     Case: 18-10900      Document: 00515022559         Page: 1    Date Filed: 07/05/2019




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

                                      No. 18-10900                           FILED
                                                                          July 5, 2019
                                                                        Lyle W. Cayce
AUDREY DICK,                                                                 Clerk

              Plaintiff - Appellant

v.

COLORADO HOUSING ENTERPRISES, L.L.C.; COMMUNITY
RESOURCES AND HOUSING DEVELOPMENT CORPORATION,

              Defendants - Appellees




                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 3:17-CV-533


Before OWEN, SOUTHWICK, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       The plaintiff obtained a $100,000 loan from the defendants to open a
restaurant with her husband. The loan was secured by a deed of trust on their
condominium.        The plaintiff stopped making payments and repeatedly
thwarted foreclosure attempts by filing bankruptcy petitions. After the third




       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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. 18-10900
such filing, the bankruptcy court ordered in rem relief and the defendants
successfully foreclosed.
      The case before us now concerns the plaintiff’s claims of breach of
contract, wrongful foreclosure, negligent misrepresentation, violations of the
Texas Debt Collection Practices Act, unjust enrichment, quiet title, and
trespass to try title. The district court granted the defendants’ motion to
dismiss all these claims, as well as partial summary judgment on their
counterclaim for a declaratory judgment recognizing their ownership rights in
the property. We AFFIRM.


              FACTUAL AND PROCEDURAL BACKGROUND
      The plaintiff, Audrey Dick, obtained a $100,000 loan from the
defendants, Colorado Housing Enterprises, L.L.C. and Community Resources
and Housing Development Corporation (“CHE”) in November 2014. The loan
was financing for the plaintiff and her husband, Ty Dick, to open a restaurant
in Canon City, Colorado. Mrs. Dick executed a promissory note with a 15-year
term and a 6.5% interest rate. The note was secured by a deed of trust granting
the defendants a lien against the Dicks’ condominium in Irving, Texas.
      The plaintiff stopped making payments by August 2015. The Dicks had
closed their restaurant at least in part due to Mr. Dick’s struggles with injuries
suffered when he served with the U.S. military in Iraq. The defendants sent
notices of default and foreclosure warnings in September and November, and
a final demand on December 7, 2015. On March 31, 2016, the defendants sent
notice of an acceleration of the loan and a foreclosure sale scheduled May 3.
      The plaintiff alleges that her husband called the defendants in April
2016 to discuss bringing the loan current because the Dicks “would likely have
around $20,000 in equity” upon the sale of their Colorado home.              The
defendants allegedly told Mr. Dick they “would not accept any form of payment
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                                  No. 18-10900
other than the fully accelerated loan amount” and that the Dicks could “‘do
whatever they had to do’ but that [d]efendants were moving forward with
foreclosure.”
        On May 1, 2016, the plaintiff filed for Chapter 13 bankruptcy, triggering
an automatic stay and preventing the foreclosure scheduled for May 3. The
petition was dismissed for failure to file numerous required documents.
        A new foreclosure date was set for August 2, but on July 29 the plaintiff
filed a second Chapter 13 petition, once again triggering an automatic stay and
preventing foreclosure. The petition was dismissed because of a failure to pay
the filing fee, this time with prejudice to Mrs. Dick’s refiling for bankruptcy for
180 days pursuant to 11 U.S.C. § 109(g)(1).
        A third foreclosure date was set for October 4, 2016. Once again, the
plaintiff prevented foreclosure by filing a Chapter 13 petition — this time on
her husband’s behalf — which invoked an automatic stay. The bankruptcy
court dismissed the petition for failure to prosecute, ordered in rem relief to
ensure foreclosure could not be stopped by further bankruptcy filings, and
barred Mr. Dick from filing in bankruptcy for two years.
        A fourth foreclosure attempt was scheduled, this time for February 7,
2017, but it too was thwarted after the plaintiff filed suit in Texas state court
and obtained a temporary restraining order five days before the scheduled sale.
The defendants removed that suit to federal court, which terminated the state
court’s TRO. They rescheduled the property for foreclosure on April 4, 2017.
The district court allowed a foreclosure sale finally to occur on the appointed
day.
        The plaintiff then filed an amended complaint alleging breach of
contract, wrongful foreclosure, negligent misrepresentation, violations of the
Texas Debt Collection Practices Act, unjust enrichment, quiet title and
trespass to try title. The district court granted the defendants’ motion to
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                                   No. 18-10900
dismiss all claims.      Also granted was the defendants’ motion for partial
summary judgment on their counterclaim for a declaratory judgment
recognizing the defendants’ ownership rights in the property. The plaintiff
timely appealed.

                                  DISCUSSION

          The plaintiff admits to defaulting on the loan. Without stating some
claim to relief against the defendants, she cannot deny that the foreclosure was
lawful. We examine her arguments that she sufficiently stated a claim for
relief.

