George Clark v. Deutsche Bank Natl Trust Co

Case: 16-11806 Document: 00514315996 Page: 1 Date Filed: 01/22/2018

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 16-11806 United States Court of Appeals
Fifth Circuit

FILED
GEORGE CLARK; VELMA CLARK, January 22, 2018
Lyle W. Cayce
Plaintiffs–Appellants, Clerk

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for Morgan
Stanley ABS Capital I, Incorporated, Trust 2006-HE3; WELLS FARGO
BANK, N.A., doing business as America’s Servicing Company,

Defendants–Appellees.

Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:14-CV-3590

Before STEWART, Chief Judge, and JOLLY and OWEN, Circuit Judges.
PER CURIAM:*
George and Velma Clark (the Clarks) defaulted on their home equity
loan. After Deutsche Bank National Trust Company and Wells Fargo Bank,
N.A. (the Creditors) took steps to foreclose on the home, the Clarks sued. The
district court granted the Creditors’ motion to dismiss. The Clarks have

* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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. 16-11806
appealed only the dismissal of their § 392.304(a)(19) claim under the Texas
Debt Collection Act (TDCA). We affirm the judgment of the district court.
I
We assume the facts are as the Clarks have presented them. They
executed a Texas Home Equity Note on their house in Rowlett, Texas in 2006.
Deutsche Bank National Trust Company was assigned the loan and Wells
Fargo Bank, N.A. became the loan servicer. Because of the TDCA’s two-year
statute of limitations, only the Clarks’ allegations of improper loan practices
occurring on or after August 28, 2012, may provide the factual basis for this
appeal. 1
In 2011, the Clarks defaulted on their home equity loan. Throughout
2013, the Clarks attempted to modify their loan to help remedy the default.
On December 13, 2013, the Clarks received what they describe as a letter of
eligibility for a Home Affordable Modification Program (HAMP) loan from
Wells Fargo. The letter of eligibility states in part:
Now that we’ve received your documents, our loan processing team
will carefully review what you’ve submitted to determine if you are
eligible for mortgage payment relief under the Home Affordable
Modification Program. I will follow up with you by Sunday,
January 12, 2014 to outline next steps in the process and address
any additional documents that might be needed to complete our
review. While we are reviewing your information . . . your home
will not be referred to foreclosure . . . . [I]t’s important for you to
continue making your regular mortgage payments until you hear
from us.

1 See TEX. CIV. PRAC. & REM. CODE ANN. § 16.003 (“[A] person must bring suit
for . . . injury to the estate . . . not later than two years after the day the cause of action
accrues.”); Galindo v Snoody, 415 S.W.3d 905, 911 (Tex. App.—Texarkana 2013, no pet.)
(“The parties agree that the two-year statute of limitations applies to all of [plaintiff’s TDCA]
claims.”).
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No. 16-11806
The Clarks immediately sent in the HAMP loan application with the
requested documentation. The complaint states that one week later, the
Clarks received a letter stating that they failed to qualify “because [Wells
Fargo] is prohibited from adjusting the original terms of the mortgage due to
state law restrictions as provided under Texas Constitution Art. 16,
Sec. 50 (a)(6).” The Creditors then filed an Application for Home Equity
Foreclosure Order on the Clarks’ house, which was approved.
In response, the Clarks filed this lawsuit against the Creditors in state
court, asserting claims for breach of contract and violations of the TDCA. The
foreclosure proceeding was automatically stayed upon filing. 2 The Creditors
removed this action to federal court and filed a motion to dismiss. The district
court granted the motion in part, but allowed the Clarks to re-plead several of
their claims, including the § 392.304(a)(19) TDCA claim under the Texas
Finance Code. In their second amended complaint, the Clarks alleged that the
Creditors “[u]se[d] false representations or deceptive means to collect a debt
and obtain information concerning a consumer, violating § 392.304(a)(19) of
the Texas Finance Code.” In particular, “[Creditors] deceptively instructed and
encouraged [the Clarks] to apply for the HAMP loan modification” and “made
affirmative statements about [the Clarks’ loan] and a HAMP loan
modification” even though this modification was not available to the Clarks.
As a result of these alleged wrongdoings, the Clarks sought damages including
“attorney’s fees . . . , mental anguish, emotional distress, anxiety, depression,
humiliation, apprehension, discomfort, annoyance,” and the “value of the time
lost in attempting to correct [the Creditors’] errors.”
The Creditors again moved to dismiss. The district court granted the
Creditors’ motion and dismissed all of the Clarks’ claims with prejudice, in part

2 See TEX. R. CIV. P. 736.11.
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No. 16-11806
because the complaint failed to allege that any violation of the TDCA resulted
in damages. The Clarks filed a notice of appeal, challenging only the district
court’s dismissal of their § 392.304(a)(19) claim.
II
We review “a district court’s dismissal under a Rule 12(b)(6) motion de
novo, accepting all well-pleaded facts as true and viewing those facts in the
light most favorable to the plaintiffs.” 3 “[A] complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” 4 “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” 5 However, a complaint
“requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” 6
III
The Clarks allege that the district court erred in dismissing their claim
under § 392.304(a)(19) of the Texas Finance Code. All other issues were not
briefed on appeal, and are thus waived. 7 The Clarks failed to state a cause of

3 Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (quoting
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)).
4 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007)).
5 Id.
6 Twombly, 550 U.S. at 555.
7 Sama v. Hannigan, 669 F.3d 585, 589 (5th Cir. 2012) (citing United States v.

