Case: 13-20425 Document: 00512757206 Page: 1 Date Filed: 09/04/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-20425 FILED
September 4, 2014
Lyle W. Cayce
TIMOTHY TIELKE; MELISSA ANN TIELKE, Clerk
Plaintiff-Appellants
v.
BANK OF AMERICA, N.A., successor to BAC Home Loans Servicing, LP,
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:12-CV-2
Before REAVLEY, ELROD, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
This dispute involves assertions by Defendant Bank of America that the
homeowners, Plaintiffs Timothy and Melissa Ann Tielke, were in default of
their mortgage obligations because they failed to make required mortgage
payments and failed to maintain homeowners insurance. The Tielkes brought
this suit against the bank, raising one claim under the Texas Debt Collection
Act (TDCA) and one claim for breach of contract. The district court granted
summary judgment in favor of the bank. We conclude that there are fact issues
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 13-20425 Document: 00512757206 Page: 2 Date Filed: 09/04/2014
No. 13-20425
concerning whether or not Plaintiffs maintained homeowners insurance and
whether they were in default of their mortgage payments. Summary judgment
was therefore inappropriate, and we REVERSE the district court’s judgment.
I.
The Tielkes obtained a home equity mortgage on property located in
Sugar Land, Texas, in 2003. The loan was originally serviced by Countrywide
Home Loans and then eventually by Defendant Bank of America. The Tielkes
filed for Chapter 13 bankruptcy protection in November 2004. According to
the complaint, they were required by the bankruptcy plan to make their
regular monthly mortgage payments of approximately $670 plus an additional
amount of $37 to cure an arrearage of $2080. They were discharged from
bankruptcy in April 2011.
The Tielkes alleged in their complaint that they have been plagued by
accounting errors by the loan servicers for many years. They alleged that in
July 2011, Bank of America obtained lender’s forced homeowners’ insurance
on the property even though they maintained homeowners’ insurance. They
also alleged that because of the forced homeowners’ insurance the bank re-
calculated their mortgage payment to be approximately $1450, which included
an escrow amount for the insurance. The Tielkes continued to make only their
regular payments of $670, however, thereby apparently causing a shortfall.
The Tielkes further alleged that in June 2011, Bank of America began making
harassing collection calls to them, and they submitted an affidavit averring
that the calls numbered as many as seven to nine calls per day for several
months. They filed the instant suit, alleging that (1) Bank of America’s
repeated and harassing collection calls violated the TDCA, and (2) Bank of
America breached the escrow agreement by obtaining forced homeowners’
insurance when coverage already existed and by paying property taxes out of
sequence, thereby causing an escrow shortage of over $5000. They sought
2
Case: 13-20425 Document: 00512757206 Page: 3 Date Filed: 09/04/2014
No. 13-20425
statutory damages, actual damages, and damages for mental anguish. The
district court, largely by adopting Bank of America’s pleadings, granted
summary judgment for the bank. The Tielkes now appeal.
II.
We review the grant of summary judgment de novo, viewing all of the
record evidence in a light most favorable to, and drawing all reasonable
inferences in favor of, the non-moving party. Lawyers Title Ins. Corp. v.
Doubletree Partners, L.P., 739 F.3d 848, 856 (5th Cir. 2014). Summary
judgment is appropriate only “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a).
III.
Bank of America argues, and the district court apparently held, that
summary judgment was proper because the undisputed evidence showed that
the Tielkes were in default of their mortgage obligations, and that as a result
the Tielkes’ claims fail. With respect to the TDCA claim, the bank asserts that
because of the Tielkes’ default, the bank was permitted to make collection calls
to the Tielkes. It also argues that the Tielkes presented no evidence that there
were six to nine calls per day and no evidence that any calls were made with
an intent to harass. With respect to the claim for breach of the escrow
agreement, the bank asserts that the Tielkes’ default on their mortgage
payments precludes them as a matter of law from making a breach of contract
claim. See Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990) (holding that
a party who is himself in default cannot assert a claim for breach of contract
against the other party). The bank argues that the Tielkes failed to make their
July 2011 mortgage payment and have made no other payments since then. It
also asserts that on numerous occasions the Tielkes failed to provide timely
evidence of the necessary homeowners’ insurance. At bottom, therefore, this
3
Case: 13-20425 Document: 00512757206 Page: 4 Date Filed: 09/04/2014
No. 13-20425
case turns on whether the Tielkes were in default of their mortgage, either by
failing to make payments or failing to maintain insurance, thereby permitting
Bank of America to act as it did. A review of the summary judgment evidence
does not resolve this question, however, and fact issues remain.
As noted above, the evidence included an affidavit from Mrs. Tielke
averring to the bank’s collection efforts, including the alleged numerous
harassing telephone calls. The bank responds that in addition to failing to
make their July 2011 mortgage payment, or any payments since that time, the
Tielkes have a history of delinquency that dates back to August 2004. The
Tielkes maintain, however, that they have made payments but that Bank of
America has consistently misapplied them.
We have examined a loan history statement produced by Bank of
America (Defendant’s Exh. A-3), which does appear to reflect missing or
sporadic mortgage payments by the Tielkes dating back to 2004. Beyond that,
however, we are unable to decipher this document with any certainty, and we
note that any irregular payment history largely predates the Tielkes’
emergence from Chapter 13 bankruptcy protection in April 2011.
