Rоger SINGHA; Amarjit Singha, Plaintiffs-Appellants v. BAC HOME LOANS SERVICING, L.P.; Federal National Mortgage Association, Defendants-Appellees.
No. 13-40061.
United States Court of Appeals, Fifth Circuit.
April 17, 2014.
65
Robert Thompson Mowrey, Arthur Elex Anthony, Esq., Thomas F. Loose, Esq., Senior Litigation Attorney, Alexa Rae Watt Locke Lord, L.L.P., Dallas, TX, for Defendants-Appellees.
Before STEWART, Chief Judge, and GARZA and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Roger and Amarjit Singha brought this action against BAC Home Loans Servicing, L.P. under the
FACTUAL AND PROCEDURAL BACKGROUND
Robert and Amarjit Singha purchased a home in the Dallas, Texas suburb of Murphy on June 1, 2007. Amarjit Singha signed a promissory note. Both of the Singhas signed a deed of trust. The deed of trust lists Countrywide Home Loans, Inc. d/b/a America‘s Wholesale Lender as the lender and the Mortgage Electronic Registration System (“MERS“), including its successors and assigns, as beneficiary and lender‘s nominee. MERS would later assign the note and deed of trust to BAC pursuant to its status as the beneficiary of the deed of trust.
The Singhas made all six reduced payments from September 1, 2009 through February 1, 2010. They also made a seventh payment at the forbearance amount which BAC accepted. On April 1, 2010, BAC rejected the Singhas’ next attempted forbearance payment and asserted it would only accept full reinstatement of the loan, which would require payment of a large sum to bring current the loan and all fees and costs. The Singhas requested modification in April 2010 after the eighth forbearance payment was rejected, and BAC sent the modification application in June. It was during this time that the Singhas allege the promise to modify their loan was made. In any event, the Singhas did not complete all the required paperwork. They also only submitted their partially-completed application on September 24, 2010, a mere two weeks before the October 5, 2010 scheduled foreclosure sale. BAC denied the Singhas modification. The property was sold to the Federal National Mortgage Association (“Fannie Mae“) at the October 5 foreclosure sale.
The Singhas filed suit in Texas state court. BAC removed the casе to the United States District Court for the Eastern District of Texas. After removal, the Singhas filed the operative Second Amended Complaint, then BAC filed a motion to dismiss. The magistrate judge recommended the motion be granted in part to dismiss the breach of contract claim, claims under the
DISCUSSION
The Singhas raise the following challenges on appeal: (1) BAC was not a proper mortgagee and therefore could not foreclose pursuant to the note and deed of trust, (2) the forbearance agreement represents waiver by BAC of any right it had to foreclose, (3) claims under the TDCA should not have been dismissed, and (4) genuine issues of material fact should have been prevented the grant of summary judgment on their quiet title and trespass to try title claims.
The district court granted a motion to dismiss as to some claims, and entered summary judgment on others. A grant of a motion to dismiss under
I. BAC‘s Authority to Foreclose under the Mortgage
The district court dismissed the Singhas’ claim that BAC breached the promissory note and deed of trust by declaring default, demanding the loan be brought current, and foreclosing. This argument is framed in terms of BAC‘s lacking standing under the deed of trust to foreclose. The success of this claim depends on our determining that BAC was not a proper mortgagee under the
We have already held that “Texas recognizes assignment of mortgages through MERS and its equivalents as valid and enforceable.” Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253 (5th Cir. 2013). “A mortgagee includes both ‘the grantee, beneficiary, owner, or holder of a security instrument’ and ‘a book entry system.‘” Id. at 255 (citing
The Singhas are incorrect that the note must be possessed by the holder of the deed of trust. Notes and deeds of trust “constitute separate obligations” under Texas law. Aguero v. Ramirez, 70 S.W.3d 372, 374 (Tex. App.-Corpus Christi 2002, pet. denied). A properly empowered mortgage servicer does not need to possess the note in order to foreclose. Martins, 722 F.3d at 255. Here, MERS was an original beneficiary of the deed of trust. MERS, then, had the right to and did assign its interest in that instrument to BAC. Because a “mortgagee” can be a “beneficiary, owner, or holder of a security instrument,” BAC as holder of the deed of trust is a proper mortgagee and may exercise any rights available to the beneficiary or holder, including that of foreclosure. Id.;
The Singhas’ argument may also be read as a challenge to the validity of the assignment of the deed of trust from MERS to BAC. The Singhas have no standing to challenge the assignment because it does not clearly appear they were intended to be third-party beneficiaries of it. See Reinagel v. Deutsche Bank Nat‘l Trust Co., 735 F.3d 220, 228 (5th Cir. 2013). The Singhas make no such claim. The argument that the assignment was ineffective fails. The Singhas havе failed to allege a breach of any provision of the promissory note or deed of trust and the district court‘s dismissal of this claim was not error.
II. Waiver of the Right to Declare Default or Foreclosure
The district court granted summary judgment on the claim that even if BAC did have the right to foreclose, it had
Under Texas law, a showing of waiver requires: “(1) an existing right, benefit, or advantage held by a party; (2) the party‘s actual knowledge of its existence; and (3) the party‘s actual intent to relinquish the right, or intentional conduct inconsistent with the right.” See Ulico Cas. Co. v. Allied Pilots Ass‘n, 262 S.W.3d 773, 778 (Tex. 2008). “Waiver is largely a matter of intent; thus, for implied waiver to be found through a party‘s actions, intent must be clearly demonstrated by the surrounding facts and circumstances.” Motor Vehicle Bd. v. El Paso Indep. Autо. Dealers Ass‘n, Inc., 1 S.W.3d 108, 111 (Tex. 1999).
