                      COURT OF APPEALS
                      SECOND DISTRICT OF TEXAS
                           FORT WORTH

                         NO. 02-15-00204-CV


FREDDIE L. SHELLNUT                               APPELLANT

                                   V.

WELLS FARGO BANK, N.A., D/B/A                     APPELLEES
AMERICA’S SERVICING
COMPANY; U.S. BANK NATIONAL
ASSOC., AS TRUSTEE FOR
CREDIT SUISSE FIRST BOSTON
MORTGAGE SECURITIES CORP.,
HOME EQUITY ASSET TRUST
2006-7, HOME EQUITY PASS-
THROUGH CERTIFICATES
SERIES 2006-7


                                ----------

       FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY
                 TRIAL COURT NO. 096-264305-13

                                ----------
                           MEMORANDUM OPINION1

                                      ----------

      This appeal by a homeowner against a home-equity loan lender and its

loan servicer involves similar factual allegations and issues raised in a striking

number of suits across this state, mostly in the federal courts. A common theme

in these suits is the contention that the loan servicer, lender, or both––either

deliberately or negligently––misled a homeowner who had defaulted on his or her

monthly payments into believing that he or she might be eligible for a loan

modification and that the loan modification application process would forestall or

waive imminent foreclosure proceedings on the home-equity note and deed of

trust. Most homeowners, like the appellant in this case, have had little success in

defending these claims against summary judgment or a 12(b)(6) dismissal

motion,2 much less in bringing their claims to trial or obtaining a judgment,

considering that most cannot overcome the undisputed fact that they have been

in, and remain in, default.

      In this case, Freddie L. Shellnut sued his home-equity loan lender––U.S.

Bank National Association, as Trustee for Credit Suisse First Boston Mortgage

Securities Corp., Home Equity Asset Trust 2006-7, Home Equity Pass-Through

Certificates Series 2006-7––and its loan servicer––Wells Fargo Bank, N.A.,

      1
          See Tex. R. App. P. 47.4.
      2
       See Fed. R. Civ. P. 12(b)(6), (c) (allowing dismissal of suit when the
pleadings fail to state a claim upon which relief can be granted).


                                          2
doing business as America’s Servicing Company––in the 96th District Court after

U.S. Bank had obtained a judicial foreclosure order in the 352nd District Court.

After discovery, during which Shellnut filed two lengthy motions to compel and

U.S. Bank and Wells Fargo raised numerous objections, the trial court granted a

take-nothing summary judgment.       On appeal, Shellnut raises a single issue

generally challenging the summary judgment.        Within that general issue, he

raises four subissues: (1) he raised a fact issue on his breach of contract claim;

(2) U.S. Bank and Wells Fargo did not conclusively prove that the statute of

frauds bars his claims for fraud, negligent misrepresentation, and violation of the

Texas Debt Collection Act (TDCA); (3) U.S. Bank and Wells Fargo did not

conclusively prove that the economic-loss rule bars all recovery on these same

tort claims; and (4) the trial court erred by denying his amended second motion to

compel discovery.

      Throughout the trial court proceedings and this appeal, U.S. Bank and

Wells Fargo have characterized Shellnut’s allegations as nothing more than an

attempt to avoid foreclosure by complaining that they wrongfully refused to

modify his loan when he fell behind on his payments, a remedy that he had no

right to under the loan documents and which neither U.S. Bank nor Wells Fargo

had any duty to consider or grant.      But the allegations in Shellnut’s original

petition––whether ultimately true or not––cannot be distilled to quite so simple a

premise.




                                        3
      After carefully reviewing the petition, the motion for summary judgment,

Shellnut’s response, and the reply, we reverse the summary judgment in part.

Because under Texas law Shellnut’s fraud and negligent misrepresentation

claims are not barred to the extent that he seeks non-benefit-of-the-bargain

damages and because the claim-specific grounds for summary judgment on his

negligent misrepresentation claim do not entitle U.S. Bank and Wells Fargo to

summary judgment, we reverse the summary judgment on those claims to the

extent Shellnut seeks non-benefit-of-the-bargain damages. In addition, because

Shellnut’s TDCA-violation claims are not barred by the economic-loss rule––

except for his claim that U.S. Bank and Wells Fargo violated the TDCA by

wrongfully threatening to foreclose––we reverse the summary judgment for that

claim to the extent it states claims based on their actions other than threatening

to foreclose. But because Shellnut failed to raise a fact issue on his breach of

contract claim, we affirm the summary judgment as to that claim. We also affirm

the summary judgment on the remaining claims in his original petition because

he did not challenge that part of the summary judgment on appeal.

                    Shellnut Obtains Home-Equity Loan,
               Falls Behind on Payments, Seeks Assistance,
              and Sues After U.S. Bank Threatens Foreclosure

      Shellnut obtained a home-equity loan in 2006 from Aames Funding

Corporation doing business as Aames Home Loan, signing a note and a deed of

trust to secure the loan. The note has a thirty-year term and, as required by

Texas law, a nonrecourse liability provision.       See Tex. Const. art. XVI,


                                        4
§ 50(a)(6)(E); Wells Fargo Bank, N.A. v. Murphy, 458 S.W.3d 912, 917 (Tex.

2015); Fein v. R.P.H., Inc., 68 S.W.3d 260, 266 (Tex. App.––Houston [14th Dist.]

2002, pet. denied) (“A nonrecourse note has the effect of making a note payable

out of a particular fund or source, namely, the proceeds of the sale of the

collateral securing the note.”).3 After Shellnut signed the loan documents but

before 2010, U.S. Bank became the holder of the note, and Wells Fargo became

the loan servicer.

      Shellnut missed some of his monthly payments during 2010; although he

was able to make up most of the missed payments at various times during that

year, he ended 2010 about one payment behind. Also during 2010, Shellnut

began calling Wells Fargo to seek its assistance in obtaining either a loan

modification with a lower monthly payment or any other option that would help

him get caught up on his payments. Shellnut admitted in discovery that he and

U.S. Bank entered into a special forbearance agreement in 2010.4 Additionally,

Shellnut was offered at least one loan modification in June 2010, but he rejected

it because the monthly payments “were considerably increased.” According to

Shellnut, Wells Fargo informed him throughout 2010 that he was eligible for a


      3
       Thus, the lender of a defaulted home-equity loan is limited by Texas law
to seeking repayment of the loan only from the sale of the residence and may not
seek a deficiency judgment against the borrower for any of the debt not paid by
the foreclosure sale price. Wells Fargo Bank, N.A. v. Murphy, 458 S.W.3d 912,
917 (Tex. 2015).
      4
          That agreement is not included in the appellate record.


                                           5
loan modification and that his request for a modification was being considered; it

also instructed him to stop sending loan payments during the modification

process. Shellnut stopped making payments altogether after January 2011.5 In

May 2011, Wells Fargo sent Shellnut a notice of acceleration and intent to

foreclose, but it did not start foreclosure proceedings at that time.

      Throughout the remainder of 2011 and 2012, Shellnut remained in contact

with Wells Fargo seeking, among other things, the exact amount necessary to

reinstate the loan in accordance with the deed of trust. Shellnut received at least

three reinstatement quotes from U.S. Bank’s foreclosure attorney in 2011, but he

refused to tender payment in reliance on the quotes because they contained a

disclaimer––that U.S. Bank “reserves the right to collect additional amounts as

necessary to complete the reinstatement”––and because neither the foreclosure

attorney nor Wells Fargo would agree in a separate writing that no additional fees

or costs would be assessed to reinstate the loan. In August 2012, approximately

two and one-half years after Shellnut had first contacted Wells Fargo seeking

loan repayment assistance, Wells Fargo sent Shellnut a letter informing him that

he was not entitled to a loan modification because “the investor that ultimately

owns your mortgage . . . has declined the request.” A Wells Fargo representative




      5
        Shellnut indicates in his reply brief that during this suit he has made
monthly payments into the trial court’s registry, but nothing in the record supports
this statement or shows when he began making these monthly payments.


                                          6
also told Shellnut that the loan was no longer eligible for modification because it

had been in default for more than six months.

      In September 2012, U.S. Bank filed a petition for judicial foreclosure of the

loan6 in the 352nd District Court, ultimately securing a court order allowing it to

foreclose. After U.S. Bank obtained its order but before it could complete the

foreclosure, Shellnut sued both U.S. Bank and Wells Fargo (collectively Lender)7

in the 96th District Court alleging causes of action for breach of contract,

promissory estoppel, fraud, violation of the TDCA and the Deceptive Trade

Practices Act (DTPA), negligent misrepresentation, and negligent hiring.

Shellnut’s suit stayed the foreclosure order; there do not appear to have been

any further proceedings in the 352nd District Court.        See Tex. R. Civ. P.

736.11(a). Lender then filed a counterclaim in this suit, again seeking a judicial

foreclosure order.

      During the discovery period, Shellnut filed two motions to compel

discovery, and Lender filed a motion for protective order and summary judgment

motion. The trial court partially granted both of Shellnut’s motions to compel and

partially granted Lender’s motion for protective order. Several months thereafter,

Lender filed an amended traditional motion for summary judgment. See Tex. R.


      6
      A lien securing repayment of a home-equity note may only be foreclosed
upon by a court order. See Tex. Const. art. XVI, § 50(a)(6)(D).
      7
       Shellnut alleged that U.S. Bank was liable for all of Wells Fargo’s actions
under agency and respondeat superior theories.


                                        7
Civ. P. 166a(c). As an initial matter, Lender argued that all of Shellnut’s claims

were based on its refusal to modify the loan and that all of his claims therefore

failed because Shellnut was not entitled to a loan modification as a matter of law.

Additionally, Lender contended that as a matter of law, all of Shellnut’s claims––

except his breach of contract claim based on the note and deed of trust (the loan

documents)––were barred by the statute of frauds and the economic-loss rule.

Finally, Lender raised additional, claim-specific grounds for all of Shellnut’s

claims except fraud.

