Case: 12-41009 Document: 00512268006 Page: 1 Date Filed: 06/10/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 10, 2013
No. 12-41009
Summary Calendar Lyle W. Cayce
Clerk
PHILIP WATSON; JANINE WATSON,
Plaintiffs–Appellants,
v.
CITIMORTGAGE, INCORPORATED,
Defendant–Appellee.
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 4:10-CV-707
Before HIGGINBOTHAM, OWEN, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Philip and Janine Watson (the Watsons) appeal the district court’s grant
of summary judgment disposing of their claims against CitiMortgage, Inc.
(CitiMortgage). We affirm.
I
In 2005, the Watsons obtained a home-purchase loan from CitiMortgage,
executing a note payable to CitiMortgage and a deed of trust that placed a lien
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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: 12-41009 Document: 00512268006 Page: 2 Date Filed: 06/10/2013
No. 12-41009
on the property. The Watsons made timely installment payments on the note
until 2009 when the Watsons defaulted on the loan, making their last payment
in September of that year.
CitiMortgage sent the Watsons a notice of default on February 3, 2010,
giving them thirty days to cure the default or risk acceleration and foreclosure.
The Watsons did not cure or make any additional payments, but instead of
accelerating the loan immediately, CitiMortgage encouraged the Watsons to
apply for a loan modification. The Watsons first applied for the federal
government’s Home Affordable Modification Program (HAMP) but were rejected.
The Watsons then applied for a non-HAMP modification program. Over the
course of the summer and early fall of 2010, the Watsons periodically
communicated with CitiMortgage to confirm that their application was still
pending and to provide additional documentation as requested. The Watsons
contend that throughout this period, representatives of CitiMortgage repeatedly
assured them that CitiMortgage would not foreclose so long as the modification
application was pending.
On October 2, 2010, while the Watsons’ loan-modification application was
still under review, CitiMortgage accelerated the debt and sent the Watsons
notice of a foreclosure sale set for November 2, 2010. A week later, CitiMortgage
informed the Watsons via email that their application had been approved and
promised that a documentation packet was forthcoming. On October 20,
CitiMortgage sent the Watsons another notice of foreclosure sale, this time
scheduling the sale for December 7. The Watsons called CitiMortgage on
October 25 and 28 and were informed that their application had been approved,
but that the final modification was contingent on successful completion of a
three-month trial-payment plan, with the first payment due on November 1.
Although presented with the option to make the first payment over the phone,
the Watsons declined. On November 2, the Watsons received the promised
documentation packet confirming that their loan would be modified if they made
2
Case: 12-41009 Document: 00512268006 Page: 3 Date Filed: 06/10/2013
No. 12-41009
the three trial payments due in November, December, and January. The
Watsons never attempted to make any payments under the trial plan.
The Watsons filed this suit in Texas state court on December 1, 2010, and
obtained a temporary restraining order that prohibited CitiMortgage from
proceeding with the December 7 foreclosure sale. CitiMortgage then removed
the case to the United States District Court for the Eastern District of Texas.
On February 3, 2012, the district court granted summary judgment in favor of
CitiMortgage and dismissed all of the Watsons’ claims. The Watsons remain in
possession of the property, and CitiMortgage has not attempted to set a new
foreclosure date.
II
We review a district court’s grant of summary judgment de novo, applying
the same standard as the district court.1 Summary judgment is appropriate if
“there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.”2 When applying this standard, “we view the
evidence in the light most favorable to the non-movant.”3 The Watsons argue
that they presented sufficient evidence to demonstrate genuine issues of
material fact on their claims for breach of contract, violation of the Texas Debt
Collection Practices Act4 (TDCPA), and negligent misrepresentation. They
further argue that as a result, the district court erred in denying their request
for a declaratory judgment.
The Watsons allege that CitiMortgage “breached the Deed of Trust
contract by failing to give Plaintiffs the opportunity to reinstate the loan or cure
the default” and that CitiMortgage’s “conduct of deliberately . . . delaying and
1
Lozano v. Ocwen Fed. Bank, FSB, 489 F.3d 636, 638 (5th Cir. 2007).
2
FED. R. CIV. P. 56(a).
3
Lozano, 489 F.3d at 638.
4
TEX. FIN. CODE §§ 392.001-.404 (West 2006).