There is no dispute that the loan documents stated that the mortgagee has the right to declare default, demand full reinstatement in the event of default, or foreclose. BAC was fully aware of that right. There is no evidence, though, that BAC made an explicit waiver of its rights under the loan documents. Thus, the only question is whether the Singhas are correct that two aсtions by BAC waived its right to declare default and foreclose.
First, the Singhas assert that the forbearance agreement itself, along with the acceptance of a seventh forbearance payment, represented assent by BAC to nonperformance of the original loan agreement and therefore a waiver of strict compliance. Second, the Singhas argue that BAC‘s considering their request for modification represented a waiver of the right to foreclose. In their view, when BAC ultimately denied their application for modification, the Singhas should have been given a reasonable opportunity to comply with the original provisions of the loan documents. The Singhas additionally allege that various BAC emрloyees orally represented to them that their loan would be or was in the process of being modified and did not allow them to make payments while they awaited the bank‘s decision on their modification.
BAC responds that the forbearance agreement‘s plain language specifically states that “nothing in [the forbearance agreement] shall be understood or construed to be a satisfaction or release in whole or in part of the obligations contained in the Loan Documents.” BAC contends the forbearance was a gratuity to allow the Singhas a chance to “get their financial affairs in order” before a foreclosure. BAC further argues that the forbearance agreement specifically disclaims that it is a modification and also disclaims any guarantee that complying with that agreement will result in a later modification. BAC also argues that, whatever oral representations were made, the clear language of the forbearance agreement explicitly states that it is not a modification and that modification is not guaranteed.
There is no еvidence in the record showing when or by whom the alleged oral representations were made. Further, Roger Singha stated that the forbearance agreement would make them eligible to be “considered” for modification. On appeal, the Singhas assert that the foreclosure occurred while they were under review for modification, not after modificаtion had already been granted. Ultimately, the Singhas’ burden is to show that BAC‘s conduct clearly demonstrated a waiver of its
Despite the Singhas’ evidence of oral representations made by BAC about the likelihood or possibility of modification, we agree with the district court that they failed to show a genuine issue of material fact as to whether BAC unequivocally manifested an intent to waive its rights to declare default, demand reinstatement, and foreclose. Id. Thus, the district court did not err in granting BAC summary judgment on the Singhas’ waiver claim.
III. Texas Debt Collection Act Claims
The district court dismissed the Singhas’ claims under the
The Singhas on appeal make arguments only about Sections 392.301(a)(8) and 392.304(a)(19).1 They allege that since BAC was not a valid mortgagee and thus did not have a right to foreclose, BAC‘S representations regarding the impending foreclosure violated these twо subsections. Alternatively, they urge that waiver destroys BAC‘s right to foreclose. According to the Singhas, a party with no right to foreclose “threaten[s] to take an action prohibited by law” by notifying the debtor of that foreclosure.
As discussed above, the Singhas’ claim that BAC was not a proper mortgagee fails as a matter of law. Martins, 722 F.3d at 255. We also decided above that BAC did not clearly manifest any intent to waive its right of foreclosure. See El Paso Indep. Auto. Dealers Ass‘n, 1 S.W.3d at 111. Since BAC is a proper mortgagee, threatening foreclosure is expressly permitted by the TDCA.
We do not announce a rule that modification discussions may never be debt collection activities. We do conclude, though, that the Singhas’ particular factual allegations here—allegations of what occurred during the course of what they describe as more than fifty phone calls and other contacts during a protracted loan modification process—are not communications in connection with collection of a debt. See
IV. Quiet Title and Trespass to Try Title; Breach of Contract
A suit to quiet title is an equitable action in which a plaintiff must prоve and recover on the strength of his own title, not the weakness of his adversary‘s. Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.-Corpus Christi 2001, no pet.). Trespass to try title is a statutory action with specific pleading requirements.
The district court dismissed the Singhas’ trespass to try title claim and granted summary judgment to BAC on their quiet title claim. Both claims rest only on the argument that BAC was not a proper mоrtgagee, which, as discussed above, fails as a matter of law. See Martins, 722 F.3d at 255. We have concluded that BAC was a proper mortgagee who may exercise the power of sale under the deed of trust and that it did not waive its right to do so. BAC foreclosed on the Singhas’ home on October 5, 2010 and sold the property to Fannie Mae. Since the foreclosure was valid and extinguished the Singhas’ interest in the property, their ti-
Various оther arguments were made in the district court that have not been reargued on appeal. Filtering out some arguments in order to focus the court‘s attention on the seemingly most compelling ones on appeal is valid advocacy. One such argument was a claim of anticipatory breach of contract for BAC‘s breach of an alleged oral сontract to modify the Singhas’ loan formed by the complained-of representations that the loan was or would be modified. The magistrate judge granted summary judgment to BAC on this claim. We will not discuss any arguments not fully briefed, and certainly will not disturb the district court‘s rejection of such arguments. See Yohey v. Collins, 985 F.2d 222, 224 (5th Cir. 1993).
AFFIRMED.