                       COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                            NO. 02-13-00092-CV


VAUGHN L. BAILEY AND CELESTE                               APPELLANTS
BAILEY

                                     V.

BANK OF AMERICA, N.A. F/K/A                                   APPELLEE
BAC HOME LOAN SERVICING, LP
F/K/A COUNTRYWIDE HOME
LOANS SERVICING LP


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         FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY

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                       MEMORANDUM OPINION 1

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     Vaughn L. and Celeste Bailey appeal from a summary judgment for Bank

of America, N.A., formerly known as BAC Home Loan Servicing, LP, which in

turn was formerly known as Countrywide Home Loans Servicing LP.    In two


     1
      See Tex. R. App. P. 47.4.
points, the Baileys contend that the trial court erred by granting summary

judgment. We affirm.

                                  Background

      In 2005, Vaughn obtained a loan from America’s Wholesale Lender; the

note was secured by a deed of trust signed by both Baileys. The deed of trust

named Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee

for the lender and its successors and assigns. A second deed of trust, with an

attached exhibit bearing a corrected legal description of the property, was

recorded in the Tarrant County property records on October 4, 2010. BAC, as

servicer of the loan, sent the Baileys a notice of default on October 19, 2009. On

January 15, 2010, an assignment of the Baileys’ deed of trust from MERS to

BAC was recorded in the Tarrant County property records; the assignment was

signed on behalf of MERS by Stephen Porter, as an assistant secretary, and was

dated effective November 26, 2009.

      On December 30, 2010, the Baileys sued BAC. On January 5, 2011, BAC

sent notices to the Baileys that it had accelerated the debt and had scheduled a

foreclosure sale for February 1, 2011. Nothing in the record indicates that BAC

went forward with the sale. In October 2012, Bank of America 2 filed a combined

traditional and no-evidence motion for summary judgment, which the trial court

granted.


      2
       Bank of America is BAC’s successor-in-interest by merger.


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                          Adequate Time for Discovery

      In their second point, the Baileys contend that the trial court erred by

granting summary judgment because they did not have an adequate time for

discovery. In their brief, they argue specifically that

      [i]nformation outside the formal discovery process that guides
      counsel in the focused pursuit of certain items in discovery has been
      in flux in this area of law, with developments over the past two years
      constantly affecting the calculus of when and where discovery
      should be pursued, and the preferred specificity of each request.

They also contend that they pled their claims in good faith.

      A party claiming an inadequate time for discovery must file an affidavit

explaining the need for further discovery or a verified motion for continuance.

See Tex. R. Civ. P. 166a(g); Tenneco, Inc. v. Enter. Prods. Co., 925 S.W.2d 640,

647 (Tex. 1996); Reule v. Colony Ins. Co., 407 S.W.3d 402, 407 (Tex. App.––

Houston [14th Dist.] 2013, pet. denied). The Baileys did not file an affidavit or

verified motion for continuance explaining the need for further discovery.

Moreover, Bank of America filed its motion for summary judgment almost two

years after the Baileys filed suit and approximately a year and half after BAC had

filed its original answer, which also sought discovery. Thus, we conclude and

hold that the trial court did not err by granting summary judgment before an

adequate time for discovery had passed. We overrule the Baileys’ second point.




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                       Propriety of Summary Judgment

      In their first point, the Baileys contend that they raised a fact issue on each

element of their claims, thereby defeating Bank of America’s summary judgment

motion.

Allegations in Baileys’ First Amended Petition

      Assignment to BAC from MERS

      In their first amended petition, the Baileys alleged that the recorded

assignment of the deed of trust from MERS to BAC is invalid because MERS had

no interest in the note and thus lacked capacity to assign the deed of trust.

Additionally, according to the Baileys, the assignment was fraudulent because

Porter knowingly and intentionally executed it without proper authorization from

MERS.     Because Porter––on behalf of MERS acting as “attorney-in-fact” for

BAC––had also signed two other documents appointing substitute trustees under

the deed of trust, which were recorded in the Tarrant County property records,

the Baileys contend those documents are fraudulent as well. The Baileys sought

damages for the allegedly fraudulent documents under section 12.003(a)(8) of

the civil practice and remedies code and under the Texas deceptive trade

practices act (DTPA). Tex. Bus. & Com. Code Ann. § 17.50 (West 2011); Tex.

Civ. Prac. & Rem. Code Ann. § 12.003(a)(8) (West 2002).