3
Case: 12-41009 Document: 00512268006 Page: 4 Date Filed: 06/10/2013
No. 12-41009
misleading the Plaintiffs to the point of foreclosure . . . is a breach of the Deed
of Trust contract and Note.” Although the Watsons’ own default (which they do
not dispute) would ordinarily bar a breach-of-contract claim,5 they argue that
CitiMortgage waived its right to foreclose, or in the alternative, that
CitiMortgage should be precluded from exercising its right by promissory
estoppel. Neither argument is persuasive.
The Watsons enumerate thirteen examples of conduct by CitiMortgage
that they claim raise a genuine issue of material fact as to whether CitiMortgage
waived its right to foreclose. The alleged conduct can be roughly grouped into
two categories: representations by CitiMortgage that it would not foreclose
during modification discussions and specific communications demonstrating that
CitiMortgage was reviewing the Watsons’ modification applications. The
Watsons also highlight apparently contradictory or confusing communications
from CitiMortgage about the status of their application. For example, they point
to a September 28, 2010, letter purporting to deny their modification application
for lack of requested documents when the allegedly missing documents were in
fact delivered on that day, prior to the deadline. Finally, the Watsons appear to
argue that CitiMortgage waived its right to foreclose because it considered
modification instead of “not mov[ing] to foreclose diligently.” These arguments
are without merit.
Under Texas law, a party may waive a contractual right by intentionally
relinquishing it or by engaging in conduct inconsistent with that right.6 A
lienholder may waive the right to accelerate or foreclose through inconsistent
5
See Thomas v. EMC Mortg. Corp., 499 F. App’x 337, 341 (5th Cir. 2012) (citing
Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990)).
6
Stephens v. LPP Mortg., Ltd., 316 S.W.3d 742, 748 (Tex. App.—Austin 2010, pet.
denied) (citing Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996)); see id. at
748-49 (“The elements of waiver include (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.” (citing Ulico Cas. Co.
v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008))).
4
Case: 12-41009 Document: 00512268006 Page: 5 Date Filed: 06/10/2013
No. 12-41009
conduct such as repeatedly accepting late payments.7 However, Texas courts
have also made clear that a lienholder does not waive the right to foreclose
merely by delaying foreclosure, entering into modification negotiations, or
otherwise exercising forbearance without additional conduct inconsistent with
the right to foreclose.8 Nor does a mortgagor waive its right to foreclose by
declining to pursue alternative contractual remedies.9
We agree with the district court that based on the record, there is no
genuine issue of material fact that CitiMortgage did not waive its rights. First
and foremost, the deed of trust contains an unambiguous nonwaiver provision,
providing that “[a]ny forbearance by [CitiMortgage] in exercising any right or
remedy . . . shall not be a waiver of or preclude the exercise of any right or
remedy,” and that “[e]xtension of time for payment or modification . . . shall not
operate to release the [Watsons’] liability.” The Watsons cite an unpublished
case of this court, U.S. Bank, N.A. v. Kobernick,10 for the proposition that a
“nonwaiver clause may, in some circumstances, be waived.”11 However, they fail
7
E.g., Dhanani Invs., Inc. v. Second Master Bilt Homes, Inc., 650 S.W.2d 220, 223 (Tex.
App.—Fort Worth 1983, no writ); McGowan v. Pasol, 605 S.W.2d 728, 732 (Tex. App.—Corpus
Christi 1980, no writ); see also Trickey v. Gumm, 632 S.W.2d 167, 170 (Tex. App.—Waco 1982,
no writ) (holding that a lienholder may waive the right to foreclose for breach of a due-on-sale
clause when the lienholder is aware of the unauthorized sale and continues to accept payment
without objection for an extended period).
8
See, e.g., Stephens, 316 S.W.3d at 749; Bluebonnet Sav. Bank, F.S.B. v. Grayridge
Apartment Homes, Inc., 907 S.W.2d 904, 911-12 (Tex. App.—Houston [1st Dist.] 1995, writ
denied); Veltmann v. Hoffman, 621 S.W.2d 441, 442 (Tex. App.—San Antonio 1981, no writ)
(“We know of no case holding that a lienholder who, at the request of the debtor, postpones a
nonjudicial foreclosure sale in order to afford the debtor an opportunity to avoid loss of his
land is to be penalized by being deprived of the right to foreclose.”); see also A.R. Clark Inv. Co.
v. Green, 375 S.W.2d 425, 434 (Tex. 1964) (holding that a note holder had not waived its right
to accelerate merely by engaging in protracted settlement negotiations with the debtor over
the alleged default).
