     Case: 12-20733       Document: 00512335304          Page: 1     Date Filed: 08/08/2013




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

                                                                             FILED
                                                                           August 8, 2013
                                     No. 12-20733
                                   Summary Calendar                         Lyle W. Cayce
                                                                                 Clerk

MICHAEL A. GARDOCKI,

                                                   Plaintiff-Appellant,
v.

JP MORGAN CHASE BANK, N.A.; FEDERAL NATIONAL MORTGAGE
ASSOCIATION, also known as Fannie Mae,

                                                   Defendants-Appellees.


                   Appeal from the United States District Court
               for the Southern District of Texas, Houston Division
                            U.S.D.C. No. 4:12-cv-2254


Before STEWART, Chief Judge, and OWEN and GRAVES, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellant, Michael A. Gardocki challenges the district court’s
grant of a motion to dismiss filed by Defendants-Appellees, JPMorgan Chase
Bank, N.A. (“JPMC”) and the Federal National Mortgage Association (“Fannie




       *
        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 R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.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: 12-20733       Document: 00512335304         Page: 2     Date Filed: 08/08/2013



                                      No. 12-20733

Mae”). For the reasons provided herein, we REVERSE the final judgment of
the district court and REMAND for proceedings consistent with this opinion.1
                                  I. BACKGROUND
A.     The Mortgage
       On October 13, 2000, Gardocki purchased the property at 1703 Riverbend
Crossing in Sugar Land, Texas (the “Property”), using the proceeds of a deed
of trust mortgage (the “Mortgage”) held by Suntrust Mortgage, Inc.
(“Suntrust”). Suntrust assigned the Mortgage to Chase Mortgage Company
(“CMC”) on June 1, 2001.
B.     The Mergers
       On October 1, 2003, CMC merged into Chase Manhattan Mortgage
Corporation (“CMMC”).           CMMC merged into Chase Home Finance, LLC
(“CHF”) on January 1, 2005. Finally, on May 1, 2011, CHF merged into JPMC.
At the time of the foreclosure at issue in this case, JPMC was both the
mortgagee and the servicer of the Mortgage.2
C.     Damage to the Property by Hurricane Ike
       Gardocki asserts that the Property sustained $26,579.70 in damage from
Hurricane Ike, and that he repaired the Property at his own expense. The
homeowner’s insurance carrier, Nationwide Insurance, issued a reimbursement



       1
        The district court did not formally enter a final judgment in CM/ECF. That said, its
October 2, 2012 order granting Defendants-Appellees’ motion to dismiss stated that it is
“ORDERED, ADJUDGED, and DECREED that all claims asserted by plaintiff . . . are hereby
dismissed with prejudice.”
       2
          Gardocki asserts that JPMC was not a proper mortgage servicer under Texas law
because JPMC did not provide him with notice that it had assumed the role of servicer upon its
acquisition of CHF. The Court need not address the issue of JPMC’s provision of notice since,
in his briefs, Gardocki concedes that he made multiple visits to local JPMC retail branches to
make Mortgage-related inquiries. Thus, Gardocki clearly knew that JMPC had assumed the role
of Mortgage servicer.

                                              2
     Case: 12-20733   Document: 00512335304       Page: 3   Date Filed: 08/08/2013



                                   No. 12-20733

check for this amount, which required the endorsement of both Gardocki and
the holder of the Mortgage.
      Under the terms of the Mortgage, the holder is entitled to withhold its
endorsement of an insurer’s reimbursement check pending its inspection of the
Property to ensure that the repairs have actually been made and that any
repair contractors have been paid. The deed of trust provides that “such
inspection shall be undertaken promptly.”
      Gardocki asserts that JPMC never undertook its inspection or endorsed
the reimbursement check, despite his repeated requests that it do so. Gardocki
further asserts that JPMC’s failure to endorse the reimbursement check left
him with insufficient funds to meet his monthly payment obligations under the
Mortgage.
D.    The Foreclosure Sale
      Gardocki defaulted on his monthly payment obligations, eventually
prompting JPMC to refer the mortgage to its foreclosure counsel. By certified
mailing, in February 2012, foreclosure counsel advised Gardocki that he was
in default, and of the payment necessary to cure the default. In the same
certified mailing, foreclosure counsel further provided Gardocki with notice of
acceleration and notice of sale.
      Gardocki asserts that the certified mailing was sent to an unmonitored
mailing address, rather than to a P.O. Box to which JPMC and its predecessors
had sent all Mortgage-related correspondence since late 2000 or early 2001. It
is not clear when, if ever, Gardocki received the certified mailing. That said,
Gardocki concedes that he received multiples notices of default, sent to the P.O.
Box address, prior to JPMC’s referral of the Mortgage to its foreclosure counsel.
      JPMC foreclosed on the Property. JPMC appointed a substitute trustee,
who sold the Property back to JPMC at auction on April 3, 2012. The Property

