     Case: 13-10914      Document: 00512760569         Page: 1    Date Filed: 09/08/2014




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

                                                                                 FILED
                                                                           September 8, 2014
                                      No. 13-10914
                                                                              Lyle W. Cayce
                                                                                   Clerk

DONALD LANGLOIS; FILOMENA LANGLOIS,

                                                 Plaintiffs - Appellants
v.

WELLS FARGO BANK NATIONAL ASSOCIATION, as successor by merger
to Wells Fargo Home Mortgage Inc. d/b/a America’s Servicing Company,

                                                 Defendant - Appellee




                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:11-CV-1263


Before KING, GRAVES, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       Donald Langlois and Filomena Langlois (collectively, “Plaintiffs”) appeal
the district court’s dismissal of their breach of contract, common law fraud,
promissory estoppel, unreasonable collection efforts, and Texas Debt
Collections Act claims against Wells Fargo Bank National Association, as
successor by merger to Wells Fargo Home Mortgage Inc. d/b/a America’s




       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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: 13-10914   Document: 00512760569     Page: 2   Date Filed: 09/08/2014



                               No. 13-10914
Servicing Company (“Defendant”). We AFFIRM in part and VACATE and
REMAND in part.
                 FACTS AND PROCEDURAL HISTORY
     Plaintiffs entered into a Home Equity Adjustable Rate Note (the “Note”)
and a Home Equity Security Instrument (“Security Instrument”) in favor of
Aames Funding Corporation Financial d/b/a Aames Home Loans on March 23,
2006. The Note and Security Instrument were assigned to U.S. Bank National
Association on March 29, 2006. Pursuant to the assignment, Wells Fargo
became the servicer of the Note on March 29, 2006. It is undisputed that the
Langlois subsequently defaulted on the Note.
     1. Forbearance Agreements
     After the Langlois became delinquent on their mortgage, Wells Fargo
sent the Langlois a letter on June 27, 2008, offering to enter into a special
forbearance agreement (the “First Forbearance agreement”).           Filomena
Langlois signed and returned the First Forbearance agreement on July 15,
2008. By executing the First Forbearance agreement, the Langlois would have
more time to make up their missed payments and bring their Note current. In
exchange, Wells Fargo promised not to foreclose on their home during the
period of the forbearance. The First Forbearance agreement required the
Langlois to comply with a strict payment schedule, but the Langlois failed to
make the first required payment on July 27, 2008.
     The next month, Wells Fargo sent the Langlois a letter offering to enter
into a second special forbearance agreement (the “Second Forbearance
agreement”), giving the Langlois more time to make up the delinquent
payments. Filomena Langlois signed and returned the Second Forbearance
agreement on September 25, 2008.         The Second Forbearance agreement
required the Langlois to comply with the following payment schedule:


                                     2
    Case: 13-10914    Document: 00512760569    Page: 3   Date Filed: 09/08/2014



                                No. 13-10914
September 19, 2008, $2,620.00; October 18, 2008, $1,975.56; November 18,
2008, $1,975.56; and on December 18, 2008, $8,869.74.
      Before signing the Second Forbearance agreement, the Langlois called
Wells Fargo because they worried that they would not be able to make the
substantially larger payment in December. The Langlois claim that the Wells
Fargo call center representative told them over the phone that they would not
have to make the December 18 payment, but that if they made the September
through November payments, the December payment would be put “into the
back of the loan.”   The Langlois paid the September through November
payments, but did not make the $8,869.74 December payment.
      The next month, Wells Fargo wrote to the Langlois on January 15, 2009
offering to enter into a third special forbearance agreement (the “Third
Forbearance agreement”). Filomena Langlois signed and returned the Third
Forbearance agreement on January 29, 2013.           The Third Forbearance
agreement required the Langlois to comply with the following payment
schedule: January 29, 2009, $2,619.38; February 28, 2009, $2,286.61; March
28, 2009, $2,286.61; April 28, 2009, $2,286.61; and on May 28, 2009, $9,928.20.
      Before signing the Third Forbearance agreement, the Langlois called
Wells Fargo because they feared that they would not be able to make the
substantially larger payment in May. The Langlois claim that the Wells Fargo
call center representative told them over the phone that they would not have
to make the May 28 payment of $9,928.20, but that if they made the January
through April payments, the May payment would be put “back in the life of
your loan.” The Langlois made the payments for January through April, 2009,
but they failed to make the May 28th payment of $9,928.20.
            2. Loan Modification
      On November 7, 2009, the Langlois signed a Loan Modification
Agreement (LMA) with Wells Fargo. The amount due under the Note in the
                                      3
    Case: 13-10914     Document: 00512760569      Page: 4    Date Filed: 09/08/2014



