IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

ROYCE DAWKINS, JR., §

Plaintiff, §

V. § No. 3:13-cv-1308-M-BN

CHASE BANK, N.A., §

Defendant. §

FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE

UNITED STATES MAGISTRATE JUDGE

This action has been referred to the United States magistrate judge for pretrial

management pursuant to 28 U.S.C. § 636(b) and a standing order of reference from the

District Court. See Dkt. No. 5. Defendant JPMorgan Chase Bank, N.A., sued as “Chase

Bank, N.A.,” filed a motion to dismiss (the “Motion to Dismiss”) [Dkt. No. 4], seeking

judgment in its favor on all claims. For the reasons stated herein, Defendant’s Motion

to Dismiss should be GRANTED.

Background

This is an action by Plaintiff Royce Dawkins, Jr., owner of real property in

Desoto, Texas (the “Property”), brought with regard to possible foreclosure of that

Property and against Defendant JPMorgan Chase Bank, a financial institution doing

business within the State of Texas. See Dkt. No. 1-1 at 7 of 22. Plaintiff brought the

instant action in the 162nd Judicial District Court, Dallas County, Texas, asserting

claims for (1) breach of contract and anticipatory breach of contract, (2) unreasonable

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collection efforts, and (3) injunctive relief. See Dkt. No. 1-1 at 9-12 of 22.

Defendant timely removed the case to federal court on the basis of diversity

jurisdiction, see Dkt. No. 1, and then filed its Motion to Dismiss, see Dkt. No. 4.

Plaintiff filed a response and brief in opposition to Defendant’s Motion to Dismiss. See

Dkt. No. 8 (“Response”). Defendant then filed a reply in support of its motion. See Dkt.

No. 9.

Legal Standards

In deciding a Fed. R. Civ. P. 12(b)(6) motion, the court must “accept all well-

pleaded facts as true, viewing them in the light most favorable to the plaintiff.” In re

Katrina Canal Breaches Litig., 495 F.3d 191, 205-06 (5th Cir. 2007). To state a claim

upon which relief may be granted, plaintiff must plead “enough facts to state a claim

to relief that is plausible on its face,” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570

(2007), and must plead those facts with enough specificity “to raise a right to relief

above the speculative level,” id. at 555. “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.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it

asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “A

claim for relief is implausible on its face when ‘the well-pleaded facts do not permit the

court to infer more than the mere possibility of misconduct.’” Harold H. Huggins

Realty, Inc. v. FNC, Inc., 634 F.3d 787, 796 (5th Cir. 2011) (quoting Iqbal, 556 U.S. at

679).

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While, under Fed. R. Civ. P. 8(a)(2), a complaint need not contain detailed

factual allegations, the plaintiff must allege more than labels and conclusions, and,

while a court must accept

all of the plaintiff's allegations as true, it is “‘not bound to

accept as true a legal conclusion couched as a factual allegation.’” Iqbal, 556 U.S. at

678 (quoting Twombly, 550 U.S. at 555). A threadbare or formulaic recitation of the

elements of a cause of action, supported by mere conclusory statements, will not

suffice. See id.

Analysis

Breach of Contract, Anticipatory Breach of Contract, and Related Claims

Plaintiff alleges in his Original Petition and argues in his Response a variety of

claims based in breach of contract, anticipatory breach of contract, breach of unilateral

contract, and breach of the covenant and good faith and fair dealing. Specifically,

Plaintiff asserts that Defendant offered, and Plaintiff accepted, a loan modification

review. Plaintiff states that he relied on Defendant’s “representations and promises ...

to his detriment.” Dkt. No. 1-1 at 9 of 22. Plaintiff argues that his reliance on

Defendant’s promises constituted a unilateral contract, which Defendant breached “as

now Defendant has placed Plaintiff in a situation in which he cannot catch up on

Defendant’s terms and may lose his home.” Id.

The elements of a breach of contract claim under Texas law are: “(1) the

existence of a valid contract; (2) performance or tendered performance by the plaintiff;

(3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff

as a result of the breach.” Smith Intern., Inc. v. Egle Group, LLC, 490 F.3d 380, 387

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(5th Cir. 2007). The elements of a claim for anticipatory breach of contract under Texas

law are: (1) absolute repudiation of a contractual obligation; (2) lack of a just excuse for

the repudiation; and (3) damage to the non-repudiating party. Enis v. Bank of America,

N.A., 3:12-cv-295-D, 2012 WL 4741073, at *4 (N.D. Tex. Oct. 3, 2012) (citing Gonzalez

v. Denning, 394 F.3d 388, 394 (5th Cir. 2004)). “To absolutely repudiate, a party must,

through words or actions, declare an unconditional intent not to perform the contract

according to its terms.” Id.