                                        3
     Case: 12-20733       Document: 00512335304          Page: 4     Date Filed: 08/08/2013



                                       No. 12-20733

sold for $146,350.42, and was valued at $206,290.00. Subsequently, JPMC
assigned the Property to Fannie Mae, which initiated eviction proceedings
against Gardocki.
                           II. PROCEDURAL HISTORY
       In his first amended complaint—the live complaint for purposes of this
appeal—Gardocki alleges breaches of both the mortgage contract and Texas
law. He seeks a declaratory judgment nullifying the foreclosure sale and
instructing JPMC to endorse the reimbursement check.
       Specifically, Gardocki asserts (i) that he was not in default;3 (ii) that
JPMC was not a proper party to enforce the Mortgage or appoint a substitute
trustee; (iii) that foreclosure counsel failed to provide him with notice of
acceleration and sale; (iv) that the substitute trustee sold the property back to
JPMC at a grossly inadequate price; (v) that JPMC failed to endorse the check
or conduct its inspection in a reasonable period of time; (vi) that JPMC was not
a proper mortgage servicer under Texas law; and (vii) that JPMC violated
Texas’s “fraudulent lien” statute, see Tex. Civ. Prac. & Rems. Code § 12.002, by
appointing the substitute trustee.
       Defendant-Appellees moved to dismiss under Federal Rule of Civil
Procedure (“FRCP”) 12(b)(6). On October 2, 2012, the district court granted
Defendants-Appellees’ motion in a one-paragraph order that provided no
written findings of fact or conclusions of law, and referenced no orally-provided
bases for the court’s decision. Gardocki timely appealed.




       3
          The Court notes that this assertion is at odds with Gardocki’s assertion that JPMC’s
failure to endorse the reimbursement check left him with insufficient funds to meet his monthly
payment obligations under the Mortgage.

                                              4
     Case: 12-20733    Document: 00512335304     Page: 5   Date Filed: 08/08/2013



                                  No. 12-20733

                       III. STANDARD OF REVIEW
      We review de novo a district court’s grant of an FRCP 12(b)(6) motion to
dismiss. In re Katrina Canal Breaches Lit., 495 F.3d 191, 205 (5th Cir. 2007).
      A plaintiff must provide “‘a short and plain statement of the claim
showing that [he] is entitled to relief,’ in order to ‘give the defendant[s] fair
notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S.
41, 47 (1957)). Accordingly, the plaintiff must provide more than mere “labels
and conclusions” or “a formulaic recitation of the elements of a cause of action.”
Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).
“When there are well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an entitlement
to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “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.” Id. at 678 (citing Twombly, 550 U.S. at 556).
                              IV. DISCUSSION
A.    Parties’ Arguments
      As a result of the district court’s failure to provide any written findings
of fact or conclusions of law, or any oral bases for its decision, Gardocki on
appeal largely reiterates the allegations made in his first amended complaint.
      JPMC responds that Gardocki’s various allegations would not entitle him
to his requested relief as a matter of law. Namely, JPMC submits (i) that
Gardocki had failed to meet his monthly payment obligations even before he
first approached JPMC to endorse the reimbursement check; (ii) that, as the
successor by merger to CMC and its progeny, JPMC was a proper party to
enforce the Mortgage and appoint a substitute trustee; (iii) that, at a minimum,

                                        5
     Case: 12-20733    Document: 00512335304     Page: 6   Date Filed: 08/08/2013



                                 No. 12-20733

Gardocki received constructive notice of acceleration and sale; (iv) that, because
the sale price was for greater than 50% of the Property’s market value, it was
per se adequate under Texas law; (v) that Gardocki did not request for JPMC
to inspect the Property but, instead, simply demanded of low-level retail
branch employees that JPMC endorse the reimbursement check; (vi) that
JPMC adequately satisfied Texas’s notice requirement for assuming the role
of Mortgage servicer, as evidenced by Gardocki’s multiple visits to JPMC retail
branches; and (vii) that Texas’s “fraudulent lien” statute does not apply to the
conduct Gardocki alleges (namely, JPMC’s appointment of the substitute
trustee).
B.    Analysis
      Here, at a minimum, issues (i) and (v) involve disputed characterizations
of fact. It is unclear from the record available on appeal whether the full
$26,579.70 related to out-of-pocket costs expended by Gardocki to repair the
Property after Hurricane Ike. It also is unclear whether Gardocki followed
proper procedures for notifying JPMC of its need to endorse the reimbursement
check. In the event JPMC had adequate notice, which is uncertain, it also is
unclear whether JPMC waited an unreasonable period of time to conduct its
inspection. Finally, it is unclear whether there was a sufficient causal link
between JPMC’s failure to endorse the reimbursement check and Gardocki’s
failure to meet his monthly payment obligations. This last issue is especially
complicated by the lack of a clear timeline as to when Gardocki first failed to
meet his monthly payment obligations relative to his first expenditures on
purported Hurricane Ike-related repairs.
      Were Gardocki to prove the facts alleged in his complaint, it is plausible
the district court could find that JPMC breached the Mortgage contract by
failing to endorse the reimbursement check in a timely manner, thereby

                                        6
    Case: 12-20733     Document: 00512335304    Page: 7   Date Filed: 08/08/2013



                                 No. 12-20733

causing Gardocki to fail to meet his monthly payment obligations. But for this
failure, foreclosure would have been improper. It is equally plausible that
Gardocki will fail to meet his burden to prove the above facts, and that JPMC
might successfully move for summary judgment.
        At least on the particular facts of this case, where the district court
provided us no indication of its reasoning, we conclude that Gardocki’s first
amended complaint “plausibly [gave] rise to an entitlement to relief,” allowing
us “to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678-79 (citing Twombly, 550 U.S. at
556).
                              V. CONCLUSION
        For the foregoing reasons, we REVERSE the final judgment of the
district court and REMAND for proceedings consistent with this opinion.




                                        7