      The trial court granted summary judgment for Lender on all of Shellnut’s

claims without specifying any grounds. Lender then filed an unopposed motion

to dismiss its counterclaim seeking an order allowing it to foreclose; the trial court

granted the motion, dismissed the counterclaim, and rendered a final take-

nothing judgment in Lender’s favor.

           Appeal Limited to Breach of Written Contract, Fraud,
         Negligent Misrepresentation, and Violation of TDCA Claims

      Although Shellnut has raised a general issue challenging the granting of

the summary judgment, he has not presented argument within that issue

challenging the propriety of the summary judgment on his promissory estoppel,

DTPA, negligent hiring, and breach of verbal contract claims.          Thus, we will

review the propriety of the summary judgment only as to the claims he has

addressed in his briefing: breach of the loan documents, fraud, violation of the

TDCA, and negligent misrepresentation. See LeBlanc v. Riley, No. 02-08-234-



                                          8
CV, 2009 WL 885953, at *3 (Tex. App.—Fort Worth Apr. 2, 2009, no pet.) (mem.

op.); Bingham v. Sw. Bell Yellow Pages, Inc., No. 02-6-229-CV, 2008 WL

163551, at *1 n.2 (Tex. App.—Fort Worth Jan. 17, 2008, no pet.) (mem. op. on

reh’g).8

           Traditional Summary Judgment Standard of Review Applies

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could, and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A defendant who conclusively

negates at least one essential element of a cause of action is entitled to

summary judgment on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d

494, 508 (Tex. 2010), cert. denied, 562 U.S. 1180 (2011); see Tex. R. Civ. P.

166a(b), (c).


      8
        Lender also contends that Shellnut abandoned his claims against U.S.
Bank on appeal because he only refers to Wells Fargo in his brief. But because
his petition specifically attributes Wells Fargo’s actions to U.S. Bank for all of his
claims, we do not agree. Shellnut confirmed in his reply brief that all of his claims
against U.S. Bank are for actions taken by Wells Fargo under an agency or
respondeat superior theory and that he therefore used the term Wells Fargo in
his brief to refer to both parties.


                                          9
      A defendant is entitled to summary judgment on an affirmative defense if

the defendant conclusively proves all the elements of the affirmative defense.

Frost Nat’l Bank, 315 S.W.3d at 508–09; see Tex. R. Civ. P. 166a(b), (c). To

accomplish this, the defendant-movant must present summary judgment

evidence that conclusively establishes each element of the affirmative defense.

See Chau v. Riddle, 254 S.W.3d 453, 455 (Tex. 2008).

         Because Most of Lender’s Summary Judgment Grounds
   Are Based on Shellnut’s Pleadings, We Briefly Summarize His Claims

      Because the resolution of this appeal requires a firm command of the exact

nature of the different claims in Shellnut’s live pleading––his forty-seven page

original petition––we will briefly summarize the claims on which he appeals.

Breach of Contract

      Shellnut pled that Lender breached the loan documents by refusing a

tender of the full amount of his default as authorized by the loan documents and

by failing to properly credit his account for the amount of the tender. Additionally,

Shellnut claimed that Lender “demanded the payment of additional fees that

were not authorized at that time.”       Finally, Shellnut contended that Lender

refused to communicate to him in writing the amount needed to reinstate the

note. According to Shellnut’s pleading, he performed and tendered performance

under the loan documents, and he was temporarily excused from future

performance by Lender’s offer to assist him in obtaining a federal home loan

modification.



                                         10
Fraud

      Shellnut claimed that Lender materially misrepresented its “ability and

willingness to process [his] application for a federal loan modification as well as

the time frame the process . . . would likely take.” He further contended that

Lender misrepresented the likely cost to him “in the form of continued accrual of

interest charges and the increased debt [he] would incur each month . . . in

addition to his interest and unpaid principal in the form of attorney fees,

foreclosure fees[,] and other service charges.” Shellnut alleged that Lender was

aware that these misrepresentations were false and intended that he act on them

to his detriment.   He specifically contended that Lender did not offer him or

consider an internal loan modification, but rather represented to him “that another

entity or party had decision making power and could decide, if given the proper

forms and information, whether [he] qualified and could be offered essentially

assistance from the federal government.”

TDCA Violation

      Shellnut claimed that in the course of attempting to collect amounts past

due under the loan documents, Lender (1) voluntarily offered to assist him in

completing a federal loan modification but failed to provide the assistance and

delayed the process for two years and (2) refused to allow Shellnut to make

payments on the loan while purporting to provide that assistance and as a result,

“each month increased the debt with penalties and fees . . . dramatically

increasing the amount of the debt by mispresenting what it was in fact doing.”


                                        11
According to Shellnut, this conduct violated section 392.304(a)(8) and (a)(14) of

the Texas Finance Code.        Tex. Fin. Code Ann. § 392.304(a)(8), (14) (West

2016). Shellnut further generally claimed that “after notice of representation and

that the amount in question is disputed, [Lender] continued to contact [the

Shellnuts] directly and continued to harass them for payment.”

Negligent Misrepresentation

      Shellnut included specific allegations that he contended amounted to

negligent misrepresentation:

      a. [Lender] made representations to [the Shellnuts] in the course of
         providing assistance with a federal home loan modification;

      b. [Lender] supplied false information attempting to guide, advise[,] and
         direct [the Shellnuts] with regard to fees they would have to pay and not
         pay, with regard [to] the timeline the application process would take, as
         well as the amounts they would have to pay during the loan
         modification process . . . .

Shellnut also claimed generally that Lender “failed to use reasonable care in

communicating the correct status of [the] mortgage loan and loan modification

application.”

Damages

      In addition to alleging claim-specific damages––which we will address in

our discussion of the economic-loss rule––Shellnut generally alleged that he is

entitled to the following damages: lost equity in his home, lost earnings and time

spent attempting to comply with Lender’s modification requests, “cpa fees” and

other expenses, damage to his credit score and credit reputation, mental anguish



                                        12
damages, economic damages, exemplary damages, attorney’s fees, and court

costs.

              Summary Judgment Improper on General Ground That
         Shellnut Had No Right to Loan Modification Because He Did Not
          Allege Wrongful Refusal to Modify as Basis For These Claims

         As part of his first subissue, Shellnut argues that Lender was not entitled to

summary judgment based on its broad characterization of his pleadings as

primarily seeking relief from its refusal to modify his loan.        We refer to this

argument as subissue 1A.9

         Lender’s first ground for summary judgment was that all of Shellnut’s

complaints fail because they are “ultimately grounded in his contention that

[Lender] ‘wrongfully delayed’ the loan modification process and ‘misled’ him

regarding his ability to obtain a loan modification.” According to Lender, because

all of Shellnut’s claims emanate from his contention that it wrongfully refused to

modify his loan and because Shellnut has no right to a loan modification under

Texas law, all of his claims fail. Although this first ground is not assigned a

specific subissue in Shellnut’s briefing, he does argue throughout his brief that

his claims are not based on Lender’s refusal to enter into a loan modification.10

Rather, he contends that his claims are based on Wells Fargo’s affirmative

         9
       Shellnut raises two distinct arguments within this subissue and
subissue 3.
         10
        For purposes of this memorandum opinion, in addressing Lender’s
arguments, Shellnut’s response, and Shellnut’s allegations as to “all” claims, we
refer only to those claims he preserved for appeal.


                                           13
statements that Lender was considering a loan modification when it was not and

that Wells Fargo would assist him in obtaining help with this loan modification

from a federal government program when it either had no intention to do so or

knew he could not obtain one. In other words, he alleges Lender was stringing

him along in order to pad its post-default fees and charges labeled as collection

costs.

         We agree with Shellnut’s characterization of his pleadings. None of his

claims allege or are based on the premise that Lender wrongfully refused to

modify his loan. Instead, he alleges that Wells Fargo wrongfully told him it would

place his loan into a loan modification review or assist him in obtaining federal

aid to modify the loan, without the intent to actually do so, for the purpose of

adding extra, default-related fees and costs to the balance due under the note.

He also alleges that Wells Fargo knew it could not provide him with assistance in

obtaining a modification. Thus, the allegations in his pleadings are not premised

upon an asserted right to a loan modification––which Lender did not have a duty

to consider, and which Shellnut had no right to demand, under the loan

documents––but rather the allegedly untruthful representation that he was being

considered for a loan modification or other type of loan assistance, that caused

him to take some actions and refrain from taking others.

         In urging summary judgment on Shellnut’s pleadings, Lender relied on

numerous federal cases dismissing suits by defaulted borrowers against lenders

and loan servicers because a borrower has no right to a loan modification. But


                                        14
the holdings in those cases are fact-specific and in response to different

allegations than those made by Shellnut; thus, they are inapposite.11        See

Calvino v. Conseco Fin. Servicing Corp., No. A-12-CA-577-SS, 2013 WL

4677742, at *7 (W.D. Tex. Aug. 30, 2013) (addressing argument that servicer

wrongfully refused to offer loan modification); Soufimanesh v. U.S. Bank, N.A.,

No. 4:12cv295, 2013 WL 3215744, at *9 (E.D. Tex. June 24, 2013) (noting that

U.S. Bank was not required to modify loan in addressing borrower’s argument

that bank’s statement that it was considering a loan modification effected a

withdrawal of the foreclosure notices it had sent borrower); Singha v. BAC Home

Loans Servicing, LP, No. 4:10-CV-692, 2012 WL 3904345, at *4 (E.D. Tex.

Aug. 7, 2012) (holding that because borrower had no right to a loan modification,

lender’s refusal to modify was not a repudiation for purposes of an anticipatory

breach claim), adopting report & recommendation, 2012 WL 3904063 (E.D. Tex.

Sept. 7, 2012), aff’d, 564 F. App’x 65 (5th Cir. 2014); Mahmood v. Bank of Am.,

N.A., No. 3:11-CV-03504-M-BK, 2012 WL 527902, at *3 (N.D. Tex. Jan. 18,

2012) (addressing claim for failure to negotiate a loan modification), accepting

findings, conclusions & recommendation, 2012 WL 527901 (N.D. Tex. Feb. 16,

2012); Mulder v. Select Portfolio Servicing, Inc., No. 1:11-CV-00862-SS, slip op.

