508 F. App'x 326
5th Cir.2013Background
- Milton purchased a Texas property secured by a loan of $295,000; U.S. Bank holds the note and deed of trust; Ocwen Servicing is the loan servicer.
- Milton defaulted in July 2009; Ocwen sent default, acceleration, and foreclosure notices.
- Milton sought a HAMP modification; Milton alleges Ocwen orally promised no foreclosure while HAMP was pending.
- Ocwen allegedly informed Milton in writing (Oct 13, 2009) that he was not eligible for HAMP due to NPV test.
- Ocwen mailed a non-judicial foreclosure notice for November 3, 2009; Milton alleges conflicting information from Ocwen thereafter.
- Foreclosure sale occurred on November 3, 2009; Milton filed suit November 23, 2009 in Texas state court and defendants removed to federal court; claims included breach of contract, promissory estoppel, fraud, negligence, gross negligence, negligent misrepresentation, and unreasonable collection efforts; district court granted summary judgment in favor of defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach of contract is barred by the statute of frauds | Milton argues oral delay agreement valid | Defendants contend no writing, so unenforceable | Yes, barred by statute of frauds |
| Whether promissory estoppel survives | Ocwen promised delay and relied on it | No written promise to reduce to writing; estoppel fails | No, fails as a matter of law |
| Whether negligent misrepresentation claim is viable | Ocwen promised non-foreclosure pending HAMP | Promises of future action not actionable under Texas law | No, fails as a matter of law |
| Whether tort claims for negligence/gross negligence exist | There was a special mortgagee-mortgagor relationship imposing duty | No such standalone duty under Texas law | No viable duty; claims fail |
| Whether fraud and unreasonable collection efforts are supported | Misrepresentations were knowing/reckless; collection efforts were unreasonable | Evidence does not show knowing/reckless misrepresentation or willful misconduct | Insufficient evidence; claims fail |
Key Cases Cited
- Bank of Tex., N.A. v. Gaubert, 286 S.W.3d 546 (Tex. App.–Dallas, 2009) (statute of frauds and oral delay agreements)
- Maginn v. Norwest Mortg. Inc., 919 S.W.2d 164 (Tex. App.–Austin 1996) (estoppel requires a writing reduction when statute of frauds applies)
- De Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x 200 (5th Cir. 2012) (promises of future action not actionable as negligent misrepresentation)
- Edwards v. Ocwen Loan Servicing, LLC, 2012 WL 844396 (E.D. Tex. 2012) (negligent representation claim based on promise of foreclosure delay not viable)
- In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) (Texas law on fraudulent misrepresentation and standards)
- Scherer v. Angell, 253 S.W.3d 777 (Tex. App.–Amarillo 2007) (promises of future action and misrepresentation)
- TMI, Inc. v. Brooks, 225 S.W.3d 783 (Tex. App.–Houston [14th Dist.], 2007) (reasonable reliance; misrepresentation and collection actions)
- UMLIC VP LLC v. T & M Sales & Envtl. Sys., Inc., 176 S.W.3d 595 (Tex. App.–Corpus Christi, 2005) (no standalone duty of good faith in mortgage context)