Thibodeaux, 211 F.3d 910, 912 (5th Cir. 2000)).

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No. 16-11806
action upon which relief may be granted, and the district court properly
dismissed this claim. 8
Section 392.304(a)(19) is the TDCA’s “catchall provision.” 9 It prohibits
debt collectors from “using any other false representation or deceptive means
to collect a debt or obtain information concerning a consumer.” 10 To maintain
a cause of action under § 392.304(a)(19), “the debt collector must have made
an affirmative statement that was false or misleading.” 11 Referring vaguely to
“using a false representation or deceptive means to collect a debt . . . is not
sufficient to overcome dismissal under Rule 12(b)(6).” 12
The Clarks allege that the Creditors violated § 392.304(a)(19) by making
“affirmative statements” encouraging the Clarks to apply for a HAMP loan
modification, even though they would not be approved for this modification.
However, none of the Creditors’ alleged statements—including the letter of
eligibility—affirmatively represented that the Clarks qualified or would
qualify for the loan modification program. In an unpublished opinion, this
court made clear that even when a creditor tells a debtor “not to worry” about
qualifying for a loan modification, such encouragement is not an affirmative
statement upon which relief may be granted under § 392.304(a)(19). 13
Furthermore, the Clarks fail to allege a cause of action because, as we
held in Thompson v. Bank of America National Association, “[c]ommunications

8 U.S. ex rel. Doe v. Dow Chem. Co., 343 F.3d 325, 330 (5th Cir. 2003) (“[T]his Court
may affirm on any grounds supported by the record below.”).
9 Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022, 1026 (5th Cir. 2015).
10 TEX. FIN. CODE ANN. § 392.304(a)(19).
11 Thompson, 783 F.3d at 1026 (emphasis in original) (quoting Verdin v. Fed. Nat’l

Mortg. Ass’n, 540 F. App’x 253, 257 (5th Cir. 2014) (per curiam) (unpublished)).
12 Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 724 (5th Cir. 2013)

(quotation marks omitted).
13 Chavez v. Wells Fargo Bank, N.A., 578 F. App’x 345, 348 (5th Cir. 2014) (per curiam)

(unpublished).

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in connection with the renegotiation of a loan do not concern the collection of a
debt but, instead, relate to its modification and thus they do not state a claim
under Section 392.304(a)(19).” 14 The Clarks do not dispute that their alleged
misrepresentations relate solely to loan modifications. They instead assert
that Thompson does not foreclose their loan-modification claim because a
concurring opinion in Thompson stated that there may “be circumstances in
which misrepresentations made during [loan] discussions are actionable.” 15
The district court agreed, holding that the Clarks’ allegations came within
§ 392.304(a)(19). However, this interpretation improperly reads an exception
into the Thompson majority’s unconditional holding that loan-renegotiation
communications do not state a claim under § 392.304(a)(19).
The Clarks rely on loan-modification discussions in the letter of
eligibility to support their § 392.304(a)(19) claim. Yet we have repeatedly
rejected similar TDCA claims arising from protracted loan-modification
discussions that end in foreclosure. 16 Thompson establishes that loan
modification discussions are not within the scope of § 392.304(a)(19). 17
Accordingly, the district court did not err in granting the Creditors’ motion to
dismiss because the Clarks failed to allege any affirmative factual statement

14 Thompson, 783 F.3d at 1026 (emphasis in original).
15 Id. at 1028 (Graves, J., concurring) (citing Singha v. BAC Home Loans Servicing,
L.P., 564 F. App’x 65, 71 (5th Cir. 2014) (per curiam) (unpublished)).
16 Id. at 1026-27 (majority opinion) (citing Singha, 564 F. App’x at 70-71; Thomas v.

EMC Mortg. Corp., 499 F. App’x 337, 343 (5th Cir. 2012) (unpublished)).
17 Id. at 1026; see also Bassknight v. Deutsche Bank Nat’l Tr. Co., 611 F. App’x 222,

223 (5th Cir. 2015) (per curiam) (unpublished) (citing Thompson for the proposition that
“[t]here is no viable [TDCA] claim when a mortgagee discusses a loan modification” (emphasis
in original)); Rabe v. Wells Fargo Bank, N.A., 616 F. App’x 729, 734-35 (5th Cir. 2015) (per
curiam) (unpublished) (citing Thompson in holding that a letter pertaining to a loan-
modification application is not an actionable affirmative statement under § 392.304(a)(19)).

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“that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” 18
* * *
For the foregoing reasons, we AFFIRM the judgment of the district court.

18Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
7