                                  No. 13-10914
LMA was $287,683.12. Under the LMA, the Langlois were responsible for a
monthly payment amount of $1,925.63 in principle and interest, along with a
$566.42 escrow payment, resulting in a total monthly payment of $2,492.05.
The LMA stated that the monthly escrow deposits were subject to change in
the future. A few months after signing the LMA, the Langlois received an
“Escrow Disclosure Statement and Notice of New Mortgage Payment” dated
May 17, 2010, informing them that their monthly escrow payments were
increasing by $60.10 per month, for a new monthly total of $626.52. The
increased escrow amount required the Langlois to pay a new monthly total of
$2,552.15, but they continued to pay the original amount of $2,492.05.
      The Langlois ultimately fell behind on their monthly payments
altogether. The Langlois then filed suit against Wells Fargo in Texas state
court in July 2010. The Langlois asserted the following claims against Wells
Fargo: (1) breach of contract; (2) promissory estoppel, (3) violation of Texas
Constitution Article XVL, § 50(a)(6)(L); 1 (4) violation of the Texas Debt
Collection Practices Act; (5) common law unreasonable debt collection; and (6)
common law fraud. Wells Fargo removed the case to the Northern District of
Texas on June 6, 2011.
      On January 20, 2012, Wells Fargo filed a motion for summary judgment
in the district court. In its first order, dated August 8, 2012, the district court
granted Wells Fargo’s motion as to the Langlois’ breach of contract claim
regarding the original loan agreement, the promissory estoppel claim, the
Texas Constitution claim, the unreasonable debt collection claim, and the
fraud claim. The district court then granted Wells Fargo leave to file a second
motion for summary judgment, which Wells Fargo filed on February 25, 2013.



      1The Langlois have not appealed the district court’s decision granting summary
judgment to Wells Fargo on the Texas Constitution claim.
                                         4
     Case: 13-10914   Document: 00512760569     Page: 5   Date Filed: 09/08/2014



                                 No. 13-10914
In the district court’s second order, dated April 16, 2013, the court granted
Wells Fargo’s motion for summary judgment on all of the Langlois’ remaining
claims. The Langlois’ filed a motion to reconsider on May 7, 2013, which the
district court denied on July 26, 2013. The Langlois now appeal.
                          STANDARD OF REVIEW
      This Court reviews a district court’s grant of summary judgment de novo.
Amburgey v. Corhart Refractories Corp., 936 F.2d 805, 809 (5th Cir. 1991).
“[S]ummary judgment is proper when, viewing the evidence in the light most
favorable to the non-movant, there is no genuine issue as to any material fact
and . . . the moving party is entitled to a judgment as a matter of law.” White
v. Ascension Parish Sch. Bd., 343 F.3d 373, 377 (5th Cir. 2003) (internal
quotation marks and citation omitted). This Court views the evidence in a light
most favorable to the non-movant, but the non-movant “must go beyond the
pleadings and come forward with specific facts indicating a genuine issue for
trial to avoid summary judgment.” Templet v. HydroChem Inc., 367 F.3d 473,
477 (5th Cir. 2004) (citation omitted).
                                DISCUSSION
I.    Breach of contract claims.
      “In Texas, the essential elements of a breach of contract action 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 Int’l, Inc. v. Egle
Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007) (internal quotation marks and
citation omitted). On appeal, the Langlois raise breach of contract claims for
the forbearance agreements and the loan modification agreement.
      A. Forbearance Agreements
      The Langlois assert that Wells Fargo breached the Second and Third
Forbearance agreements by failing to fulfill its promise to provide them with a
                                          5
    Case: 13-10914     Document: 00512760569     Page: 6   Date Filed: 09/08/2014



                                  No. 13-10914
loan modification at the end of each forbearance period. The district court
found that the Langlois could not sustain a claim against Wells Fargo for
breach of the forbearance agreements when the Langlois breached the
agreements themselves by failing to make all of the scheduled payments.
Under Texas law, “[i]t is a well established [sic] rule that a party to a contract
who is himself in default cannot maintain a suit for its breach.” Dobbins v.
Redden, 785 S.W.2d 377, 378 (Tex. 1990) (internal quotation marks and
citations omitted).
      The Langlois concede that they did not make the final payments under
the Second and Third Forbearance agreements. Nonetheless, they argue that
their failure to make these two payments does not preclude their breach of
contract claim because the Wells Fargo representatives told them over the
phone that these payments were not required. The Langlois’ arguments are
precluded by the statute of frauds.
      Under Texas Law, the statute of frauds provides that, “[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.”
Tex. Bus. & Com. Code Ann. § 26.02(b). Since the Langlois owed $232,500
under their original Note, this loan agreement is subject to the statute of
frauds. The statute of frauds also requires that any agreement in “which a
financial institution loans or delays repayment of” a loan must be in writing.
Tex. Bus. & Com. Code Ann. § 26.02(a)(2). Thus, the forbearance agreements
are also subject to the statute of frauds because they delayed repayment of the
original loan. Accordingly, any alleged verbal modifications to the forbearance
agreements are unenforceable under the statute of frauds. See Williams v.
Wells Fargo Bank, N.A., 560 F. App’x 233, 239 (5th Cir. 2014) (per curiam)
(unpublished) (“The statute of frauds also applies to preclude enforcement of
                                        6
      Case: 13-10914      Document: 00512760569         Page: 7     Date Filed: 09/08/2014