      11
        Federal cases addressing Texas law in similar circumstances are
particularly persuasive to Texas courts, see Robeson v. Mortg. Elec. Registration
Sys., Inc., No. 02-10-00227-CV, 2012 WL 42965, at *4 n.4 (Tex. App.––Fort
Worth Jan. 5, 2012, pet. denied) (mem. op.); however, we must be mindful that
the holdings in those cases are governed by federal procedural rules of pleading
and proof, which in some instances may dictate a different result.


                                       15
at 2 (W.D. Tex. Sept. 30, 2011) (order setting hearing on motion seeking to

temporarily restrain foreclosure) (noting––without describing the specific

allegations in Mulder’s pleadings––that neither law nor equity were on Mulder’s

side since he had been in default for almost a year and had not clearly alleged

“any legal excuse for his failure to make his loan payments”).12

      Accordingly, we conclude and hold that Lender was not entitled to

summary judgment on all of Shellnut’s claims on this ground.          We sustain

subissue 1A.

                  Shellnut Failed to Raise Fact Issue Precluding
                 Summary Judgment on Breach of Contract Claim

      The remainder of Shellnut’s first subissue––subissue 1B––challenges the

summary judgment on his breach of contract claim.

      In response to two of the alleged breaches of the loan documents that

Shellnut raised––(1) that when he attempted to tender the entire amount of his

past due payments on the note, Lender “did not bring the account current or

properly credit [his] payments” and (2) that Lender “refused to communicate in

      12
         Lender cited two other cases in its motion for summary judgment, but
those courts dismissed TDCA-related claims with different allegations: Chavez v.
Wells Fargo Bank, N.A., 578 F. App’x 345, 348 (5th Cir. 2014) (holding that
borrower’s claim he was misled to believe that he qualified for and would be
approved for a loan modification, despite knowing that he was not eligible for a
loan modification, did not state a claim under TDCA section 392.304(a)(8) and
(a)(19)); Bracken v. Wells Fargo Bank, N.A., 13 F. Supp. 3d 673, 684 (E.D. Tex.
2014) (holding that claims of delay of loan modification process and misleading
borrower into believing modification would be approved did not raise fact issue to
survive summary judgment on TDCA sections 392.303(a)(2) and 392.301(a)(8)),
aff’d, 612 F. App’x 248 (5th Cir. 2015).


                                        16
writing . . . the amount needed to reinstate the note”––Lender contended that its

evidence conclusively proved that the allegations are false. Lender attached

Shellnut’s deposition, in which he admitted that he had never tendered the entire

amount of past due payments on the note, and three separate reinstatement

quotes Lender sent to Shellnut in June and July of 2011.         Shellnut did not

present any controverting summary judgment evidence; therefore, the trial court

did not err by granting summary judgment as to these two breach of contract

allegations.

      As to Shellnut’s remaining breach of contract allegation––that instead of

accepting payments, Lender “demanded the payment of additional fees that were

not authorized at that time,” which Shellnut explained in his summary judgment

response is an allegation that Lender charged unauthorized fees and misapplied

payments––Lender argued that the claim is “barred in whole or in part because

[Shellnut] has not tendered and cannot tender the entire indebtedness on the

loan.”13 In other words, Lender challenged Shellnut’s ability to prove the second

element of a breach of contract suit: “performance or tendered performance by

the plaintiff.” See Rice v. Metro. Life Ins. Co., 324 S.W.3d 660, 666 (Tex. App.––

Fort Worth 2010, no pet.). Shellnut responded that a fact issue exists as to




      13
       Lender raised this ground on all of the breach of contract allegations, but
because summary judgment was proper on the remaining allegations for other
reasons, we need not address it with respect to them. See Tex. R. App. P. 47.1.


                                       17
whether he was excused from performing under the loan documents because of

Lender’s prior material breach.14

      Generally, a defaulting party under a contract cannot maintain a suit for its

breach. Ramex Constr. Co. v. Tamcon Servs. Inc., 29 S.W.3d 135, 137 (Tex.

App.––Houston [14th Dist.] 2000, no pet.); Joseph v. PPG Indus., 674 S.W.2d

862, 867 (Tex. App.—Austin 1984, writ ref’d n.r.e.) (op. on reh’g); see also

Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004)

(“It is a fundamental principle of contract law that when one party to a contract

commits a material breach of that contract, the other party is discharged or

excused from further performance.”). But that party may nevertheless sue for

breach of the contract if its default was excused by the other party’s prior material

breach. See Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994)

(“A fundamental principle of contract law is that when one party to a contract

commits a material breach of that contract, the other party is discharged or

excused from any obligation to perform.”).         Whether a party breached an

agreement is generally a question of law for the court unless the evidence of the

parties’ conduct is disputed. See Greater Hous. Radiation Oncology, P.A. v.



      14
         Shellnut does not appear to argue that Lender breached any post-default
obligations. See Franklin v. BAC Home Loans Servicing, L.P., No. 3:10-CV-
1174-M, 2011 WL 248445, at *2 (N.D. Tex. Jan. 26, 2011) (“It is illogical for the
Court to conclude that Plaintiff cannot enforce BAC’s obligations, assumed to be
contractual, which arise after Plaintiff’s default merely because Plaintiff is in
default.”).


                                         18
Sadler Clinic Ass’n, P.A., 384 S.W.3d 875, 888–89 (Tex. App.––Beaumont 2012,

pets. denied).

      In his response to the motion for summary judgment, Shellnut admitted

that “[i]t is not in dispute that [he] missed a . . . payment in 2009, possibly earlier.”

Additionally, in his summary judgment affidavit, he averred that he began missing

payments in 2010, that he made payments sporadically throughout 2010, and

that he ended 2010 around one payment behind. Although he contends that

Wells Fargo’s continued demands for payment indicate that it had elected to treat

the contract as continuing––implicitly waiving his default––the deed of trust itself

contains a nonwaiver provision:

      Extension of the time for payment or modification of amortization of
      the sums secured by this Security Instrument granted by Lender to
      Borrower or any Successor in Interest of Borrower shall not operate
      to release the liability of Borrower or any Successors in Interest of
      Borrower. Lender shall not be required to commence proceedings
      against any Successor in Interest of Borrower or to refuse to extend
      time for payment or otherwise modify amortization of the sums
      secured by this Security Instrument by reason of any demand made
      by the original Borrower or any Successors in Interest of Borrower.
      Any forbearance by Lender in exercising any right or remedy
      including, without limitation, Lender’s acceptance of payments . . . in
      amounts less than the amount then due, shall not be a waiver of or
      preclude the exercise of any right or remedy.

Additionally, the deed of trust provides that the borrower’s performance is not

contingent upon the Lender’s performance: “No offset or claim which Borrower

might have now or in the future against Lender shall relieve Borrower from

making payments due under the Note and this Security Interest or performing the

covenants and agreements secured by this Security Instrument.”                A similar


                                           19
provision is contained in the note, under the title “BORROWER’S FAILURE TO

PAY AS REQUIRED” and subtitle “No Waiver by Note Holder”: “Even if, at a

time when I am in default, the Note Holder does not require me to pay

immediately in full as described above, the Note Holder will still have the right to

do so if I am in default at a later time.” Thus, under the plain language of the

loan documents, Shellnut’s obligation to make timely loan payments was not

excused by Lender’s continued demands for performance under the contract and

delay in instituting any remedies such as acceleration and foreclosure.        See

Creech v. Christian, No. 05-08-00952-CV, 2009 WL 2902940, at *3 (Tex. App.––

Dallas Sept. 11, 2009, pet. denied) (mem. op. on reh’g); A.G.E. v. Buford, 105

S.W.3d 667, 676 (Tex. App.––Austin 2003, pet. denied); see also Watson v.

CitiMortgage, Inc., 530 F. App’x 322, 326 (5th Cir. 2013) (holding that bank did

not waive its rights under deed of trust with nonwaiver clause); Nguyen v.

Jpmorgan Chase Bank, N.A., No. G-12-125, 2014 WL 12537069, at *2 (S.D. Tex.

Mar. 5, 2014) (rejecting claim that lender waived Nguyen’s default because of

nonwaiver clause, noting that “the Nguyens contracted in advance that they

would not be able to assert waiver”), adopting report & recommendation, 2014

WL 12539242 (S.D. Tex. Apr. 21, 2014); In re GuideOne Nat’l Ins., No. 07-15-

00281-CV, 2015 WL 5766496, at *3 (Tex. App.––Amarillo Sept. 29, 2015, orig.

proceeding) (mem. op.) (“Non-waiver clauses are generally considered valid and

enforceable.”).




                                        20
      Shellnut claims that he raised a fact issue as to whether Lender breached

the loan documents first, thus excusing his default. Shellnut presented evidence

that he contends shows that Lender provided him inaccurate information

regarding the payoff amount of his loan, charged fees not authorized by the loan

documents, and made wrongful property tax and insurance payments on his

behalf even though Lender had waived its right to have Shellnut pay these

expenses into escrow.    But none of this evidence raises a fact issue as to

whether Lender materially breached first.

      Although the May 23, 2010 and August 15, 2010 past due letters contain

different amounts, the evidence shows that during both of those months, Shellnut

was delinquent by at least two payments.      The May 2010 letter shows that

Lender credited a partial payment that month, and Lender’s internal records

show that in June 2010, Shellnut made a lump sum payment of $2,500, which

would have brought him current through May 2010 and part of June. Although

the August 15, 2010 letter shows that Shellnut was only behind for two monthly

payments (instead of two and one half)––and no evidence explains whether

Shellnut made an additional payment or was credited for some other reason––

any error would have been in Shellnut’s favor. The May 2010 letter indicates that

Lender charged Shellnut a $45 unspecified fee; likewise, the August 2010 letter

indicates that Lender charged Shellnut a $50 unspecified fee. But Shellnut did

not present any evidence that these unspecified fees were not authorized by the

loan documents. See, e.g., Thomas v. EMC Mortg. Corp., 499 F. App’x 337, 343


                                       21
(5th Cir. 2012) (noting, in evaluating TDCA-violation claim, that “conclusional

allegations of unexplained fees . . . do not constitute evidence of improper fees”).