     I.     Motion to Dismiss

          We review the “district court’s dismissal under Federal Rule of Civil
Procedure 12(b)(6) de novo, accepting all well-pleaded facts as true and viewing
those facts in the light most favorable to the plaintiff. A district court’s Rule
12(b)(6) dismissal may be affirmed on any grounds raised below and supported
by the record.” Republic Waste Servs. of Tex., Ltd. v. Texas Disposal Sys., Inc.,
848 F.3d 342, 344 (5th Cir. 2016) (citations omitted).


                  Breach of Contract
          The plaintiff alleges the defendants failed to honor her right to
reinstatement after the loan was accelerated. She relies on paragraph 19 in
the Deed of Trust, which is titled “Reinstatement After Default.” It provides
that if there is an acceleration of the secured debt, the debtor “shall have the
right to have any proceedings begun . . . to enforce this Deed of Trust
discontinued and to have this Deed of Trust reinstated at any time before the
day of the Trustee’s Sale or before the filing of a foreclosure action.” This, of
course, is a conditional right. The debtor needed to (1) pay “the entire amount
due . . . other than such portion of the principal as would not be due had no
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                                 No. 18-10900
default occurred;” (2) “[c]ure all defaults;” and (3) “[p]ay costs and expenses
incurred” in enforcing the Deed of Trust, including any attorneys’ and
recording fees.
      The plaintiff did none of this. In fact, after defaulting she never made
another payment of any kind on the debt. She nonetheless insists this was
because the defendants “refused” to communicate the amount of payment
necessary for reinstatement, and that this refusal breached the Deed of Trust
by effectively extinguishing her right to reinstatement.
      The Deed of Trust does not contain any explicit obligation on the
defendants to notify the plaintiff of the reinstatement amount. Though a “duty
to cooperate is implied in every contract in which cooperation is necessary for
performance of the contract,” there is not any “precedential authority to
support the existence of an implied covenant to provide a payoff amount in a
transaction involving a promissory note and deed of trust.” Graves v. Logan,
404 S.W.3d 582, 585-86 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (citation
omitted).
      In determining how such a rule operates here, we start with what
plaintiff alleges was the breach of this contract. She claims the defendants
failed to fulfill their implied duty to cooperate with respect to the
reinstatement provision in the Deed of Trust. The duty to cooperate is a
“promise that a party will not do anything to prevent or delay the other party
from performing the contract.” Texas Nat’l Bank v. Sandia Mortg. Corp., 872
F.2d 692, 698 (5th Cir. 1989).
      The appropriate question, then, is whether the defendants prevented the
plaintiff from reinstating the loan. The complaint focuses primarily on an
alleged “refusal” to provide the reinstatement amount to Mr. Dick when he
called in April 2016. In those calls, Mr. Dick attempted to prevent foreclosure


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                                         No. 18-10900
by telling the defendants that he and his wife “would likely have around
$20,000 in equity” to bring the loan current once they sold their Colorado home.
       The complaint does not allege that the Dicks attempted to make a
reinstatement payment, but rather that Mr. Dick promised a potential
payment, on some uncertain future date, of an uncertain amount “likely” to be
more than $20,000. At most, Mr. Dick conveyed a present intention to seek
reinstatement in the future.
       Whatever the scope of the defendants’ duty to cooperate on
reinstatement, it was not invoked by “mere statements of intention” or an
“illusory promise” of future payment.                  See RESTATEMENT (SECOND) OF
CONTRACTS § 2 cmt. e (1981). There was nothing to cooperate on yet since the
Dicks were not attempting to reinstate the loan at that time. 1
       The complaint also alleges that Mr. Dick called in October 2016 “to try
to make a payment to bring the Loan current without paying the entire
accelerated amount,” but was told it was “too late.” At this point, the plaintiff
had “filed bankruptcy three times to stop” the defendants from foreclosing but
had “not ever intended to prosecute any of those cases . . . appropriately.” Tr.
of Hr’g at 12, In re Dick, No. 16-BR-33914 (Bankr. N.D. Tex. Apr. 17, 2017)
(ECF No. 57). 2 The Deed of Trust provides for a right of reinstatement “at any
time before the day of . . . [s]ale,” but the only reason that day had not yet
arrived was the Dicks’ improper use of the bankruptcy courts.




       1 This renders irrelevant the complaint’s allegation that the defendants said they
“would not accept any form of payment other than the fully accelerated loan amount” and
that the Dicks could “‘do whatever they had to do’ but that [d]efendants were moving forward
with foreclosure.”
       2 “It is ‘clearly proper in deciding a 12(b)(6) motion to take judicial notice of matters of

public record.’” U.S. ex rel. Long v. GSDMIdea City, L.L.C., 798 F.3d 265, 274 n.8 (5th Cir.
2015) (quoting Norris v. Hearst Tr., 500 F.3d 454, 461 n.9 (5th Cir. 2007)).

