TIB-The Independent BankersBank v. Canyon Community Bank
13 F. Supp. 3d 661
N.D. Tex.2014Background
- TIB and CCB entered into correspondent mortgage loan agreements (2002 and 2009) under which CCB warranted loans complied with Fannie Mae requirements and agreed to indemnify/repurchase defective loans.
- In March 2008 TIB purchased a loan from CCB and sold it to Fannie Mae; a post-foreclosure review later revealed undisclosed borrower funds and misrepresentations rendering the loan ineligible for Fannie Mae.
- Fannie Mae notified TIB on January 31, 2013 and TIB was forced to repurchase the loan from Fannie Mae.
- On September 23, 2013 TIB demanded that CCB repurchase the loan; CCB refused. TIB sued in state court for breach of contract, unjust enrichment, money had and received, and negligent misrepresentation; CCB removed and moved to dismiss under Rule 12(b)(6).
- The court evaluated whether various claims were barred by limitations or by doctrines (discovery rule, economic loss rule) and whether unjust enrichment/money had and received could be pleaded given an express contract.
- The court denied dismissal for most claims (permitting amendment) but dismissed unjust enrichment and money-had-and-received claims with leave to replead.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach-of-contract claims are time-barred | TIB: accrual occurred when CCB refused to repurchase in 2013; discovery rule delays accrual until 2013 | CCB: breaches occurred at or before March 2008 when loans were sold; four-year limitations expired | Court: cannot dismiss at 12(b)(6); TIB plausibly invoked discovery rule, so limitations unclear on face of pleadings |
| Accrual of contractual indemnification claim | TIB: indemnification claim arose when it repurchased/paid Fannie Mae (post-2013) | CCB: claim accrued at purchase in 2008 | Court: indemnification accrues when plaintiff pays/recovers; denying dismissal on pleadings for indemnification claim |
| Negligent misrepresentation — limitations | TIB: discovery rule applies because TIB did not learn of the misrepresentation until Fannie Mae’s 2013 notice | CCB: two-year limitations ran from 2008 purchase | Court: TIB’s allegations that it discovered issues in 2013 invoke discovery rule; claim not dismissed on limitations ground |
| Negligent misrepresentation — economic loss rule | TIB: seeks out-of-pocket reliance losses (repurchase costs) — distinct injury from contract damages | CCB: tort claim is a repackaged contract claim and barred by economic loss doctrine | Court: economic loss rule does not bar negligent misrepresentation to the extent TIB seeks out-of-pocket reliance damages; claim survives at pleading stage |
| Unjust enrichment / money had and received (quasi-contract) | TIB: may plead equitable claims in the alternative if contract unenforceable | CCB: express contract governs dispute, so quasi-contract claims unavailable | Court: where an express contract governs and parties do not dispute existence of a contract, unjust enrichment/money had and received claims barred; dismissed but TIB given leave to amend if it can plead avoiding dismissal |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must allege factual content permitting reasonable inference of liability)
- Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007) (economic loss rule overview)
- Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671 (Tex. 2000) (express contract forecloses unjust enrichment)
- Stine v. Stewart, 80 S.W.3d 586 (Tex. 2002) (breach accrual rule for contracts)
- HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998) (discovery rule framework)
- Fed. Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439 (Tex. 1991) (damages for negligent misrepresentation)