     Case: 14-40114     Document: 00513073472     Page: 1   Date Filed: 06/10/2015




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

                                                                          FILED
                                                                       June 10, 2015
                                   No. 14-40114
                                                                       Lyle W. Cayce
                                                                            Clerk
DAVID MCCAIG, Individually and as the Representative of the Estate of
Allie Vida McCaig; MARILYN MCCAIG,

               Plaintiffs - Appellees

v.

WELLS FARGO BANK (TEXAS), N.A.,

               Defendant - Appellant




                  Appeal from the United States District Court
                       for the Southern District of Texas


Before REAVLEY, JONES, and ELROD, Circuit Judges.
REAVLEY, Circuit Judge:
      This judgment is based on a jury verdict finding violations of the Texas
Debt Collection Act (“TCDA”) by Wells Fargo and awarding damages and
attorney’s fees. Wells Fargo raises numerous issues on appeal. We affirm in
large part but vacate the judgment and remand for entry consistent with this
opinion.
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                                     No. 14-40114
                                   BACKGROUND
      In 2002, Allie Vida McCaig qualified for a mortgage and purchased the
home directly behind that of her son and his wife, David and Marilyn McCaig. 1
When Allie died, the McCaigs took over the mortgage payments, but the loan
fell into default. Eventually, the McCaigs and Wells Fargo (the loan servicer)
entered into settlement and forbearance agreements.             While the contracting
parties agreed the loan “remain[ed] in Default,” Wells Fargo agreed not to
foreclose on the property so long as the McCaigs followed a 35-month payment
plan. More specifically, the settlement agreement provided:
      the McCaigs are not obligors on the note, and the McCaigs are not
      personally liable for the Loan Agreement Debt. . . . Wells Fargo
      has agreed to accept payments from the McCaigs and to give the
      McCaigs an opportunity to avoid foreclosure of the Property; as
      long as the McCaigs make the required payments consistent with
      the Forbearance Agreement and the Loan Agreement.
      Wells Fargo also “agreed to waive and forebear” the collection of certain
fees and costs “conditioned upon the McCaigs [sic] successful completion of,
and performance under, this Agreement and the Forbearance Agreement.”
      The McCaigs adhered to the plan, but Wells Fargo made repeated
mistakes in the servicing of the loan. Wells Fargo initiated the foreclosure
process, dispatched multiple erroneous notices of default, and posted the
property for a foreclosure sale. At least some of these notices constituted
unjustified threats to foreclose. Additionally, Wells Fargo repeatedly sent
statements indicating that, notwithstanding the parties’ agreements, it was
assessing late fees based on the continued delinquency of the loan. Wells Fargo
never consummated a foreclosure sale, and when the McCaigs had finished




      1Because this case involves multiple members of the McCaig family, henceforth, first
names will be employed. David and Marilyn will be referred to collectively as the McCaigs.
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                                 No. 14-40114
paying under the payment plan, Wells Fargo brought the loan current and
waived all late fees.
      During the course of this prolonged dispute, David filed a complaint with
the Texas Attorney General asserting “Wells Fargo ha[d] harassed [his] family
for the past few months” and that it was wrongfully demanding payment of
$13,000. Wells Fargo responded with a three-page letter asserting that the
McCaigs had broken the forbearance plan, providing records to support the
claim, and explaining what was being done to address the issue. Because Wells
Fargo’s records were mistaken, the claim that the McCaigs had broken the
forbearance plan was also mistaken.
      For over two years, the McCaigs were subjected to intermittent and
repeated threats of foreclosure. Their attempts to correct the problems were
met with misinformation at times, non-responsiveness at times, and at times,
apologies—followed by still more of the same “mistakes.” Eventually, they
sued Wells Fargo in state court. Wells Fargo removed to federal court on the
basis of diversity jurisdiction, and the case went to trial on breach of contract
and TDCA claims. In addition to establishing the facts set forth above, the
McCaigs testified that Wells Fargo’s mistakes took a toll on their mental
health. David and Marilyn testified on this issue, as did their son and an
expert witness.
      The jury found that Wells Fargo had breached the settlement and
forbearance agreements and had violated multiple provisions of the TDCA.
Based on the TDCA violations, the jury awarded David and Marilyn $75,000
each for mental anguish damages and $1,900 in expenses “sustained” by them.
The jury also awarded them $500 each based on a finding that Wells Fargo
violated the TDCA by representing to a third party that the McCaigs were
willfully refusing to pay an uncontested debt. Further, the jury awarded the
McCaigs $200,000 in attorney’s fees.
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                                  No. 14-40114
      The district court entered judgment in accordance with the jury’s verdict
except that the award for attorney’s fees was reduced to $156,775. Wells Fargo
then moved for a new trial and for judgment as a matter of law. The motions
were denied, and Wells Fargo appealed.
                           STANDARD OF REVIEW
      A district court’s denial of a motion for judgment as a matter of law is
reviewed de novo under the same Rule 50(a) standard utilized by the district
court. Heck v. Triche, 775 F.3d 265, 272 (5th Cir. 2014). To the extent the
defendant challenges the sufficiency of the evidence after a case tried by a jury,
our review is “especially deferential” to the verdict. Id. (quoting Flowers v. S.
Reg’l Physician Servs. Inc., 247 F.3d 229, 235 (5th Cir. 2001)). We will uphold
the verdict “unless there is no legally sufficient evidentiary basis for a
reasonable jury to find as the jury did.” Id. (quoting Foradori v. Harris, 523
F.3d 477, 485 (5th Cir. 2008)). “In conducting our review, we must draw all
reasonable inferences in the light most favorable to the verdict and cannot
substitute other inferences that we might regard as more reasonable.”
Eastman Chem. Co. v. Plastipure, Inc., 775 F.3d 230, 238 (5th Cir. 2014).
      A district court’s resolution of a motion for new trial is reviewed for abuse
of discretion, and “[t]he district court abuses its discretion by denying a new
trial only when there is an ‘absolute absence of evidence to support the jury’s
verdict.’” Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 881 (5th Cir. 2013)
(quoting Seidman v. Am. Airlines, Inc., 923 F.2d 1134, 1140 (5th Cir. 1991)).
Accordingly, if we find the evidence is legally sufficient, we must also find that
the district court did not abuse its discretion in denying a motion for new trial.
See Cobb v. Rowan Companies, Inc., 919 F.2d 1089, 1090 (5th Cir. 1991); see
also Whitehead v. Food Max of Miss., Inc., 163 F.3d 265, 269 (5th Cir. 1998)
(explaining that it is “far easier” to show a district court should have granted


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                                       No. 14-40114
a motion for judgment as a matter of law than it is to show a district court
abused its discretion by not granting a new trial).
                                       DISCUSSION
                                              I.
      Wells Fargo argues that neither Marilyn nor David had statutory
standing to bring TDCA claims. “We review questions of statutory standing
de novo.” Janvey v. Brown, 767 F.3d 430, 437 (5th Cir. 2014).
      Texas Financial Code section 392.403 2 creates a private right of action
for TDCA violations and provides: “A person may sue for: actual damages
sustained as a result of a violation of this chapter.”                    Tex. Fin. Code
§ 392.403(a)(2). Because the Texas Supreme Court has not defined the scope
of Section 392.403(a)(2) and statutory standing to bring TDCA claims, our job
is to “predict” how the court will rule. See, e.g., Wisznia Co. v. General Star
Indem. Co., 759 F.3d 446, 448 (5th Cir. 2014). In making this “Erie guess,” we
first examine precedents set by intermediate state appellate courts. Howe ex
rel. Howe v. Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir. 2000). “[W]e defer
to intermediate state appellate court decisions ‘unless convinced by other
persuasive data that the highest court of the state would decide otherwise.’”
Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 558 (5th Cir.
2002) (quoting First Nat’l Bank of Durant v. Trans Terra Corp. Int’l, 142 F.3d
802, 809 (5th Cir. 1998)).
      “When we interpret a Texas statute, we follow the same rules of
construction that a Texas court would apply—and under Texas law the
starting point of our analysis is the plain language of the statute.” Wright v.
Ford Motor Co., 508 F.3d 263, 269 (5th Cir. 2007). Section 392.403 “itself
provides the framework for the standing analysis,” and “[t]he standing


