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

                                                                                   FILED
                                    No. 12-50929                           December 31, 2013
                                  Summary Calendar
                                                                              Lyle W. Cayce
                                                                                   Clerk
STEVEN T. WALTNER; SARAH V. WALTNER,

                                                 Plaintiffs–Appellants,
v.

AURORA LOAN SERVICES, L.L.C.; MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INCORPORATED; CODILIS & STAWIARSKI,
P.C.; FEDERAL HOME LOAN MORTGAGE CORPORATION,

                                                 Defendants–Appellees.




                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 1:11-CV-502


Before WIENER, OWEN, and HAYNES, Circuit Judges.
PER CURIAM:*
       Plaintiffs–Appellants Steven and Sarah Waltner (the Waltners) brought
this action following foreclosure on their Texas home. The Waltners appeal
the district court’s grant of judgment as a matter of law on their promissory
estoppel claim in favor of Defendants–Appellees Aurora Loan Services, L.L.C.
(Aurora) and Federal Home Loan Mortgage Corporation (FHLMC). They also


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                No. 12-50929
appeal various discovery and evidentiary rulings and pre-trial orders,
including the district court’s dismissal of their constitutional challenges and
wrongful foreclosure claim against Aurora, FHLMC, and Defendants–
Appellees Mortgage Electronic Registration Systems, Incorporated (MERS)
and Codilis & Stawiarski, P.C. (C&S).         We affirm the district court’s
judgments.
                                       I
      The undisputed facts are as follows. In 2006, the Waltners purchased a
home in Georgetown, Texas with a mortgage from Aegis Wholesale
Corporation (Aegis). MERS was listed as the beneficiary on the Deed of Trust.
In April 2008, the Waltners encountered financial hardship and sought a loan
modification from Aurora, which had become their loan servicer.          While
modification discussions were still ongoing, the Waltners received a notice of
default from Aurora in September 2008.
      The Waltners subsequently entered into negotiations directly with
FHLMC, which was authorized to work with the Waltners in modifying their
loan. In January 2009, the Waltners reached an oral agreement to modify the
loan to a 447-month fixed-rate loan at an interest rate of 4.375 percent and
first payment due April 1, 2009. However, in April 2009, the loan modification
documents received by the Waltners indicated a modification to a 447-month
fixed-rate loan at 4.5 percent annual interest with first payment due June 1,
2009. The Waltners rejected the proposed modification as not reflecting the
earlier oral agreement. The property was foreclosed on and sold to FHLMC on
June 2, 2009.
      The Waltners then brought this action against Aurora and FHLMC for
promissory estoppel and against all defendants for a declaratory judgment of
wrongful foreclosure. The complaint also sought a declaratory judgment that


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sections 51.0001(4)(B) and 51.0075(c) of the Texas Property Code are
unconstitutional.
       The defendants were served on October 31 and November 1, 2011. On
November 22, 2011, C&S moved to dismiss for failure to state a claim. On
November 30, 2011, Aurora and MERS filed similar motions to dismiss. On
December 5, 2011, the Waltners moved for entry of default and default
judgment against all defendants under Federal Rule of Civil Procedure 55. The
Clerk of the Court entered default against FHLMC the following day.
However, the district court subsequently vacated the entry of default against
FHLMC and denied the Waltners’ motions for entry of default and default
judgment. The district court then ruled on the defendants’ motions to dismiss,
including FHLMC’s motion filed December 22, 2011, and granted the motions
of C&S and MERS in their entirety, and the motions of Aurora and FHLMC in
part, leaving only the Waltners’ promissory estoppel claim. 1
       The parties subsequently engaged in contentious discovery, resulting in
motions by the Waltners to compel production, to strike discovery responses,
and for sanctions. The district court granted in part and denied in part the
Waltners’ motions to compel, denied their motion to strike the responses of
Aurora and FHLMC, granted the motion by Aurora and FHLMC to amend
their responses, and carried the Waltners’ motion for sanctions until the end
of trial. Both sides also filed motions for summary judgment, which the district
court declined to decide.
       At trial, the Waltners called only themselves as witnesses. During the
course of their testimony, they sought to admit various documents, including