9
See Cooper v. Cochran, 288 S.W.3d 522, 537-38 (Tex. App.—Dallas 2009, no pet.).
10
454 F. App’x 307 (5th Cir. 2011) (per curiam).
11
Kobernick, 454 F. App’x at 315 (quoting Straus v. Kirby Court Corp., 909 S.W.2d 105,
108 (Tex. App.—Houston [14th Dist.] 1995, writ denied)).
5
Case: 12-41009 Document: 00512268006 Page: 6 Date Filed: 06/10/2013
No. 12-41009
to explain how that general proposition would apply to the circumstances in this
case. In any event, the facts in Kobernick and the Texas case it cited were
materially different.12 We decline the Watsons’ invitation to treat the nonwaiver
clause in this case as a functionless ornament.
Furthermore, even disregarding the nonwaiver clause, none of
CitiMortgage’s conduct appears inconsistent with its rights. Indeed, among the
actions allegedly “inconsistent” with CitiMortgage’s right to foreclose, the
Watsons include the notice of acceleration and two letters setting a foreclosure
date. Although it is evident that CitiMortgage repeatedly invited and even
encouraged the Watsons to apply for modification and sent several requests for
additional documentation, none of its conduct is evidence that CitiMortgage
intended to waive its contractual rights. To the contrary, CitiMortgage
repeatedly warned the Watsons that it retained the right to demand full
payment and foreclose. At most, the evidence demonstrates that CitiMortgage
delayed foreclosure while attempting to reach an alternative agreement to
protect its interests. Such forbearance is not inconsistent with retaining the
right to foreclose.
The Watsons’ estoppel argument, premised on the same factual
allegations, is also without merit. The Watsons assert that they “were induced
into remaining in default” by the promise of modification. Yet they point to no
evidence that they attempted, contemplated, or were even capable of curing their
default. Nor do they explain why, after their loan modification was approved,
they remained in default and did not attempt to make any payments under the
trial plan. They concede that they were given the details of the plan and offered
the opportunity to make a payment but declined. Furthermore, the evidence
demonstrates that the trial payments could be made at any time during the
12
Id.; Straus, 909 S.W.2d at 108-09.
6
Case: 12-41009 Document: 00512268006 Page: 7 Date Filed: 06/10/2013
No. 12-41009
relevant month, and the Watsons admit that they never contacted CitiMortgage
to tender payment.
Under Texas law, promissory estoppel requires “(1) a promise,
(2) foreseeability of reliance thereon by the promisor, and (3) substantial reliance
by the promisee to his detriment.”13 The promise cannot be “too vague and
indefinite,” and “[a] promisee’s reliance must be both reasonable and justified.”14
A plaintiff ‘s recovery under promissory estoppel is limited to reliance damages.15
The Watsons fail to demonstrate a genuine issue of material fact on any
element of promissory estoppel. First, the Watsons fail to identify the specific
or definite promise by CitiMortgage. Although the evidence demonstrates that
CitiMortgage exercised forbearance and expressed a willingness to consider
modification, the Watsons point to no evidence supporting the assertion that
CitiMortgage’s representations were anything more than “indefinite
assurance[s] of an ongoing negotiation process.”16 It is axiomatic that without
a definite promise there can be no foreseeable reliance. Even if CitiMortgage’s
representations constituted a definite promise, the Watsons fail to articulate
how they detrimentally relied on the promise or how such reliance would have
been reasonable or justified. Nor do they explain how they were damaged by
their alleged reliance. In their First Amended Complaint, the Watsons allege
that they “have incurred damages, including mental anguish, filing fees, and
reasonable and necessary attorney fees,” but do not explain how those damages
13
English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983).
14
Addicks Servs., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286, 300 (5th Cir. 2010)
(quoting Gillum v. Republic Health Corp., 778 S.W.2d 558, 570 (Tex. App.—Dallas 1989, no
writ)) (internal quotation marks omitted); see also id. at 301 (“[S]tatements of an intention to
reach agreement have been found too vague and indefinite to survive summary judgment on
promissory estoppel”).