      2   All further unlabeled statutory references are to the Texas Financial Code.
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                                 No. 14-40114
analysis begins and ends with the statute itself.” Marauder Corp. v. Beall, 301
S.W.3d 817, 820 (Tex. App. 2009). “The statute is broadly written.” Id. Texas
courts have recognized that Section 392.403’s grant of standing is not limited
to debtors. Monroe v. Frank, 936 S.W.2d 654, 660 (Tex. App. 1996) (“The Act
provides for remedies for ‘any person’ adversely affected by prohibited conduct,
not just parties to the consumer transaction.”); Campbell v. Beneficial Fin. Co.
of Dallas, 616 S.W.2d 373, 374 (Tex. App. 1981) (holding that because “any
person may maintain an action for actual damages sustained as a result of the
violation of the Act, . . . persons other than the debtor may maintain an action
for violations of the Act”). The rule suggested by these cases and supported by
a plain reading of the statutory text is that persons who have sustained actual
damages from a TDCA violation have standing to sue. See Tex. Fin. Code
§392.403(a)(2).
      Under Texas law, mental anguish is a form of “actual damages.” See, e.g.,
Bentley v. Bunton, 94 S.W.3d 561, 604 (Tex. 2002). Here, the McCaigs alleged
(and proved) mental anguish caused by Wells Fargo’s TDCA violations. They
therefore had standing to bring their claims.
      Wells Fargo argues Marilyn’s “lack of standing is indisputable” because
she owns no interest in the [subject property], is “not a party to or obligor on
the underlying Note and Deed of Trust,” and was not an addressee on any of
the objectionable Wells Fargo correspondences. It asserts her TDCA claims
are “wholly derivative of her husband’s” and that bystander liability is not
permitted. Wells Fargo argues David lacks standing under the TDCA because
he was not a party to Allie’s loan and had no personal liability. Wells Fargo
further argues David was not the “target of prohibited conduct.” Wells Fargo’s
briefing entirely ignores Section 392.403(a) and does not cite any of the Texas
intermediate appellate court decisions referenced above.


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                                  No. 14-40114
      Whether Marilyn or David own an interest in the subject property or are
parties or obligors on the subject debt is irrelevant for purposes of the standing
inquiry.   See, e.g., Monroe, 936 S.W.2d at 660 (holding that standing to bring
TDCA claims extends beyond “parties to the consumer transaction”);
Campbell, 616 S.W.2d at 374 (“[P]ersons other than the debtor may maintain
an action for violations of the [TDCA].”).
      Further, Wells Fargo’s invocation of “bystander standing” is a red
herring, and Wells Fargo inaccurately downplays Marilyn’s connection to
events. Marilyn was a signatory to the forbearance and settlement agreements
and therefore was obligated to “make the required payments consistent with
the Forbearance Agreement and the Loan Agreement.” (Emphasis added.)
Wells Fargo had at least constructive knowledge that its various mailings
would be received by Marilyn.            Indeed, at least two Wells Fargo
correspondences to the “Estate of Allie Vida McCaig” were sent “C/o David and
Marilyn McCaig.” The threats that caused her harm were threats to take away
a home. The misrepresentations that caused her harm concerned a loan
agreement she had agreed to make payments in accordance with. This is not
bystander standing. See Campbell, 616 S.W.2d at 374.
      This analysis applies with even greater force to David, who was the
addressee of much of the offending correspondence and personally dealt with
Wells Fargo over the phone and through correspondence.
      Wells Fargo urges a far narrower conception of TDCA standing than that
provided for by Section 392.403(a)(2). According to Wells Fargo, “a TDCA
plaintiff must have been the target of unlawful debt collection activity as
defined in the statute in order to have standing to sue.” Several district courts




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                                      No. 14-40114
have applied such a rule. 3 In rejecting this rule, it is sufficient to observe that
Section 392.403(a)(2) contains no targeting requirement and that the district
courts that have adopted the rule did not base their standing analyses on the
text of Section 392.403(a)(2). As a federal court sitting in diversity, our duty is
to apply existing state law, not create it. See, e.g., Carnival Leisure Indus.,
Ltd. v. Aubin, 53 F.3d 716, 720 (5th Cir. 1995). The McCaigs had standing to
bring their TDCA claims.
                                             II.
       Wells Fargo argues the economic loss rule bars the McCaigs’ TDCA
claims because Texas courts have applied the economic loss rule to the similar
Texas Deceptive Trade Practices Act (“DTPA”) and because “mistakes in
performance under a contract” should not “trigger recovery under the TDCA.” 4
Whether the economic loss rule applies to the TDCA is a legal question we
review de novo. See SMI Owen Steel Co., Inc. v. Marsh USA, Inc., 520 F.3d
432, 441 (5th Cir. 2008).
       The economic loss rule “serves to provide a more definite limitation on
liability than foreseeability can and reflects a preference for allocating some
economic risks by contract rather than by law.” LAN/STV v. Martin K. Eby
Constr. Co., 435 S.W.3d 234, 235 (Tex. 2014). “[T]he rule is not generally


       3 See, e.g., Brush v. Wells Fargo Bank, N.A., 911 F.Supp.2d 445, 472 (S.D. Tex. 2012);
Prophet v. Myers, No. CIV.A.H-08-0492, 2009 WL 1437799, at *3 (S.D. Tex. May 21, 2009);
Lee v. Wells Fargo Bank, N.A., No. CIV.A. H-11-1334, 2013 WL 754053, at *8 (S.D. Tex. Feb.
27, 2013).
       4 That “mistakes” should not trigger liability under the TDCA is the dominant theme

in Wells Fargo’s briefing. As a general rule, there is express statutory support for that
assertion. Under Section 392.401, the TDCA is not violated where “the action complained of
resulted from a bona fide error that occurred notwithstanding the use of reasonable
procedures adopted to avoid the error.” For whatever reason, Wells Fargo chose not to plead
or prove this affirmative defense. See Waterfield Mortg. Co., Inc. v. Rodriguez, 929 S.W.2d
641, 647 (Tex. App. 1996). On appeal, though arguing it made only innocent and
understandable mistakes, Wells Fargo conspicuously omits any citation or reference to
Section 392.401. Accordingly, we express no opinion on how Section 392.401 might apply to
a case such as this.
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                                      No. 14-40114
applicable in every situation; it allows recovery of economic damages in tort, or
not, according to its underlying principles.”           Id. at 235–36.       Accordingly,
“application of the rule depends on an analysis of its rationales in a particular
situation.” Id. at 245–46.
       Breach of “an independent legal duty, separate from the existence of the
contract itself,” represents a particular situation where tort claims (based on
that independent duty) may co-exist with contract claims (based on a breach of
the contract). Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors,
Inc., 960 S.W.2d 41, 47 (Tex. 1998). “Thus, 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.”
Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718
(Tex. 2014).
       If Wells Fargo violated the TDCA, it can be held liable for those
violations even if there are contracts between the parties, and even if Wells
Fargo’s prohibited conduct also amounts to contractual breach. A statutory
offender will not be shielded from liability simply by showing its violation also
violated a contract.
       Indeed, the TDCA contemplates that there will often be contractual
duties running between a consumer and debt collector, 5 and a debt collector’s
otherwise wrongful conduct may be permissible if authorized by contract. See,
e.g., Tex. Fin. Code § 392.301(b)(3) (providing that debt collectors are not
prevented from “exercising or threatening to exercise a statutory or contractual
right of seizure, repossession, or sale that does not require court proceedings”);
§ 392.303(a)(2) (prohibiting debt collectors from collection or attempted