A unilateral contract requires a promise, which is a manifestation of an

intention to act or refrain from acting in a specified way, so made as to justify a

promisee in understanding that a commitment has been made, acceptance of which by

performance will form a contract. See Lopez v. JP Morgan Chase Bank, N.A., No. SA-

11-CA-936, 2012 WL 2726762, at *2 n.1 (W.D. Tex. July 9, 2012). Thus, a unilateral

contract becomes enforceable when the promisee performs rather than when the

parties make mutual promises. See id. Unilateral contracts are part of Texas common

law. See id. Almost all unilateral contracts begin as illusory promises; what matters

is whether the promise became enforceable by the time of the breach. See id.

Plaintiff’s Original Petition does not state a claim under any of the above

theories. Turning first to the breach of contract claim, as Defendant points out in its

Motion to Dismiss, Plaintiff has not pled facts indicating that he performed under the

Deed of Trust by making the required payments. See Dkt. No. 4-1 at 3. In fact, Plaintiff

alleges that “his loan is in arrearage and Defendant will not accept payment unless it

is in full.” Dkt. No. 1-1 at 9 of 22. Plaintiff thus has not alleged that he has performed

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or tendered performance under the Deed of Trust. Although, ordinarily, the fact that

the Original Petition demonstrates that Plaintiff has failed to make proper payments

would warrant dismissal with prejudice of Plaintiff’s breach of contract claim, see

Thomas v. EMC Mortg. Corp., 499 F. App’x 337, 341 (5th Cir. 2012), Plaintiff suggests

that he has attempted to make payments, see Dkt. No. 1-1 at 10 of 22. Because copies

of the Deed of Trust and Note are not in the record, it is impossible to determine under

what circumstances Plaintiff may cure and thus whether payments tendered after

default could be considered substantial performance or tender by Plaintiff – and

Plaintiff makes no allegations to indicate that such payments constitute performance

or tender. If the controlling documents permit Plaintiff to cure, Plaintiff may be able

to allege that he tendered performance. Plaintiff’s claim for breach of contract should

therefore be dismissed without prejudice.

The undersigned notes that, in his Response, Plaintiff argues that he did not

perform under the contract because he was “waiting on Defendant to make a

determination regarding the modification of Plaintiff’s monthly mortgage payments.”

Dkt. No. 8 at 4. However, Plaintiff does not allege, or even argue, that the parties

modified their contract to permit Plaintiff to delay payment during any review period.

Without any such allegations, Plaintiff’s failure to pay under the terms of the contract

necessarily means that Plaintiff failed to perform his obligations.

As for Plaintiff’s claim for anticipatory breach of contract, Plaintiff fails to state

any facts to plead such a claim. Plaintiff fails to plead any facts tending to show that

Defendant repudiated a contractual obligation. See Dkt. No. 1-1 at 9-10 of 22. Plaintiff

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makes no allegations tending to show that any of Defendant’s words or actions

positively and unconditionally demonstrated an intent to abandon its obligations under

the Deed of Trust. The undersigned cannot even determine what obligation Plaintiff

alleges that Defendant allegedly repudiated and therefore recommends that, because

it appears that Plaintiff may not have pled his best case, this claim should be

dismissed without prejudice.

To the extent Plaintiff pleads any facts regarding Defendant’s failure to perform

a contract, Plaintiff’s allegations most clearly sound in Plaintiff’s breach of unilateral

contract claim. Plaintiff alleges that Defendant “offered and Plaintiff accepted a loan

modification review.” Id. at 9 of 22. Thus, the undersigned interprets this as an

allegation that Defendant made Plaintiff a unilateral promise to consider entering into

a loan modification with Plaintiff. However, this promise does not appear to be

sufficient to state a claim unless Defendant also promised that it would delay

foreclosure until concluding its review or some other such benefit to Plaintiff – facts

that Plaintiff does not allege. Next, although Plaintiff states that he “accepted”

Defendant’s offer, Plaintiff does not allege performance, which he must do to establish

a unilateral contract. Further, Plaintiff does not adequately allege how Defendant

breached any unilateral contract. Although Plaintiff makes the statements that

“Defendant has now placed Plaintiff in a situation in which he cannot catch up on

Defendant’s terms and may lose his home” and accuses Defendant of “run around

games and stall tactics,” Plaintiff has not explained how Defendant breached its

alleged promise to review Plaintiff’s loan for modification. Id.

