Douglas v. Wells Fargo Bank

Case: 18-11567 Document: 00515797842 Page: 1 Date Filed: 03/26/2021

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit

FILED
No. 18-11567 March 26, 2021
Lyle W. Cayce
JASON DOUGLAS; CHERYL DOUGLAS, Clerk

Plaintiffs–Appellants,

v.

WELLS FARGO BANK, N.A.,

Defendant–Appellee.

Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:17-CV-2588

Before OWEN, Chief Judge, and HAYNES and COSTA, Circuit Judges.
PRISCILLA R. OWEN, Chief Judge:
Jason and Cheryl Douglas financed their home through a note and deed
of trust. The Douglases missed several payments on the note, so Wells Fargo
Bank, N.A. (Wells Fargo)—the holder of both the note and the deed of trust—
foreclosed on the home. The Douglases sued to set aside the foreclosure sale,
to cancel the trustee’s deed, to quiet title, and for trespass to try title
(collectively, the foreclosure-sale claims). They also filed claims for alleged
violations of the Texas Debt Collection Act (TDCA), Texas Financial Code
sections 392.301(a)(8) and 392.304(a)(8), and of their due process rights. In the
alternative, the Douglases asserted claims for breach of contract, unjust
enrichment, and money had and received. The district court granted summary
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No. 18-11567
judgment on the foreclosure-sale and due process claims, and it dismissed all
the other claims. This appeal followed. We affirm.
I
In July 2015, Jason and Cheryl Douglas purchased a home. The
Douglases financed their purchase with a note and deed of trust guaranteed
by the Department of Veterans Affairs (VA). Both the note and the deed of
trust were later transferred to Wells Fargo. In September 2016, the Douglases
contacted Wells Fargo to have their monthly payments automatically
withdrawn from their bank account. Wells Fargo collected payments from the
Douglases’ bank account in September and October of 2016. After October
2016, however, the payments stopped. The Douglases allege they did nothing
to stop the payments. Wells Fargo alleges that it does not know the reason the
payments stopped.
The Douglases—allegedly unaware of the stoppage—missed their
payments for November 2016, December 2016, January 2017, February 2017,
and March 2017. According to both parties, the monthly payment for principal,
interest, and escrow amounted to $3,054.51 for each of these months. On
January 17, 2017, Wells Fargo sent a letter advising the Douglases of
$15,272.55 in past due payments—a sum equal to five monthly payments of
$3,054.51. The Douglases argue that they “were only behind on three
payments at that point” and protest that “based on three missed monthly
payments of $3,054.51, the amount of past due payments should only have
been $9,163.53.” Wells Fargo points out that “the record is silent” as to
whether the Douglases made all their payments between the loan’s initiation
in 2015 and September 2016.
On March 3, 2017, Wells Fargo sent a second letter. This time, the letter
advised the Douglases of $21,381.57 in past due payments—a sum equal to
seven monthly payments. The Douglases argue that this letter was also two
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months overstated. Sometime that same month, Cheryl Douglas allegedly
called a representative at Wells Fargo and made a payment of $14,000.
According to Cheryl Douglas, “[t]he representative said that Wells Fargo would
accept the payment as part of a repayment plan, or payment to bring the loan
current.” She claims that she gave the representative their “bank account
information” and that the “representative stated that she would automatically
draft the $14,000 payment from [their] bank account.”
Allegedly unbeknownst to the Douglases, Wells Fargo never drafted the
$14,000. The Douglases then received an escrow review letter dated March 13,
2017 advising of a $657.07 shortage in their escrow account balance. The letter
stated: “Starting May 1, 2017 your new mortgage payment amount will be
$3,199.86.” This statement was directly below a bolded heading which read:
“No action required.”
Approximately one month later, on April 10, 2017, Wells Fargo—through
its foreclosure counsel, Bonial & Associates (Bonial)—sent the Douglases a
notice of acceleration and a notice of foreclosure sale scheduled for May 2, 2017.
The notices were sent via first-class and certified mail, return receipt
requested. The notice sent via certified mail was returned to Wells Fargo with
the notations “unclaimed” and “unable to forward.” The Douglases vigorously
deny ever receiving notice.
In May 2017, Wells Fargo initiated foreclosure on the home and
purchased the property at the foreclosure sale, allegedly without the
Douglases’ knowledge. The Douglases have not made payments on the loan
since October 2016; however, they continue to reside on the property.
The Douglases filed this lawsuit in Texas state court in August 2017.
Wells Fargo removed the case to federal court based on diversity jurisdiction.
The Douglases’ first amended complaint pleaded (1) “a cause of action to set
aside the foreclosure sale,” (2) “breach of contract, or alternatively . . . money
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had and received and unjust enrichment,” (3) “negligent misrepresentation,”
and (4) “suit to quiet title” and “trespass to try title” against the VA. It also
asserted claims against Wells Fargo for alleged violations of the TDCA,
sections 392.301(a)(8) and 392.304(a)(8).
Wells Fargo moved to dismiss. The district court granted the motion,
dismissing all of the Douglases’ claims with prejudice except the
section 392.304(a)(8) claim, which the district court dismissed without
prejudice and with leave to amend. The district court clarified the extent of
the dismissal in a later order, stating that Wells Fargo’s motion to dismiss “did
not address the Douglases’ suit to set aside the foreclosure and cancel the
trustee’s deed.” Therefore, those claims also survived.
The Douglases then filed their second amended complaint, repleading
the section 392.304(a)(8) claim and reasserting their suit to set aside the
foreclosure sale and cancel the trustee’s deed. They also added quiet-title and
trespass-to-try title claims against Wells Fargo. Wells Fargo moved to dismiss
for a second time. Wells Fargo argued that the alleged oral agreement to draft
$14,000 from the Douglases’ bank account could not support a section
392.304(a)(8) claim because it is barred by the statute of frauds. The
Douglases’ response made no mention of the statute of frauds.
The district court dismissed the Douglases’ section 392.304(a)(8) claim
with prejudice. It acknowledged that “[t]he Douglases thought that their loan
was no longer delinquent based on the representative’s statement that the
$14,000 payment would be automatically withdrawn from their bank account
and the escrow shortage letter’s indication that no action was required.”
However, the district court ultimately agreed with Wells Fargo, reasoning that
“[Wells Fargo’s] oral agreement to accept $14,000 from the Douglases is