       5 As discussed above, Wells Fargo even argues a contractual relationship is necessary
to have standing under the TDCA.
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                                  No. 14-40114
collection of certain charges “unless the interest or incidental charge, fee, or
expense is expressly authorized by the agreement creating the obligation”).
Permitting 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.
      The cases Wells Fargo cites where Texas courts have applied the
economic loss rule to the DTPA are inapt because, in each of them, the Texas
Supreme Court concluded there was no statutory violation to begin with. See
Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996) (rejecting a theory of
DTPA liability that “would convert every breach of contract into a DTPA
claim”); Ashford Dev., Inc. v. USLife Real Estate Servs. Corp., 661 S.W.2d 933,
935 (Tex. 1983) (“An allegation of a mere breach of contract, without more, does
not constitute a ‘false, misleading or deceptive act’ in violation of the DTPA.’”).
While, under Crawford and Ashford, a breach of contract does not itself
constitute a DTPA violation, the Texas Supreme Court has never held that
underlying conduct that breaches an agreement cannot violate the DTPA
merely because it also breaches an existing contractual obligation.            Put
differently, if a particular duty is defined both in a contract and in a statutory
provision, and a party violates the duty enumerated in both sources, the
economic loss rule does not apply.      See Formosa Plastics Corp. USA, 960
S.W.2d at 47 (recognizing under certain limited circumstances that conduct
can give rise to both tort and breach of contract claims).
      The economic loss rule does not bar the McCaigs’ TDCA claims.
                                       III.
      The jury was asked within one question whether Wells Fargo violated
TDCA sections 392.301(a)(7), 392.301(a)(8), 393.303(a)(2), 392.304(a)(8), or
392.304(a)(12). As required by the verdict form, the jury answered with a
categorical “Yes.”
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                                  No. 14-40114
                                       A.
        Because the verdict form leaves us in the dark as to which TDCA
provision (or provisions) the jury deemed violated, Wells Fargo argues on
appeal that we must remand for a new trial if any of the five theories fail.
        The “general rule” is “that ‘when a case is submitted to the jury on a
general verdict, the failure of evidence or a legal mistake under one theory of
the case generally requires reversal for a new trial because the reviewing court
cannot determine whether the jury based its verdict on a sound or unsound
theory.’” Muth v. Ford Motor Co., 461 F.3d 557, 564 (5th Cir. 2006) (quoting
Maryland v. Baldwin, 112 U.S. 490, 493 (1884)). A party that makes no
objection “as to form or substance,” however, cannot argue for the first time on
appeal that a new trial is required due to inherent ambiguity in the verdict
form. See Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 878 (5th Cir. 2013).
        Here, Wells Fargo objected to the substance of the question but not its
form.    We need not determine whether, generally, such an objection is
sufficient to preserve the issue for appeal, however. Wells Fargo invited the
error and cannot complain of it now.
        The question at issue, “Question 4,” asked whether Wells Fargo “violated
the [TDCA] by committing any of the following prohibited acts” and went on to
describe five possible ways the TDCA might have been violated. The trial
transcript reveals how Question 4 took on its form. Initially, Wells Fargo
submitted draft instructions that set forth each potential violation separately.
The district court was skeptical about the necessity of such an approach and
asked if it would not be better to list the potential violations within one
question. After a brief colloquy, counsel for Wells Fargo stated, “I believe, your
Honor, if I had to draft this over again, that’s the way I’d draft it.” Two days
later, just prior to closing arguments, Wells Fargo’s counsel objected Question
4 on the grounds that there was “insufficient evidence of each of the three
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                                 No. 14-40114
subsections submitted under Question Number 4.” After the objection was
overruled, the district court specifically asked if there were any further
objections to Question 4, and Wells Fargo counsel answered, “No.”
      “A party cannot complain on appeal of errors which he himself induced
the district court to commit.” United States v. Lopez-Escobar, 920 F.2d 1241,
1246 (5th Cir. 1991). This “invited error doctrine applies to jury instructions
as well as evidentiary rulings.” United States v. Baytank (Houston), Inc., 934
F.2d 599, 606–07 (5th Cir. 1991); see also United States v. Silvestri, 409 F.3d
1311, 1337 (11th Cir. 2005) (“When a party responds to a court’s proposed jury
instructions with the words ‘the instruction is acceptable to us,’ such action
constitutes invited error.”). It “prevents a litigant from speculating on a
verdict, and then, when the speculation turns out badly, escaping the
consequences of having done so.” Alabama Great S. R. Co. v. Johnson, 140
F.2d 968, 971 (5th Cir. 1944).
      With the words, “If I had to draft this over again, that’s the way I’d draft
it,” Wells Fargo expressly endorsed the jury question it now complains of. It
thus introduced an error that would be harmless if the jury found in Wells
Fargo’s favor while likely necessitating a new trial if the jury found against
Wells Fargo.    This is the sort of speculation the invited error doctrine is
designed to prevent, and Wells Fargo cannot now complain. See Alabama
Great S. R. Co., 140 F.2d at 971. We will affirm the jury’s finding of a TDCA
violation “if any one of the underlying theories is legally and factually
sufficient.” Pan E. Exploration Co. v. Hufo Oils, 855 F.2d 1106, 1124 (5th Cir.
1988).
                                       B.
      We now consider each of the TDCA provisions at issue in Question 4. We
will conclude that the evidence supports a finding that Wells Fargo violated
four of the provisions.
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                                  No. 14-40114
       Tex. Fin Code § 392.301(a)(7)–(8)
       (a)   In debt collection, a debt collector may not use threats, coercion, or
             attempts to coerce that employ any of the following practices:
       (7)   threatening that nonpayment of a consumer debt will result in the
             seizure, repossession, or sale of the person’s property without
             proper court proceedings; or
       (8)   threatening to take an action prohibited by law.
Tex. Fin. Code § 392.301(a)(7)–(8).
       However a debt collector may “exercise[e] or threaten[ ] to exercise a
statutory or contractual right of seizure, repossession, or sale that does not
require court proceedings.” Tex. Fin. Code § 392.301(b)(3). Wells Fargo argues
that its mistaken threats to foreclose are permissible under this exception.
According to Wells Fargo, the “plain language” of Section 392.301(b)(3) means
it is not liable for “threatening to exercise its contractual and statutory rights,
even if Wells Fargo changed course after learning its analysis of the situation
was mistaken.” The McCaigs argue that “Wells Fargo gave up any right it may
have had to foreclose under the Note due to late payments,” meaning it had no
“right” upon which to base a Section 392.301(b)(3) defense.
       We agree with the McCaigs. As indicated by the statutory text, without
an actual predicate “contractual right,” there is no Section 392.301(b)(3)
defense. Wells Fargo may be right that “[t]he TDCA does not punish a mere
breach of contract,” but a debt collector seeking the affirmative protections of
Section 392.301(b)(3) must be within its contractual rights. Wells Fargo was
not.
       Wells Fargo relies on our unpublished case, Singha v. BAC Home Loans
Servicing, L.P., 564 F.App’x 65 (5th Cir. 2014), in which we reasoned that
“[s]ince BAC is a proper mortgagee, threatening foreclosure is expressly
permitted by the TDCA.” Id. at 70. In Singha, however, we specifically found
that the mortgagee-defendant had a right to foreclose—the lender was a