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However, Plaintiff provides a bit more detail in his Response. For example,

Plaintiff states that he performed by submitting all required information to Defendant.

See Dkt. No. 8 at 3, 5; see also Dkt. No. 1-1 at 8 of 22. Of course, statements made in

a brief do not save a deficient complaint. See Collins v. Morgan Stanley, 224 F.3d 496,

498 (5th Cir. 2000) (“In considering a motion to dismiss for failure to state a claim, a

district court must limit itself to the contents of the pleadings.”). And in any case,

Plaintiff alleges insufficient facts even considering the statements that Plaintiff makes

in his Response. Nevertheless, because it appears that Plaintiff may not have pled his

best case, Plaintiff should be permitted to replead his breach of unilateral contract

claim. See Jacquez v. Procunier, 801 F.2d 789, 791 (5th Cir. 1986).

Plaintiff includes within his breach of contract claim allegations that Defendant

“has not exercised good faith and fair dealing.” Dkt. No. 1-1 at 10 of 22. Plaintiff bases

this theory on allegations that Defendant purposefully delayed and misled Plaintiff to

the point of possible foreclosure. See id. Defendant is silent as to Plaintiff’s allegations

regarding the covenant of good faith and fair dealing; however, the undersigned

nevertheless recommends that this claim be dismissed without prejudice. The Court

may sua sponte dismiss a claim on its own motion under Rule 12(b)(6) for failure to

state a claim as long as the plaintiff has notice of the intention to dismiss and an

opportunity to respond. See Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir.

2006). The fourteen-day time frame for filing objections to a recommended dismissal

provides Plaintiff with notice and an opportunity to respond. See Cabrera ex rel.

Lucinda Trust v. LoanCare, No. 3:12-cv-2054-M, 2013 WL 664687, at *4 n.6(N.D. Tex.

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Jan. 22, 2013), rec. adopted, 2013 WL 673898 (N.D. Tex. Feb. 25, 2013).

Under Texas law, a duty of good faith and fair dealing does not exist in all

contractual contexts. See Great Am. Inc. Co. v. N. Austin Mun. Utility Dist. No. 1, 908

S.W.2d 415, 418 (Tex. 1995). Rather, the duty of good faith and fair dealing arises

where a special relationship of trust exists between the parties. See Vogel v. Travelers

Indent. Co., 966 S.W.2d 748, 753 (Tex. App. – San Antonio 1998, no pet.). “Ordinarily,

there is no such duty in lender/lendee relationships.” Id. Indeed, Texas law does not

“recognize a common law duty of good faith and fair dealing in transactions between

a mortgagee and mortgagor, absent a special relationship marked by shared trust or

an imbalance in bargaining power.” Coleman v. Bank of Am., N.A., 3:11-cv-430-G-BD,

2011 WL 2516169, at *1 (N.D. Tex. May 27, 2011) (internal quotations omitted), rec.

adopted, 2011 WL 2516668 (N.D. Tex. June 22, 2011).

Plaintiff has not offered any allegations that would show any “special

relationship” between Plaintiff and Defendant. Compare Omrazeti v. Aurora Bank

FSB, No. SA:12-CV-00730-DAE, 2013 WL 3242520, at *13-*16 (W.D. Tex. June 25,

2013) (citing Milton v. U.S. Bank Nat. Ass’n, 508 F. App’x 326, 300 (5th Cir. 2013)).

Plaintiff has also not pointed to any authority to establish that there is a duty of good

faith and fair dealing in the mortgage context. See Wiley v. U.S. Bank, N.A., No. 3:11-

cv-1241-B, 2012 WL 1945614, at *7 (N.D. Tex. May 30, 2012); Casterline v. Indy

Mac/One West, 761 F. Supp. 2d 483, 491 (S.D. Tex. 2011). Further, neither the Texas

Business and Commerce Code nor the Uniform Commercial Code impose a duty of good

faith and fair dealing in this context. See Water Dynamics, Inc. v. HSBC Bank U.S.A.,

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No. 4:11-CV-614-A, 2012 WL 34253, at *5 (N.D. Tex. Jan. 6, 2012); McAllister v. BAC

Home Loans Servicing, LP, No. 4:10-CV-504, 2011 WL 2200672, at *4 (E.D. Tex.

Apr.28, 2011), rec. adopted, 2011 WL 2183844 (E.D. Tex. June 6, 2011).

For these reasons, the undersigned recommends that, because it appears that

Plaintiff may not have pled his best case, Plaintiff’s claim of breach of the covenant of

good faith and fair dealing should be dismissed without prejudice.