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unenforceable under the statute of frauds because it modified the terms of the
loan agreement.”
The district court did, however, allow the Douglases to replead their
foreclosure-sale claims. The Douglases accepted the invitation and filed their
third amended complaint. Wells Fargo then moved for summary judgment,
attaching the following as evidence of proper service: (1) a declaration from a
managing attorney at Bonial stating that notice had been sent; (2) the notice
letters themselves; and (3) scans of certified mail envelopes bearing the
Douglases’ names and address. The Douglases responded, arguing that their
failure to receive notice was enough to raise a genuine dispute of material fact.
In their response to summary judgment, they also raised a federal
constitutional due process claim based on Wells Fargo’s failure to provide
notice. This was the first time the Douglases had raised such a claim.
The district court granted summary judgment for Wells Fargo on the
foreclosure-sale claims. The court concluded that there was no genuine dispute
over whether Wells Fargo properly sent notice in compliance with both the
deed of trust and the Texas Property Code. The district court then turned to
the due process claim. It acknowledged the split in Fifth Circuit precedent on
how to treat claims raised for the first time on summary judgment, then
rejected the claim under both lines of authority.
The Douglases timely appealed both dismissal orders, the summary
judgment order, and the final judgment.
II
The Douglases’ argument concerning the foreclosure-sale claims hinges
entirely on their allegation that Wells Fargo “violated the deed of trust and the
Texas Property Code” by failing to send the proper notices before foreclosing
and selling their home at the foreclosure sale. They argue that their non-

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receipt of notice is at least some evidence—enough to create a factual dispute
at summary judgment—that notice was improper.
The Douglases’ deed of trust states that “[a]ny notice to Borrower in
connection with this Security Instrument shall be deemed to have been given
to Borrower when mailed by first class mail . . . .” Texas Property Code
section 51.002(e), which governs service of notice to a borrower before a
foreclosure sale, states:
Service of a notice . . . by certified mail is complete when the notice
is deposited in the United States mail, postage prepaid and
addressed to the debtor at the debtor’s last known address. The
affidavit of a person knowledgeable of the facts to the effect that
service was completed is prima facie evidence of service. 1

Importantly, the Douglases do not argue that the deed of trust or the
Texas Property Code requires receipt of service. Indeed, they do not argue that
the deed of trust or the Texas Property Code requires anything more than
constructive notice. Rather, they contend that their non-receipt of notice is
alone sufficient evidence to survive summary judgment.
We rejected this same argument in LSR Consulting, LLC v. Wells Fargo
Bank, N.A. 2 In LSR, the deed of trust—like the Texas Property Code—only
required constructive notice. 3 Nonetheless, the appellant claimed that non-
receipt of notice was enough evidence to create a genuine dispute of fact and
defeat summary judgment. 4 We summarily rejected the argument, explaining

1 TEX. PROP. CODE ANN. § 51.002(e); see also Martins v. BAC Home Loans Servicing,
L.P., 722 F.3d 249, 256 (5th Cir. 2013) (citing § 51.002(e)) (“[The lender] satisfied its burden
of proof by presenting evidence of mailing the notice and an affidavit to that effect. There is
no requirement that [the borrower] receive notice.”).
2 835 F.3d 530 (5th Cir. 2016).
3 Id. at 534; see also § 51.002(e); Onwuteaka v. Cohen, 846 S.W.2d 889, 892 (Tex.