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                                 No. 14-40114
“proper mortgagee” and it had not “waive[d] its right of foreclosure.” Id. at *5.
Here, Wells Fargo had no right to foreclose. The case is distinguishable.
      Subsections (a)(7) and (a)(8) provide two different ways of proving a
TDCA violation. There is no evidence to support a finding that Wells Fargo
violated section 392.301(a)(7), which prohibits specific threats to seize or
dispose of “property without proper court proceedings.” Section 392.301(a)(7)
simply does not apply to non-judicial foreclosure.
      The McCaigs argue that Wells Fargo violated Section 392.301(a)(8) by
threatening to take an action prohibited by law—specifically, by threatening
to foreclose absent any right to do so. Wells Fargo’s defense primarily relies
on Section 392.301(b)(3), which we have already held inapplicable under these
factual circumstances.    Wells Fargo also argues that we must read Section
392.301(a)(8) “in context and in harmony with the surrounding provisions” and
that a “breach (or threatened breach) of a consumer contract” is not “egregious
conduct” like that expressly forbidden.     This secondary argument has no
substance. Section 392.301(a)(8) prohibits threats “to take an action prohibited
by law;” whether the threat is “egregious” is immaterial. See Dixon v. Brooks,
604 S.W.2d 330, 334 (Tex. App. 1980) (holding threats to terminate a contract
without statutorily required notice were “prohibited by law” under the TDCA).
In any event, the McCaigs did not sue Wells Fargo simply for threatening to
breach a contract; they sued because Wells Fargo threatened to unjustifiably
take a home from them and sell it at a foreclosure sale. That threat is every
bit as egregious as various other threats specifically prohibited by Section
392.301.
      Wells Fargo clearly threatened to foreclose, and thus to “take an action.”
See Section 392.301(a)(8). The question is whether that threatened action was
prohibited by law. The right to a nonjudicial foreclosure, where it exists, is a
contractual right memorialized within “a deed of trust or other contract lien.”
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See Tex. Prop. Code § 51.002(a).          Because a default generally triggers a
mortgagor’s right to foreclose under a deed of trust, district courts have
recognized that Section 392.301(a)(8) claims premised on a threat of
foreclosure generally turn on whether the mortgage is in default. Wildy v.
Wells Fargo Bank, NA, No. 3:12–CV–01831–BF, 2012 WL 5987590, at *3
(N.D.Tex. Nov. 30, 2012) (“[F]oreclosure, or the threat of foreclosure, is not an
action prohibited by law when a plaintiff has defaulted on their mortgage.”).
This is so because a mortgagor will be able to have the sale set aside if a
property is foreclosed upon absent default. See Phillips v. Latham, 523 S.W.2d
19, 21–22 (Tex. App. 1975).
      Here, Wells Fargo contracted away its right to foreclose while expressly
maintaining the loan’s status as in default.               In determining whether
foreclosure would be prohibited by law, however, what matters is whether the
mortgagor has a right to foreclose, not whether the debt is considered in
default. Cf. Matter of Marriage of Rutherford, 573 S.W.2d 299, 301 (Tex. App.
1978) (“The holder of a note may waive the right to foreclose as to past defaults
where late payments have been regularly accepted and notice has not been
given that future defaults will provide the basis for foreclosure proceedings.”).
Had Wells Fargo foreclosed absent a right to do so, the McCaigs would have
been entitled to a judgment setting aside the sale. 6 Accordingly, the threat to
foreclose was a threat to take an action prohibited by law. That threat is
actionable under Section 392.301(a)(8).
      Tex. Fin. Code § 392.303(a)(2)
      (a) In debt collection, a debt collector may not use unfair or
      unconscionable means that employ the following practices: (2)
      collecting or attempting to collect interest or a charge, fee, or
      expense incidental to the obligation unless the interest or

      6 In arguing that an award of damages for mental anguish is not proper, Wells Fargo
even labels its own conduct “attempted wrongful foreclosure.”
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                                       No. 14-40114
      incidental charge, fee, or expense is expressly authorized by the
      agreement creating the obligation or legally chargeable to the
      consumer.
Tex. Fin. Code § 392.303(a)(2).
       The settlement agreement included a provision that Wells Fargo would
“waive and forebear” the collection of certain fees and costs “conditioned upon
the McCaigs [sic] successful completion of, and performance under, this
Agreement and the Forbearance Agreement.”                   It is undisputed that Wells
Fargo “assessed” certain fees and late charges that it later waived.                      The
McCaigs argue that these charges were not authorized and therefore represent
a Section 392.303(a)(2) violation. Wells Fargo raises three arguments that the
McCaigs’ Section 392.303(a)(2) claim failed as a matter of law. 7
       Because the challenged fees in this case were made in connection with
Allie’s home loan, Wells Fargo argues that the McCaigs lack “standing” to
assert Section 392.303(a)(2) claims. Wells Fargo asserts the McCaigs were not
“liable for paying” Allie’s loan. The evidence is to the contrary. The settlement
agreement requires Marilyn and David “make the required payments
consistent with the Forbearance Agreement and the Loan Agreement.”
(Emphasis added).          Thus, once the parties entered the settlement and
forbearance agreements, the McCaigs became obligated to pay any charges
assessed on the loan by Wells Fargo. Any attempt to collect from Allie, who
Wells Fargo knew was deceased, was necessarily an attempt to collect from the
McCaigs, who had agreed to make payments required under Allie’s “Loan
Agreement.”




