Shaw v. Wells Fargo Bank, N.A.

• Decision Date: 10 September 2013
• Docket Number: Civil Action No. 4:12-CV-01422
• Parties: ALVINA SHAW Plaintiff, v. WELLS FARGO BANK, N.A. Defendant.
• Court: U.S. District Court — Southern District of Texas

ALVINA SHAWPlaintiff, v. WELLS FARGO BANK, N.A.Defendant.

Civil Action No. 4:12-CV-01422

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

SIGNED: September 10, 2013

OPINION AND ORDER

Pending before the Court is DefendantWells Fargo Bank, N.A's ("Wells Fargo")Motion for Summary Judgment and Motion to DismissPlaintiffAlvina Shaw's ("Shaw") original petition.Doc. 6.Wells Fargo moves for dismissal under Rule 12(b)(6) and/or for full and final summary judgment pursuant to Fed. R. Civ. P. 56(c).

Having considered Wells Fargo's motion, the absence of a response to the motion, and the applicable law, the Court concludes that Defendant's Motion to Dismiss should be granted pursuant to Federal Rules of Civil Procedure 8, 9, and 12(b)(6).

I.Background and Relevant Facts

On September 20, 2002, Plaintiff Shaw purchased the property located at 13435 Castle Way Drive, Houston, Texas 77083 (the "Property"), executing a promissory note (the "Note") and Deed of Trust (collectively, the "Mortgage") in favor of the original lender, World Savings Bank.Pl.'s OriginalPet. at 2, Doc. 1.The Mortgage was later assigned to DefendantWells Fargo, and, after Shaw experienced extreme financial difficulties in 2010 and stopped making payments, the Mortgage went into default.Pl.'s OriginalPet. at 2, Doc. 1.

Shaw contacted Wells Fargo requesting a loan modification, and information was exchanged for several months.Pl.'s OriginalPet. at 3, Doc. 1.During this period Shaw was under the impression that Wells Fargo would not foreclose on the Property until it completed its review of Shaw's loan modification.Wells Fargo, however, proceeded with the foreclosure process and completed the foreclosure sale on October 4, 2011.Pl.'s OriginalPet. at 7-8, Doc. 1.

On April 24, 2012, Shaw filed her Original Petition in the 295^th Judicial District Court of Harris County, Texas, requesting a declaratory judgment from the Court that the foreclosure sale constituted a "wrongful foreclosure" and that Plaintiff is the sole "title holder" of the Property.Shaw asserted claims for: (1) fraud; (2) wrongful foreclosure due to fraud; (3) wrongful foreclosure due to failure to properly notice; (4) slander of title; (5) promissory estoppel; (6) an accounting; and (7) declaratory and injunctive relief.On May 7^, 2012, Wells Fargo removed the case from state court on diversity jurisdiction, and on December 17, 2012, filed its Motion to Dismiss and/or for Summary Judgment.PlaintiffAlvina Shaw has not, to this date, filed a response to the motion.

II.Legal Standard

Under Federal Rule of Civil Procedure 8(a), a complaint "must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief."Furthermore, "[t]o survive a [Rule 12(b)(6) ]motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'"Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868(2009)(quotingBell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929(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."Id.(citingTwombly, 550 U.S. at 556).In determining plausibility, courts should first disregard "formulaic recitation [s] of the elements" of the legal claim as conclusory, then consider only the remaining, well-pleaded facts.Id. at 681(quotingTwombly, 550 U.S. at 555)."[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief."Id. at 679(alterations and internal quotation marks omitted)(quotingFed. R. Civ. P. 8(a)(2)).If these facts fail to "nudge [the] claims across the line from conceivable to plausible, [then the] complaint must be dismissed."Twombly, 550 U.S. at 570.

III.Analysis

A.Fraud

The Court agrees with Wells Fargo and dismisses Shaw's fraud claim as a matter of law because Shaw fails to allege facts to state a plausible claim and fails to meet the heightened pleading standard set forth in Rule 9 of the Federal Rules of Civil Procedure.

To state a claim for fraud under Texas law a plaintiff must allege (1) that the defendant made a representation to the plaintiff, (2) that the representation was material, (3) that the representation was false, (4) that when the misrepresentation was made the defendant knew it was false or made it recklessly and without knowledge of its truth, (5) that the defendant made it with the intent that the plaintiff act on it, (6) that the plaintiff relied on the representation, and (7) that the representation caused injury to the plaintiff.Shandong Yinquang Chem., Indus. Jt. Stock Co. v. Potter, 607 F.3d 1029, 1032-33(5th Cir.2010), citingErnst & Young, LLP v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 577(Tex.2001).A false representation is material if a reasonable person would attach importance to and be induced to act on the information.Id. at 1033."A promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made."Formosa Plastics Corp. USA v. Presidio Engineers and Contractors, Inc., 960 S.W.2d 41, 48(Tex.1998).Nevertheless, "the mere failure to perform a contract is not evidence of fraud."Id.