       1 In the same order, the district court also denied the Waltners’ objection and motion
for reconsideration of the district court’s order denying entry of default and default judgment
against the defendants and the Waltners’ objections and motions to strike the defendants’
motions to dismiss.
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a “call sheet” of notes taken by Sarah Waltner during telephone conversations
with representatives of FHLMC, a Consolidated Notes Log related to the
Waltners’ loan, a Loss Mitigation Document Order Form sent from Aurora to
attorney Ruth Ruhl, and a series of e-mails between Ruhl and Aurora, which
the district court excluded as hearsay. At the close of the Waltners’ case,
Aurora and FHLMC moved for judgment as a matter of law under Rule 50(a),
which the district court granted. This appeal followed.
                                          II
      The Waltners first challenge the district court’s order denying their
motion for entry of default and default judgment against the defendants. The
district court held that the Waltners were not entitled to an entry of default or
default judgment against Aurora, MERS, or C&S because those defendants
had filed motions to dismiss prior to the entry of any default judgment, and
thus were not in default. With respect to FHLMC, the district court held that
it was not in default because it was a federal institution that had sixty days to
answer rather than twenty-one. In its order denying the Waltners’ motion for
reconsideration, the district court also held that even if the untimeliness of the
motions of Aurora, MERS, and C&S did not preclude entry of default, the
district court would still not enter default or a default judgment against them
because the Waltners had failed to show prejudice from the delay. Similarly,
the district court held that even if FHLMC was not a United States agency, it
would not enter default judgment against FHLMC for the same reason.
      We review the district court’s denial of the Waltners’ motion for entry of
default and default judgment against the defendants for abuse of discretion. 2
“[A] party is not entitled to a default judgment as a matter of right, even where



      2  Settlement Funding, LLC v. TransAmerica Occidental Life Ins. Co., 555 F.3d 422,
424 (5th Cir. 2009); Lacy v. Sitel Corp., 227 F.3d 290, 291-92 (5th Cir. 2000).
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the defendant is technically in default.” 3 Moreover, “default judgments are a
drastic remedy, not favored by the Federal Rules and resorted to by courts only
in extreme situations.” 4 Indeed, we have held that when the plaintiff has made
no showing of prejudice stemming from the defendant’s delay, a default
judgment “should not be granted on the claim, without more, that the
defendant ha[s] failed to meet a procedural time requirement.” 5
       The Waltners do not argue that they were prejudiced by the defendants’
delays. Instead, they assert that a showing of prejudice is not required for an
entry of default or default judgment. In regard to FHLMC in particular, they
also argue that FHLMC was required to make a showing of good cause in order
to have the clerk’s entry of default set aside.
       First, although a showing of good cause is required under Rule 55(c) to
set aside an entry of default, an entry of default against a defendant does not
automatically entitle the plaintiff to a default judgment because the decision
whether to grant a default judgment remains in the discretion of the district
court. 6 Second, while the Waltners are correct that a showing of prejudice is
not required for an entry of default or default judgment, the district court may
still consider the absence of prejudice to the plaintiff in deciding whether to
exercise its discretion to grant a default judgment. 7 Given the lack of prejudice
to the Waltners from the defendants’ delays, we hold that the district court did



       3   Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (internal quotation marks omitted).
       4   Id (internal quotation marks omitted).
       5  Mason & Hanger-Silas Mason Co. v. Metal Trades Council of Amarillo, Tex. &
Vicinity, AFL-CIO, 726 F.2d 166, 168 (5th Cir. 1984) (per curiam).
       6 FED. R. CIV. P. 55(b)(2); see also Jefferson v. La. Dept. of Pub. Safety & Corr., 401 F.
App’x 927, 929 (5th Cir. 2010) (per curiam) (unpublished) (“Entering a judgment based on
the default is at the discretion of the court, which means [plaintiff] was not entitled to a
default judgment simply because of the earlier entry of a default.”).
       7   Mason, 726 F.2d at 168; see also FED. R. CIV. P. 55(b)(2).
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not abuse its discretion in denying the Waltners’ motion for entry of default
and default judgment against the defendants. 8
                                             III
      The Waltners’ next contend that the district court erred in granting
Aurora and FHLMC judgment as a matter of law under Rule 50(a) on the
Waltners’ promissory estoppel claim. “We review the district court’s grant of
judgment as a matter of law de novo, applying the same legal standards as the
district court.” 9 Judgment as a matter of law is appropriate when “a party has
been fully heard on an issue during a jury trial and the court finds that a
reasonable jury would not have a legally sufficient evidentiary basis to find for
the party on that issue.” 10 In reviewing the district court’s grant of judgment
as a matter of law, we “consider all of the evidence in the light most favorable
to the nonmovant, drawing all factual inferences in favor of the non-moving
party, and leaving credibility determinations, the weighing of evidence, and
the drawing of legitimate inferences from the facts to the jury.” 11
      Under Texas law, a plaintiff must prove four elements in order to prevail
on a claim of promissory estoppel: “(1) a promise (2) that the promisor should
have expected would lead the promisee to some definite and substantial injury,
(3) that such an injury occurred, and (4) that injustice may be remedied only




