendants. Orig. Pet. ¶...

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