992 F.3d 367
5th Cir.2021Background
- Jason and Cheryl Douglas purchased a home in 2015 and financed it with a VA‑guaranteed note and deed of trust later owned by Wells Fargo.
- The Douglases set up automatic withdrawals in Sept–Oct 2016; payments stopped thereafter and they missed payments from Nov 2016–Mar 2017.
- Wells Fargo sent collection letters (Jan 17 and Mar 3, 2017) stating larger past‑due amounts than the Douglases asserted; in March 2017 Cheryl alleges she arranged a $14,000 payment by phone and was told Wells Fargo would draft it or accept it as a repayment plan, but the draft was never made.
- Wells Fargo sent a March 13, 2017 escrow letter stating “No action required,” then sent acceleration and foreclosure notices (April 10, 2017) by certified/first‑class mail (certified returned unclaimed); foreclosure occurred in May 2017 and Wells Fargo purchased the property.
- The Douglases sued in Texas court (removed to federal court) seeking to set aside the foreclosure, cancel the trustee’s deed, quiet title, and asserting TDCA claims (§ 392.301(a)(8) and § 392.304(a)(8)), due‑process and other claims; the district court dismissed most claims, dismissed § 392.304(a)(8) with prejudice (statute of frauds), and later granted summary judgment to Wells Fargo on foreclosure‑sale and due‑process claims. The Fifth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wells Fargo failed to give required notice of acceleration/foreclosure under the deed of trust and Texas Property Code | Non‑receipt of mailed notices creates fact issue that service was improper | Constructive service under deed and Tex. Prop. Code § 51.002(e) was satisfied by proof of mailing and affidavit/scans | Affirmed: sending/mailing evidence satisfied constructive notice; mere non‑receipt insufficient to create genuine issue (LSR controlling) |
| Whether a due‑process claim first raised in response to summary judgment may proceed | Raising due‑process argument in summary‑judgment response should be allowed | New claims raised only at summary judgment are untimely; alternatively, treated as motion to amend and denied for futility/tardiness | Affirmed: district court properly rejected claim as untimely and futile to amend |
| TDCA § 392.301(a)(8): whether Wells Fargo unlawfully threatened/foreclosed when prohibited by law (i.e., lacking required notice) | Foreclosure was improper because notice was never received, so threats/foreclosure violated TDCA | Notice was properly served, so foreclosure was lawful and no TDCA violation | Affirmed dismissal: no statutory prohibition existed because service shown to be proper |
| TDCA § 392.304(a)(8) — letters allegedly overstating past due amounts | January and March letters misrepresented amount owed and thereby misled the Douglases about the character/extent/status of their debt | Even if amounts were overstated, the letters did not change the Douglases’ understanding that they were in default; letters didn't cause them to think differently | Affirmed dismissal as to letters: inaccuracies did not alter plaintiffs’ perception of debt status, so no actionable TDCA misrepresentation |
| TDCA § 392.304(a)(8) — alleged oral promise to accept $14,000 (phone call) | Wells Fargo told them it would automatically draft/accept $14,000, which lulled them into believing loan would be brought current and prevented remedial action | Alleged oral agreement would modify loan terms and is barred by the statute of frauds; cannot be sole basis for TDCA claim | Affirmed dismissal: oral‑modification allegation is barred by statute of frauds and cannot alone sustain TDCA claim (majority). Dissent would have allowed TDCA claim to proceed as independent misrepresentation claim |
| Breach/quantum meruit arising from alleged abandonment of acceleration | $14,000 promise plus "no action required" letter amounted to abandonment of acceleration, supporting breach/unjust enrichment | Loan was not accelerated until April 10, 2017, after March communications; no abandonment occurred | Affirmed dismissal: cannot abandon acceleration before loan was accelerated |
Key Cases Cited
- LSR Consulting, LLC v. Wells Fargo Bank, N.A., 835 F.3d 530 (5th Cir. 2016) (non‑receipt of notice does not create fact issue where mailing/service evidence satisfies § 51.002(e))
- Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013) (mailing affidavit satisfies lender's burden under Texas Property Code service rules)
- Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717 (5th Cir. 2013) (TDCA § 392.304(a)(8) requires that alleged misrepresentation cause borrowers to think differently about the character/extent/status of debt)
- McCaig v. Wells Fargo Bank (Tex.), N.A., 788 F.3d 463 (5th Cir. 2015) (TDCA can reach extra‑contractual misrepresentations and allows noncontract damages such as mental anguish)
- Williams v. Wells Fargo Bank, N.A., [citation="560 F. App'x 233"] (5th Cir. 2014) (an alleged oral loan modification barred by the statute of frauds cannot alone sustain a TDCA claim)