970 F. Supp. 2d 568
N.D. Tex.2013Background
- Plaintiff Rose Mary Miller sued CitiMortgage, Inc. over a Fort Worth mortgage, noting servicing by CitiMortgage and ownership of the Note and Deed of Trust.
- Miller underwent a First Modification approved in Oct 2010 reducing payments to $830.57; she made several payments but Defendant later purportedly terminated the modification.
- In Feb 2011, Defendant orally offered a Second Modification ($851/mo) that was not reduced to writing; Miller made two payments under it which CitiMortgage accepted.
- Foreclosure occurred on May 3, 2011, after which CitiMortgage purchased the Property for $54,089.41; Miller sued in state court Sept 15, 2011, later removed to federal court.
- Miller’s First Amended Complaint asserts multiple tort and contract claims, including breach of Deed of Trust, promissory estoppel, negligent misrepresentation, fraud, DTPA, unjust enrichment/quantum meruit, and various title-related actions.
- Magistrate Judge Horan issued a Report recommending partial grant/partial denial of Defendant’s motion to dismiss; Miller objected to seven conclusions, which the district judge overruled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract viability and statute of frauds implications | Miller contends Defendant breached Deed of Trust and promised to modify. | Modification promises were unenforceable under the statute of frauds and not proven in writing. | Breach claim survives; promise to modify barred by statute of frauds as to enforceable contract. |
| Promissory estoppel applicability to modification | Promissory estoppel supports enforcement despite lack of writing. | No written promise to modify existed; promissory estoppel does not apply. | Promissory estoppel claim dismissed with prejudice. |
| Fraud/fraudulent inducement and Rule 9(b) pleading | Defendant misrepresented loan modification prospects and ownership of the Note/Deed; broad reliance alleged. | Fraud claims lack particularity and are barred by economic loss rule and statute of frauds. | Fraud/fraudulent inducement claim dismissed without prejudice to cure; fraud pleading required greater particularity. |
| Negligent misrepresentation and economic loss rule | Defendant misrepresented loan modification and ownership; damages include out-of-pocket expenses. | Economic loss rule bars tort recovery for purely contractual disputes; misrepresentation must be pleaded with specificity. | Negligent misrepresentation claim dismissed with prejudice; potential leave to replead with greater specificity avoided. |
| DTPA consumer status and viability | Modification-related servicing actions constitute consumer services under DTPA. | Borrower pursuing loan modifications does not become a consumer for DTPA purposes. | DTPA claim dismissed with prejudice; Miller not a consumer under the DTPA. |
Key Cases Cited
- Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719 (5th Cir.2003) (heightened pleading for fraud/strict pleading standards)
- Formosa Plastics Corp. USA v. Presidio Eng’rs and Contractors, Inc., 960 S.W.2d 41 (Tex. 1998) (economic loss vs. fraud and contract interactions)
- Hugh Symons Group, Inc. v. Motorola, Inc., 292 F.3d 466 (5th Cir.2002) (statute of frauds and torts in contracts context)
- Haase v. Glazner, 62 S.W.3d 795 (Tex.2001) (statute of frauds and contract-based claims)
- DeLanney v. Sw. Bank & Trust Co. (De-Lanney), 809 S.W.2d 494 (Tex.1991) (economic loss doctrine and tort vs. contract analysis)