Thus, although the two letters show different amounts due and owing, that

difference shows nothing more than the application of credits, payments, and $95

in fees.

      Shellnut also contends that a loan modification quote dated June 2010

shows that Lender was in breach because it showed that Lender was charging

him different amounts from what it demanded in the May and August 2010

default letters.   But whether Lender used correct information to calculate a

proposed modification––which Shellnut admits Lender was not obligated to offer

under either the note or deed of trust and which Shellnut declined––does not

show a prior material breach of either of those documents.

      Additionally, although Shellnut offered some evidence that Lender’s

internal records showed that Lender made escrow advances for property taxes in

excess of what Tarrant County records show was actually assessed for years

2009 through 2011, there is no evidence of how Tarrant County applied or

credited those payments or whether it refunded any overpayment. The Tarrant

County record also shows overpayment of property taxes for the years 2005,

2008, and 2009, before Lender’s internal records show that it made advances for

the payment of property taxes. But that same Tarrant County record also shows

underpayment of Shellnut’s property taxes for 1998 through 2002. In fact, the

Tarrant County record provided by Shellnut shows that from 1994 through 2014,


                                        22
the total amount of property taxes paid is less than the total amount levied by

over $5,000.    Thus, Shellnut did not present evidence showing that Lender

breached the loan documents by paying his property taxes.

      Even if Shellnut had shown that Lender had overpaid his property taxes,

he does not indicate how that overpayment––which according to Lender’s

internal records did not begin until December 2010, months after Shellnut began

missing payments––is a breach of the loan documents.               Shellnut’s main

argument regarding the property tax and insurance payments15 made by Lender

appears to be that Lender failed to notify him before revoking its initial waiver of

escrow as required by section 3 of the deed of trust. But that provision requires

notice to the borrower only upon Lender’s revocation of its escrow waiver “for any

reason”; the deed of trust also provides that Lender can make such payments

(without requiring prior notice) if the borrower failed to make the payment.

Shellnut did not bring forward any evidence––other than a general assertion that

he was making insurance payments on his own and his specific assertion that in

2014, his insurance company refunded him what he had personally paid for

insurance––showing that before his default, Lender paid property taxes or

property insurance that he had already timely paid and for which he was not

credited or did not receive a refund.



      15
       Lender’s internal records show that the first insurance payment occurred
in January 2010 and that another one was made in November 2010.


                                        23
      Shellnut also argued in his summary judgment response that Lender

breached first by charging fees and costs “necessary to originate, evaluate,

maintain, record, insure, or service” the loan over the three percent ceiling

mandated by the Texas constitution, which is specifically incorporated into the

loan documents.16 See Tex. Const. art. XVI, § 50(a)(6)(E). But even if Shellnut

could challenge any post-loan closing fees assessed by Lender on this basis––

which we do not hold––the only evidence of the assessment of such fees and

costs prior to Shellnut’s ceasing payments altogether in February 2011 is the

unspecified $95 fees charged by Lender in May 2010 and August 2010. Either

separately or together, these fees do not exceed the three percent cap in the

constitutional provision.

      To the extent that Shellnut argues that the trial court should have allowed

him an opportunity to replead his contractual allegations before granting the

motion for summary judgment, we disagree.           Shellnut did not amend his

pleadings, only seeking leave to amend them after the trial court granted the

summary judgment motion, and he never alleged that Lender failed to follow


      16
         Lender contends that Shellnut did not preserve this argument because
he did not explicitly identify this provision in his motion for summary judgment,
but in the event that the facts alleged in his petition can be read to include fair
notice of such an allegation, we address it. See Tex. R. Civ. P. 45, 47; Roark v.
Allen, 633 S.W.2d 804, 810 (“A petition is sufficient if it gives fair and adequate
notice of the facts upon which the pleader bases his claim.”). Shellnut did not
bring a separate claim against Lender for violation of the Texas constitution.
See, e.g., Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542, 544–46 (Tex. 2016);
Sims v. Carrington Mortg. Servs., L.L.C., 440 S.W.3d 10, 11–13 (Tex. 2014).


                                        24
proper notice and pleading requirements for the motion proceeding. See Tex. R.

Civ. P. 63, 166a(c).     Moreover, Lender did not seek summary judgment on

Shellnut’s breach of contract claim for failure to state a claim; instead, it sought

summary judgment on the ground that because of his default, he could not prove

the element of performance or tendered performance and on the ground that his

allegations were false. See Gonzales v. Am. Postal Workers Union, AFL-CIO,

948 S.W.2d 794, 799 (Tex. App.––San Antonio 1997, writ denied) (holding that

trial court did not err by granting summary judgment without giving plaintiff a

chance to replead when motion for summary judgment was based on plaintiff’s

failure to raise a fact issue on any viable legal theory rather than failure to state a

claim). Accordingly, we conclude and hold that the trial court did not err by

granting summary judgment before he had an opportunity to replead his breach

of contract claims.

      None of Shellnut’s evidence shows a prior material breach excusing his

default.17 For these reasons, we conclude and hold that the trial court did not err

by determining that Lender was entitled to summary judgment on Shellnut’s

breach of contract claim based on the loan documents.                   We overrule

subissue 1B.




      17
      To the extent that he alleges Lender prevented him from making
payments, his own summary judgment evidence shows otherwise.


                                          25
           Shellnut’s Tort Claims Not Barred by Statute of Frauds

      In his second subissue, Shellnut argues that the trial court improperly

granted summary judgment on all of his tort claims on Lender’s second ground

for summary judgment. In that ground, Lender alleged that because the loan

documents are subject to the statute of frauds, and because all of the alleged

representations upon which Shellnut allegedly relied were oral statements about

modifying the loan, the statute of frauds bars all of Shellnut’s claims. See Tex.

Bus. & Com. Code Ann. §§ 26.01(a), (b)(6), 26.02 (West 2015).

      “[T]he Statute of Frauds bars a fraud claim to the extent the plaintiff seeks

to recover as damages the benefit of a bargain that cannot otherwise be

enforced because it fails to comply with the Statute of Frauds.”         Haase v.

Glazner, 62 S.W.3d 795, 799 (Tex. 2001); see Hawkins v. Walker, 233 S.W.3d

380, 396 (Tex. App.––Fort Worth 2007, no pet.). But to the extent a party seeks

out-of-pocket damages incurred in relying upon misrepresentations and not

simply to attempt to enforce an otherwise unenforceable contract, such a claim

will survive. Haase, 62 S.W.3d at 799. This application of the statute of frauds

has been used with other tort claims, including negligent misrepresentation. See

Heritage Constructors, Inc. v. Chrietzberg Elec., Inc., No. 06-14-00048-CV, 2015

WL 3378377, at *8 (Tex. App.––Texarkana Mar. 4, 2015, no pet.) (mem. op.);

Lam v. Phuong Nguyen, 335 S.W.3d 786, 792 (Tex. App.––Dallas 2011, pet.

denied); Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d 122, 142 (Tex. App.––

Corpus Christi 2006, pet. denied); 1001 McKinney Ltd. v. Credit Suisse First


                                        26
Boston Mortg. Capital, 192 S.W.3d 20, 29–30 (Tex. App.––Houston [14th Dist.]

2005, pet. denied).

      Although Shellnut’s fraud, negligent misrepresentation, and TDCA-violation

claims are premised on similar allegations as his breach of verbal contract claims

(that he pled but did not challenge on appeal), he does not premise his tort

claims on Lender’s alleged failure to perform a verbal promise to modify the loan.

Instead, he pled those claims in the alternative: that Lender deliberately misled

him into believing that his participation in the loan modification process––

regardless of whether he eventually obtained a modification––would not

negatively impact his liability under the loan documents, or at least not to the

extent that it ultimately did, and that he incurred damages by participating in that

process. In other words, he is not seeking tort damages solely to obtain the

benefit of an alleged bargain but as recompense for his futile participation in the

loan modification process and resulting negative impact on his outstanding loan

balance.   See Bagwell v. BBVA Compass, No. 05-14-01579-CV, 2016 WL

3660403, at *5 (Tex. App.––Dallas July 7, 2016, no pet.) (mem. op.) (“In these

types of cases, the viability of the fraud claim depends on the nature of the

damages sought.”); see also Barraza v. Bank of Am., N.A., No. EP-12-CV-35-

KC, 2012 WL 12886438, at *8 (W.D. Tex. Aug. 13, 2012) (holding that statute of

frauds did not bar negligent misrepresentation claim, the basis of which was

plaintiffs’ complaint that because lender misrepresented that it was reviewing

their foreclosure claim, they did not file for bankruptcy or seek another alternative


                                         27
to foreclosure).18 The cases Lender cites as entitling it to summary judgment are

inapposite. See Whittier v. Ocwen Loan Servicing, L.P., 594 F. App’x 833, 837

(5th Cir. 2014) (holding that statute of frauds barred negligent misrepresentation

claim based on loan servicer’s letter informing borrowers of necessary steps to

qualify for a loan modification that borrowers contended was promise to modify

loan); Milton v. U.S. Bank Nat’l Ass’n, 508 F. App’x 326, 328–30 (5th Cir. 2013)

(holding, on ground other than statute of frauds, that borrower’s negligent

misrepresentation claim was based on promise to take future action rather than

misrepresentation of existing fact); Traynor v. Chase Home Fin., L.L.C., No. 3:11-

CV-800-K, 2013 WL 704932, at *3–4 (N.D. Tex. Feb. 27, 2013) (holding that

statute of frauds barred claim based on promises to modify loan agreement);

Salazar v. BAC Home Loans Servicing, LP, No. 3:11-CV-1309-L, 2012 WL

995296, at *3–4 (N.D. Tex. Mar. 23, 2012) (holding that borrower’s claim that

lender should have processed and approved her loan modification application as

verbally promised, rather than proceeding to foreclose, was barred by statute of

frauds).