      8  Because we uphold the district court’s denial on the district court’s alternative
ground—that it would have denied the Waltners’ motion for default judgment against the
defendants due to the lack of prejudice to the Waltners even if Aurora, MERS, and C&S were
in default and FHLMC was not a United States agency for purposes of service of process—
we do not address whether the district court erred in holding that Aurora, MERS, and C&S
were not in default and that FHLMC is a United States agency for purposes of service of
process.
      9   Gonzalez v. Fresenius Med. Care N. Am., 689 F.3d 470, 474 (5th Cir. 2012).
      10   FED. R. CIV. P. 50(a).
      11   Gonzalez, 689 F.3d at 474-75 (internal quotation marks omitted).
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by enforcing the promise.” 12 Damages on a promissory estoppel claim are
limited to reliance damages. 13 In granting judgment as a matter of law, the
district court held that the Waltners had not provided “any evidence of any
measure of damages within . . . Texas law for [their] cause of action in the
record which would allow the jury to do anything but speculate.” We agree.
       Reliance damages cover “expenditures made in preparation for
performance or in performance,” and essentially seek to restore the status quo
by putting the injured party in the “position . . . he would have been [in] had
the contract not been formed.” 14 They differ from expectation damages, which
seek to give the injured party the benefit of the bargain by putting him in the
position he would have been in had the contract as promised been performed. 15
At trial, the evidence presented by the Waltners on damages related to the lost
use of the property, both as a rental property and a personal use property, loss
of equity in the house, increase in the loan balance, and negative impact on the
Waltners’ credit. These are not reliance damages.
       First, none is an expenditure in preparation for performance or in
performance of the alleged promised loan modification. To the extent that the
Waltners’ argument is that they rejected the loan modification offered in April
2009 in reliance on the earlier promised modification, their reliance was not
reasonable—and thus any resulting damages unrecoverable—because they
knew at that point that Aurora and FHLMC did not intend to perform under


       12 Hartford Fire Ins. Co. v. City of Mont Belvieu, 611 F.3d 289, 295 (5th Cir. 2010)
(citing Nagle v. Nagle, 633 S.W.2d 796, 800 (Tex. 1982)).
       13  Fretz Constr. Co. v. S. Nat. Bank of Hous., 626 S.W.2d 478, 483 (Tex. 1981); Allied
Vista, Inc. v. Holt, 987 S.W.2d 138, 142 (Tex. App.—Houston [14th Dist.] 1999, pet. denied)
(“[I]n a claim for promissory estoppel, only reliance damages are allowed.”).
       14Bechtel Corp. v. CITGO Prods. Pipeline Co., 271 S.W.3d 898, 926 (Tex. App.—Austin
2008, no pet.).
       15   Id. at 927.
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the original agreement. 16 Second, the Waltners offered no explanation as to
how they would have avoided these consequences had there been no promise
of a forthcoming loan modification. Absent the promise to modify their loan,
the Waltners would still have been in default, and there was no evidence at
trial as to any action the Waltners would have taken to avoid the various
negative consequences they asserted had they not received the promise to
modify their loan. Thus, as the district court held, any award of damages by
the jury would be based on pure speculation.
       The damages claimed by the Waltners, which resulted from their
continued default and the ultimate foreclosure on the property, are instead
consequential losses caused by the failure of Aurora and FHLMC to perform
as promised. However, consequential losses are a form of expectation damages
and are not recoverable on a claim of promissory estoppel. 17 Accordingly, we
hold that, on the record before us, Aurora and FHLMC were entitled to
judgment as a matter of law.
                                                IV
       Related to the Waltners’ argument that the district court erred in
granting Aurora and FHLMC judgment as a matter of law are challenges to
the district court’s denial of the Waltners’ motion for summary judgment and
to the court’s discovery and evidentiary rulings. With respect to the Waltners’
motion for summary judgment, “[o]nce trial began, the summary judgment
motion[] effectively became moot.” 18 “Because a trial followed the denial of