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       Whether these filings entitled the Dicks to additional time or not, the
defendants ultimately afforded them one last opportunity before foreclosure.
On February 8, 2017, the defendants’ counsel informed the plaintiff’s counsel
that the “current amount to reinstate the loan is $34,188.86,” and asked
whether the Dicks would be sending the funds. 3
       Even if there were an obligation to provide a reinstatement amount,
which is unclear under Texas law, the plaintiff does not adequately explain
why the February 2017 notice would fail to satisfy it. She does argue it was
“too late” and that she was “not able to tender” the amount because her funds
were “depleted due to multiple bankruptcy filings.” Those filings, though, were
the Dicks’ choice, and there is no other allegation on how being told that
amount earlier would have allowed it to be satisfied.


                  Negligent Misrepresentation
       Negligent misrepresentation sounds in tort. In Texas, the economic loss
rule “restricts contracting parties to contractual remedies for those economic
losses associated with the relationship, even when the breach might
reasonably be viewed as a consequence of a contracting party’s negligence.”
Yumilicious Franchise, L.L.C. v. Barrie, 819 F.3d 170, 178 (5th Cir. 2016)
(quoting Lamar Homes, Inc. v. Mid–Continent Cas. Co., 242 S.W.3d 1, 12-13
(Tex. 2007)).     The doctrine applies unless the “duty allegedly breached is
independent of the contractual undertaking and the harm suffered is not
merely the economic loss of a contractual benefit.” Chapman Custom Homes,
Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014).



       3 While not referenced in the complaint, the plaintiff readily acknowledged this in her
district court filings and in her brief on appeal. “We can appropriately treat statements in
briefs as binding judicial admissions of fact.” City Nat’l Bank v. United States, 907 F.2d 536,
544 (5th Cir. 1990).
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                                   No. 18-10900
         The complaint alleges that during the April and October 2016 phone
calls,    the   defendants   negligently   misrepresented    to   Mr.   Dick   that
“reinstatement was not an option” and that “there was nothing [the] Plaintiff
could do to stop a foreclosure.”               The plaintiff’s claim that these
misrepresentations prevented her from reinstating the loan merely repackages
her claim for breach of contract based on the duty to cooperate. It is therefore
barred by the economic loss rule.


                  Texas Debt Collection Practices Act
         The Texas Debt Collection Practices Act applies only to consumer debt,
not commercial debts. First Gibraltar Bank, FSB v. Smith, 62 F.3d 133, 135-
36 (5th Cir. 1995).      “‘Consumer debt’ means an obligation, or an alleged
obligation, primarily for personal, family, or household purposes and arising
from a transaction or alleged transaction.” TEX. FIN. CODE ANN. § 392.001.
         The claim was properly dismissed because the complaint’s allegation
that the loan was to open a restaurant constituted an admission it was not a
consumer debt. See First Gibraltar Bank, 62 F.3d at 135-36.


                  Unjust Enrichment
         “In Texas, unjust enrichment is based on quasi-contract and is
unavailable when a valid, express contract governing the subject matter of the
dispute exists.” Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 454 (5th Cir.
2001).     The promissory note and deed of trust are clearly valid, express
contracts that govern the subject matter of this dispute.
         The plaintiff argues she is entitled to plead in the alternative, but she
failed to plead facts sufficient to state an alternative theory of unjust
enrichment. The complaint never alleges, even in the alternative, that there
was no valid express contract to govern the parties’ dealings.
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                                   No. 18-10900
                  Wrongful Foreclosure, Quiet Title and Trespass to Try Title
         Another claim dismissed in district court was for a wrongful foreclosure.
Any error in that dismissal has not been discussed on appeal, and thus we do
not reach it. Relatedly, though, the plaintiff’s suit sought to quiet title and to
pursue a trespass-to-try-title action. Those actions are governed by Texas law
and have different requirements. See Lance v. Robinson, 543 S.W.3d 723, 735-
39 (Tex. 2018). To quiet title, a plaintiff must show the defendant’s title is
invalid. Vernon v. Perrien, 390 S.W.3d 47, 61 (Tex. App.—El Paso 2012, pet.
denied). For a trespass to title, a plaintiff must demonstrate its own title is
valid, and the claim does not focus on the weakness of anyone else’s title. Id.
at 60. Here, the plaintiff’s inability to undermine the validity of the foreclosure
means both of those causes of action fail.


   II.      Motion for Partial Summary Judgment
      Summary judgment “is appropriate if the record evidence shows that
there is no genuine issue of material fact and that the moving party is entitled
to judgment as a matter of law.” Republic Waste Servs., 848 F.3d at 344. Our
review on appeal is de novo. Id.
      The district court granted partial summary judgment on the defendants’
counterclaim for a declaratory judgment recognizing their ownership and
possession rights in the property. The Deed of Trust was shown to be valid.
The dismissal of all the plaintiff’s claims leaves no disputes about the rightful
ownership and control over the property.           A judgment recognizing the
defendants’ rights in the property was appropriate.
      AFFIRMED.




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