Case: 14-51156 Document: 00513701218 Page: 1 Date Filed: 10/03/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 14-51156 FILED
October 3, 2016
Lyle W. Cayce
TERESA GAROFOLO, Clerk
Plaintiff - Appellant
v.
OCWEN LOAN SERVICING, L.L.C.,
Defendant - Appellee
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:14-CV-745
Before HIGGINBOTHAM, DENNIS, and HAYNES, Circuit Judges.
PER CURIAM:*
Teresa Garofolo (“Garofolo”) appealed the district court’s dismissal of her
claims against Ocwen Loan Servicing, L.L.C., (“Ocwen”) for violating Article
XVI, § 50(a)(6)(Q)(vii), of the Texas Constitution and for breach of contract to
this court. Because the case raised an important issue of Texas constitutional
law as to which there is no controlling Texas Supreme Court authority, and
the authority from the intermediate state appellate courts provided
insufficient guidance, we certified the relevant questions to the Texas Supreme
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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No. 14-51156
Court. Garofolo v. Ocwen Loan Servicing, L.L.C., 626 F. App’x 59, 65-66 (5th
Cir. 2015); see TEX. CONST. art. V, § 3-c(a); TEX. R. APP. P. 58.1. The questions
were as follows:
1. Does a lender or holder violate Article XVI, Section
50(a)(6)(Q)(vii) of the Texas Constitution, becoming liable for
forfeiture of principal and interest, when the loan agreement
incorporates the protections of Section 50(a)(6)(Q)(vii), but the
lender or holder fails to return the cancelled note and release of
lien upon full payment of the note and within 60 days after the
borrower informs the lender or holder of the failure to comply?
2. If the answer to Question 1 is “no,” then, in the absence of actual
damages, does a lender or holder become liable for forfeiture of
principal and interest under a breach of contract theory when
the loan agreement incorporates the protections of Section
50(a)(6)(Q)(vii), but the lender or holder, although filing a
release of lien in the deed records, fails to return the cancelled
note and release of lien upon full payment of the note and
within 60 days after the borrower informs the lender or holder
of the failure to comply?
Id. at 66. The Texas Supreme Court answered both questions “no.” Garofolo
v. Ocwen Loan Servicing, L.L.C., No. 15-0437, 2016 Tex. LEXIS 391, at *2 (May
20, 2016). As a result of the answer to question 1, we AFFIRM the district
court’s dismissal of the constitutional claim. With respect to the breach of
contract claim, the Texas Supreme Court concluded that forfeiture was not an
available remedy.
“In Texas, the elements of a claim for breach of contract are: (1) a valid
contract between the plaintiff and the defendant, (2) performance or tender of
performance by the plaintiff, (3) breach by the defendant, and (4) damage to
the plaintiff as a result of the breach.” Lawyers Title Ins. Corp. v. Doubletree
Partners, L.P., 739 F.3d 848, 858 (5th Cir. 2014) (citation and internal
quotation marks omitted). The district court observed, and Garofolo concedes,
that she does not allege any actual damages such that she cannot satisfy one
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No. 14-51156
of the elements of the breach of contract claim. See Intercontinental Grp. P’ship
v. KB Home Lone Star L.P., 295 S.W.3d 650, 655 n.26 (Tex. 2009) (“[M]oney
damages are essential in contract claims seeking money damages (though not
for contract claims seeking something else).”). To the extent that Garofolo
claims to be seeking liquidated damages in the form of total forfeiture, she
failed to allege any of the elements necessary for a valid liquidated damages
claim. Flores v. Millennium Interests, Inc., 185 S.W.3d 427, 431 (Tex. 2005)
(noting that “‘liquidated damages’ ordinarily refers to an acceptable measure
of damages that parties stipulate in advance will be assessed in the event of a
contract breach”); Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991)
(explaining that whether a party is entitled to liquidated damages is dependent
on whether “(1) . . . the harm caused by the breach is incapable or difficult of
estimation, and (2) . . . the amount of liquidated damages called for is a
reasonable forecast of just compensation”). She did not seek any remedy other
than forfeiture. As such, we AFFIRM the dismissal of the breach of contract
claim.
AFFIRMED.
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