       16See Conner v. Lavaca Hosp. Dist., 267 F.3d 426, 436 (5th Cir. 2001) (holding that
there could be no reasonable reliance on original contract following its repudiation).
       17Bechtel Corp., 271 S.W.3d at 928 (“Such [consequential] damages are in the nature
of expectancy damages: they place [plaintiff] in the position it claims it would have been had
the promises been kept. Such damages are not recoverable through promissory estoppel.”).
       18   Wells v. Hico Indep. Sch. Dist., 736 F.2d 243, 251 n.9 (5th Cir. 1984).
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summary judgment, we lack jurisdiction to consider the denial of summary
judgment.” 19 We review the district court’s discovery and evidentiary rulings
for abuse of discretion. 20 “Control of discovery is committed to the sound
discretion of the trial court and its discovery rulings will be reversed only
where they are arbitrary or clearly unreasonable.” 21                   We “will reverse a
judgment on the basis of an evidentiary ruling only where the challenged
ruling affects a substantial right of a party.” 22
                                                A
       The Waltners challenge the district court’s grant of the motion by Aurora
and FHLMC to amend their responses and concurrent denial of the Waltners’
motions to strike the defendants’ deficient discovery responses, and the district
court’s failure to consider the Waltners’ motion for sanctions, including its
refusal to deem the unsigned discovery responses of Aurora and FHLMC to the
Waltners’ requests for admissions as admitted by operation of law. However,
while the Waltners assert that these discovery rulings allowed the “dilatory
tactics” of Aurora and FHLMC to go largely unchecked and left the Waltners
with inadequate discovery, they make no specific arguments as to the arbitrary
nature or clear unreasonableness of any of the district court’s individual
discovery rulings.          Accordingly, these claims are waived for inadequate
briefing. 23
       Even if the Waltners’ challenges to the district court’s discovery rulings
were not waived, a review of the district court’s decisions indicates that they



       19   Brown v. Slenker, 220 F.3d 411, 421 n.9 (5th Cir. 2000).
       20   Gomez v. St. Jude Med. Daig Div. Inc., 442 F.3d 919, 927 (5th Cir. 2006).
       21   Mayo v. Tri-Bell Indus., Inc., 787 F.2d 1007, 1012 (5th Cir. 1986).
       22   Washington v. Dep’t of Transp., 8 F.3d 296, 299 (5th Cir. 1993).
       23   See Young v. Repine (In re Repine), 536 F.3d 512, 518 n.5 (5th Cir. 2008).
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were neither arbitrary nor clearly unreasonable.                    The grounds for the
Waltners’ motion to strike the defendants’ discovery responses were that they
were unsigned and/or unsworn. While Federal Rule of Civil Procedure 26(g)(2)
provides that the court “must strike” unsigned discovery responses “unless a
signature is promptly supplied after the omission is called to the attorney’s or
party’s attention,” 24 the district court found that Aurora and FHLMC had
“promptly corrected [the technical deficiencies] when the matter was brought
to their attention.” Additionally, the district court found that the Waltners had
suffered no prejudice from the technical deficiencies in the discovery responses.
Denying the Waltners’ motion to strike the technically deficient responses of
Aurora and FHLMC and allowing them to amend their responses to correct
those deficiencies, which did not prejudice the Waltners, is neither arbitrary
nor clearly unreasonable, and is not an abuse of discretion. 25
         Relatedly, the Waltners’ challenge to the district court’s decision not to
deem admitted the deficient discovery responses of Aurora and FHLMC also
fails.    The Waltners argue that the responses should have been deemed
admitted under Federal Rules of Civil Procedure 36(a) and 37(a)(4). 26
However, Rule 36(b) provides that a matter deemed admitted under subsection
(a) is not established if the court permits the admission to be amended, which
it may do if it “would promote the presentation of the merits” and if “it would
[not] prejudice the requesting party in maintaining or defending the action on