      18
        Even if Shellnut’s claims could be construed as seeking to enforce the
benefit of a verbal promise to modify the loan, those claims would be barred by
the statute of frauds only to the extent they sought benefit-of-the-bargain as
opposed to out-of-pocket reliance damages. See Baylor Univ. v. Sonnichsen,
221 S.W.3d 632, 636 (Tex. 2007); Haase v. Glazner, 62 S.W.3d 795, 799 (Tex.
2001).


                                       28
      Because Lender had the burden to conclusively prove its affirmative

defense that Shellnut’s tort claims19 are barred by the statute of frauds and

because it did not do so, we conclude and hold that summary judgment is not

proper on Shellnut’s tort claims for that reason.        See Barraza, 2012 WL

12886438, at *8; Bagwell, 2016 WL 3660403, at *6.          We sustain Shellnut’s

second subissue.




      19
         The federal cases Lender cites in its motion for summary judgment in
support of its contention that the TDCA claims are barred by the statute of frauds
are distinguishable. See Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233,
241 (5th Cir. 2014); Kruse v. Bank of N.Y. Mellon, 936 F. Supp. 2d 790, 794
(N.D. Tex. 2013). The plaintiffs in Williams alleged that the bank had engaged in
deceptive debt collection means by foreclosing “after telling [the plaintiffs] they
would be considered for a loan modification” and “failing to notify them of the
status of their second loan modification request.” 560 F. App’x at 241. The court
held that because the Williamses’ pleadings did not allege any damages outside
of the alleged verbal agreement to modify the loan or any factual
misrepresentation independent of the alleged verbal loan modification, their
TDCA claim was likewise barred by the statute of frauds. Id. (“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.”).    In Kruse, the only TDCA-violation alleged was the lender’s
misrepresentation that it would postpone foreclosure. 936 F. Supp. 2d at 794.
The court recognized the exception to the statute of frauds in Haase but
concluded that the Kruses failed to demonstrate any out-of-pocket damages
independent of the alleged promise to delay foreclosure. Id. at 794–95. Here,
Shellnut raised additional TDCA-related claims separate from the alleged verbal
loan modification.

                                        29
             “Economic-Loss Rule”20 Does Not Bar TDCA-Violation Claim
               But Partially Bars Fraud and Negligent Misrepresentation
             Claims to Extent Shellnut Failed to Allege Independent Injury

        In part of his third subissue, which we will refer to as subissue 3A, Shellnut

claims that the trial court erred by granting summary judgment on Lender’s

economic-loss rule ground.          In that ground, Lender argued that it had

conclusively proved that Shellnut’s tort claims are barred by the economic-loss

rule.

        The supreme court has held that the economic-loss rule generally

precludes recovery in tort for economic losses resulting from a party’s failure to

perform under a contract when the harm consists only of the economic loss of a

contractual expectancy. Chapman Custom Homes, Inc. v. Dallas Plumbing Co.,

445 S.W.3d 716, 718 (Tex. 2014). But the rule does not bar all tort claims arising

out of a contractual setting; instead, a party states a tort claim when the duty

allegedly breached is independent of the contractual undertaking and the harm

suffered is not merely the economic loss of a contractual benefit. Id. The Texas

Supreme Court has thus rejected a formulation of the economic-loss rule that

“says you can never recover economic damages for a tort claim.” JPMorgan

Chase Bank, N.A. v. Prof’l Pharmacy II, 508 S.W.3d 391, 422 (Tex. App.––Fort


        20
        This court has held that the more appropriate reference is the
“independent-injury rule,” but for this case, we will use the parties’ description of
the rule. See Cactus Well Serv., Inc. v. Energico Prod., Inc., No. 02-13-00186-
CV, 2014 WL 6493231, at *3 & n.3 (Tex. App.––Fort Worth Nov. 20, 2014, pet.
denied) (mem. op.).


                                          30
Worth 2014) (citing Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d

407, 418 (Tex. 2011)), judgm’t withdrawn & appeal dism’d, 2015 WL 1119894, at

*1 (Tex. App.––Fort Worth Mar. 12, 2015, no pet.) (mem. op.).21 In determining

whether economic damages are recoverable for a tort claim independently of a

contract claim, we examine the nature of the plaintiff’s alleged loss. Sw. Bell Tel.

Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991); McPherson Rd. Baptist

Church v. Mission Inv’rs/Fort Worth, LP, No. 2-08-412-CV, 2009 WL 2579647, at

*6 (Tex. App.––Fort Worth Aug. 20, 2009, no pet.) (mem. op.).

Fraud and Negligent Misrepresentation

      Shellnut’s fraud and negligent misrepresentation claims include the basic

assertion that Lender misrepresented his eligibility for a loan modification and its

intent to assist him in obtaining a modification for the purpose of increasing the

fees and costs it could charge him on the loan in addition to the past due loan

balance. In the section of his petition devoted solely to his fraud claim, Shellnut

specifically pled to recover, in addition to the general damages pled in his

petition, (1) the loss of equity in his home because “the current required payoff

amount now equals or exceeds the value of the home now that all of the fees



      21
         As one federal court has observed, “By design this rule makes it difficult
for plaintiffs to recover for negligent misrepresentation when a contract exists. If
the state of the law were otherwise, then all contracts in which a breach left a
party with no recovery could be fertile ground for a negligent misrepresentation
claim. But recovery in similar circumstances is not impossible.” Petro-Hunt,
L.L.C. v. Williams-S. Co., L.L.C., No. 3:13-CV-1588-P, 2016 WL 6806312, at *8
(N.D. Tex. Jan. 6, 2016), aff’d, 668 F. App’x 126 (5th Cir. 2016).

                                        31
have been added to his account,”22 (2) court costs and actual damages

generally, (3) exemplary damages, and (4) damages related to Lender’s attempts

to foreclose on the loan.     He did not specify any particular damages in the

negligent misrepresentation section of his petition apart from the general

damages he alleged in his petition.

      Inherent in Shellnut’s fraud and negligent misrepresentation claims is the

allegation that, but for Lender’s misrepresentations that attempting to seek a loan

modification would not result in any negative effect to him under the loan

documents, Shellnut would have attempted to mitigate damages arising from his

default rather than participate in that process. Thus, his alleged damages related

to that failure to mitigate are not an independent injury because they are

damages to the subject matter of the loan––what he owed Lender and the

disposition of the collateral, his home. Therefore, we conclude and hold that

Shellnut’s claims for fraud and negligent misrepresentation are barred by the


      22
         As we have stated, because the note is nonrecourse, Lender could only
look to the sales price of Shellnut’s residence to satisfy any default, rather than
obtaining a deficiency judgment against Shellnut. Thus, its assessment of
additional fees and costs attributable to Shellnut’s default prior to a foreclosure
sale would result in a greater chance that the sale price at foreclosure would be
in an amount to satisfy any remaining outstanding debt and reduce the chance
that Shellnut would be entitled to any surplus. See, e.g., Patton v. Porterfield,
411 S.W.3d 147, 158 (Tex. App.––Dallas 2013, pet. denied) (holding that
common law rules relating to the distribution of excess proceeds from a
foreclosure sale apply to the foreclosure of home-equity loans); Conversion
Props., L.L.C. v. Kessler, 994 S.W.2d 810, 813 (Tex. App.––Dallas 1999, pet.
denied) (stating common law rule that surplus proceeds after foreclosure sale are
distributed first to inferior lienholders and then to holder of equity of redemption).


                                         32
economic-loss rule to the extent he seeks damages for (a) lost equity––not due

to any alleged decline in market value of the property during the time Lender

purported to engage in the modification process but, as pled by Shellnut, due to

the increased fees and costs that Lender charged under the loan documents as a

result of his continuing default during the time he was seeking a loan

modification—and (b) costs he incurred in connection with Lender’s attempts to

foreclose the loan. See Narvaez v. Wilshire Credit Corp., 757 F. Supp. 2d 621,

634    (N.D.   Tex.    2010)    (“Plaintiff    claims   that   Defendants’   alleged

misrepresentations resulted in the increase of his mortgage payments and

excess interest and penalty fees. . . . Such injuries are in no way independent of

the subject matter of the deed of trust or note, and so Plaintiff cannot recover for

a tort of negligent misrepresentation.”); Long v. Sw. Funding, L.P., No. 03-15-

00020-CV, 2017 WL 672445, at *3 (Tex. App.––Austin Feb. 16, 2017, no pet. h.)

(mem. op.) (“The proper remedy for wrongful foreclosure is either: (1) damages

equal to the difference between the value of the property and the indebtedness;

or (2) the setting aside of the foreclosure sale.”). But to the extent Shellnut seeks

damages for lost earnings and time, out-of-pocket expenses, mental anguish,

costs of treatment, and loss of credit score and credit reputation that would not

be recoverable as consequential damages in a claim against Lender for breach

of the loan documents,23 those damages are more in the nature of reliance


      23
        Lender did not include any ground in its motion for summary judgment
challenging the availability generally of any out-of-pocket consequential damages

                                          33
damages independent of the subject matter of the loan. See Gross v. WB Tex.