Finally, Defendant urges that all of Plaintiff’s breach of contract claims should

be dismissed because they are barred by the statute of frauds where they are based on

an alleged promise to consider Plaintiff for a loan modification. Specifically, Defendant,

citing Tex. Bus. Com. Code § 26.01(a), argues that, “[u]nder Texas law, an agreement

that by its terms or by the nature of the required performance cannot be performed

within one year from the date it is made is subject to the statute of frauds.” Dkt. No.

4-1 at 3. Defendant then states, without citation, that “the loan at issue here was

payable over 30 years.” Id. at 4. Defendant did not attach a copy of the Note or Deed

of Trust to its Motion to Dismiss. Neither document is otherwise in the record, and the

Original Petition does not make any allegations regarding the term of the loan. See

Dkt. No. 1-1.

“The statute of frauds is an affirmative defense, and thus its application must

be conclusively established in the pleadings to support a dismissal under Rule

12(b)(6).” Lopez, 2012 WL 2726762, at *3. In addition to the term of the loan,

Defendant has failed to demonstrate several other requirements to establish an

affirmative defense under the statute of frauds, including whether the agreement at

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issue was oral; whether the purported modification to the loan materially modified any

terms of the Note and/or Deed of Trust; and whether the required statutory notice was

given, and the undersigned lacks information to make these determinations. See id.;

see also Rhodes v. Wells Fargo Bank, N.A., No. 3:10-CV-2347-L, 2013 WL 2090307, at

*7-*10 (N.D. Tex. May 14, 2013); Conceal City, L.L.C. v. Looper Law Enforcement, LLC,

No. 3:10-CV-2506-D, 2013 WL 81485, at *5 (N.D. Tex. Jan. 8, 2013); Higgins v. Bank

of Am., N.A., No. 3:12-cv-5297-N-BN, 2013 WL 2370564, at *6 (N.D. Tex. May 31,

2013). Although Plaintiff, in his Response, does not dispute the term of the loan alleged

by Defendant, and indicates that the modification in question was oral, Defendant has

the burden to establish its affirmative defense based on the pleadings, and it has failed

to meet that burden. On the record before the Court at this stage of the proceedings,

the undersigned cannot conclude that the statute of frauds bars Plaintiff’s claims.

The Tort of Unreasonable Collection Efforts

Under Texas law, unreasonable collection is a common law intentional tort. See

Kopin v. Wells Fargo Bank, N.A., No. 4:11-CV-751, 2013 WL 74601, at *6 (E.D. Tex.

Jan.4, 2013). “The elements are not clearly defined and the conduct deemed to

constitute an unreasonable collection effort varies from case to case.” Id. Therefore, the

reasonableness of conduct is judged on a case-by-case basis. See id. To support a claim

of unreasonable collection efforts, plaintiff must allege facts that amount to a course

of harassment by the defendant that was “willful, wanton, malicious, and intended to

inflict mental anguish and bodily harm.” Water Dynamics, Ltd. v. HSBC Bank USA,

Nat. Ass’n, 509 F. App’x 367, 370 (5th Cir. 2013); De Franceschi v. BAC Home Loans

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Servicing, L.P., 477 F. App’x 200, 205 (5th Cir. 2012); Burnette v. Wells Fargo Bank,

N.A., No. 4:09-cv-370, 2011 WL 676955, at *6 (E.D. Tex. Jan. 27, 2011), rec. adopted,

2011 WL 675392 (E.D. Tex. Feb.16, 2011); accord Smith v. JPMorgan Chase Bank,

N.A., No. 12-40816, 2013 WL 1165218, at *2 (5th Cir. Mar. 22, 2013).

Here, Plaintiff has alleged that Defendant “has failed to give Plaintiff a

reasonable offer of a loan modification even after its agreement to do so” and “has

intentionally misled and delayed Plaintiff to the point of possible foreclosure. While all

along, Defendant assessed late charges and penalties and imposed numerous

additional charges upon Plaintiff’s mortgage loan account, thus using a deceptive

means to collect a debt.” Dkt. No. 1-1 at 11 of 22. Defendant argues that these

allegations fail to state a claim.

The undersigned agrees. Plaintiff fails to allege that Defendant’s conduct was

“willful, wanton, malicious, and intended to inflict mental anguish and bodily harm.”