                                       No. 13-10914
oral modifications to loan agreements.” (citing Martins v. BAC Home Loans
Servicing, L.P., 722 F.3d 249, 256 (5th Cir. 2013))); Bank of Tex., N.A. v.
Gaubert, 286 S.W.3d 546, 555–56 (Tex. App. 2009).
       B. Loan Modification Agreement
       The Langlois assert that Wells Fargo breached the Loan Modification
Agreement (LMA) by failing to recognize the agreement and failing to comply
with the terms of the agreement. In support of their assertion, the Langlois
point to various accounting errors Wells Fargo made after the parties signed
the LMA. The district court found that Wells Fargo did recognize the LMA
and that any late fees or charges imposed due to Wells Fargo’s accounting
errors were reversed.
       On appeal, the Langlois have not disputed the district court’s finding
that Wells Fargo reversed any erroneous charges due to its accounting errors.
Moreover, it is undisputed that the Langlois themselves ultimately breached
the LMA by failing to make the required escrow payments, and then defaulting
on their payments completely.            As discussed above, the Langlois cannot
maintain a breach of contract claim against Wells Fargo under Texas law since
they breached the LMA themselves. See Dobbins, 785 S.W.2d at 378. 2
II.    Promissory estoppel claim.
       Under Texas law, the elements of promissory estoppel are: “(1) a
promise, (2) foreseeability of reliance thereon by the promisor, and (3)
substantial reliance by the promisee to his detriment.” Henry Schein, Inc. v.
Stromboe, 102 S.W.3d 675, 686 n.25 (Tex. 2002) (citation omitted).                       The



       2  The Langlois also argue, for the first time on appeal, that Wells Fargo has waived
its right to foreclose on their home by failing to pursue foreclosure during the more than two
years the Langlois have been in default. Notwithstanding the fact that this Court does not
address arguments raised for the first time on appeal, the written forbearance agreements
clearly state that Wells Fargo was not waiving any of its rights under the original Note and
Security instrument during the periods of forbearance.
                                              7
       Case: 13-10914   Document: 00512760569    Page: 8   Date Filed: 09/08/2014



                                  No. 13-10914
Langlois allege that Wells Fargo representatives promised them that they
would receive a loan modification upon completion of the forbearance
agreements. The sole remedy the Langlois seek for their promissory estoppel
claim is enforcement of Wells Fargo’s promise to give them a loan modification.
It is undisputed, however, that the Langlois signed a Loan Modification
Agreement with Wells Fargo on November 7, 2009. Therefore, this claim is
moot.
III.    Unreasonable collection efforts claim.
        In Texas, “[u]nreasonable collection is an intentional tort.” EMC Mortg.
Corp. v. Jones, 252 S.W.3d 857, 868 (Tex. App. 2008).          To be liable for
unreasonable debt collection, the debt collector must employ “efforts that
amount to a course of harassment that was willful, wanton, malicious, and
intended to inflict mental anguish and bodily harm.” Id. (quotation marks and
citations omitted). The Langlois assert that Wells Fargo erroneously assessed
late fees and made accounting errors when the Langlois first began making
payments under the LMA. The district court found, and the Langlois do not
dispute, that Wells Fargo reversed any improper fees or charges due to its own
internal accounting errors. Accordingly, the Langlois have failed to show that
Wells Fargo engaged in unreasonable debt collection efforts.
IV.     Common law fraud claim.
        Under Texas law, “[t]he elements of fraud are: (1) that a material
representation was made; (2) the representation was false; (3) when the
representation was made, the speaker knew it was false or made it recklessly
without any knowledge of the truth and as a positive assertion; (4) the speaker
made the representation with the intent that the other party should act upon
it; (5) the party acted in reliance on the representation; and (6) the party
thereby suffered injury.” Aquaplex, Inc. v. Rancho La Valencia, Inc., 297
S.W.3d 768, 774 (Tex. 2009).
                                        8
    Case: 13-10914     Document: 00512760569      Page: 9   Date Filed: 09/08/2014



