James Miller v. BAC Home Loans Servicing, L
2013 U.S. App. LEXIS 16773
| 5th Cir. | 2013Background
- James and Allene Miller obtained a purchase-money mortgage for 810 Corey Drive; Nexstar assigned the loan servicing to BAC effective April 7, 2010.
- Millers defaulted; BAC sent a default notice dated March 10, 2010 with a cure deadline of April 9, 2010; Millers allege multiple BAC promises to send loan-modification paperwork and to postpone foreclosure.
- Loan-modification application was allegedly sent late (May 18, 2010), returned by Millers May 28, 2010; BAC allegedly represented the June 1, 2010 foreclosure sale had been postponed but the sale proceeded and the property was sold.
- Millers sued raising FDCPA, TDCA, DTPA, promissory estoppel, wrongful foreclosure, and requested an accounting/distribution of sale proceeds; BAC moved to dismiss under Rule 12(b)(6); magistrate and district court dismissed; Millers appealed.
- On appeal the Fifth Circuit affirmed dismissal of DTPA and common-law claims, affirmed dismissal of TDCA claims under §§392.304(a)(8), (18), (19), reversed dismissal under §392.304(a)(14), and reversed denial of Millers’ request for an accounting from NDE; remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BAC is a "debt collector" under the TDCA and whether alleged oral promises state a claim under §392.304(a)(14) (misrepresenting status/nature of services) | Millers: BAC promised to send modification paperwork and to postpone foreclosure; relied to their detriment; those representations misrepresented services and caused harm | BAC: Analogous FDCPA exclusion should apply; no actionable misrepresentation about debt amount/status; promises were not binding modifications | Held: BAC qualifies as a debt collector under TDCA; Millers stated a §392.304(a)(14) claim — reversal and remand on this claim |
| Whether §392.304(a)(8) (misrepresenting character/amount/status of debt) was alleged | Millers: misrepresentations about foreclosure postponement and modification process implied status misrepresentations | BAC: Millers always knew they owed the debt and its amount/status; no misstatement of debt itself | Held: No §392.304(a)(8) claim — affirmed dismissal |
| Whether Millers alleged §392.304(a)(18) or (19) TDCA violations (subterfuge/other deceptive means) | Millers: BAC misrepresented its independence and used deceptive practices to collect debt | BAC: No allegation that BAC represented it was independent or used specific deceptive acts; statutory elements unmet | Held: No plausible §392.304(a)(18) or (19) claims — affirmed dismissal |
| Whether Millers qualify as "consumers" under the DTPA for loan-modification conduct | Millers: alleges deceptive conduct in servicing/modification process | BAC: The claim concerns a post-purchase loan modification (a pure loan/refinance transaction), not acquisition of a good/service, so Millers are not DTPA consumers | Held: Millers are not consumers re: the modification; DTPA claims dismissed — affirmed |
| Whether promissory estoppel claims survive (statute of frauds) | Millers: relied on oral promises to their detriment; promissory estoppel should apply | BAC: Statute of frauds bars enforcement of unwritten modifications of loans over $50,000; promissory estoppel cannot circumvent unless a promise to sign a written agreement is alleged | Held: Dismissal proper; Millers did not allege a promise to sign a written memorialization — affirmed |
| Whether wrongful-foreclosure claim survives without alleging grossly inadequate sale price or "chilled" bidding; and whether NDE must provide accounting/distribution | Millers: seek damages from wrongful foreclosure and an accounting/distribution from NDE; alleged promises to postpone sale | BAC/NDE: Plaintiffs did not allege grossly inadequate sale price or deliberate chilling of bidding; NDE did not move to dismiss earlier | Held: Wrongful-foreclosure claims dismissed for failure to allege inadequate price or chilling; reversal as to Millers’ request for an accounting from NDE (remanded) |
Key Cases Cited
- Gregson v. Zurich Am. Ins. Co., 322 F.3d 883 (5th Cir. 2003) (standard of review for Rule 12(b)(6))
- Perry v. Stewart Title Co., 756 F.2d 1197 (5th Cir. 1985) (FDCPA exclusions and servicers; TDCA broader than FDCPA)
- Kansa Reins. Co. v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362 (5th Cir. 1994) (affirmative defenses may be resolved on face of the pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requires more than labels and conclusions)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705 (Tex. 1983) (when a loan serves to acquire a good, DTPA consumer status may attach)
- Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368 (Tex. App. 1989) (wrongful-foreclosure claims and the "chilled" bidding exception)