      Notices of Acceleration and Foreclosure

      The Baileys also claimed that BAC had no capacity to threaten foreclosure

in its January 5, 2011 notice of substitute trustee’s sale. They alleged that BAC


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violated section 392.301(a)(8) of the finance code because it had no authority or

capacity to threaten foreclosure and its notices of acceleration and foreclosure

were therefore not in compliance with sections 51.002(d) and 51.0025(2) of the

property code. Tex. Fin. Code Ann. § 392.301(a)(8) (West 2006) (prohibiting

debt collector from “threatening to take an action prohibited by law” in attempt to

collect a debt); Tex. Prop. Code Ann. §§ 51.002(d) (setting forth method by which

mortgage servicer must provide notice of default), 51.0025(2) (West Supp. 2013)

(providing that mortgage servicer may administer foreclosure on behalf of

mortgagee if the required notices disclose the representation and address of

either the mortgagee or servicer). The Baileys also claimed damages for BAC’s

alleged negligent misrepresentation that it owned the loan secured by the deed

of trust, and the corresponding servicing rights, and that it had the capacity to

enforce the deed of trust lien.

      Alleged Modification Plan

      The Baileys further claimed that Vaughn had tried to contact BAC in

December 2009 about a modification or workout arrangement and that BAC told

him that if he paid $8,100.17 in certified funds, it would begin a workout process

and not attempt to foreclose.     The Baileys allege that they relied on BAC’s

representations and hand delivered a cashier’s check for $8,100.17 to BAC’s

counsel but nevertheless received notice from BAC that it was returning the

check because it was an incorrect amount and was not certified funds. The




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Baileys claim that Bank of America proceeded to foreclose even after assuring

the Baileys that it would not do so.

      The Baileys sought damages for BAC’s alleged misrepresentations about

the alleged loan modification under section 392.404 of the finance code and

section 17.46(b)(24) of the business and commerce code. They also sought

damages for negligent misrepresentation.

Summary Judgment Grounds

      In its motion for summary judgment, Bank of America alleged that it was

the lawful beneficiary of the deed of trust, that the Baileys had been in default

since September 2009, that the Baileys had failed to timely cure the default after

receiving proper notice of default and opportunity to cure, and that BAC as the

mortgage servicer had properly served the Baileys notices of acceleration and

foreclosure. Bank of America also claimed that the applicable property records

showed its authority to proceed with foreclosure under the deed of trust, that

MERS validly assigned the deed of trust to BAC, that the Baileys were not

“consumers” such that they had standing to bring a DTPA claim, and that the

Baileys’ claim sounded in contract, not in tort, such that they could not maintain a

claim for negligence. Bank of America also contended that the Baileys could

produce no evidence that it had failed to comply with the Texas debt collection

practices act, that it had violated the DTPA, or that its negligence was the

proximate cause of any damages to the Baileys.




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      Bank of America attached to its motion for summary judgment the affidavit

of its records custodian, with a copy of the note, deed of trust, assignment, and

October 2009 notice of default. It also attached an affidavit from the records

custodian for its counsel, with copies of the notices of acceleration and

foreclosure sale.

Response

      The Baileys attached to their response an affidavit from Vaughn in which

he averred as follows:

              In December, 2009, I approached BAC Home Loans
      Servicing, LP fka Countrywide Home Loans Servicing LP (“BAC”)
      about a modification or workout arrangement on the Loan. BAC
      represented to me that if I made a payment of $8,100.17 in certified
      funds, BAC would begin a workout process and not attempt to
      foreclose on the Property. I relied on BAC’s representations, agreed
      to provide the funds, and hand-delivered Frost National Bank
      Cashier’s Check 714003094 dated December 31, 2009 in the
      amount of $8,100.17 to BAC via their counsel, Barrett Daffin
      Frappier Turner & Engel in Addison, Texas. I received a notice from
      BAC dated January 13, 2010, that they were returning the cashier’s
      check because it was (a) in an incorrect amount and (b) not in
      certified funds, both of which allegations were plainly untrue.
      Thereafter, I attempted numerous times to speak to BAC personnel
      by phone to rectify the situation, but was never able to reach a BAC
      representative who would pull up the file and address the problem;
      instead, I was hung up on more than once.

            Throughout the course of our dealings, BAC has presented
      me a moving target, and despite my compliance with their series of
      requests for information and attempt to pay them in the amount, form
      and manner they requested, they did not stand by their promise to
      accept payment from me and go through with the workout
      arrangement they induced me to commence.