The record shows that on June 6, 2011, Bank of America sent the Tielkes
a notice of default indicating that as of April 1, 2011, the Tielkes were
delinquent in the amount of $2011.89 plus late charges. The Tielkes dispute
the delinquency. How the bank arrived at this delinquency amount is not clear
from the record, and neither the district court’s opinion nor the bank on appeal
explains it. 1 Equally unclear is how the Tielkes allegedly came to be over
1 The amount is equivalent to approximately three months’ worth of the Tielkes’
regular mortgage payments ($670.62 x 3 = $2011.86). We note that Melissa Ann Tielke
averred in an affidavit that in 2007 Countrywide had sent the Tielkes notice of an arrearage
of an identical amount, but she averred that the Tielkes paid it. It is not clear from the record
whether the amount claimed by Bank of America on June 6, 2011, was the same arrearage
claimed by Countrywide in 2007.
4
Case: 13-20425 Document: 00512757206 Page: 5 Date Filed: 09/04/2014
No. 13-20425
$2000 in arrears if they had just been released from bankruptcy, which had
included a plan to cover arrearages. In any event, the Tielkes submitted copies
of checks written to the bank for $670 on June 16, July 26, and August 29,
2011. These checks would appear to show there was no delinquency (other
than perhaps for late charges), but the bank responds that the payments from
those checks were applied for delinquencies that already existed on payments
due in April, May, and June 2011. However, Defendant’s Exh. A-3 appears to
show that payments designated as “regular payments” were posted to the
Tielkes’ account on January 3, February 17, March 2, March 28, May 10, May
20, and June 17, 2011. It is therefore unclear whether or how the Tielkes were
delinquent on June 6 for payments due in April, May, and June 2011, and Bank
of America is no help in explaining it. 2
We surmise that the forced homeowners’ insurance may have something
to do with the bank’s view that the Tielkes were in default. The Tielkes’ alleged
that Bank of America obtained forced homeowners’ insurance and then
erroneously required them to pay into an escrow account for insurance despite
the fact that they already had homeowners’ insurance. Bank of America denies
that it actually obtained an insurance policy, but it does not deny that there
was an increase in the mortgage payment to cover an insurance escrow.
Therefore, it may be that any payments by the Tielkes that did not include the
insurance escrow were deemed by the bank to be insufficient and the cause of
a default. But the bank does not say so, and we are stymied in our effort to
understand the cause of the Tielkes’ alleged default, if indeed they ever were
in default.
2 The Tielkes also made monthly payments of $670 by checks dated October 6,
November 6, and December 12, 2011, and January 11 and March 26, 2012. These checks
were either returned to the Tielkes or placed in a suspense account because the bank viewed
them as insufficient to cure the default, but the propriety of that view depends on whether
there was a valid default in the first place.
5
Case: 13-20425 Document: 00512757206 Page: 6 Date Filed: 09/04/2014
No. 13-20425
In the district court, Bank of America produced its own internal records
purporting to show that on numerous occasions it received notice from the
Tielkes’ insurance carrier stating that the homeowners’ insurance had lapsed
due to nonpayment. It also produced letters that Bank of America sent to the
Tielkes notifying them of this deficiency. Bank of America concedes in its
appellate brief, however, that each time it sent letters to the Tielkes, they
allegedly reinstated their homeowners’ insurance and that the bank therefore
never obtained the insurance. Moreover, in the district court, the Tielkes’
submitted evidence from their insurance carriers showing that there had never
been a lapse in coverage. There are fact issues, therefore, as to whether the
Tielkes’ homeowners’ insurance ever lapsed, whether the bank ever did require
an escrow amount for insurance, and if so, whether the escrow was justified. 3
The Tielkes claim that the unjustified escrow amount for homeowners’
insurance was the cause of the dispute between the parties, and we cannot say
on this record that they are wrong. There are simply too many unanswered
questions about the homeowners insurance, the Tielkes’ mortgage payments,
and the bank’s application of the payments to justify summary judgment in
3 The Tielkes’ Home Equity Security Instrument (First Lien) provided for an escrow
for insurance, but it also provided that the bank could waive that requirement, and at the
loan’s inception the lender did not apparently require an escrow for insurance. See
Defendant’s Exh. A-2 ¶ 3. The Lien did further provide that the lender could revoke the
waiver at any time and thereby require the borrower to establish an escrow account, but the
Lien also required written notice of the revocation to be given to the borrower. Id. Although
we express no opinion on the matter, Bank of America at least arguably could have required
that an escrow amount for insurance be established if the Tielkes did repeatedly allow their
homeowners insurance to lapse only to then reinstate the insurance once they were notified
of the deficiency by the bank. But no party has addressed whether Bank of America ever did
waive the requirement for an escrow amount, or whether, if so, it properly gave written notice
of a subsequent revocation. And, other than Bank of America’s internal file notes, there is
no evidence of the alleged notices of insurance lapse that the bank claims to have received.
All of this, in conjunction with the Tielkes’ evidence that the insurance never lapsed, adds to
the confusion of this case and the fact issues it presents.
6
Case: 13-20425 Document: 00512757206 Page: 7 Date Filed: 09/04/2014
No. 13-20425
this case at this time. The district court’s judgment must therefore be reversed
and the cause remanded for further proceedings.
REVERSED and REMANDED.
7