       7  In its reply brief, Wells Fargo also argues that its actions were not “unfair or
unconscionable” as required by Section 392.303(a)(2). Arguments first raised in a reply brief
are waived. E.g., In re Katrina Canal Breaches Litig., 620 F.3d 455, 459 n.3 (5th Cir. 2010).
In any event, the statute is best read to define “unfair and unconscionable” practices as those
listed in its various subsections, including (a)(2).
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                                No. 14-40114
      Wells Fargo also argues that the fees were authorized because, under
the settlement agreement, they were not waived until the payment plan
established by the forbearance agreement had been completed. The text of the
settlement agreement does not support such a reading. Wells Fargo “agreed
to waive and forebear” the collection of the fees and costs “conditioned upon
the McCaigs [sic] successful completion of, and performance under,” the
settlement and forbearance agreements. (Emphasis added.) Wells Fargo’s
argument that the fees were waived upon completion of the payment plan
would be obviously correct if the settlement agreement did not include the
phrase “and performance under.”       We must, however, give that phrase
meaning. See Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983) (“Courts must
favor an interpretation that affords some consequence to each part of the
instrument so that none of the provisions will be rendered meaningless.”). The
fees were “conditionally” waived the moment the parties entered the
settlement agreement, and that waiver remained in effect so long as the
McCaigs performed under the forbearance agreement. The McCaigs faithfully
performed, and the undisputedly “assessed” fees and costs were unauthorized.
See Tex. Fin. Code § 392.303(a)(2).
      Wells Fargo’s final argument, that “there were no unauthorized charges”
because the fees were not “ultimately” collected, is meritless.    See Eads v.
Wolpoff & Abramson, LLP, 538 F.Supp.2d 981, 986 & n.5 (W.D. Tex. 2008).
Section 392.303(a)(2) makes “attempt[s] to collect” actionable. That the charge
was later “removed” merely suggests it was unauthorized to begin with.
      While Wells Fargo argues it never attempted to collect these fees “from
the McCaigs” and “from them personally,” but does not argue it never
attempted to collect the fees—full stop. That argument is therefore waived.
We have already explained why an attempt to collect the fees from Allie—who
was deceased and whose obligation David and Marilyn had agreed to
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                                   No. 14-40114
undertake—necessarily amounted to an attempt to collect from the McCaigs.
We assume without holding that Wells Fargo attempted to collect the fees from
Allie, and thus the McCaigs. Collection of such fees was not authorized under
the parties’ agreements, and the evidence was sufficient to support a finding
that Wells Fargo violated Section 392.303(a)(2).
      Tex. Fin. Code § 392.304(a)(8)
      Except as otherwise provided by this section, 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.
Tex. Fin. Code. § 392.304(a)(8).
      Wells Fargo argues the McCaigs presented “no evidence that Wells Fargo
misrepresented the character, extent, or amount of Allie’s debt.” Additionally,
within its standing argument, Wells Fargo also argues David McCaig is not a
“consumer” and that the obligation to pay Wells Fargo is not a “consumer debt”
for purposes of the TDCA.
      Because the amount ultimately owed on the loan depended on whether
the McCaigs adhered to the forbearance plan, Wells Fargo kept two sets of
records. Wells Fargo explains its “computer software was not equipped to
handle” the settlement and forbearance agreements meaning “manual
tracking” was required. This led to mistakes. For example, on April 6, 2010,
Wells Fargo sent a notice asserting the forbearance plan had been broken when
it had not been. Additionally, a customer representative with no access to
records pertinent to the forbearance agreement told David his repayment plan
had been cancelled and that he needed to pay $11,900 to avoid foreclosure.
Finally, as discussed above, Wells Fargo’s representations with respect to the
amount owed on Allie’s loan included unauthorized late charges that Wells
Fargo now asserts were never owed at all. The evidence supports a finding
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                                 No. 14-40114
that Wells Fargo misrepresented the amount, extent, and character of the
McCaigs’ obligation. See Miller v. BAC Home Loans Servicing, L.P., 726 F.3d
717, 723 (5th Cir. 2013).
      Wells Fargo’s argument that David is not a consumer because he was not
“a party to Allie’s loan” and not liable for her consumer debt overlooks the
statutory definitions. A consumer is an individual with a “consumer debt.”
Tex. Fin. Code § 392.001(1). “‘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 § 392.001(2).
When the McCaigs entered the settlement and forbearance agreements, they
entered a transaction with Wells Fargo that obliged them to make “payments
consistent with the Forbearance Agreement and the Loan Agreement.” The
McCaigs put on evidence to show they undertook that obligation entirely for
personal, family and household purposes. The jury’s specific conclusion that
the McCaigs were consumers for purposes of the TDCA is supported by the
evidence.
      The evidence that Wells Fargo, acting as a debt collector, misrepresented
the amount, extent, and character of an obligation the McCaigs undertook for
personal, family, and household purposes is sufficient to sustain a jury finding
that Wells Fargo violated Section 392.304(a)(8).
      Nonetheless,   Wells   Fargo   further    argues     Section   392.304(a)(8)
misleading misrepresentations must be made with an “intent” to “defraud
deceive or mislead” to be actionable. The statutory text contains no intent
requirement, and Wells Fargo has directed us to no decisions where a court
applying the TDCA has inferred an intent requirement. Rather, as suggested
by the statute’s plain text, district courts have recognized that facially
innocuous misrepresentations made in the course of an attempt to collect a
debt constitute a violation of Section 392.304(8). See, e.g., Johnson v. Wells
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                                  No. 14-40114
Fargo Bank, NA, 999 F.Supp.2d 919, 933 (N.D. Tex. 2014); Cole v. U.S. Bank
Nat. Ass’n ND, No. CIV.A. H-11-2325, 2011 WL 3651029, at *2 (S.D. Tex. Aug.
17, 2011); Steele v. Green Tree Servicing, LLC, No. 3:09–cv–603–D, 2010 WL
3565415, at *5 n. 6 (N.D. Tex. Sept. 7, 2010); Baker v. Countrywide Home
Loans, Inc., No. CIV A 308-CV-0916-B, 2009 WL 1810336, at *7 (N.D. Tex.
June 24, 2009). The Texas Court of Appeals has observed numerous times that
a bank’s “failure to keep accurate records” may lead to liability under Section
392.304(a)(8). See Dodeka, L.L.C. v. Campos, 377 S.W.3d 726, 733 (Tex. App.
2012); Simien v. Unifund CCR Partners, 321 S.W.3d 235, 244 (Tex. App. 2010);
accord Levy v. Cach, L.L.C., No. 14-12-00905-CV, 2013 WL 6237273, at *3 (Tex.
App. Dec. 3, 2013) (unpublished) (“[A] failure by the Bank to keep accurate
records of its customers’ credit-card debt could result in . . . civil penalties.”
(citing Tex. Fin. Cod. § 392.304(a)(8)); Ainsworth v. CACH, LLC, No. 14-11-
00502-CV, 2012 WL 1205525, at *5 (Tex. App. Apr. 10, 2012) (unpublished)
(same).
      Additionally, imposition of an intent requirement is inconsistent with
Section 392.401, which provides as an affirmative defense that the TDCA is not
violated “if the action complained of resulted from a bona fide error that
occurred notwithstanding the use of reasonable procedures adopted to avoid
the error.”   Lack of intent is thus an aspect of an affirmative defense Wells
Fargo chose not to plead or prove. See Torres v. Mid-State Trust II, 895 S.W.2d
828, 831 (Tex. App. 1995) (holding “the bona fide error defense requires a
creditor to prove,” inter alia “that the violation was not intentional”). As
discussed previously, Wells Fargo has not asserted this defense at any stage of
the proceedings.
      Tex. Fin. Code § 392.304(a)(8)
      Except as otherwise provided by this section, in debt collection or
      obtaining information concerning a consumer, a debt collector may

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                                  No. 14-40114
      not use a fraudulent, deceptive, or misleading representation that
      employs the following practices: representing that a consumer debt
      may be increased by the addition of attorney’s fees, investigation
      fees, service fees, or other charges if a written contract or statute
      does not authorize the additional fees or charges
Tex. Fin. Code § 392.304(a)(8).
      We have already held that, under the settlement and forbearance
agreements, late fees were not authorized so long as the McCaigs made
payments under the forbearance plan. Under these circumstances, the same
evidence that supports a finding that Wells Fargo violated Section
392.303(a)(2) is sufficient to sustain a finding that Wells Fargo violated Section
392.304(a)(12) as well.
      Testifying, Wells Fargo’s corporate representative Michael Dolan tried
to distinguish between late fees that were “assessed” and late fees that were
“charged,” suggesting that late fees were not actually “charged” if the McCaigs
did not ultimately pay them.           But Section 392.304(a)(12) prohibits
representations that an unauthorized fee “may” be levied, making this already
dubious distinction immaterial.        The assessed late fees appeared on
correspondences sent to the McCaigs as Wells Fargo sought to collect a debt.
This evidence supports a finding that Wells Fargo violated Section
392.304(a)(12).
                                       IV.
      Based on the TDCA violations discussed above, the jury awarded the
McCaigs actual damages for “expenses” and for mental anguish. Wells Fargo
challenges the McCaigs’ entitlement to the damages and challenges the
measure of the mental anguish award. There is no evidence to support the
jury’s $1,900 award for expenses. Otherwise, we affirm.




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                                      No. 14-40114
                                             A.
       The jury awarded the McCaigs $1,900 in damages for expenses
supposedly caused by Wells Fargo’s TDCA violations. The McCaigs incurred
the expenses by voluntarily making payments under the forbearance plan via
certified checks and through overnight mail. Wells Fargo’s TDCA violations
did not cause these expenses, and they are not recoverable as damages. 8 See
Ledisco Fin. Servs., Inc. v. Viracola, 533 S.W.2d 951, 957 (Tex. App. 1976).
                                             B.
       We are “very deferential” to the jury finding that the McCaigs were
entitled to damages. See Vogler v. Blackmore, 352 F.3d 150, 154 (5th Cir.
2003). “We apply federal standards of review to assess the sufficiency or
insufficiency of the evidence in relation to the verdict, but in doing so we refer
to state law for the kind of evidence that must be produced to support a verdict.”
Hamburger v. State Farm Mut. Auto. Ins. Co., 361 F.3d 875, 884 (5th Cir. 2004)
(emphasis added; alterations, internal quotations, and citations omitted); see
also Homoki v. Conversion Servs., Inc., 717 F.3d 388, 398 (5th Cir. 2013) (“The
law governing what damages are recoverable is substantive, and therefore in
a diversity case state law governs what damages are available for a given claim
and the manner in which those damages must be proved.”). In short, state law
governs what the plaintiff must prove and how it may be proved; federal law
governs whether the evidence is sufficient to prove it.




       8 The damages were also not caused by Wells Fargo’s alleged breach of the forbearance
and settlement agreements. They were incurred as part of the McCaigs’ performance.
Accordingly, there can be no alternative recovery for breach of contract. See Snyder v. Eanes
Indep. Sch. Dist., 860 S.W.2d 692, 695 (Tex. App. 1993); see also Stewart Title Guar. Co. v.
Aiello, 941 S.W.2d 68, 72 (Tex. 1997) (“[A] breach of contract action will not support mental
anguish damages.”).