App.—Houston [1st Dist.] 1993, writ denied) (“The general purpose of the statute is to provide
a minimum level of protection for the debtor, and it provides for only constructive notice of
the foreclosure.”).
4 See LSR, 835 F.3d at 534.

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that “the dispositive inquiry ‘is not receipt of notice, but, rather, service of
notice.’” 5 “For that reason, [Texas courts] have held there to be no genuine
dispute as to the sending of notices required under [s]ection 51.002 [of the
Texas Property Code] when the sole contravening evidence is the homeowner’s
affidavit asserting non-receipt.” 6
Here, as in LSR, the Texas Property Code and the deed of trust only
required constructive notice. 7 As evidence of proper service, Wells Fargo
provided the following: (1) a declaration from a managing attorney at Bonial
stating that notice had been sent; (2) the notice letters themselves; and
(3) scans of certified mail envelopes bearing the Douglases’ names and address.
This evidence satisfies both the deed of trust’s and the Texas Property Code’s
constructive service requirements. The fact that the Douglases did not receive
notice does not change this conclusion.
The Douglases point to Sauceda v. GMAC Mortgage Corporation, 8 a
Texas court of appeals case which held that homeowners’ testimony of non-
receipt of notice created a fact issue as to whether they were properly served
with the required notice under the Texas Property Code. 9 But Sauceda is
distinguishable. 10 In Sauceda, “the mortgage servicer provided no supporting
documentation showing that it had served notice.” 11 Here, as in LSR, Wells
Fargo provided supporting documentation—in addition to testimony—showing

5 Id. (quoting Adebo v. Litton Loan Servicing, L.P., No. 01-07-00708-CV, 2008 WL
2209703, at *4 (Tex. App.—Houston [1st Dist.] May 29, 2008, no pet.)); see also WMC Mortg.
Corp. v. Moss, No. 01-10-00948-CV, 2011 WL 2089777, at *7 (Tex. App.—Houston [1st Dist.]
May 19, 2011, no pet.) (“The purpose of notice under Section 51.002 is to provide a minimum
level of protection to the debtor, and actual receipt of the notice is not necessary.”).
6 LSR, 835 F.3d at 534 (citing Adebo, 2008 WL 2209703, at *4).
7 See id.
8 268 S.W.3d 135 (Tex. App.—Corpus Christi 2008, no pet.).
9 See id. at 140.
10 See LSR, 835 F.3d at 534-35 (discussing Sauceda).
11 Id. at 535.

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it served proper notice. 12 Specifically, Wells Fargo provided the notice letters
themselves as well as scanned copies of the certified mail envelopes bearing
the Douglases’ names and address.
In short, the Douglases’ “self-serving protestation[] of non-receipt of
notice” is not enough to create a genuine dispute at summary judgment. 13 The
undisputed evidence shows that Wells Fargo properly served notice. The
district court did not err in granting summary judgment on the Douglases’
foreclosure-sale claims.
III
The Douglases next argue that the district court erred in concluding that
they improperly raised their constitutional due process claim. They argue that
the fact that they raised the issue for the first time in response to Wells Fargo’s
motion for summary judgment should not defeat their claim. According to the
Douglases, unpleaded issues can be properly decided on summary judgment.
To support this assertion, the Douglases cite a footnote from Apex Oil Company
v. Archem Company 14 and a column from The Federal Lawyer magazine. 15
We have previously addressed the issue of new claims raised for the first
time in response to a motion for summary judgment. We have taken two
different approaches. The first approach states that a “claim which is not
raised in the complaint but, rather, is raised only in response to a motion for
summary judgment is not properly before the court.” 16 The second approach
instructs the district court to treat a new claim raised in response to a motion

12 See id.
13 Id.
14 770 F.2d 1353 (5th Cir. 1985).
15 John R. Knight, Rule 56 Revisited: The Effect of Seeking or Opposing Summary

Judgment on the Basis of Unpleaded Claims or Defenses, 43 Sept. FED. LAW 15 (1996).
16 See Cutrera v. Bd. of Supervisors of La. State Univ., 429 F.3d 108, 113 (5th Cir.