Resort Cmtys., L.P., No. 02-12-00411-CV, 2014 WL 7334950, at *7 (Tex. App.––

Fort Worth Dec. 23, 2014, no pet.) (mem. op.) (“The Grosses argue that they are

seeking not only benefit-of-the-bargain damages for breach of contract but also

damages for the diminution in the value of the lot and consequential damages

associated with having the lot but being unable to build on it, such as loss of

prospective business, loss of credit reputation, and costs of delay in

performance. . . . [W]e think that the Grosses’ evidence raises a genuine issue

of material fact with regard to the types of losses they have sustained that go

beyond the benefit of the bargain.”); see also Murex v. GRC Fuels, Inc.,

for any of Shellnut’s claims. See, e.g., Barraza v. Bank of Am., N.A., No. EP-12-
CV-35-KC, 2012 WL 12886438, at *15 (W.D. Tex. Aug. 13, 2012) (dismissing
negligent misrepresentation claim as to certain types of pled damages, including
mental anguish); Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 304 (Tex.
2006) (“For breach of contract, Chapa could recover economic damages and
attorney’s fees, but not mental anguish or exemplary damages. For fraud, she
could recover economic damages, mental anguish, and exemplary damages, but
not attorney’s fees.” (footnotes omitted)); Fed. Land Bank Ass’n of Tyler v.
Sloane, 825 S.W.2d 439, 443 (Tex. 1991) (holding that damages for negligent
misrepresentation are limited solely to pecuniary loss and, thus, that plaintiffs
could not recover mental anguish damages for such a claim). In its brief, Lender
contends that “allegations of lost equity arising from a loan modification review
could not support a claim in any event,” citing Lawrence v. Federal Home Loan
Mortgage Corp., 808 F.3d 670, 674 (5th Cir. 2015). But Lender failed to raise
this argument in its motion for summary judgment. Additionally, the ground for
summary judgment in Lawrence was that the lost equity damages were too
speculative, and the court held that in the face of that complaint, the plaintiffs had
failed to bring forward evidence that “they had planned to sell the house, when
they would have sold it, or for how much” and that “[w]ithout some evidence that
Wells Fargo’s misrepresentations denied them the chance actually to sell, the
Lawrences’ claim that they would have sold are ‘speculation’ that is not enough
to oppose summary judgment.” Id.


                                         34
No. 3:15-CV-3789-B, 2016 WL 4207994, at *8–9 (N.D. Tex. Aug. 10, 2016)

(holding that consequential losses were not related to loss of contractual

expectancy); Gordon v. Bank of Am. Corp., No. 3:15-CV-902-L, 2015 WL

5872659, at *4 (W.D. Tex. Oct. 5, 2015) (holding that claims for “out-of-pocket

expenses, loss of credit and damage to his credit reputation, and interest and

finance charges” alleged injury “over and above the economic loss to the subject

matter of the note and deed of trust” sufficient to allow a claim); Barraza, 2012

WL 12886438, at *14 (“Here, Plaintiffs do[] not claim that Defendants made any

misrepresentations related to existing duties or obligations under the Note or

Deed    of   Trust;   instead,   Plaintiffs    claim   that   Defendants   negligently

misrepresented the status of their loan modification application, which caused

them to incur various compliance costs and refrain from taking steps to prevent

foreclosure. . . .    The Court finds that in such circumstances, section 552

imposes an independent legal duty separate from any contractual duties between

Plaintiffs and Defendants.”); Wilkerson v. Citimortgage, Inc., No. 3:111-CV-1393-

0-BK, 2011 WL 6937382, at *6–7 (N.D. Tex. Oct. 24, 2011) (holding, for purpose

of negligence claim, that alleged damages for mental anguish and harm to credit

history were not barred by economic-loss rule), adopting findings, conclusions &

recommendation, 2012 WL 11039 (N.D. Tex. Jan. 3, 2012). See generally Basic

Capital Mgmt. v. Dynex Commercial, Inc., 348 S.W.3d 894, 901 (Tex. 2011)

(“Consequential damages are those damages that result naturally, but not

necessarily, from the defendant’s wrongful acts. They are not recoverable unless


                                          35
the parties contemplated at the time they made the contract that such damages

would be a probable result of the breach.”).

      Again, the cases relied on by Lender are distinguishable. See Dixon v.

Bank of N.Y. Mellon, No. 3:13-CV-4235-L, 2014 WL 2991742, at *6 (N.D. July 3,

2014) (holding that economic-loss rule barred claim that lender intentionally

misrepresented that it provided borrower with notices of default and sale and

performed other prerequisites to foreclosure); Omrazeti v. Aurora Bank FSB, No.

SA:12-CV-00730-DAE, 2013 WL 3242520, at *11 (W.D. Tex. June 25, 2013)

(rejecting claim that lender owed borrower duty of ordinary care when instituting

foreclosure process and when filing documents in public records affecting

borrower’s title); Casey v. Fed. Home Loan Mortg. Ass’n, No. H-11-3830, 2012

WL 1425138, at *1, *4 (S.D. Tex. Apr. 23, 2012) (holding that economic-loss rule

barred claim that lender misrepresented that a foreclosure sale would not occur if

borrowers made reduced payments and were still in the modification review

stage); Motten v. Chase Home Fin., 831 F. Supp. 2d 988, 1006 & n.5 (S.D. Tex.

2011) (holding that plaintiffs failed to distinguish between their breach of contract

and general negligence claims, which were based on the assertion that lender

“had a duty to Plaintiffs of modification services, protecting Plaintiffs home

managing Plaintiffs escrow account and loan account”); Heil Co. v. Polar Corp.,

191 S.W.3d 805, 808, 817 (Tex. App.––Fort Worth 2006, pet. denied) (holding

that independent-injury rule barred claim that party that sold stock of company to

Heil falsely represented that company owned a crane when contract of sale for


                                         36
stock included a representation and warranty that company owned the crane);

see also Owen v. Option One Mortg. Corp., No. 01-10-00412-CV, 2011 WL

3211081, at *2, *7 (Tex. App.––Houston [1st Dist.] July 28, 2011, pet. denied)

(mem. op.) (holding that borrower did not properly plead an independent tort by

alleging that lender falsely misrepresented the amount due on the loan and that it

had made a property tax payment).

      Accordingly, we conclude and hold that the trial court erred by granting

summary judgment on Shellnut’s fraud and negligent misrepresentation claims

only to the extent Shellnut alleged non-benefit-of-the-bargain damages.

TDCA Violation

      In his original petition, Shellnut accused Lender of violating two specific

parts of the Finance Code: subsections (a)(8) and (14) of section 392.304. Tex.

Fin. Code Ann. § 392.304(a)(8), (14). Those sections provide that

      in debt collection or obtaining information concerning a consumer, a
      debt collector may not use a fraudulent, deceptive, or misleading
      representation      that    employs      the   following   practices:

            ....

             (8) misrepresenting the character, extent, or amount of a
      consumer debt, or misrepresenting the consumer debt’s status in a
      judicial or governmental proceeding;

            ....

            (14) representing falsely the status or nature of the services
      rendered by the debt collector or the debt collector’s business.




                                       37
Id. Additionally, although Shellnut did not list a specific provision in reference to

his claim that Lender harassed him for payment, finance code section 392.302

provides that

           In debt collection, a debt collector may not oppress, harass, or
      abuse a person by:

             (1) using profane or obscene language or language intended
                 to abuse unreasonably the hearer or reader;

             (2) placing telephone calls without disclosing the name of the
                 individual making the call and with the intent to annoy,
                 harass, or threaten a person at the called number;

             (3) causing a person to incur a long distance telephone toll,
                 telegram fee, or other charge by a medium of
                 communication without first disclosing the name of the
                 person making the communication; or

             (4) causing a telephone to ring repeatedly or continuously, or
                 making repeated or continuous telephone calls, with the
                 intent to harass a person at the called number.

Id. § 392.302 (West 2016) (emphasis added). Shellnut also alleged that Lender

engaged in prohibited abusive, harassing, coercive, and threatening behavior

under the TDCA by threatening to foreclose its deed of trust lien.

      Shellnut complains that Lender violated statutory duties imposed on debt

collectors by the TDCA.      The Texas Supreme Court has clarified that the

economic-loss rule does not necessarily apply to bar certain statutory causes of

action that allow recovery of economic losses even when a contract exists

between the parties. See Sharyland Water Supply, 354 S.W.3d at 418; SCS

Builders, Inc. v. Searcy, 390 S.W.3d 534, 540 (Tex. App.––Eastland 2012, no



                                         38
pet.); see also McCaig v. Wells Fargo Bank (Tex.), N.A., 788 F.3d 463, 475 (5th

Cir. 2015) (“A statutory offender will not be shielded from liability simply by

showing its violation also violated a contract.”). It is only when a statutory claim

is premised upon nothing more than a claim of nonperformance of a promised

contractual obligation that it is barred. See, e.g., Crawford v. Ace Sign, Inc., 917

S.W.2d 12, 14–15 (Tex. 1996) (holding that misrepresentations alleged under

DTPA were nothing more than promises to perform under the contract).

      Shellnut specifically alleged that in the course of attempting to collect past

due amounts on the loan, Lender (1) affirmatively misrepresented the amount he

actually owed and attempted to make him pay fees he did not actually owe,

(2) told him he was eligible for a loan modification program it knew he was not

eligible for, and (3) harassed him and his wife. None of these claims seek to

enforce Lender’s contractual obligations under the loan documents or involve a

claim that Lender misrepresented that it would comply with its obligations under

the loan documents. Instead, Shellnut contends that Lender told him it would not

exercise its rights under the loan documents during the modification process.

And as Lender points out in its own arguments, the loan documents did not

impose a duty on it to modify the loan.

      Shellnut contends that he is entitled to the following “actual damages” for

the TDCA-violation claim: “value for loss of time rectifying the problem, . . .

damages for loss of credit and damages to credit reputation, attorneys’ fees, . . .

mental and emotional distress, damages resulting from payment of excess or


                                          39
additional interest, and any consequential damages.” These are not the type of

damages seeking the benefit of the bargain of the loan. See Gordon, 2015 WL

5872659, at *4, *7.