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                                  No. 14-40114
      Under Texas law, to show an entitlement to mental anguish damages,
the plaintiff must put on evidence showing “the nature, duration, and severity
of their mental anguish, thus establishing a substantial disruption in the
plaintiffs’ daily routine,” or showing “‘a high degree of mental pain and distress’
that is ‘more than mere worry, anxiety, vexation, embarrassment, or anger.’”
Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex. 1995) (quoting J.B.
Custom Design & Bldg. v. Clawson, 794 S.W.2d 38, 43 (Tex. App. 1990)).
Plaintiffs are not required to show the mental anguish resulted in physical
symptoms. Id. at 443.
      “[D]amages for mental anguish are recoverable under the [TDCA].”
Monroe, 936 S.W.2d at 661.         Expert testimony is not required to show
compensable mental anguish, which may be proven by the “claimants’ own
testimony, that of third parties, or that of experts.” Parkway Co., 901 S.W.2d
at 444 (emphasis added); see also Gilmore v. SCI Texas Funeral Servs., Inc.,
234 S.W.3d 251, 258 n.4 (Tex. App. 2007) (“Expert testimony is not required to
recover mental anguish damages.”).           Similarly, expert testimony is not
required to establish that mental anguish led to physical symptoms. See Serv.
Corp. Int’l v. Guerra, 348 S.W.3d 221, 233 (Tex. 2011) (affirming a finding of
mental anguish where the claimant “testified that she suffered burning in her
stomach due to the stress and sought medical treatment for the symptoms” and
further testified “[s]he continued to have headaches and take medication for
anxiety and depression”). The suffering of family members may evidence
mental anguish.      See Bentley, 94 S.W.3d at 606–07 (reciting evidence
adequately supporting a finding of mental anguish, including evidence that
“the ordeal . . . disrupted [the plaintiff’s] family, and distressed his children at
school” and “that his family had suffered, too, adding to his own distress”).
      Marilyn testified that dealing with Wells Fargo was “outrageous and
angering,” that “[i]t’s like this ominous cloud over you all the time, and
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                                   No. 14-40114
everything is related to this,” and that she was “very upset and angry.” She
also testified she obsessed over the matter and experienced an “ongoing fear”
that Wells Fargo would take the house away. Additionally, she testified she
had to “try to keep [herself] calm,” when observing her husband’s related
stress—stress she feared might cause him a heart attack. In her own words:
        It’s just heart stopping; it’s panic; it’s fear. It’s what—what can
        you do? I mean, it’s like just—and hopelessness is mixed in there,
        as well, and then also just plain anger that—just out—that’s just
        outrageous. It’s just unbelievable that this could continue this way,
        on an on, and be ignored and be—just not—just not respected.
        There is evidence David experienced anxiety and chest pain based on
stress related to Wells Fargo’s misconduct. According to the testimony, he had
to visit the emergency room twice as a result of this pain. David testified that
the events were “extremely upsetting” and affecting his family, and also that
the experience left him “very anxious” and “very fearful.” David testified that
Wells Fargo’s misconduct affected him every day over a two-and-a-half-year
span.    Marilyn testified that David “was becoming more anxious; he was
becoming more withdrawn . . . it just wasn’t his usual self. He would wake up
and be thinking about this.” The McCaigs’ son also testified to a change in
David—that he was “tense, stressed, frustrated, worried.”
        Based on the evidence, we cannot upset the jury’s finding that Marilyn
and David suffered a sufficiently “high degree of mental pain and distress.” See
Parkway Co., 901 S.W.2d at 444. Cf. Dickerson v. Lexington Ins. Co., 556 F.3d
290, 304–05 (5th Cir. 2009) (affirming mental anguish award under Louisiana
law). The evidence is that Wells Fargo’s repeated mistakes and institutional
inability to identify and remedy its mistakes cast a deep pall of extended
duration over the McCaig household.           The evidence was provided by the
claimants themselves and corroborated. Based on the evidence, a reasonable



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                                 No. 14-40114
jury could find Wells Fargo’s TDCA violations caused the McCaigs
compensable mental anguish.
      The McCaigs also offered expert testimony linking David’s chest pain to
the situation with Wells Fargo. We have already held that expert testimony
was not required. On appeal, Wells Fargo argues the district court abused its
discretion by permitting the expert to testify. “Even assuming an abuse of
discretion occurred, the erroneous admission is subject to a harmless error
analysis.” St. Martin v. Mobil Exploration & Producing U.S. Inc., 224 F.3d
402, 405 (5th Cir. 2000). The appellant bears the burden of proving the error
was not harmless. Dresser-Rand Co. v. Virtual Automation Inc., 361 F.3d 831,
842 (5th Cir. 2004). Wells Fargo has not discussed the harmless error standard
or argued that admitting the expert testimony affected its substantial rights.
Wells Fargo’s argument is simply that “[w]ithout expert testimony to support
their mental anguish claims, the McCaigs’ lay testimony . . . was insufficient
as a matter of law to support their damages recovery.” Wells Fargo is wrong
on the law and has not shown that any error in admitting the expert testimony
was harmful.
                                      C.
      Wells Fargo argues we should “at least” grant a new trial to determine
whether the McCaigs are entitled to mental anguish damages because the
jury’s mental anguish finding is against the great weight of the evidence. The
argument overlooks the standard of review. We are not deciding Wells Fargo’s
request for a new trial in the first instance and instead consider whether there
is “an absolute absence of evidence to support the jury’s verdict.” Hidden Oaks
Ltd. v. City of Austin, 138 F.3d 1036, 1046 (5th Cir. 1998). We have already
determined the evidence supports the verdict, and we cannot say the district
court abused its discretion in denying Wells Fargo’s motion for new trial.


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                                  No. 14-40114
                                       D.
      Wells Fargo also seeks a new trial based on the jury instruction given
regarding mental anguish.        “We review jury instructions for abuse of
discretion.” Duvall v. Dallas Cnty., Tex., 631 F.3d 203, 206 (5th Cir. 2011) (per
curiam). “Because of the broad discretion afforded district courts in framing
the instructions to the jury, we will find such an abuse of discretion only if the
charge as a whole is not a correct statement of the law and does not clearly
instruct the jurors regarding the legal principles applicable to the factual
issues before them.” Cozzo v. Tangipahoa Parish Council—President Gov’t,
279 F.3d 273, 293 (5th Cir. 2002).
      The challenged jury instruction accurately sets forth the law, and we
cannot say the district court abused its discretion by rejecting Wells Fargo’s
requested instruction.
                                       E.
      Wells Fargo also argues the “excessive” $75,000 award to each David and
Marilyn necessitates a new trial.
      “The size of the award to which a plaintiff is entitled is generally a fact
question, and the reviewing court should be ‘exceedingly hesitant’ to overturn
the decision of the jury—the primary fact finder—and the trial judge’ who
entered judgment on the verdict.” Wackman v. Rubsamen, 602 F.3d 391, 404
(5th Cir. 2010) (quoting Shows v. Jamison Bedding, Inc., 671 F.2d 927, 934
(5th Cir. 1982)).   Accordingly, only the “strongest of showings” warrants
reversal. Id. (quoting Foradori, 523 F.3d at 504). “Our review of a damage
award for emotional distress and mental anguish is conducted with deference
to the fact-finder because of the intangibility of the harms suffered.” Tompkins
v. Cyr, 202 F.3d 770, 783 (5th Cir. 2000). “Absent gross excessiveness,” we
accept as proper the measure of damages a jury awards for mental anguish.
Pope v. Rollins Protective Servs. Co., 703 F.2d 197, 207 (5th Cir. 1983). We
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                                  No. 14-40114
cannot say the district court abused its discretion in denying the motion for a
new trial on damages.