2005) (citing Fisher v. Metro. Life Ins. Co., 895 F.2d 1073, 1078 (5th Cir. 1990)).
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for summary judgment as a request for leave to amend. 17 The district court
must then determine whether leave should be granted. 18
In this case, the district court recognized the first approach, indicating a
new claim raised for the first time in response to summary judgment is not
properly before the court. It then conducted the relevant analysis under the
second approach, analyzing the Douglases’ claim as a request for leave to
amend. When a party wishes to add a new claim after the deadline for
amending the pleadings has passed, the party generally must move for leave
to amend. 19 Leave to amend a complaint requires modifying the scheduling
order, which can only be granted for good cause. 20 If the party shows good
cause, the court may then consider a variety of factors under Rule 15(a)(2)’s
more liberal pleading standard. 21 Included among these factors are
(1) “repeated failures to cure deficiencies by amendments previously allowed,”
and (2) “futility of the [proposed] amendment.” 22
In conducting the leave-to-amend analysis, the district court first
determined that any request for leave would be tardy, given that the Douglases
already had three prior opportunities to amend. It then determined that, even
if the Douglases were granted leave, the amendment would be futile. The
Douglases’ new due process claim hinged on the same lack of notice at the
center of the foreclosure-sale claims.

17 See Pierce v. Hearne Indep. Sch. Dist., 600 F. App’x 194, 200 (5th Cir. 2015) (per
curiam) (“Generally, a new claim or legal theory raised in response to a dispositive motion
should be construed as a request for leave to amend the complaint, and the district court
should determine whether leave should be granted.” (citing Stover v. Hattiesburg Pub. Sch.
Dist., 549 F.3d 985, 989 n.2 (5th Cir.2008))).
18 Id.
19 See FED. R. CIV. P. 16(b)(4).
20 See id.
21 See Jones v. Robinson Prop. Grp., 427 F.3d 987, 994 (5th Cir. 2005).
22 Id.

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Regardless of whether the Douglases’ due process claim is characterized
as improperly before the court or as a request for leave to amend, the result is
the same—the claim was properly denied by the district court. As the district
court recognized, not only is the claim tardy but it is also inextricably tied to
the non-meritorious foreclosure-sale claims. The district court did not err.
IV
The Douglases contend that Wells Fargo violated Texas Finance Code
section 392.301(a)(8) by “threatening to foreclose, and then actually
foreclosing, when it was prohibited by law from doing so.” According to the
Douglases, Wells Fargo was “prohibited by law from foreclosing” because it
“failed to provide [the Douglases] with the prescribed notice under Texas law.”
As previously discussed, Wells Fargo properly served notice in accordance with
the deed of trust and the Texas Property Code. Therefore, contrary to the
Douglases’ allegations, Wells Fargo was not prohibited by law from foreclosing.
The district court did not err in dismissing this TDCA claim.
V
The Douglases also contend that Wells Fargo violated Texas Finance
Code section 392.304(a)(8) by misrepresenting the amount of past due
payments in the January 17, 2017 and March 3, 2017 letters. They argue that
Wells Fargo violated section 392.304(a)(8) by orally agreeing to draft $14,000
from their bank account and then failing to do so. The Douglases do not argue
that the March 13 no-action-required letter violated section 392.304(a)(8).
Although they passingly reference the March 13 no action-required letter in
the statement of facts, there is no mention of the no-action-required letter in
any of their discussion of the section 392.304(a)(8) claim. In any event, to the
extent the Douglases intended to rely on the March 13 no-action-required letter

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to support the section 392.304(a)(8) claim, they have abandoned the argument
by failing to brief it adequately. 23
Texas Finance Code section 392.304(a)(8) provides that “in debt
collection or obtaining information concerning a consumer, a debt collector may
not use a fraudulent, deceptive, or misleading representation that . . .
misrepresent[s] the character, extent, or amount of a consumer debt . . . .”24
Intent is not required to violate this provision. 25 In fact, “courts have
recognized that facially innocuous misrepresentations made in the course of an
attempt to collect a debt constitute a violation of [s]ection 392.304(8).” 26
However, we have also indicated that misrepresenting the amount of debt is
not enough for a section 392.304(a)(8) claim; the misrepresentation must cause
borrowers to “think differently with respect to the character, extent, amount,
or status of their debt.” 27
The Douglases allege that Wells Fargo violated section 392.304(a)(8) by
misrepresenting the amount of past due payments in both the January 17,
2017 letter and the March 3, 2017 letter. They claim that they were “only
behind on three (3) payments [as of January 17, 2017]—November of 2016,
December of 2016, and January of 2017”—such that “[i]t was fraudulent,
deceptive, and misleading for [Wells Fargo] to state that it was attempting to
collect amounts for past due payments, that represented more than $6,000 that
was actually past due.” Likewise, the Douglases allege that as of March 3,
2017 they were “only behind on five (5) monthly payments” such that “[i]t was

23 See United States v. Scroggins, 599 F.3d 433, 446-47 (5th Cir. 2010) (“A party that
asserts an argument on appeal, but fails to adequately brief it, is deemed to have waived it.
It is not enough to merely mention or allude to a legal theory.” (internal citations omitted)).
24 TEX. FIN. CODE ANN. § 392.304(a)(8).
25 See McCaig v. Wells Fargo Bank (Texas), N.A., 788 F.3d 463, 480-81 (5th Cir. 2015).
26 Id. (collecting cases from several district courts).
27 Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 723 (5th Cir. 2013)

