Lawrence v. Federal Home Loan Mortgage Corp.
2015 U.S. App. LEXIS 21986
| 5th Cir. | 2015Background
- Ronald and Jennifer Lawrence bought a house in 2008 secured by a deed of trust; Wells Fargo serviced the mortgage.
- The Lawrences anticipated payment problems in 2010, defaulted in January 2011, and made no payments through April 2011; Wells Fargo accelerated the loan and pursued foreclosure.
- The Lawrences applied repeatedly for a HAMP modification beginning November 2010; Wells Fargo initially told them the loan was ineligible as a “Texas Cash Out” loan and denied modification applications for eligibility, affordability, or incomplete documentation reasons.
- Wells Fargo entered a repayment plan in April 2011 (monthly payment increased but total obligation unchanged); Lawrences defaulted again and foreclosure was rescheduled multiple times while negotiations continued.
- On November 4, 2011 Wells Fargo told the Lawrences the loan could be HAMP-eligible and asked for timely documentation; the application was incomplete and Wells Fargo said it could not complete review before a December 6 foreclosure sale.
- The Lawrences sued in 2013 raising multiple claims but pursued only common-law fraud and fraudulent inducement on appeal; the district court granted summary judgment for Wells Fargo, finding Lawrences failed to prove damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lawrences proved damages for fraud/fraudulent inducement | Lawrences say they suffered out-of-pocket costs, lost opportunity to sell, increased arrears, and lost savings from a hypothetical HAMP modification | Wells Fargo contends alleged harms are speculative, not supported by evidence, or not legally recoverable (arrears already owed) | Court held Lawrences failed to present non-speculative, supported damages and affirmed summary judgment for Wells Fargo |
| Whether arrears caused by reliance are recoverable damages | Lawrences argue accumulated arrears resulted from reliance on Wells Fargo’s misrepresentations | Wells Fargo argues arrears were already owed under the mortgage and not a new injury | Court held arrears were not recoverable because they were amounts already owed under the original mortgage |
| Whether lost opportunity to sell is compensable without proof | Lawrences claim misstatements denied them chance to sell and avoid foreclosure | Wells Fargo argues Lawrences produced no evidence they actually planned, timed, or could have sold | Court held mere speculation about a sale is insufficient to prove damages |
| Whether district court erred by denying Rule 56(d) continuance for discovery | Lawrences sought more discovery to oppose summary judgment | Wells Fargo notes Lawrences provided no specifics about needed discovery and missed deadlines | Court reviewed for plain error and found denial not reversible—Lawrences showed no basis for additional discovery |
Key Cases Cited
- Wilcox v. Wild Well Control, Inc., 794 F.3d 531 (5th Cir. 2015) (summary judgment reviewed de novo)
- Likens v. Hartford Life & Accident Ins. Co., 688 F.3d 197 (5th Cir. 2012) (speculation and unsubstantiated assertions insufficient to defeat summary judgment)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (elements of common-law fraud under Texas law)
- In re Swift, 129 F.3d 792 (5th Cir. 1997) (preexisting obligation is not a compensable injury)
- United States v. Escalante-Reyes, 689 F.3d 415 (5th Cir. 2012) (plain-error review standards)
- United States ex rel. Steury v. Cardinal Health, Inc., 735 F.3d 202 (5th Cir. 2013) (plain-error review when party failed to object to magistrate judge recommendation)