                                  No. 13-10914
      The Langlois argue that Wells Fargo “made several fraudulent
misrepresentations,” including Wells Fargo’s representations that the Langlois
did not have to pay the December 18th payment under the Second Forbearance
agreement; that Wells Fargo improperly revoked an offer for a loan
modification in June 2009; and that Wells Fargo told the Langlois they were
still in default after the loan modification had been established. The district
court found that the “Langlois provide[d] no evidence that any of the alleged
misrepresentations by Wells Fargo were made intentionally, knowingly or
recklessly.” In addition, the Langlois have not brought forth any evidence
showing how they were injured by Wells Fargo’s allegedly fraudulent
misrepresentations, and proof of injury is an essential element of fraud under
Texas law. See Aquaplex, 297 S.W.3d at 775. Thus, the Langlois have not
sustained a claim for fraud. Id. at 774.
      The Langlois also asserted a claim for fraudulent inducement, claiming
that they would not have signed the Second and Third Forbearance
agreements absent Wells Fargo’s verbal representations that the final
“payments” under the forbearance agreements were not actually payments.
The Langlois cannot sustain a claim for fraudulent inducement under Texas
law because Wells Fargo’s verbal representations directly contradict the terms
of the signed forbearance agreements, which stated that, “Each payment must
be remitted according to the schedule.” See Taft v. Sherman, 301 S.W.3d 452,
458 (Tex. App. 2009) (“When oral promises are directly contradicted by express,
unambiguous terms of a written agreement, the law says that reliance on those
oral promises is not justified.”). Thus, the district court did not err in granting
summary judgment to Wells Fargo on the Langlois’ fraudulent inducement
claims.




                                        9
     Case: 13-10914     Document: 00512760569     Page: 10    Date Filed: 09/08/2014



                                   No. 13-10914
V.     Texas Debt Collections Act (TDCA).
       Under the TDCA, a debt collector “may not use threats, coercion, or
attempts to coerce that employ [certain enumerated] practices . . . [including]
threatening to take an action prohibited by law.”            Tex. Fin. Code Ann.
§ 392.301(a)(8).      In addition, “a debt collector may not use a fraudulent,
deceptive, or misleading representation that employs [certain enumerated]
practices . . . [including] misrepresenting the character, extent, or amount of a
consumer debt.” Tex. Fin. Code Ann. § 392.304(a)(8).
       The Langlois argue that Wells Fargo is a “debt collector” subject to the
prohibitions against unfair debt collection practices under the TDCA. They
also assert that Wells Fargo violated the TDCA’s prohibition on “threatening
to take an action prohibited by law,” Tex. Fin. Code Ann. § 392.301(a)(8), by
threatening to foreclose on the Langlois’ home when Wells Fargo did “not have
legal authority to foreclose.” The Langlois also claim Wells Fargo violated the
TDCA’s prohibition on “misrepresenting the character, extent, or amount of a
consumer debt,” Tex. Fin. Code Ann. § 392.304(a)(8), by consistently
misrepresenting the amount of the Langlois’ debt. The issue here turns on
whether Wells Fargo may be properly considered a “debt collector” under the
TDCA.
       In the district court, Wells Fargo moved for summary judgment on the
TDCA claim, asserting that it was not a “debt collector” as defined by the
TDCA. The district court held that “Wells Fargo is not a debt collector as
defined under the TDCA because there is no evidence that the Langlois were
in default when Wells Fargo became the mortgage servicer of the Note.”
Accordingly, the district court granted Wells Fargo’s motion for summary
judgment on the TDCA claims.
       After the district court ruled on the motion for summary judgment―but
before the Langlois filed their notice of appeal―this Court adopted a different
                                        10
   Case: 13-10914     Document: 00512760569     Page: 11    Date Filed: 09/08/2014



                                 No. 13-10914
definition of “debt collector” in mortgage foreclosure cases under the TDCA. In
Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717 (5th Cir. 2013), this
Court held that a mortgage servicer or assignee “qualifies as a debt collector
under the . . . TDCA, irrespective of whether the [borrower’s] mortgage was
already in default at the time of its assignment.” Id. at 723.
      Since the district court reasoned that Wells Fargo was exempt from the
TDCA because the Langlois were in default when Wells Fargo became the
mortgage servicer of the Note, the district court’s determination is inconsistent
with Fifth Circuit precedent. Given this intervening change in the case law,
both Wells Fargo and the Langlois agree that the TDCA claims should be
remanded to the district court in light of this Court’s holding in Miller.
      Since Miller adopted a definition of “debt collector” in mortgage
foreclosure cases that is inconsistent with the district court’s opinion, we
vacate the district court’s summary judgment on the TDCA claims, and
remand the TDCA claims so that the district court can adjudicate the Langlois’
TDCA claims on the merits in the first instance.
                                CONCLUSION
      For the reasons above, we VACATE and REMAND the plaintiffs’ TDCA
claims. All other claims are AFFIRMED.




                                       11