In addition to Rules8(a) and 12(b)(6), fraud claims must satisfy the heightened pleading standard set out in Federal Rule of Civil Procedure 9(b): "in allegation[s] alleging fraud..., a party must state with particularity the circumstances constituting fraud or mistake.Malice, intent, knowledge, and other condition of a person's mind may be alleged generally."A dismissal for failure to plead with particularity as required by this rule is treated the same as Rule 12(b)(6) dismissal for failure to state a claim.Lovelace v Software Spectrum, Inc., 78 F.3d 1015, 1017(5th Cir.1996).The Fifth Circuit interprets Rule 9(b) to require "specificity as to the statements (or omissions) considered to be fraudulent, the speaker, when and why the statement were made, and an explanation of why they were fraudulent."Plotkin v. IP Axess, Inc., 407 F.3d 690, 696(5th Cir.2005).

Wells Fargo argues that Shaw fails adequately, specifically or properly to plead her common law fraud cause of action and that Shaw's pleading fails to give Wells Fargo fair notice of the substance of Plaintiff's claim as required by Rule12(b)(6).Wells Fargo further argues that Shaw's formulaic recitation of the common law fraud elements and conclusory allegation unsupported by facts are insufficient to state a claim of fraud.Def's. Motionat 5, Doc 1.The Court agrees.

Furthermore, Shaw's allegations are wholly inadequate under Rule 9(b) for the following reasons: (1) Shaw fails to specify the fraudulent statements and simply alleges that Wells Fargo made fraudulent statements; (2) Shaw does not properly identify the speaker who made the allegedly fraudulent statements; (3) Shaw fails to provide any information as to the time and place the allegedly fraudulent statements were made; and (4) Shaw fails to specify why and how the alleged statements were fraudulent.Instead, all Shaw alleges is that Wells Fargo"intentionally misrepresented its intentions" and that she understood the foreclosure would be stopped or delayed.Pl.'s OriginalPet. at 3, Doc. 1.

Any alleged representation by Wells Fargo to halt the foreclosure sale constitutes a promise to act in the future.As stated above, for a future promise to be actionable, the party must show that it was made with the intention and purpose to deceive and with no intention of performing the act.Shaw fails to stateany facts that make any alleged representation of a future promise to act by Wells Fargo actionable.The fraud claim is subject to dismissal.

B.Wrongful Foreclosure

Shaw requests that the Court declare the foreclosure sale a wrongful foreclosure.Pl.'s OriginalPet. at 3, Doc. 1.Shaw, however, does not assert any facts in support of such a claim.

A plaintiff asserting wrongful foreclosure must show (1) a defect in the foreclosure sale proceedings, (2) a grossly inadequate selling price, and (3) a causal connection between the defect and the grossly inadequate selling price.Sauceda v. GMAC Mortgage Corp., 268 S.W.3d 135, 139(Tex. App.— Corpus Christi 2008, no pet .), citingCharter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368, 371(Tex. App.—Houston [14th Dist.]1989, writ denied).Moreover, there must be evidence of an irregularity that "must have caused or contributed to cause the property to be sold for a grossly inadequate price."In re Keener, 268 B.R. 912, 921(N.D. Tex.2001)."Under Texas law a grossly inadequate price would have to be 'consideration so far short of the real value of the property as to shock a correct mind, and thereby raise a presumption that fraud attended the purchase.' "Richardson v. Wells Fargo Bank, N.A., No. 4:11-CV-359-A, 2012 WL 2511169, *9(N.D. Tex.June 29, 2012), citingFDIC v. Blanton, 918 F.2d 524, 531(5th Cir.1990), quotingRichardson v. Kent, 47 S.W.2d 420, 425(Tex. Civ. App.—Dallas 1932, no writ)("The weight of Texas authority rejects a determination of gross inadequacy where ... property sells for over 60% of fair market value.")

In this case, Shaw does not plead (1) a defect in the foreclosure proceedings; (2) a grossly inadequate sale price; or (3) a connection between the two, all essential elements of a wrongful foreclosure claim; rather, Shaw relies solely on the same insufficient allegation made in support of her fraud claim.Shaw has not, when the conclusory allegations are disregarded, stated a claim for wrongful foreclosure.

As for Shaw's claim of wrongful foreclosure due to failure to...