            ....



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             I received a notice, issued on behalf of BAC as mortgagee, of
      a substitute trustee’s sale of the Property for January 4, 2011,
      despite BAC having assured me that they would not attempt to
      foreclose on my Property.

      Additionally, the Baileys attached a deposition excerpt from a suit in a New

Jersey trial court in which Countrywide was a third party defendant. The name

William Hultman is noted at the bottom of the title page, and the Baileys

represented in their response that the deposition is of William Hultman, the

secretary of MERS. In the deposition excerpt from April 7, 2010, Hultman states

that it was his belief that MERS’s bylaws, which authorized the Board of Directors

to appoint vice presidents, also provided authority for the Board to delegate to

him personally the authority to appoint such vice presidents. He also testified

that there were no minutes evidencing his appointment of a Mr. Hallinan as a

vice president of MERS.

Analysis

      Validity of Assignment and Subsequent Foreclosure Notices

      The Baileys contend that the deposition testimony they proferred creates a

fact issue as to Porter’s capacity to execute documents on behalf of MERS. This

argument has been made recently in a Texas appellate court to no avail. See

Lowery v. Bank of Am., N.A., No. 04-12-00729-CV, 2013 WL 5762227, at *2–3

(Tex. App.––San Antonio Oct. 23, 2013, no pet.) (mem. op.) (concluding that

Hultman’s deposition testimony is no evidence that Porter lacked authority to

assign deeds of trust for MERS); cf., e.g., Marsh v. JPMorgan Chase Bank, N.A.,



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888 F. Supp. 2d 805, 809 (W.D. Tex. 2012) (holding that borrowers lacked

standing to challenge authority of signatory of assignment from MERS because

they were not parties to the assignment). We agree with the San Antonio Court

of Appeals’s reasoning in Lowery: at most, the deposition excerpt attached to

the Baileys’ response shows that the Board of Directors of MERS may or may

not have, prior to the date of the deposition, delegated to Hultman, as secretary,

the authority to appoint vice presidents, specifically a Mr. Hallinan.   It is not

evidence that Porter lacked authority to execute the January 2010 assignment of

the deed of trust on MERS’s behalf. Because the Baileys’ contentions about the

validity of the substitute trustee appointments and notices of acceleration and

foreclosure 3 are based on their argument that Porter lacked authority to execute

documents on behalf of MERS, those arguments also fail.         See Robeson v.

MERS, No. 02-10-00227-CV, 2012 WL 42965, at *6 (Tex. App.––Fort Worth

Jan. 5, 2012, pet. denied) (mem. op.).



      3
       The Baileys also argue in their brief that the notices attached to Bank of
America’s motion for summary judgment were not “executed” for purposes of
compliance with section 51.002(b). We construe their argument to be that the
notices do not bear a handwritten signature. The Baileys cite an inapposite case
holding that unsigned documents may be construed with a signed document only
if the unsigned documents are specifically incorporated by reference into the
signed document. Caufmann v. Schroer, No. 03-08-00517-CV, 2010 WL
668869, at *2 n.12 (Tex. App.––Austin Feb. 26, 2010, no pet.) (mem. op.). The
Baileys have not cited, and we have not found, any authority requiring the notices
under section 51.002(b) to be signed to be valid. Atchley v. Chase Home Fin.
LLC, No. 02-12-00365-CV, 2013 WL 3064444, at *2 (Tex. App.––Fort Worth
June 20, 2013, no pet.) (mem. op.).


                                         9
      The Baileys additionally complain that Bank of America did not properly

prove its ownership of the note. But Bank of America did not have to prove

ownership of the note to validly foreclose on the deed of trust. See, e.g., Farkas

v. Aurora Loan Servs., LLC, No. 05-12-01095-CV, 2013 WL 6198344, at *4 (Tex.

App.––Dallas Nov. 26, 2013, no pet.) (mem. op.); Kyle v. Countrywide Home

Loans, Inc., 232 S.W.3d 355, 361–62 (Tex. App.––Dallas 2007, pet. denied)

(holding that in suit for foreclosure under deed of trust, introduction of note into

evidence was unnecessary when other evidence showed borrower was in default

on the note).