      Thus, we conclude and hold that Shellnut’s TDCA-violation claims—except

his claim that Lender wrongfully threatened foreclosure in violation of the

TDCA—are not barred by the economic-loss rule.          See SCS Builders, 390

S.W.3d at 541–42 (holding that DTPA duty not to engage in unconscionable

business practices arose independently from contract and, thus, DTPA claim was

not barred by economic-loss rule); see also McCaig, 788 F.3d at 475 (holding

that TDCA-violation claim was not barred by economic-loss rule and noting that

“[p]ermitting debt collectors to cast the absence of a contractual right as a mere

contractual breach triggering the economic[-]loss rule would fundamentally

disrupt the statutory scheme”); Strong v. Green Tree Servicing, LLC, No. 3:14-

CV-1027-B, 2016 WL 4095597, at *7 (N.D. Tex. Aug. 1, 2016) (“Green Tree had

a statutory duty not to misrepresent its services . . . or to otherwise engage in

deceptive collection practices.”); Tex. Fin. Code Ann. § 392.403 (West 2016)

(providing that attorney general may bring action in the State’s name to restrain

or enjoin a violation of the TDCA), § 392.404(a) (West 2016) (providing that

violation of TDCA is also a violation of the DTPA); Tex. Bus. & Com. Code Ann. §

17.44 (West 2011) (providing that purpose of DTPA is “to protect consumers

against false, misleading, and deceptive business practices, unconscionable

actions, and breaches of warranty”). But cf. Nelson v. Ocwen Loan Servicing,


                                       40
LLC, No. H-16-778, 2016 WL 7324284, at *8 (S.D. Tex. Nov. 7, 2016) (holding

that claim that lender misrepresented debt by attempting to wrongfully foreclose

was barred by economic loss doctrine because wrongfulness of alleged actions

arose solely from violation of the loan agreement), adopting memorandum &

recommendation, 2016 WL 7242735 (S.D. Tex. Dec. 15, 2016).

      Again, the cases Lender relies on involve different allegations than those

pled here; thus, the holdings in those cases are inapposite.      Moreover, we

disagree that an allegation that a lender violated the TDCA by misrepresenting

the loan amount owed in a collection attempt alleges an action wrongful only

under the loan documents. See Rucker v. Bank of Am., N.A., No. 3:13-CV-1895-

N, 2014 WL 11310156, at *7 (N.D. Tex. Dec. 18, 2014) (appearing to grant

summary judgment on TDCA-violation claim under section 392.304(a)(8) in part

because allegation of misrepresentation of character and extent of loan covered

by note and deed of trust), aff’d on other grounds, 806 F.3d 828 (5th Cir. 2015)

(noting that in McCaig Fifth Circuit had decided that the economic-loss rule does

not bar TDCA-violation claims but affirming summary judgment on section

392.304(a)(8) claim because different amounts in four notice letters were result

of two different types of obligations and were consistent); Hammond v. Ocwen

Loan Servicing, LLC, No. 3:14-cv-2599-BN, 2014 WL 5326722, at *4–5 (N.D.

Tex. Oct. 20, 2014); Johnson v. Wells Fargo Bank, N.A., No. 3:13-cv-1793-M-

BN, 2014 WL 2593616, at *4 (N.D. Tex. June 9, 2014); Hernandez v. U.S. Bank,

N.A., No. 3:13-cv-2164-O, 2013 WL 6840022, at *10 (N.D. Tex. Dec. 27, 2013).


                                       41
A collection notice or balance statement affirmatively misstating the amount

owed on a debt constitutes a misleading assertion regarding the amount of that

debt under the TDCA. See VanHauen v. Am. Home Mortg. Servicing, Inc., No.

4:11-CV-461, 2012 WL 874330, at *5 (E.D. Tex. Feb. 17, 2012), adopting report

& recommendation, 2012 WL 874328 (E.D. Tex. Mar. 14, 2012); Baker v.

Countrywide Home Loans, Inc., No. 3:08-CV-0916-B, 2009 WL 1810336, at *7

(N.D. Tex. June 24, 2009); see also Tex. Fin. Code Ann. § 392.304(a)(8). This is

a different allegation from a complaint that a bank’s failure to apply or properly

apply a payment is a violation of the TDCA; nothing in the TDCA specifically

makes misapplication of a payment or failure to apply a payment a prohibited

misleading practice. See, e.g., Dominguez v. Beneficial Fin. I, Inc., No. B:14-67,

2015 WL 12748637, at *9 (S.D. Tex. Feb. 4, 2015), adopting report &

recommendation, 2015 WL 12748638 (S.D. Tex. June 17, 2015); Llanes v. U.S.

Bank Nat’l Ass’n, No. 3:13-CV-2243-M-BN, 2014 WL 2883922, at *9 (N.D. Tex.

June 25, 2014); Caldwell v. Flagstar Bank, FSB, No. 3:12-cv-1855-K-BD, 2013

WL 705110, at *12 (N.D. Tex. Feb. 4, 2013), accepting findings, conclusions, &

recommendation, 2013 WL 705876 (N.D. Tex. Feb. 26, 2013); cf. Singh v. JP

Morgan Chase Bank, NA, No. 4:11-CV-607, 2012 WL 3904827, at *8–9 (E.D.

Tex. July 31, 2012) (recommending that summary judgment be granted on

TDCA-violation claim alleging that lender wrongfully charged late fees under the

loan after verbally representing that it would not do so), adopting report &

recommendation, 2012 WL 3891060 (E.D. Tex. Sept. 7, 2012); McCartney v.


                                       42
CitiFinancial Auto Credit, Inc., No. 4:10-CV-424, 2010 WL 5834802, at *4–5 (E.D.

Tex. Dec. 14, 2010) (recommending dismissal of claim under TDCA section

392.304(a)(8) for attempting to collect debt in violation of agreement to settle

debt), adopting report & recommendation, 2011 WL 675386 (E.D. Tex. Feb. 16,

2011).

      However, threatening foreclosure when a borrower has defaulted under

the loan documents––which is clearly the case here––is not prohibited by the

TDCA; thus, this claim is nothing but a recast breach of contract claim. See Tex.

Fin. Code Ann. § 392.301(b)(2) (West 2016). Accordingly, the trial court did not

err by granting summary judgment on this claimed TDCA-violation. See Rabe v.

Wells Fargo Bank, N.A., No. 4:11-cv-787, 2013 WL 5458068, at *11 (E.D. Tex.

Sept. 30, 2013), aff’d, 616 F. App’x 729 (5th Cir. 2015).

Conclusion—Economic-Loss Rule

      Accordingly, we conclude and hold that the summary judgment was proper

on Shellnut’s fraud and negligent misrepresentation claims only to the extent that

Shellnut sought damages for loss of the equity in his home and damages

attributable to Lender’s attempts to foreclose.     But because he also sought

damages for injuries independent of the subject matter of the loan, we conclude

and hold that summary judgment was not proper on Shellnut’s fraud and

negligent misrepresentation claims to the extent he seeks independent damages

related to his reliance on Lender’s alleged misrepresentations. Likewise, we also

conclude and hold that summary judgment was not proper on most of his TDCA-


                                        43
violation claims because of the economic-loss rule except with respect to the

allegation that Lender wrongfully threatened to foreclose under the deed of trust.

We overrule Shellnut’s subissue 3A in part and sustain it in part.

      Because Lender did not raise any other grounds for summary judgment on

Shellnut’s fraud claim, we reverse the summary judgment for fraud to the extent

that Shellnut seeks damages for lost earnings and time, out-of-pocket expenses,

mental anguish, costs of treatment, and loss of credit score and credit reputation

that would not be recoverable as consequential damages in a claim against

Lender for breach of the loan documents. We finally consider the claim-specific

grounds Lender raised as to Shellnut’s TDCA-violation and negligent

misrepresentation claims.

       Summary Judgment on Surviving TDCA-Violation Claims and
 Negligent Misrepresentation Claim Not Proper on Claim-Specific Grounds

      In the remaining part of his third subissue––subissue 3B––Shellnut

contends that summary judgment was not proper on the claim-specific grounds

raised by Lender.

TDCA Violation

      Lender contended in its motion for summary judgment that Shellnut’s

TDCA-related claims “fail[] because [(1) Shellnut] admits he owed a debt that

was in default and he tendered no payments and [2] because loan modification

discussions cannot support a TDCA claim.”            Lender again characterizes

Shellnut’s TDCA-violation claims as being based on its alleged offer to consider



                                        44
Shellnut for a loan modification and its alleged refusal to accept payments on the

loan. Lender cites numerous federal cases, including Chavez v. Wells Fargo

Bank, N.A., 578 F. App’x 345, 348 (5th Cir. 2014), Massey v. EMC Mortgage

Corp., 546 F. App’x 477, 480 (5th Cir. 2013), Verdin v. Federal National

Mortgage Ass’n, 540 F. App’x 253, 257 (5th Cir. 2013), Miller v. BAC Home

Loans Servicing, L.P., 726 F.3d 717, 723 (5th Cir. 2013), and Thomas v. EMC

Mortgage Corp., 499 F. App’x 343, 337 (5th Cir. 2012). Lender attempts to

extricate a general holding for all TDCA-violation claims from these cases, but all

of these cases addressed whether specific claims were sufficient to state causes

of action under specific sections of the TDCA. Thus, the holdings in these cases

cannot be read in the broad sense Lender urges.

      In Miller, the Fifth Circuit held that a borrower could not maintain a cause

of action under section 392.304(a)(8) of the TDCA based on a loan servicer’s

statements that it would send the Millers a loan application and delay foreclosure

pending loan modification discussions when the Millers were always aware of the

existence of a mortgage debt, knew the specific amount owed on that debt, and

knew that they were in default. 726 F.3d at 723 (“[T]he Millers always were

aware (i) that they had a mortgage debt; (ii) of the specific amount that they

owed; (iii) and that they had defaulted.      Nothing in the Millers’ allegations

suggests the BAC led them to think differently with respect to the character,

extent, amount, or status of their debt.”). This is because section 392.304(a)(8)

prohibits misleading statements about the amount, character, or nature of the


                                        45
original debt rather than a potential modification of that debt. See Bracken v.

Wells Fargo Bank, N.A., 13 F. Supp. 3d 673, 684 (E.D. Tex. 2014) (holding that

the Brackens could not state claim under section 392.304(a)(8) with allegation

that Wells Fargo told them it would pursue a loan modification simultaneously

with a foreclosure and offered a modification which the Brackens then rejected

for inaccuracy), aff’d, 612 F. App’x 248 (5th Cir. 2015); see also Chavez, 578 F.