(emphasis added).
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fraudulent, deceptive, and misleading for [Wells Fargo] to state that it was
attempting to collect amounts for past due payments, that represented more
than $6,000.00 that was actually past due.”
However, even assuming the letters were facially inaccurate, the
inaccuracies did not lead the Douglases to think differently with respect to the
amount actually past due. The Douglases were aware—despite having
received these letters—that they had a mortgage debt, and that they had
defaulted on that debt. Neither the January 17 nor the March 3 letters
changed these understandings. In fact, the Douglases do not allege that they
ever believed these letters to be an accurate representation of their debt; they
merely claim that the letters overstated the amount past due. The letters did
not change the Douglases’ thinking in any way with respect to their debt;
therefore, they cannot serve as the basis for their section 392.304(a)(8) claim. 28
Besides these two letters, the Douglases’ only other support for their
section 392.304(a)(8) claim is a March 2017 telephone conversation in which a
Wells Fargo representative purportedly agreed to accept a $14,000 payment
“as part of a repayment plan, or payment to bring the loan current.” The
district court concluded that the statute of frauds barred consideration of the
alleged oral agreement; therefore, it could not serve as a basis for the
Douglases’ section 392.304(a)(8) claim. The Douglases contend that this
conclusion is erroneous. We disagree.
Under the statute of frauds, “[a] loan agreement in which the amount
involved in the loan agreement exceeds $50,000 in value is not enforceable
unless the agreement is in writing and signed by the party to be bound or by
that party’s authorized representative.” 29 There is no dispute that the loan

28 See id.
29 TEX. BUS. & COM. CODE ANN. § 26.02(b).
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agreement in this case is subject to the statute of frauds. The question is
whether the statute of frauds bars consideration of the alleged oral agreement
under the TDCA.
In Williams v. Wells Fargo Bank, N.A., an unpublished Fifth Circuit
opinion, we determined that an alleged oral agreement subject to the statute
of frauds is alone insufficient to support a TDCA claim. 30 In Williams, the
plaintiffs brought several claims against Wells Fargo pertaining to the bank’s
foreclosure on their property, including claims under the TDCA. 31 To support
these claims, the plaintiffs relied on an alleged phone conversation with an
agent from Wells Fargo wherein the agent purportedly agreed to modify the
plaintiffs’ loan. 32 However, the plaintiffs failed to allege any damages or
factual misrepresentation independent of the alleged oral agreement, which
we had already determined to be barred by the statute of frauds. 33 Given this
failure, we concluded that the plaintiffs had failed to state a claim under the
TDCA. 34 We reasoned: “To allow [the plaintiffs] to recover under the TDCA
would be to ‘allow [them] to do indirectly what [they] could not by law do
directly.’” 35
The reasoning in Williams applies with equal force here. Like the
plaintiffs in Williams, the Douglases have failed to allege any independent
support for their TDCA claim besides an alleged oral agreement. As discussed
above, the Douglases cannot rely on either the January 17 or the March 3

30 Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233, 241 (5th Cir. 2014) (per
curiam) (“The Williamses have not alleged any damages outside of the alleged oral agreement
to modify their loan or any other factual misrepresentation independent of the oral loan
modification which we have already determined to be barred by the statute of frauds” (citing
Kruse v. Bank of N.Y. Mellon, 936 F. Supp. 2d 790, 794-95 (N.D. Tex. 2013))).
31 Id. at 236-38.
32 Id. at 236, 240-41.
33 Id. at 241.
34 Id.
35 Id. (second and third alterations in original) (quoting Kruse, 936 F. Supp. 2d at 795).

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letters to support their section 392.304(a)(8) claim because neither letter
caused the Douglases to think differently with respect to their debt. These two
letters aside, the Douglases’ only remaining allegation in support of their
section 392.304(a)(8) claim is the purported oral agreement to modify the
terms of the loan agreement, which the Douglases concede is subject to the
statute of frauds. This alleged oral agreement cannot alone sustain the
Douglases’ claim under the TDCA. 36 There must be some allegation
independent of the oral agreement to sustain the claim. The Douglases have
made no such allegation here. Thus, the Douglases’ section 392.304(a)(8) claim
fails.
With great respect, we disagree with the dissenting opinion regarding
the alleged misrepresentation by a Wells Fargo employee that Wells Fargo
would accept a payment of $14,000. In the district court and in their briefing
in this court, the Douglases have asserted that as of March 3, 2017, they were
in arrears on only five monthly payments, totaling $15,272.55, and that the
March 3, 2017 letter from Wells Fargo was mistaken in asserting that the past
due payment amount was $21,381.57. They additionally have alleged that
“[a]lso in March 2017,” the Douglases called Wells Fargo to make a payment
of $14,000, and “the representative said that [Wells Fargo] would accept the
payment as part of a repayment plan, or payment to bring the loan current.”
This means that Wells Fargo allegedly agreed to accept less than the minimum
amount the Douglases admit they owed, which they say was $15,272.55.
Agreeing to accept $14,000 as either part of a repayment plan or to bring the
loan current would constitute an agreement to modify the existing loan
agreement, under which the Douglases admit that they owed more than
$14,000 at the time that their offer was allegedly accepted. In order for such