                                        V.
        Wells Fargo also argues that insufficient evidence supports the jury’s
finding that it violated Section 392.301(a)(3), which prohibits debt collectors
from making representations “to any person other than the consumer that a
consumer is wilfully refusing to pay a nondisputed consumer debt when the
debt is in dispute and the consumer has notified in writing the debt collector
of the dispute.” We agree with Wells Fargo.
        According to the McCaigs, Wells Fargo’s correspondence with the Texas
Attorney    General   violated   Section     392.301(a)(3).    However,     Section
392.301(a)(3) requires representations that the subject debt is nondisputed and
that the consumer’s refusal to pay is willful. See Tex. Fin. Code § 392.301(a)(3).
Neither requirement is satisfied here.        As evidenced by David’s initiating
complaint to the Texas Attorney General, there was a dispute regarding the
debt.    Wells Fargo’s letter responding to the complaint did not deny the
existence of a dispute. Rather, within the context of a dispute, Wells Fargo
told its (mistaken) side of the story. Moreover, Wells Fargo did not accuse the
McCaigs of willful refusal to pay; it merely provided (erroneous) payment
records and insisted the McCaigs broke their forbearance plan. Wells Fargo’s
letter to the AG’s office did not trigger liability under Section 392.301(a)(3).
        The McCaigs argue that the TDCA “imposes a standard of behavior that
requires truthfulness and accuracy,” meaning any mistaken communication
about “the status of the loan and dispute” amounts to an actionable violation
of Section 392.301(a)(3). The McCaigs completely ignore the text of Section
392.301(a)(3) and fail to cite any case law whatsoever. Their argument is


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                                 No. 14-40114
meritless.   The $1,000 in statutory damages awarded for Wells Fargo’s
supposed violation of Section 392.301(a)(3) must be vacated.
                                       VI.
      Because the McCaigs prevailed in their TDCA claims against Wells
Fargo, they were “entitled to attorney’s fees reasonably related to the amount
of work performed and costs.” Tex. Fin Code § 392.403(b).         The jury heard
evidence on this issue and found the McCaigs to be entitled to $200,000 in
attorney’s fees.     The judge reduced that award to $156,775 and entered
judgment accordingly.
      Wells Fargo’s final argument is that the award of $156,775 in attorney’s
fees cannot be sustained because the evidence included “no contemporaneous
billing records or other documentation recorded reasonably close to the time
where the work was performed.” Thus, rather than arguing the fees award is
excessive, Wells Fargo argues that “no competent evidence support[s] the
award.” Accordingly, the specific question here—whether the type of evidence
submitted can sustain a jury’s finding—is a legal question we review de novo.
      According to Wells Fargo, under El Apple I, Ltd. v. Olivas, 370 S.W.3d
757 (Tex. 2012), plaintiffs seeking an award of attorney’s fees must provide
“documentary evidence of the work performed.” The Texas Supreme Court has
recently clarified El Apple I:
      El Apple does not hold that a lodestar fee can only be established
      through time records or billing statements. We said instead that
      an attorney could testify to the details of his work, but that “in all
      but the simplest cases, the attorney would probably have to refer
      to some type of record or documentation to provide this
      information.” Id. at 763. For this reason, we encouraged attorneys
      using the lodestar method to shift their fee to their opponent to
      keep contemporaneous records of their time as they would for their
      own client. Id.
City of Laredo v. Montano, 414 S.W.3d 731, 736 (Tex. 2013).


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                                  No. 14-40114
      Wells Fargo’s claim that the McCaigs’ attorney testified without any
records and based on “estimates she wrote down on [sic] piece of paper in her
hotel on the first day of trial” is not supported by the record. Contrary to Wells
Fargo’s assertions, and unlike in El Apple I and City of Laredo, the McCaigs
counsel did not simply estimate time spent on the case. Rather, the McCaigs
provided “other documentation recorded reasonably close to the time when the
work is performed.”      El Apple I, 370 S.W.3d at 763 (emphasis added).
Specifically, the McCaigs introduced a print-out from their attorney’s case
management system showing individual tasks performed by the attorney and
the date on which those tasks were performed. The document was not merely
relied upon during testimony, it was admitted into evidence. The McCaigs’
manner of proving attorney’s fees was legally adequate.
      Because Wells Fargo’s legal challenge to the evidence fails and Wells
Fargo raises no other challenges, the reduced award of $156,775 in attorney’s
fees is affirmed.
                                CONCLUSION
      The McCaigs prevailed after a jury trial and secured a verdict to which
we must largely defer. Having considered Wells Fargo’s numerous points of
error, we find only two that have merit. The evidence does not support the
jury’s $1,900 award to the McCaigs for expenses. Likewise, the evidence does
not support a finding that Wells Fargo violated Section 392.301(a)(3) of the
Texas Financial Code, meaning there is no basis upon which to award the
McCaigs $500 each in statutory damages. In all other respects, the verdict is
supported by the evidence.      Accordingly, we VACATE the judgment and
REMAND the case for entry of judgment consistent with this opinion.




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                                      No. 14-40114
JONES, Circuit Judge, dissenting.
       With due respect to my colleagues, I dissent from the affirmance of this
$300,000 judgment for a house worth less $100,000 that the McCaigs never
lived in, and for a debt on which they never had personal liability. Given the
majority’s errors in interpreting the Texas Debt Collection Act (“TDCA”) 1, this
kind of liability may become plausible nearly every time a lender makes a
mistake concerning a consumer debt. 2 Another way to look at this result is
that in Texas, there has been no cause of action for “attempted wrongful
foreclosure.” Port City State Bank v. Leyco Constr., 561 S.W.2d 546, 547 (Tex.
Civ. App. 1977); Peterson v. Black, 980 S.W.2d 818, 823 (Tex. App. 1998);
Anderson v. Baxter, Schwartz & Shapiro LLP, 2012 WL 50622, at *4 (Tex. App.
2012). Until today. I would reverse the judgment.
       There is no doubt that “Wells Fargo’s repeated mistakes and
institutional inability to identify and remedy its mistakes cast a deep pall of
extended duration over the McCaig household.” On the other hand, these
individuals were well educated, knew their rights, and ultimately received full
contractual satisfaction. Wells Fargo wrote letters and threatened foreclosure,
but it never foreclosed on the house. Significantly, contrary to the majority’s
repeated assertions, Wells Fargo never “waived” its right to foreclose. The
original loan remained in default, but Wells Fargo agreed to forbear from
exercising its remedies, including foreclosure, only so long as the McCaigs
made payments consistent with the Forbearance Agreement. The majority’s




       Tex. Fin. Code §§ 392.001-392.404. All statutory citations are to the Texas Financial
       1

Code unless specified otherwise.

       2 The majority cite a TDCA provision that offers a defense for bona fide errors under
certain circumstances. § 392.401. Neither party noted this defense, and research has not
uncovered relevant cases. Unlike the majority, I will not speculate about the parameters of
this provision.
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                                          No. 14-40114
apparent confusion between the lender’s contractual rights and its
mismanagement of the loan has serious legal consequences.
        To be clear, I dissent from Parts II, III.B, IV.B and IV.C-E of the majority
opinion. 3 My disagreement centers on the applicability of the economic loss
rule.
        The economic loss rule “generally precludes recovery in tort for economic
losses resulting from the failure of a party to perform under a contract.” Lamar
Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 12 (Tex. 2007). 4 Texas
cases support applying that rule here, and our own district courts have
extended this reasoning to the TDCA. There is no need for the majority’s
sweeping, straw-man conclusions about how the TDCA coexists, or does not,
with a party’s contract rights. Had the McCaigs failed to make their payments,
nothing Wells Fargo did was inconsistent with the Forbearance Agreement.
Wells Fargo, however, repeatedly mis-accounted for the McCaigs’ monthly
payments and erroneously believed they were in default. Wells Fargo sent
notices of breach and intent to foreclose, and then instigated, but fortunately
did not consummate, formal foreclosure proceedings. That the McCaigs did
not default means that Wells Fargo did not perform as it was supposed to under
the contract. This is breach, no more.
        Like the TDCA, the Texas Deceptive Trade Practices Act (“DTPA”)
proscribes certain unconscionable or deceptive practices that create



