McCaig Ex Rel. Estate of McCaig v. Wells Fargo Bank (Texas), N.A.
2015 U.S. App. LEXIS 9666
| 5th Cir. | 2015Background
- This TDCA case arises from Wells Fargo's handling of a Mortgage/Forbearance agreement with the McCaigs, including alleged TDCA violations and mental anguish damages.
- Wells Fargo repeatedly mishandled loan servicing, issuing erroneous default notices and threatening foreclosure while the loan remained in forbearance.
- The McCaigs sued in state court; Wells Fargo removed to federal court and the case went to trial on breach of contract and TDCA claims.
- Jury awarded mental anguish damages, expenses, and attorney’s fees; district court reduced attorney’s fees and judgment was appealed.
- The appellate court vacated the judgment and remanded for entry consistent with its opinion, affirming some TDCA findings while vacating others.
- Dissent contends the majority misapplies the economic loss rule and would broaden TDCA liability beyond Texas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TDCA standing of plaintiffs | Marilyn and David have standing under 392.403(a)(2) as persons adversely affected by TDCA violations. | Standing limited to debtors or direct targets; Marilyn and David lack standing. | McCaigs have statutory standing. |
| Economic loss rule and TDCA claims | Economic loss rule does not bar TDCA claims arising from independent statutory duties. | TDCA claims should be barred by the economic loss rule as contractual issues predominate. | Economic loss rule does not bar McCaigs’ TDCA claims. |
| Question 4: TDCA violations under 392.301(a)(7)-(8) | Wells Fargo violated (a)(7) and (a)(8) via improper foreclosure threats. | Defense under 392.301(b)(3) permits threats tied to contractual rights; (a)(7) not applicable to non-judicial foreclosure. | Violated (a)(8); no violation of (a)(7); misapplication of (b)(3) rejected. |
| Certain misrepresentations under 392.303(a)(2) and 392.304(a)(8)/(a)(12) | Charges/fees assessed were not authorized and misrepresentations occurred regarding amounts and authorization. | Fees were authorized by contract or waived only after completion of performance; no misrepresentation. | TDCA violations proven under (a)(2), (a)(8), and (a)(12). |
| Damages: expenses vs. mental anguish and statutory damages | Mental anguish damages supported; $1,900 expenses recoverable as caused by TDCA violations. | Expenses not caused by TDCA violations; statutory damages improperly awarded for (a)(3). | Expense award vacated; mental anguish damages upheld; statutory damages under §392.301(a)(3) vacated. |
Key Cases Cited
- Monroe v. Frank, 936 S.W.2d 654 (Tex.App.1996) (standing extends beyond debtors)
- Campbell v. Beneficial Fin. Co. of Dallas, 616 S.W.2d 373 (Tex.App.1981) (any person may maintain action for TDCA violations)
- Crawford v. Ace Sign, Inc., 917 S.W.2d 12 (Tex.1996) (breach of contract not per se a DTPA/TDCA violation)
- Ashford Dev., Inc. v. US-Life Real Estate Servs. Corp., 661 S.W.2d 933 (Tex.1983) (mere breach of contract not a DTPA violation)
- Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (Tex.1998) (independent duty allows tort and contract coexist)
- El Apple I, Ltd. v. Olivas, 370 S.W.3d 757 (Tex.2012) (lodestar fee evidence may require contemporaneous records)
- City of Laredo v. Montano, 414 S.W.3d 731 (Tex.2013) (commentary on attorney’s fees and contemporaneous records)
- Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d 692 (Tex.App.1993) (TDCA damages standards discussed in context of contract)