Spinoso v. PHH Mortg. Corp.
| Decision Date | 17 July 2020 |
| Docket Number | CIVIL ACTION H-19-3941 |
| Parties | RAQUEL SPINOSO, et al., Plaintiffs, v. PHH MORTGAGE CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Pending before the court is a motion to dismiss filed by defendants PHH Mortgage Corporation d/b/a PHH Mortgage Services ("PHH") and GMAC Mortgage LLC ("GMAC") (collectively, "Defendants").1 Dkt 8. Having considered the motion, related filings, and the applicable law, the court is of the opinion that Defendants' motion to dismiss should be GRANTED.
Plaintiffs Raquel Spinoso and Juan Luna (collectively, "Plaintiffs") filed this lawsuit to preclude Defendants from foreclosing on their property located at 2739 Sherwin Street, Houston, Texas 77007 (the "Property"). Dkt. 1, Ex. D-1 at 10 (state-court petition). In October 2007, Plaintiffs obtained a mortgage loan from Homecoming Financial, LLC, in the amount of $284,900.000, secured by a Deed of Trust. Id. at 5. The loan was then assigned to GMAC and then to Ocwen Loan Servicing LLC ("Ocwen"). Id. According the Defendants, PHH is the successor by merger to Ocwen. Dkt. 8 at 6.
Since 2011, and with the exception of a few months, Spinoso struggled in making her mortgage payments.2 Dkt. 1, Ex. D-1 at 5, 7. In 2011, Spinoso suffered from medical issues and loss of employment, which caused interruptions in making the mortgage payments. Id. Plaintiffs claim that Spinoso applied several times for a loan modification from GMAC, but her applications were all denied. Id. at 6. Around August of 2012, GMAC took steps towards a foreclosure sale of the Property, but Spinoso filed for bankruptcy "to protect her homestead property from foreclosure sale." Id. Plaintiffs allege that Spinoso withdrew her filing after GMAC promised to modify her loan. Id. On December 27, 2012, Spinoso filed for bankruptcy protection again, allegedly because GMAC failed to respond to her application for a loan modification. Id. While the second bankruptcy case was pending, GMAC assigned the loan to Ocwen. Id. Plaintiffs allege that Ocwen informed Spinoso that she would qualify for a loan modification, but the bankruptcy court had to approve it. Id. at 6-7. As a result, Spinoso withdrew the bankruptcy case; the loan was modified two years later in 2014. Id. at 7.
In 2015, only a few months after the loan modification, Spinoso suffered another financial hardship. Id. Plaintiffs claim that even though Spinoso sent Ocwen "numerous applications for [another] loan modification," she had to resubmit yet another application in October 2016 because Ocwen informed her that they had no application from her on record. Id. at 7-8. On or around January 2017, Plaintiffs allege that Ocwen informed Spinoso that they sent her correspondences via email, but she claims that did not receive any correspondence from Ocwen.Id. at 8. On February 9, 2017,3 Spinoso resubmitted her application. Id. Months later, when Hurricane Harvey made landfall in Houston, Spinoso alleges that she was displaced. Id. at 9. After the moratorium on foreclosures due to Hurricane Harvey was lifted, Plaintiffs allege that Ocwen proceeded towards the foreclosure sale of the Property. Id. They also claim that Spinoso did not receive any notice of default and opportunity to cure notice from Ocwen. Id.
On February 1, 2019, Plaintiffs allege that Ocwen transferred the loan to PHH. Id. at 15. However, Defendants assert that PHH is the successor by merger to Ocwen. Dkt. 8 at 6. Thereafter, according to Plaintiffs, PHH scheduled the foreclosure sale of the Property without first notifying Spinoso. Dkt. 1, Ex. D-1 at 15. The foreclosure sale was scheduled for October 1, 2019. Id.
On September 30, 2019, Plaintiffs filed their suit against PHH, Ocwen, and GMAC in the 333rd Judicial District for Harris County, Texas. Id. at 2. Upon removal to federal court based on diversity jurisdiction, PHH and GMAC filed this motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Fed. R. Civ. P. 12(b)(6); Dkt. 8. As of the date of this order, Plaintiffs have not responded to the Defendants' motion to dismiss. The motion is ripe for disposition.