15
Sullivan v. Leor Energy, LLC, 600 F.3d 542, 549-50 (5th Cir. 2010); see Fretz Const.
Co. v. S. Nat’l Bank of Hous., 626 S.W.2d 478, 483 (Tex. 1981).
16
Addicks Servs., 596 F.3d at 301.
7
Case: 12-41009 Document: 00512268006 Page: 8 Date Filed: 06/10/2013
No. 12-41009
result from their reliance on any promises by CitiMortgage. In sum, the record
supports the district court’s conclusion that no genuine issue of material fact
existed as to promissory estoppel.
The Watsons next argue that the district court erred in granting summary
judgment on their claims under the TDCPA. Specifically, the Watsons claim
that CitiMortgage violated sections 392.301(a)(8), 392.303(a)(2), 392.304(a)(8),
and 392.304(a)(19) of the Texas Finance Code. None of these claims has merit.
With respect to section 392.301(a)(8), the Watsons make only a passing reference
to this section and therefore, due to inadequate briefing, have waived whatever
argument they may have had.17
Section 392.303(a)(2) prohibits a debt collector from “collecting or
attempting to collect interest or a charge, fee, or expense incidental to the
obligation unless the interest or incidental charge, fee, or expense is expressly
authorized by the agreement creating the obligation or legally chargeable to the
consumer.”18 The Watsons argue that CitiMortgage violated this section by
assessing foreclosure costs and attorney’s fees. However, because the deed of
trust expressly authorizes CitiMortgage to add these fees to the Watsons’ debt,
section 392.303(a)(2) is inapplicable.19 The Watsons also fail to identify any
17
See FED. R. APP. P. 28(a)(9)(A) (“[A]ppellant’s brief must contain . . . appellant’s
contentions and the reasons for them, with citations to the authorities and parts of the record
on which the appellant relies.”); Martin v. Alamo Cmty. Coll. Dist., 353 F.3d 409, 413-14 (5th
Cir. 2003).
18
TEX. FIN. CODE § 392.303(a)(2) (West 2006).
19
The deed of trust provides in pertinent part:
If . . . Borrower fails to perform the covenants and agreements contained in this
Security Instrument . . . , then Lender may do and pay for whatever is
reasonable or appropriate to protect Lender’s interest . . . . Lender’s actions can
include, but are not limited to . . . paying reasonable attorneys’ fees . . . .
Any amounts disbursed by Lender under this Section [] shall become additional
debt of Borrower secured by this Security Instrument.
8
Case: 12-41009 Document: 00512268006 Page: 9 Date Filed: 06/10/2013
No. 12-41009
evidence that CitiMortgage “misrepresent[ed] the character, extent, or amount
of [the Watsons’] debt” in violation of section 392.304(a)(8).20 Finally, the
Watsons do not explain how and we find no evidence that either the scheduling
of the December 7 foreclosure sale or the delayed arrival of the loan modification
documents constitutes a “false representation or deceptive means to collect a
debt” in violation of section 392.304(a)(19).21 Dismissal of the TDCPA claims
was therefore proper.
Likewise, the Watsons’ negligent misrepresentation claim fails because,
“under Texas law, promises of future action are not actionable as a
negligent-misrepresentation tort.”22 Finally, the Watsons’ request for a
declaratory judgment was properly dismissed as it depends on the success of
their other claims.23
* * *
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
20
TEX. FIN. CODE § 392.304(a)(8); see Thomas v. EMC Mortg. Corp., 499 F. App’x 337,
343 (5th Cir. 2012) (“[D]iscussions regarding loan modification or a trial payment plan are not
representations, or misrepresentations, of the amount or character of [a] debt.” (second
alteration in original)).
21
TEX. FIN. CODE § 392.304(a)(19); see Thomas, 499 F. App’x at 343.
22
De Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x 200, 205 (5th Cir.
2012) (internal quotation marks omitted); see also Miller v. Raytheon Aircraft Co., 229 S.W.3d
358, 379 (Tex. App.—Houston [1st Dist.] 2007, no pet.).
23
Sid Richardson Carbon & Gasoline v. Interenergy Res., Ltd., 99 F.3d 746, 752 n.3 (5th
Cir. 1996).
9