Monsalve v. CMG Fin.
| Decision Date | 15 June 2021 |
| Docket Number | EP-21-CV-00058-FM |
| Parties | LUISA FERNANDA CALLE MONSALVE, Plaintiff, v. CMG FINANCIAL, A DIVISION OF CMG MORTGAGE, INC., Defendant. |
| Court | U.S. District Court — Western District of Texas |
Before the court are "Defendant's Motion to Dismiss" ("Motion") [ECF No. 5], filed April 16, 2021 by CMG Mortgage, Inc. d/b/a CMG Financial, misnamed as CMG Financial, a Division of CMG Mortgage, Inc. ("Defendant"); "Plaintiff's Response to Defendant's Motion to Dismiss" ("Response") [ECF No. 8], filed May 3, 2021 by Luisa Fernanda Calle Monsalve ("Plaintiff"); "Defendant's Reply in Support of Motion to Dismiss" ("Reply") [ECF No. 9], filed May 10, 2021; and "Plaintiff's Sur-Reply to Defendant's Reply in Support of Motion to Dismiss" [ECF No. 10], filed May 19, 2021. Defendant requests Plaintiff's complaint be dismissed with prejudice in its entirety.1 After due consideration of the Motion, Response, Reply, Sur-Reply,2 and applicable law, the Motion is GRANTED.
This action arises out of delinquent mortgage payments on a property located at 344 Rio Tinto Drive, El Paso, Texas 79912 ("Property").3 Plaintiff and her ex-husband, Ricardo Nahuel Rosales ("Rosales") assumed ownership of the Property on September 13, 2019, during their marriage.4 Rosales signed as the borrower on the Note for the purchase of the Property.5 Defendant is the note holder.6 Rosales and Plaintiff both signed the Loan Agreement Addendum ("Addendum"), VA Guaranteed Loan and Assumption Policy Rider ("VA Rider"), and Deed of Trust.7
In December 2019, Rosales filed a petition for a divorce from Plaintiff.8 In January 2021, Plaintiff learned of a letter to Rosales from Defendant informing Rosales he was delinquent on the mortgage payment.9 In March 2021, the Texas court adjudicating the divorce awarded ownership of the Property to Plaintiff.10 Plaintiff then attempted to communicate with Defendant about the delinquent mortgage payments.11 Defendant would not communicate withPlaintiff, because, in its view, Plaintiff was not a signatory to the Note and therefore not a party to the debt.12
Plaintiff filed "Original Petition and Application for Ex Parte Restraining Order, Temporary Injunction, and Permanent Injunction" against Defendant in Texas state court.13 Therein, Plaintiff asserts Defendant breached its contractual obligations under the Note or other binding agreement by failing to communicate with Plaintiff, initiating foreclosure, and refusing to allow Plaintiff to cure default on the Note.14 Plaintiff also pleads the following causes of action in tort: promissory estoppel, conversion, theft, fraudulent misrepresentation or inducement, fraud by nondisclosure, negligence, gross negligence, breach of fiduciary duty, breach of duty of good faith and fair dealing, quantum meruit, and unjust enrichment.15 Defendant removed the action to federal court on March 10, 2021 and now moves to dismiss Plaintiff's petition.16
Federal Rule of Civil Procedure Rule 12(b)(6) allows dismissal of a complaint for "failure to state a claim for which relief can be granted."17 "The central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief."18 To survive amotion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face."19 "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."20 "[F]acial plausibility" exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."21 Therefore, a complaint is not required to set out "detailed factual allegations," but it must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action."22 Although the court must accept well-pleaded allegations in a complaint as true, it does not afford conclusory allegations similar treatment.23
Plaintiff's defense of her breach of contract claim hinges on two arguments, neither of which she supports with citation to caselaw. First, she argues it is inconsequential that she did not sign the Note as it is merely one component of the larger "Loan Agreement" as defined by Texas law.24 As long as she is a party to the Loan Agreement, Plaintiff may state a claim for breach of contract based on Defendant's breach of its obligations under the Note. Second, even if Plaintiff was not already a party to the Note, the divorce decree imposed all mortgageobligations associated with the Property to her.25 Both arguments fail for the same reason: whether an individual is a party to a mortgage note is independent from whether she holds title to the encumbered property.
In Texas, the elements of a valid contract are: (1) an offer; (2) an acceptance in strict compliance with the offer's terms; (3) a meeting of the minds; (4) a communication that each party consented to the terms of the contract; (5) execution and delivery of the contract with an intent it become mutual and binding on the parties; and (6) consideration.26 When construing a written contract, the primary goal is to ascertain the true intent of the parties as expressed in the instrument.27 In general, only parties to a contract and their successors-in-interest have standing to seek a contract's enforcement.28
Section 26.02 of the Texas Business and Commerce Code defines a "loan agreement" as:
one or more promises, promissory notes, agreements, undertakings, security agreements, deeds of trust or other documents, or commitments, or any combination of those actions or documents, pursuant to which a financial institution loans or delays repayment of or agrees to loan or delay repayment ofmoney, goods, or another thing of value or to otherwise extend credit or make a financial accommodation.29
The parties identify four documents, all signed on September 13, 2019, that comprise the Loan Agreement and are relevant to determining whether Plaintiff shares the debt obligation with Rosales: The Note, Addendum, Deed of Trust, and the VA Rider. Of these, Plaintiff signed all documents as a "borrower" except the Note.30 Rosales alone signed the Note as the borrower.31 The Note stipulates Rosales's agreement to pay back Defendant's loan of $139,945.00 in monthly installments.32
Plaintiff argues that all four documents together constitute the "Loan Agreement" and should therefore be considered together.33 However, the Texas Business and Commerce Code does not make Loan Agreements an indivisible monolith superseding the component contracts. Were that so, it would be irrelevant whether a party signed one agreement and not another in determining obligations. That is not the case. Courts considering whether signatories to security instruments, who are not also signatories to promissory notes, are debtors have uniformly determined they are not.34 Notes and deeds of trust create two separate sets of rights andobligations.35 Consent to be bound by one cannot be construed as consent to be bound by all absent language to the contrary. Therefore, as Plaintiff did not sign the Note and it does not bind her on its face, the court must review the obligations imposed by the Note and Deed of Trust to determine whether these establish an obligation under the Note.
The Deed of Trust is an instrument that grants Defendant a security interest in the Property.36 Notably, it expressly defines the obligations imposed on signatories who do not sign the Note:
This language indicates that, although Plaintiff signed as a "borrower," according to the quoted terms of the Deed of Trust, she is in fact a co-signer. The effect of her signaturewas to sign over her ownership interest in the Property as security protecting payment of the Note. Texas law acknowledges that signing over a security interest is a contractual relationship distinct from an obligation to make payments on a Note.38 Therefore, no contractual obligation between Defendant and Plaintiff with respect to the mortgage debt can be inferred from her signature on the Deed of Trust.39 To find otherwise would render meaningless the second quoted clause in the Deed of Trust, which provides a process by which a co-signer can assume the borrower's obligations in the future. Plaintiff did not plead she acted to assume Rosales's interest after their divorce. Thus, Plaintiff's signature on the Deed of Trust does not create any obligation on the Note.
Plaintiff's signature on the VA Rider also does not indicate acceptance of any obligation to repay the loan or make her a party to the Note. Qualified veterans are entitled to housing benefits, including loan guarantees, pursuant to 38 U.S.C. § 3702.40 By guaranteeing a home loan, the United States assumes the obligation to repay a specified percentage of a loan upon the default of the primary debtor.41 The VA Rider states that it amends and supplements the ...
To continue reading
Request your trial