Linda Smith v. JPMorgan Chase Bank, N.A.
699 F. App'x 393
| 5th Cir. | 2017Background
- Linda Denise Smith, pro se, sued defendants over servicing of a promissory note signed by her deceased husband and foreclosure proceedings on a deed of trust encumbering the couple's jointly owned home.
- The district court dismissed Smith's complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim; Smith appealed.
- Smith argued the magistrate judge lacked jurisdiction, the district court applied an improper evidentiary standard, and the defendants failed to comply with discovery requests.
- On the merits Smith mainly alleged defendants acted in bad faith (citing Tex. Bus. & Comm. Code § 1.304), that customer-service misrepresentations prevented foreclosure avoidance and caused emotional and financial harm, and asserted unreasonable debt-collection conduct.
- The Fifth Circuit reviewed the 12(b)(6) dismissal de novo but applied plain-error review to claims Smith did not raise in objections to the magistrate judge.
- The Fifth Circuit affirmed, concluding Smith failed to plead a plausible claim of statutory or common-law bad faith or to allege conduct meeting the standard for unreasonable debt collection; several district-court claims were deemed abandoned on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Magistrate jurisdiction | Magistrate lacked authority to issue findings and recommendation | Magistrate acted within 28 U.S.C. § 636(b)(1) | Magistrate had jurisdiction; contention meritless |
| Use of evidence/discovery at 12(b)(6) stage | District court erred by considering matters outside complaint and not compelling discovery | Motion to dismiss should be decided on complaint allegations without expanded discovery | Court applied correct Rule 12(b)(6) standard; discovery issue irrelevant to pleading sufficiency |
| Bad-faith claim under Tex. Bus. & Comm. Code § 1.304 | Defendants breached duty of good faith in contract performance/enforcement | § 1.304 does not create an independent cause of action; must tie bad faith to a specific contractual duty | Dismissed: Smith failed to identify a specific contractual duty linking § 1.304 to a breach |
| Common-law bad faith / Unreasonable debt collection | Customer-service misrepresentations amounted to bad faith and harassing debt collection | Mortgagee–mortgagor relationship lacks the special relational basis for an implied duty; conduct alleged not the outrageous harassment required for unreasonable-debt-collection tort | Dismissed: no special relationship alleged; allegations do not meet the heightened standard for unreasonable debt collection |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
- Scanlan v. Tex. A&M Univ., 343 F.3d 533 (courts generally may not consider matters outside the complaint on 12(b)(6))
- N. Nat. Gas Co. v. Conoco, Inc., 986 S.W.2d 603 (Tex.) (§ 1.304 does not create an independent cause of action; ties good-faith obligation to specific contractual duties)
- Yohey v. Collins, 985 F.2d 222 (pro se pleadings construed liberally on appeal)
- FDIC v. Coleman, 795 S.W.2d 706 (Tex.) (implied duty of good faith arises only in special relationships)
- EMC Mortg. Corp. v. Jones, 252 S.W.3d 857 (Tex. App.) (defines unreasonable debt-collection as willful, malicious course of harassment)