Federal Rule of Civil Procedure 8(a)(2) requires only that the pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A court may dismiss a complaint for "failure to state a claim upon which relief can begranted." Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Gines v. D.R. Horton, Inc., 699 F.3d 812, 816 (5th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955 (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." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937 (2009). "Factual allegations 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)." Twombly, 550 U.S. at 555. As part of the Twombly-Iqbal analysis, the court proceeds in two steps. First, the court separates legal conclusions from well-pled facts. Iqbal, 556 U.S. at 678-79. Second, the court reviews the well-pled factual allegations, assumes they are true, and then determines whether they "plausibly give rise to an entitlement of relief." Id. at 679.
When considering a motion to dismiss for failure to state a claim, "a district court must limit itself to the contents of the pleadings, including attachments thereto." Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Here, the court will consider Plaintiffs' complaint and their attached exhibits.
Plaintiffs bring the following claims against PHH and GMAC: common law fraud, breach of contract, violations of the Real Estate Settlement Procedures Act ("RESPA"), and violations of the Texas Debt Collection Practices Act ("TDCPA"). Dkt. 1, Ex. D-1. Plaintiffs request a temporary restraining order and a temporary injunction to prevent Defendants from foreclosing.Id. at 16.
Defendants move to dismiss all of Plaintiffs' claims for failure to state a claim. Dkt 8. Defendants assert that Plaintiffs' fraud claim is barred by the Economic Loss Doctrine and because the claim is not pled with specificity, the breach of contract claim fails because Plaintiffs suffered no damages, the RESPA claim fails because Plaintiffs did not and cannot allege actual damages, and the TDCPA claim fail because Plaintiffs did not allege any facts that would establish a cause of action under the TDCPA. Dkt. 8 at 7. Defendants request that the court dismiss this case with prejudice and deny Plaintiffs' request for injunctive relief. Id. The court will address each of these claims in turn.
Plaintiffs allege that Defendants' actions constitute common law fraud and misrepresentation of material facts which they "relied upon to [their] detriment." Dkt. 1, Ex. D-1 at 11. Plaintiffs assert that Defendants agreed on "numerous occasions during 2014-2017" to consider Plaintiffs for a loan modification. Id. Plaintiffs claim that after Defendants failed to respond to their requests, Defendants proceeded to post their property for foreclosure sale. Id. Defendants, however, argue that Plaintiffs' fraud claim should be dismissed because the complaint makes general allegations and fails to meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Dkt. 8 at 9. Furthermore, Defendants argue the claim is barred by the economic loss doctrine. Id.
Under Texas law, to recover for a claim of common law fraud, a plaintiff must prove that (1) a material representation was made; (2) it was false; (3) the speaker knew it was false whenmade or that the speaker made it recklessly without any knowledge of the truth; (4) the speaker made it with the intention that it be acted upon by the other party; (5) the party acted in reliance upon it; and (6) the party was injured as a result of the reliance. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex. 1992). State law fraud claims must be pled with particularity and are "subject to the heightened pleading requirements of FRCP Rule 9(b)." Sullivan v. Leor Energy, LLC, 600 F.3d 542, 550-51 (5th Cir. 2010). A plaintiff must specify the fraudulent statements, "identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent." Id. at 551.
Texas courts also recognize the economic loss doctrine---the general rule that precludes recovery under tort law when the plaintiff's economic loss is based on contract law alone. Arlington Home, Inc. v. Peak Envtl. Consultants, Inc., 361 S.W.3d 773, 779 (Tex. App.—Houston [14th Dist.] 2012, pet. denied). The nature of the injury determines which duty has been breached. Sw. Bell Tel. Co. v. Delanney, 809 S.W.2d 493, 495 (Tex. 1991). "When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone." Id.
Here, Plaintiffs make specific allegations that Defendants falsely represented material facts. Specifically, the complaint allege that Defendants falsely claimed that they did not receive Plaintiffs' paperwork for their loan modification application. Dkt. 1, Ex. D-1 at 7. Plaintiffs present emails and fax receipts confirming that the paperwork was received by Defendants on October 19, 21, 22, and 31, 2016, November 1, 2016, and February 9, 2017. Id. at 25, 26, 37-40. Plaintiffs further allege that in spite of the fax receipts confirmations, Defendants continued to deny receiving the application. Id. at 7-8. Plaintiffs allege that Defenda...
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