36 See id. at 240-41.
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an acceptance to be an actual, enforceable acceptance, it had to be in writing
under Texas law.
To the extent that the dissent views the misrepresentation as nothing
more than Wells Fargo’s broken promise to withdraw $14,000 from the
Douglases’ bank account, such a claim would not be actionable. As we have
explained, section 392.304(a)(8) covers misrepresentations about “the
character, extent, or amount of a consumer debt.” 37 A statement that the bank
would execute a transfer from the Douglases’ bank account, without more, is
not a representation about the “character, extent, or amount of a consumer
debt.” 38 Indeed, the Douglases recognize that the claim has to be that Wells
Fargo “agreed to accept [the Douglases’] $14,000-payment to bring their
account current.” While that makes the representation one about the extent
or amount of the debt, it means that the statute of frauds applies, as we have
explained: if the Wells Fargo representative said the bank would modify the
loan by accepting less than the amount due, then that would be an
impermissible oral modification of the contract.
The alleged “misrepresentation” under the TDCA is the agreement to
accept a $14,000 payment. The mental anguish and attorney’s fees that the
Douglases seek to recover are based entirely on Wells Fargo’s failure to honor
the agreement that it allegedly made, an agreement that is unenforceable
under the statute of frauds. The Douglases cannot rely on an unenforceable
oral agreement as the basis for a claim under the TDCA. “To allow [the

37 TEX. FIN. CODE ANN. § 392.304(a)(8).
38 Id.
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plaintiffs] to recover under the TDCA would be to ‘allow [them] to do indirectly
what [they] could not by law do directly.’” 39
VI
Finally, the Douglases request this court revive their claims for breach
of contract, or alternatively, unjust enrichment and money had and received.
The Douglases’ argument rests on the theory that Wells Fargo abandoned
acceleration on the loan. According to the Douglases, the $14,000 alleged oral
agreement with Wells Fargo to bring their loan current and the subsequent
March 13, 2017 no-action-required letter were “so inconsistent with [Wells
Fargo’s] prior acceleration such that it could be construed to have abandoned
such acceleration.” This argument is not persuasive. Wells Fargo did not
accelerate the loan until April 10, 2017—nearly a month after the March 13,
2017 letter. Wells Fargo could not abandon acceleration of the loan because
the loan had not yet been accelerated. The district court properly dismissed
these claims.
* * *
For the foregoing reasons, we AFFIRM the district court’s judgment.

39 Williams, 560 F. App’x at 541 (second and third alterations in original) (quoting
Kruse, 936 F. Supp. 2d at 795).
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No. 18-11567

HAYNES, Circuit Judge, concurring in part and dissenting in part:

I respectfully dissent from the majority opinion’s resolution of the
Douglases’ claim under Texas Financial Code § 392.304(a)(8), known as the
Texas Debt Collection Act (“TDCA”). 1 In particular, I would reverse the
dismissal of the Douglases’ claim that Wells Fargo violated the TDCA by
misrepresenting, in a March 2017 phone call, that $14,000 would be
automatically deducted from the Douglases’ account to pay off the bulk of their
past-due mortgage payments.
The majority opinion treats any TDCA claim based off that phone call as
barred by contract law principles: it characterizes the call as generating an
“oral agreement,” frames the Douglases’ claim as an attempt to effectuate that
agreement, and concludes that the Douglases’ claim cannot proceed because
the agreement was not in writing as required by the statute of frauds. That
might be the right analysis if the Douglases were merely asserting that the
phone call contractually bound Wells Fargo in some way. 2 See Williams v.
Wells Fargo Bank, N.A., 560 F. App’x 233, 240–41 (5th Cir. 2014) (per curiam)
(concluding that a TDCA claim that effectively sought only to enforce an oral
modification of a loan was barred because “the statute of frauds acts to bar
certain claims of misrepresentation” (emphasis added)); Kruse v. Bank of N.Y.
Mellon, 936 F. Supp. 2d 790, 794–95 (N.D. Tex. 2013) (same). But it is the