Water Dynamics, 509 F. App’x at 370; accord Milton v. U.S. Bank Nat. Ass’n, No. 12-

40742, 2013 WL 264561, at *3 (5th Cir. Jan. 18, 2013). And courts in the Northern

District have dismissed nearly identical claims. See Richardson v. Wells Fargo Bank,

N.A., 873 F. Supp. 2d 800, 814-15 (N.D. Tex. 2012) (concluding that defendant’s alleged

failure to give the plaintiff a chance to reinstate or cure the default; intentionally

misleading and delaying the plaintiff to the point of foreclosure; assessing late charges,

penalties, and other additional charges; and improperly placing the property in

foreclosure did not constitute unreasonable collection efforts); May v. Wells Fargo

Home Mortgage, 3:12-cv-4597-D, 2013 WL 2984795, at *3 (N.D. Tex. June 17, 2013);

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Enis, 2013 WL 1721961, at *3-*4; Massey v. JPMorgan Chase Bank, N.A., No. 4:12-cv-

154, 2012 WL 3743493, at *9 (N.D. Tex. Aug. 29, 2012); Franklin v. BAC Home Loans

Servicing, L.P., No. 3:10-cv-1174-M, 2011 WL 248445, at *3 (N.D. Tex. Jan. 26, 2011);

see also Cuevas v. BAC Home Loans Servicing, L.P., No. 4:10-cv-31, 2012 WL 4339063,

at *5 (S.D. Tex. Sept. 19, 2012).

Moreover, Plaintiff, by his own admission, was in default throughout the time

the alleged acts occurred. See, e.g., Dkt. No. 1-1 at 8-9 of 22. “[O]ther judges in the

Northern District of Texas that have considered the issue, under very similar

circumstances, have dismissed such claims brought by plaintiffs in federal court,

noting that Texas courts generally do not sustain claims of unreasonable collection

efforts when the plaintiff still owes money to the lender.” Richardson, 872 F. Supp. 2d

at 814-15.

In his Response, Plaintiff merely argues for application of a lesser standard than

the requirement that Defendant’s conduct be “willful, wanton, malicious, and intended

to inflict mental anguish and bodily harm.” Dkt. No. 8 at 8. However, many decisions

in the Fifth Circuit have considered arguments identical to Plaintiff’s, and the great

weight of authority has rejected them. See, e.g., Water Dynamics, 509 F. App’x at 370;

De Franceschi, 477 F. App’x at 205; Richardson, 872 F. Supp. 2d at 814-15.

While Plaintiff’s complaint is deficient, the record does not demonstrate whether

Plaintiff has pled his best case; therefore, the undersigned recommends that Plaintiff’s

unreasonable collection efforts claim be dismissed without prejudice.

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Injunctive Relief

Because the undersigned has determined that none of Plaintiff’s claims can

withstand dismissal, Plaintiff’s request for injunctive relief cannot survive. Injunctive

relief is a form of relief based on underlying claims. See Cook v. Wells Fargo Bank,

N.A., No. 3:10-CV-592-D, 2010 WL 2772445, at *4 (N.D. Tex. July 12, 2010). Plaintiff’s

claim for injunctive relief should be dismissed without prejudice.

Recommendation

The Court should grant Defendant’s motion to dismiss [Dkt. No. 4] without

prejudice as to Plaintiff’s claims for (1) breach of contract; (2) anticipatory breach of

contract; (3) breach of unilateral contract; (4) breach of the covenant of good faith and

fair dealing; (5) the tort of unreasonable collection efforts; and (6) injunctive relief. The

Court should grant Plaintiff 21 days from the date of any order adopting these

Findings, Conclusions, and Recommendation in which to file an amended complaint

as to these claims that should be dismissed without prejudice and should order that,

if Plaintiff fail to do so, the case will be dismissed with prejudice without further

notice.

A copy of these findings, conclusions, and recommendation shall be served on all

parties in the manner provided by law. Any party who objects to any part of these

findings, conclusions and recommendation must file specific written objections within

14 days after being served with a copy. See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b).

In order to be specific, an objection must identify the specific finding or

recommendation to which objection is made, state the basis for the objection, and

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specify the place in the magistrate judge’s findings, conclusions, and recommendation

where the disputed determination is found. An objection that merely incorporates by

reference or refers to the briefing before the magistrate judge is not specific. Failure

to file specific written objections will bar the aggrieved party from appealing the

factual findings and legal conclusions of the magistrate judge that are accepted or

adopted by the district court, except upon grounds of plain error. See Douglass v.

United States Auto. Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996).

DATED: July 15, 2013

_________________________________________

DAVID L. HORAN

UNITED STATES MAGISTRATE JUDGE

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