      Deed of Trust Copy Proferred by Bank of America

      The Baileys contend that the deed of trust attached to Bank of America’s

motion for summary judgment is the original recorded deed of trust, which

identifies the wrong property addition in the legal description. According to the

Baileys, the deed of trust is therefore invalid and supportive of their fraudulent

document claim. The deed of trust is the only document attached by Bank of

America that contains the incorrect legal description; the records custodians’

affidavits, the assignment, and the notices of acceleration and foreclosure all

contain the correct description. The notice of foreclosure sale references two

recording numbers for the deed of trust:       D205151708 “as affected by . . .

D201243345.” The second recording number corresponds to what the Baileys’

counsel described in his affidavit attached to their summary judgment response

as a “re-recorded” deed of trust with the correct legal description. Moreover, the


                                        10
note, original deed of trust, assignment, and statutory notices all list the property

address as 1428 Virginia Place, Fort Worth, Texas 76107-2466. See, e.g., AIC

Mgmt. v. Crews, 246 S.W.3d 640, 645 (Tex. 2008) (“A property description is

sufficient if the writing furnishes within itself, or by reference to some other

existing writing, the means or data by which the particular land to be conveyed

may be identified with reasonable certainty.”); Hebisen v. Nassau Dev. Co., 754

S.W.2d 345, 351 (Tex. App.––Houston [14th Dist.] 1988, writ denied) (holding

that mailing address described property with reasonable certainty), disapproved

of on other grounds by Formosa Plastics Corp. USA v. Presidio Eng’rs &

Contractors, Inc., 960 S.W.2d 41 (Tex. 1998).

      Thus, we conclude and hold that the trial court did not err by granting

summary judgment on the Baileys’ fraudulent document claims and all of their

related claims for damages under the civil practice and remedies code, DTPA,

finance code, and for negligent misrepresentation as to those documents.

      Alleged Modification Agreement

      The Baileys argue that Vaughn’s affidavit establishes specific instances of

misconduct by BAC “in negligently or deceptively furnishing information on which

[the Baileys] relied in tendering certified funds, [which] BAC refused to accept . . .

in the manner in which BAC asked for them.” The Baileys essentially allege that

Bank of America refused to perform an agreement to modify an already-existing

loan. Because a person seeking to renew or extend a pre-existing loan is not

seeking goods or services, he or she does not qualify as a “consumer” under the


                                         11
definition of the DTPA; thus, this type of transaction is not subject to a DTPA

claim. See Tex. Bus. & Com. Code Ann. § 17.45(1)–(2), (4) (West 2011); Fix v.

Flagstar Bank, FSB, 242 S.W.3d 147, 160 (Tex. App.––Fort Worth 2007, pet.

denied); Ford v. City State Bank of Palacios, 44 S.W.3d 121, 135 (Tex. App.––

Corpus Christi 2001, no pet.); see also, e.g., Miller v. BAC Home Loans

Servicing, L.P., 726 F.3d 717, 725 (5th Cir. 2013) (relying on Fix and Ford to hold

that borrowers seeking modification of existing loan did not qualify as consumers

who could bring a DTPA cause of action).

      Moreover, the Baileys failed to establish that BAC owed them any duty

independent of its obligations as the lender under the note and deed of trust;

therefore, they cannot recover for negligent misrepresentation in this context.

See Krudop v. Bridge City State Bank, No. 09-05-00111-CV, 2006 WL 3627078,

at *3 (Tex. App.––Beaumont Dec. 14, 2006, pet. denied) (mem. op.) (involving

alleged failure of bank president to adhere to verbal agreement to forego

threatened foreclosure); see also Sharyland Water Supply Corp. v. City of Alton,

354 S.W.3d 407, 417 (Tex. 2011) (“When the injury is only the economic loss to

the subject of a contract itself the action sounds in contract alone.” (quoting Sw.

Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 495 (Tex. 1991)).

      Therefore, we conclude and hold that the trial court did not err by granting

summary judgment on the Baileys’ remaining DTPA, finance code, and negligent

misrepresentation claims arising from their allegations that BAC failed to comply

with an agreed loan modification.


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     We overrule the Baileys’ first point.

                                   Conclusion

     Having overruled both of the Baileys’ points, we affirm the trial court’s

judgment.

                                                /s/ Terrie Livingston

                                                TERRIE LIVINGSTON
                                                CHIEF JUSTICE

PANEL: LIVINGSTON, C.J.; MEIER and GABRIEL, JJ.

DELIVERED: March 13, 2014




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