         24   FED. R. CIV. P. 26(g)(2).
         See Coco v. United States, 569 F.2d 367, 372 (5th Cir. 1978) (holding that district
         25

court did not abuse its discretion in denying a motion to strike when movant failed to show
prejudice).
         See FED. R. CIV. P. 36(a)(3) (“A matter is admitted unless, within 30 days after being
         26

served, the party to whom the request is directed serves on the requesting party a written
answer or objection addressed to the matter and signed by the party or its attorney.”); FED.
R. CIV. P. 37(a)(4) (“[A]n evasive or incomplete disclosure, answer, or response must be
treated as a failure to disclose, answer, or respond.”).
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the merits.” 27      Because the district court properly permitted Aurora and
FHLMC to amend their discovery responses, the responses are not admitted
under Rule 36(a) and the district court did not abuse its discretion in not
deeming their responses admitted and declining to rule on the Waltners’
motion for sanctions until the end of the case.
                                               B
      The Waltners’ evidentiary challenges are myriad.                     They contest the
exclusion as hearsay of Sarah Waltner’s “call sheet,” the Consolidated Notes
Log, the Loss Mitigation Document Order Form, and a series of e-mails
between Ruhl and Aurora.              They also challenge the admission of defense
exhibits of the Note on the Waltners’ loan and the Deed of Trust. However,
none of this evidence goes to the Waltners’ failure to show reliance damages.
Thus, even if the district court abused its discretion in excluding the Waltners’
various exhibits and in admitting the defendants’ exhibits, Aurora and
FHLMC would still be entitled to judgment as a matter of law because the
Waltners failed to establish any reliance damages from the non-performance
of the defendants’ promise. Therefore, we hold that the Waltners are not
entitled to reversal of the judgment against them on the basis of any of the
challenged evidentiary rulings.
                                               V
      The Waltners additionally contest the district court’s dismissal of their
constitutional challenges to sections 51.0001(4)(B) and 51.0075(c) of the Texas
Property Code as well as their wrongful foreclosure claim. We review the
district court’s grant of a motion to dismiss de novo. 28 We will “affirm the
district court’s grant of a motion to dismiss ‘when the plaintiff has not alleged


      27   FED. R. CIV. P. 36(b).
      28   Raj v. La. State Univ., 714 F.3d 322, 329-30 (5th Cir. 2013).
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enough facts to state a claim to relief that is plausible on its face or has failed
to raise its right to relief above the speculative level, on the assumption that
all the allegations in the complaint are true (even if doubtful in fact).’” 29
      With regard to their constitutional challenge, the Waltners cite no legal
authority for the proposition that sections 51.0001(4)(B) and 51.0075(c) are
unconstitutional and assert simply that they are “obnoxious to the Texas and
U.S. Constitutions.” They do not identify the constitutional provisions that
sections 51.0001(4)(B) and 51.0075(c) allegedly violate or explain how their
complaint adequately stated plausible claims regarding such violations. Given
the lack of argument on this issue, it is waived. 30
       With respect to the Waltners’ dismissed wrongful foreclosure claim,
Texas law requires that a plaintiff bringing a wrongful foreclosure claim show
that there was (1) a defect in the foreclosure sale proceedings, (2) a grossly
inadequate selling price, and (3) a causal connection between the defect and
the grossly inadequate selling price. 31 The latter two elements need not be
shown if the borrower instead establishes that the lender deliberately chilled
the bidding at the foreclosure sale. 32
      The Waltners’ complaint fails to allege facts supporting either a grossly
inadequate selling price or the deliberate chilling of bidding at the foreclosure
sale. Instead, the Waltners’ claim is that the defendants proceeded with the
foreclosure      sale    without      authority     and     on    the    basis    of    various



      29   Id. at 330 (quoting Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012)).
      30   See Young v. Repine (In re Repine), 536 F.3d 512, 518 n.5 (5th Cir. 2008).
      31Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013) (citing
Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, no
pet.).
      32Id. at 727; Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex. App.—
Houston [14th Dist.] 1989, writ denied).
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misrepresentations.    As the district court correctly recognized, while such
facts, if established as true, might provide the basis for a meritorious breach of
a contract claim, they do not state a claim for wrongful foreclosure.
Accordingly, the district court did not err in dismissing the Waltners’ wrongful
foreclosure claim.
                                *        *         *
      For the foregoing reasons, the judgments of the district court are
AFFIRMED.




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