1 I concur with the majority opinion in all other respects.
2The claim in this case does not seem to address some kind of new oral contract which
would be barred by the statute of frauds. Instead, it deals with payment of what was owed
under an existing contract. Cf., e.g., Miller v. BAC Home Loans Serv., L.P., 726 F.3d 720, 726
(5th Cir. 2013) (concluding that a loan modification was subject to the statute of frauds).
Because I conclude that the Douglases stated a TDCA claim independent of any agreement,
I conclude that the statute of frauds analysis is the wrong path.
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No. 18-11567
wrong analysis here for a simple reason: the Douglases’ issues with the phone
call are distinct from the breach of any oral agreement.
The Douglases claim that Wells Fargo told them on the call that it would
“automatically draft” a required payment from their account. That
representation, coupled with a subsequent letter from Wells Fargo indicating
that “no action was required,” led the Douglases to believe that their loan was
current such that Wells Fargo would not be foreclosing on their house. They
were blindsided when Wells Fargo did just that less than two months later. 3
Cf. Miller v. BAC Home Loans Serv., L.P., 726 F.3d 717, 723 (5th Cir. 2013)
(concluding that a set of plaintiffs failed to state a § 392.304(a)(8) claim in part
because the plaintiffs were “always aware” that they were in default).
Separate and apart from any agreement, Wells Fargo’s alleged
misrepresentation made the Douglases “think differently” about the
“character, extent, amount, or status of their debt” in two respects. Miller, 726
F.3d at 723. It made them think, first, that the required payment would be
drawn, and, second, that the payment would bring their account current.
Those impressions concern the character and status of their debt (from their
perspective, their payment was pending and the loan was therefore no longer
delinquent), as well as their debt’s extent and amount (they thought they had

3 To be sure, the Douglases could have realized that the “no action required” letter
related only to their monthly escrow payment rather than the impending foreclosure on their
house. They also could have independently checked their account to see if the payment was
actually drawn. But our analysis at this stage is only for plausibility, see Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007), and it is plausible that the Douglases thought the “no
action required” letter—which the complaint suggests was the only communication Wells
Fargo had with them between the phone call and the foreclosure—had confirmed Wells
Fargo’s representations on the call. It is also plausible that, whether or not they
independently checked their account, the Douglases believed that the payment was (or would
be) drawn before the loan was accelerated and the house foreclosed on less than two months
later. Whether the Douglases actually believed those things is for later stages of litigation.
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No. 18-11567
no present payment obligations and, more broadly, that their total balance
would be reduced by $14,000). 4
The upshot: the phone call plausibly muddled the Douglases’
understanding of whether they had a past-due mortgage debt, how much they
owed, and whether they were in default. These are paradigmatic indicia of a
misrepresentative statement. Cf. id. (concluding that a TDCA claim failed
because the plaintiffs always knew the answers to those questions). What’s
more, it plausibly made them behave differently, too: without that statement,
the Douglases may well have tried to make the payment some other way. The
phone call, in other words, lulled the Douglases into a false sense of security
about their mortgage. The TDCA is supposed to guard against exactly that
sort of conduct. See TEX. FIN. CODE ANN. § 392.304(a)(8) (prohibiting
“misleading representation[s]” that “misrepresent[]” borrowers’ obligations).
Further illustrating that the Douglases’ TDCA claim takes issue with
the alleged misrepresentation itself is the fact that the Douglases sought to
recover only for damages they allegedly sustained as a result of the
misrepresentation, specifically, damages for the mental anguish (and
attorneys’ fees) they allegedly experienced not to enforce an allegedly modified
contract. Cf. Williams, 560 F. App’x at 241 (concluding that the statute of

4 Both the execution-of-transfer aspect and the loan-delinquency aspect to Wells
Fargo’s alleged statement plausibly constitute misrepresentations; it is plain that assertions
about the steps a defendant might take to accommodate delinquency can plausibly make a
party think differently about their obligations. See, e.g., Davis v. Wells Fargo Bank, N.A.,
976 F. Supp. 2d 870, 886 (S.D. Tex. 2013) (concluding that a bank representative’s statement
about the bank’s willingness to accommodate a delinquency—that the bank “did not care
whether or not [the plaintiff] defaulted, or was foreclosed on, because [the bank] was
guaranteed to get paid . . . through the federal loan guarantee”—was a misrepresentation
sufficient to state a claim under § 392.304(a)(8)); see also Gomez v. Wells Fargo Bank, N.A.,
No. 3:10-CV-0381-B, 2010 WL 2900351, at *5 (N.D. Tex. July 21, 2010) (concluding that a
bank’s statements that the plaintiff no longer needed to make mortgage payments and that
another individual did not have to sign a loan modification document misrepresented the
“status or nature of [the defendant’s] services or business” under § 392.304(a)(14)).
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No. 18-11567
frauds barred a TDCA claim in part because the plaintiffs did not allege “any
damages outside of the alleged oral agreement to modify their loan”). That is,
the Douglases sought redress for the downstream effects that their belief that
the payment would be drawn and that the foreclosure would be avoided had on
their mental health—not for any contractual failure to set up a repayment plan
or to accept $14,000 to make the loan current. 5 See generally Haase v. Glazner,
62 S.W.3d 795, 799 (Tex. 2001) (concluding that non-contract claims are not
subject to the statute of frauds if they seek “out-of-pocket damages incurred in
relying upon [a defendant]’s alleged misrepresentations”).
Of course, the Douglases were never actually current on their loan. As
the majority opinion ably describes, because the Douglases owed over $15,000,
it would have taken an enforceable modification of the loan agreement for their
$14,000 payment to actually bring the loan current as Wells Fargo allegedly
said it would. But that’s precisely what makes Wells Fargo’s alleged statement
a misrepresentation: although Wells Fargo affirmatively told them otherwise,
the Douglases remained delinquent on their mortgage. That sort of statement
is undeniably actionable as a misrepresentation claim; it is a violation of the
TDCA to falsely tell borrowers that they either do or do not have to do
something with respect to their debt—even if the false assertion is inconsistent
with the borrowers’ actual contractual obligations. McCaig v. Wells Fargo
Bank (Tex.), N.A., 788 F.3d 463, 475, 480 (5th Cir. 2015). 6 Put another way,