App’x at 348 (citing Miller in affirming dismissal of claim under section

392.304(a)(8)); Massey, 546 F. App’x at 480 (citing Thomas in affirming

dismissal of section 392.304(a)(8) claims); Verdin, 540 F. App’x at 257 (affirming

summary judgment on section 392.304(a)(8) claim that lender foreclosed after

telling borrower “not to worry” about foreclosure and to seek a postponement of

the sale); Thomas, 499 F. App’x at 343 (holding that lender was entitled to

summary judgment on claim that it violated section 392.304(a)(8) because loan

modification discussions did not represent or misrepresent the amount or

character of the debt). But Shellnut alleges that––aside from the modification

misrepresentations––Lender affirmatively misrepresented the amount he actually

owed on the underlying loan and attempted to collect fees he did not actually

owe.24 Because Lender did not move for summary judgment on Shellnut’s claim


      24
          The May and August 2010 past due letters, and Lender’s internal
records, show that Lender was calculating Shellnut’s past due payments at
$1,372.88 per month instead of $1,372.86 per month as set forth in the loan
documents. Although this is a de minimis amount, even when spread over the
life of the loan, it is nevertheless an inaccurate statement of the monthly amount
due.


                                       46
that Lender misrepresented what amount he actually owed on the underlying

note, summary judgment was not proper.

      With regard to subsection (a)(14), Shellnut alleged that Wells Fargo

affirmatively misrepresented that he was eligible for the loan modification

program when he was not. This allegation is similar to the plaintiffs’ subsection

(a)(14) allegation in Miller that their lender told them it would consider a loan

modification before the scheduled June 1 foreclosure but did not do so. 726 F.3d

at 724. The Fifth Circuit held that although the Millers had failed to state a claim

under section 392.304(a)(8), this allegation did state a claim under section

392.304(a)(14). Id. at 724. None of the other cases cited by Lender address a

misrepresentation under subsection (a)(14). Thus, we conclude and hold that

Lender was not entitled to summary judgment on Shellnut’s claim that it made

affirmative misrepresentations under section 392.304(a)(14). See id.

      Likewise, Lender failed to move for summary judgment on Shellnut’s claim

of TDCA-prohibited harassment. Thus, it was not entitled to summary judgment

on that part of his TDCA-violation claim. See Tex. R. Civ. P. 166a(c); G & H

Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011); see also State Farm

Lloyds v. Page, 315 S.W.3d 525, 532 (Tex. 2010) (stating that a “[s]ummary

judgment may not be affirmed on appeal on a ground not presented to the trial

court in the motion”).

      Because the grounds stated in Lender’s motion for summary judgment

specifically as to Shellnut’s remaining TDCA-related claims do not show that


                                        47
those claims fail as a matter of law, we conclude and hold that the trial court

erred by granting summary judgment on the TDCA-violation claims.

Negligent Misrepresentation

      Lender    raised   three   other   grounds   as   to   Shellnut’s   negligent

misrepresentation claim:    (1) that Shellnut does not contend, as required to

recover for negligent misrepresentation, that Lender’s alleged misrepresentations

were made in the context, and for the purpose of, guiding Shellnut in his

“business,” (2) that the tort of negligent misrepresentation is “not usually

available where a contract was actually in force between the parties,” and (3) that

Lender has no independent duty to Shellnut upon which such a claim can be

based.

      As to (1) above, Lender cited Steele v. Green Tree Servicing, in which the

court informed the plaintiffs that it would sua sponte grant summary judgment on

their negligent misrepresentation claim because they had not brought forward

any evidence that two letters the loan servicer had sent them––a “Notice of

Receipt of Partial Payment” and a “Demand for Payment and Notice of Intent to

Accelerate”––contained “information . . . supplied for guidance of others in their

business.”   No. 3:09-CV-0603-D, 2010 WL 3565415, at *5, *7–8 (N.D. Tex.

Sept. 7, 2010), aff’d, 453 F. App’x 473 (5th Cir. 2011), cert. denied, 133 S. Ct.

111 (2012). But, here, Lender did not move for summary judgment on any no-

evidence grounds. Instead, it argued that the false information Shellnut alleged

he had been provided was not for his guidance in “business.” Lender cited no


                                         48
authority to the trial court, and has not cited any in this court, holding that the tort

of negligent misrepresentation is categorically unavailable to a plaintiff in

circumstances such as those pled here. See, e.g., Williams v. Wells Fargo Bank,

N.A., No. 3:11-cv-1253-O, 2012 WL 12871948, at *9 (N.D. Tex. Feb. 7, 2012)

(holding, in context of evaluating 12(b)(6) dismissal motion in suit by borrower

against bank alleging post-default negligent misrepresentations involving loan

modification, that “the Court cannot agree with Defendant’s contention that

Plaintiffs’ complaint does not sufficiently allege that Defendant’s purported

misrepresentations were made for the guidance of Plaintiffs in their business

affairs”), aff’d, 560 F. App’x 233 (5th Cir. 2014); Barraza, 2012 WL 12886438, at

*5–6 (holding that party not named on note but named in deed of trust had

standing to bring negligent misrepresentation claim against lender based on

allegedly false representation that loan modification was being reviewed, which

misrepresentation allegedly caused that party to delay making loan payments);

Brandon v. Wells Fargo Bank, N.A., No. 4:11-CV-261, 2011 WL 6338832, at *14

(E.D. Tex. Nov. 30, 2011) (holding that plaintiff was plausibly entitled to relief on

his negligent misrepresentation claim that bank misrepresented the status of his

loan modification and his eligibility for such a modification for the purpose of

preventing him from seeking assistance elsewhere and so that it could accrue

additional fees and penalties), adopting report & recommendation, 2011 WL

6338827 (E.D. Tex. Dec. 19, 2011). Thus, we conclude and hold that Lender did

not prove its entitlement to summary judgment on this ground.


                                          49
      With respect to (2) above, Lender cited Airborne Freight Corp. v. C.R. Lee

Enterprises, in which the court held that a negligent misrepresentation cause of

action is generally brought in lieu of a breach of contract action, such as when a

party represents that it has entered into a contract with another party when it has

not. 847 S.W.2d 289, 295 (Tex. App.––El Paso 1992, writ denied) (citing Fed.

Land Bank Assoc. of Tyler v. Sloane, 825 S.W.2d 439, 442–43 (Tex. 1991)); see

also Scherer v. Angell, 253 S.W.3d 777, 780 (Tex. App.––Amarillo 2007, no pet.)

(holding that evidence was insufficient to prove negligent misrepresentation

because alleged misrepresentations were either (1) promises of future

performance rather than misstatements of existing fact or (2) restatements of

promises made in existing construction contract). But unlike in the cases cited by

Lender, none of the alleged misrepresentations here are based on promises in

the loan agreements; as we have pointed out, Shellnut alleged that Lender gave

him false information about his participation in the loan modification process,

which is not an obligation under the loan documents. Thus, with respect to the

out-of-pocket injuries alleged by Shellnut, the negligent misrepresentation claim

is not precluded by the existing loan documents.

      Finally, with respect to (3) above, Lender contends that it owes no

independent duty to Shellnut that would impose liability for negligent

misrepresentation.   According to Lender, because the relationship between

mortgagor and mortgagee is not a special relationship that would impose a duty

on either party to engage in a duty of good faith and fair dealing under the loan


                                        50
documents, it had no independent duty in relation to the modification process.

See FDIC v. Coleman, 795 S.W.2d 706, 709 (Tex. 1990).                However, this

argument is likewise based on Lender’s contention that all of Shellnut’s claims

are related to or subsumed by obligations under the loan documents.

Accordingly, we conclude Lender was not entitled to summary judgment on this

ground.

      Having determined that Lender was not entitled to summary judgment on

claim-specific grounds on Shellnut’s violation of the TDCA and negligent

misrepresentation claims, we sustain subissue 3B.

Although Subissue 4 Inadequately Briefed, Trial Court Not Precluded From
      Revisiting Ruling on Remand in Light of This Court’s Holdings

      In his fourth subissue, Shellnut contends the trial court erred by partially

denying his amended second motion seeking to compel Lender to answer

thirteen interrogatories and by granting Lender a protective order as to several

deposition topics.   Instead of addressing each alleged error with pertinent

argument and authority, Shellnut incorporated into his brief by reference all of his

arguments in the trial court, conceding that the discovery issues were

“voluminous.” But this type of argument is not adequate to require this court to

address the issue on appeal. See, e.g., Tex. R. App. P. 38.1(f), (h), (i); Galilee

Partners, L.P. v. Tex. Comm’n on Envtl. Quality, No. 11-12-00033-CV, 2014 WL

358287, at *5 (Tex. App.––Eastland Jan. 31, 2014, no pet.) (mem. op.). In any

event, because we are remanding for further proceedings on Shellnut’s fraud,



                                        51
negligent misrepresentation, and TDCA-violation claims, nothing precludes the

trial court from reconsidering the discovery-related concerns raised in Shellnut’s

amended second motion to compel and Lender’s motion for a protective order,

nor precludes the parties from conducting further discovery or other proceedings

on Shellnut’s surviving claims.25 See Kaldis v. Aurora Loan Servs., 424 S.W.3d

729, 737 & n.10 (Tex. App.––Houston [14th Dist.] 2014, no pet.). We overrule

Shellnut’s fourth subissue.




      25
        A cursory review of Lender’s response to the motion to compel and
objections to discovery shows that Lender relied extensively on its summary
judgment allegations and characterization of Shellnut’s claims in litigating the
discovery dispute.


                                       52
                                  Conclusion

      Having sustained part of Shellnut’s first subissue (subissue 1A), his

second subissue, and parts of his third subissue (all of 3B and part of 3A), we

reverse the summary judgment on his TDCA-violation claims except the

allegation that Lender wrongfully threatened to foreclose, and we reverse the

summary judgment on his fraud and negligent misrepresentation claims to the

extent Shellnut seeks non-benefit-of-the-bargain damages. We remand those

claims to the trial court for further proceedings. We affirm the remainder of the

summary judgment.

                                                 /s/ Terrie Livingston

                                                 TERRIE LIVINGSTON
                                                 CHIEF JUSTICE

PANEL: LIVINGSTON, C.J.; GABRIEL and SUDDERTH, JJ.

DELIVERED: April 27, 2017




                                       53