5Indeed, the Douglases could not even seek mental anguish damages on a breach of
contract claim. Compare Latham v. Castillo, 972 S.W.2d 66, 71 (Tex. 1998) (noting that
mental anguish damages “are not recoverable under a breach of contract cause of action”),
with McCaig v. Wells Fargo Bank (Tex.), N.A., 788 F.3d 463, 482 (5th Cir. 2015) (“Damages
for mental anguish are recoverable under the TDCA.” (quoting Monroe v. Frank, 936 S.W.2d
654, 661 (Tex. App.—Dallas 1996, writ dism’d w.o.j.))).
6 The typical TDCA case involves allegations that a defendant overstated the plaintiffs’
obligations, usually by charging the plaintiffs more than they were obligated to pay under
their contracts. See, e.g., McCaig, 788 F.3d at 480 (concluding that the defendant’s false
assertions that the plaintiffs needed to pay $11,900 and various late fees, even though the
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No. 18-11567
where Wells Fargo misrepresents what it agrees to do such a claim is not
necessarily contractual in nature: falsely representing that a loan is not
delinquent can also give rise to an independent misrepresentation claim. See
id. at 475.
By overlooking the Douglases’ focus on the nature and effects of Wells
Fargo’s alleged misrepresentation, the majority opinion concludes that
Douglases’ TDCA claim fails simply because they would be unable to sustain a
hypothetical breach of contract claim on the same allegations. In short, the
majority opinion treats an enforceable contract as a prerequisite for a TDCA
claim. That approach is impossible to reconcile with the TDCA’s plain
application to non-contractual and extra-contractual statements; on its face,
the statute requires that a plaintiff allege that the defendant made a
“representation”—not that the parties had any enforceable agreement. TEX.
FIN. CODE ANN. § 392.304(a) (emphasis added). It is also at odds with binding
precedent, which clearly anticipates that TDCA and contract claims can exist
independently from each other. See McCaig, 788 F.3d at 475 (“If [the
defendant] violated the TDCA, it can be held liable for those violations even if
there are contracts between the parties, and even if [the defendant]’s
prohibited conduct also amounts to contractual breach.”). Indeed, there is no

plaintiffs were not actually obligated to do so, supported a jury verdict on a § 392.304(a)(8)
claim); Narvaez v. Wilshire Credit Corp., 757 F. Supp. 2d 621, 632–33 (N.D. Tex. 2010)
(denying summary judgment on a plaintiff’s TDCA claim because the defendant
unnecessarily required the plaintiff to pay for force-placed insurance).
But understating obligations, as here, can be just as pernicious. As in this case, telling
plaintiffs that they owe less than they thought can cause them to face unexpected loan
acceleration and foreclosure—not to mention other harms like unanticipated late fees. See,
e.g., Gomez, 2010 WL 2900351, at *5 (concluding that a plaintiff adequately stated a
misrepresentation-of-services TDCA claim in part by alleging that the defendant told her she
no longer needed to make mortgage payments). Whether such an understatement is an
actionable misrepresentation under the TDCA is plainly a separate question from whether,
as a matter of contract law, the plaintiffs’ obligations actually changed in any way. McCaig,
788 F.3d at 475.
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No. 18-11567
real purpose for many of Texas’s consumer protection statutes, specifically
those in the area of debt collection, if those statutes are just duplicative of
contractual remedies already available to consumers.
I conclude that the Douglases plausibly alleged that the March 2017
phone call constituted a representation actionable under the statute.
Accordingly, I would reverse the district court’s judgment dismissing the
Douglases’ TDCA claim. I therefore respectfully dissent from Section V of the
majority opinion.

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