        3   I concur in Parts I, III.A, IV.A and V of the majority opinion.

        4The Texas Supreme Court has carefully explained the reach and ambiguities
inherent in the economic loss rule. See Sharyland Water Supply Corp. v. City of Alton,
354 S.W.3d 407, 418-19 (Tex. 2011). The ambiguities are of little moment here, however,
because Wells Fargo’s bad acts occurred in its erroneous attempt to exercise its remedies
under the Forbearance Agreement. The McCaigs assert no recovery for economic loss
pertaining to the breach of contract, which Wells Fargo fully cured, and their only sustainable
claims were for mental anguish caused by the breach.
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“independent legal duties,” yet the Texas Supreme Court has held, and this
and lower courts have repeatedly affirmed, that mere breaches of contract
cannot create DTPA liability. In Ashford, the Court explained that a mere
breach of contract is not a “false, misleading or deceptive act” pursuant to the
DTPA. Ashford Dev., Inc. v. U.S. Life Real Estate Servs., 661 S.W.2d 933, 935
(citing Dura-Wood Treating Co. v. Century Forest Indus., Inc., 675 F.2d 745
(5th Cir. 1982); Coleman v. Hughes Blanton, Inc., 599 S.W.2d 643 (Tex. Civ.
App. 1980)). In Crawford, contrary to the majority’s interpretation, the Court
did not “conclude[] there was no statutory violation to begin with.” Rather, the
Court concluded that contractual violations are not statutory violations. That
is, the Court interpreted the statute to exclude breach of contract claims. The
alleged misrepresentation in Crawford was a promise to perform that was
never fulfilled. Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996). The
Texas Supreme Court rejected this as a candidate for DTPA liability, since the
opposite conclusion “would convert every breach of contract into a DTPA
claim.” Id. 5
       This court and a legion of Texas courts have correctly construed
Crawford and Ashford to exclude mere breach of contract cases from DTPA
liability. See, e.g., Dura-Wood, 675 F.2d at 756 (5th Cir. 1982) (“an allegation
of breach of contract—without more—does not constitute a false, misleading,
or deceptive action such as would violate . . . the DTPA”). See also, e.g., Greco
v. Jones, 38 F. Supp. 3d 790, 799 (N.D. Tex. 2014); Allstar Nat’l Ins. Agency v.
Johnson, No. 01-09-00322-CV, 2010 WL 2991058, at *6 (Tex. App. July 29,



       5 The majority opinion relies on the “independent source” doctrine, which holds that
an act can give rise to both tort and contract liability when it violates duties independently
arising under each body of law. See Formosa Plastics Corp. USA v. Presidio Eng’rs &
Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998); Chapman Custom Homes, Inc. v. Dallas
Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014). This is true, but it ignores the fact that Wells
Fargo’s alleged wrongdoing here was only wrong because it violated the agreement.
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                                No. 14-40114
2010); Bank One, Texas, N.A. v. Little, 978 S.W.2d 272, 281 (Tex. App. 1998);
Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877, 890 (Tex. App.
1996); Kuehnhoefer v. Welch, 893 S.W.2d 689, 693 (Tex. App. 1995).
      Further, district courts in this circuit have applied this rule to TDCA
claims. In Johnson, the plaintiff “assert[ed] that, by seeking payments and
charges or made [sic] payments out of escrow in amounts not authorized by the
loan documents, Defendants misrepresented what Plaintiff owed under her
loan documents—that is, her contract.” 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).
The court in that case joined other district courts that had “applied the
economic loss doctrine to TDCA claims premised on alleged misrepresentations
where the actions taken by the lender were wrongful only because they violated
the agreement between the borrower and lender.” Id. See also McCartney v.
CitiFinancial Auto Credit, Inc., No. 4:10-CV-424, 2010 WL 5834802, at *5 (E.D.
Tex. Dec. 14, 2010) (“To the extent that Plaintiff may claim that Citi made a
misrepresentation or false statement by attempting to collect the debt in
violation of the agreement. . ., the Court finds such an argument not to be
actionable under the TDCA.”); Caldwell v. Flagstar Bank, FSB, No. 3:12-CV-
1855-K-BD, 2013 WL 705110, at *12 (N.D. Tex. Feb. 4, 2013) (applying “the
economic loss rule to TDCA claims premised on alleged misrepresentations
where the actions taken by the lender were wrongful only because they violated
the agreement between the borrower and lender”). Cf. Singh v. JP Morgan
Chase Bank, NA, No. 4:11-CV-607, 2012 WL 3904827, at *7 (E.D. Tex. July 31,
2012) (“if the defendant’s conduct would give rise to liability only because it




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                                      No. 14-40114
breaches the parties’ agreement, the plaintiff’s cause of action sounds only in
contract”). The majority took no note of these cases duly cited by Wells Fargo. 6
       Applying the economic loss rule here, Wells Fargo should have been
granted judgment as a matter of law on all four of the TDCA claims that the
majority discuss. One of these is a claim for “misrepresenting the character,
extent, or amount of a consumer debt[.]” § 392.304(a)(8). Consistent with
Crawford and Ashford, the “misrepresentation” occasioned solely as a result of
Wells Fargo’s breach of its contract with the McCaigs should not have been
transformed into a statutory claim for mental anguish damages. Two other
claims are for the “unfair or unconscionable” practices of “attempting to collect
. . . a charge, fee, or expense incidental to the obligation unless . . . expressly
authorized by the agreement creating the obligation,” § 392.303(a)(2), and for
the “fraudulent, deceptive or misleading” practice of “representing that a
consumer debt may be increased by the addition of attorney’s fees, service fees,
or other charges if a written contract or statute does not authorize” them.
§ 392.304(a)(12). These claims relate to the accruals of interest, penalties, and
fees (erroneously) premised on the McCaigs’ default.                    But the parties’
agreement expressly authorized, in writing, the accrual of certain fees and
charges during the pendency of the Forbearance Agreement, and these charges
were all removed once the McCaigs had completed the makeup payments.
Because the contracts, whether complied with or not, provided for these
charges, no non-contractual statutory violation should be recognized.
       Finally, for violating its contract, Wells Fargo was found guilty of
“threats or coercion” consisting of threats to foreclose “without proper court


       6 But see Baker v. Countrywide Home Loans, Inc., 2009 WL 1810336, at *7 (N.D. Tex.
2009); Steele v. Green Tree Servicing, LLC, 2010 WL 3565415 (N.D. Tex. 2010), at *6; Brush
v. Wells Fargo Bank, N.A., 911 F.Supp.2d 445, 474 (S.D. Tex. 2012). These cases hold that
lenders’ errors in loan balance statements may give rise to TDCA violations, but none of them
discusses nor squarely rejects the economic loss rule.
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                                  No. 14-40114
proceedings,” § 392.301(a)(7), and “threatening to take an action prohibited by
law.” § 392.301(a)(8). The majority’s reading of these provisions specifically
equates mere contract breach with statutory violations, contrary to Crawford
and Ashford.
      Equally unjustifiable, the majority’s interpretation of these two
provisions eviscerates the very next statutory provision, which was clearly
intended to preserve a lender’s legal rights.         § 392.301(b) states that
“Subsection (a) does not prevent a debt collector from: . . . (2) threatening to
institute civil lawsuits or other judicial proceedings to collect a consumer debt;
or (3) exercising or threatening to exercise a statutory or contractual right of
[nonjudicial foreclosure].”   That language is clear, and it is simply not
contingent on whether the lender is in breach of the basic contract. This
language is not contingent on whether a lender is in breach because otherwise,
whenever the parties’ dispute about a debt evolves into a lawsuit, other judicial
proceedings, or foreclosure, and the lender loses, it would automatically be
liable for violating the TDCA by an action “without proper court proceedings”
or “prohibited by law.” The majority, in essence, penalizes the lender’s access
to the courts unless it wins the suit. This is a high price to pay for accessing
the justice system, and it is a price at odds with the statute.
      Perhaps the simplest explanation of the overall inconsistency between
the majority’s holding and the economic loss rule was articulated in a Texas
appellate court’s reasoning why a tenant’s claim for return of a $175 deposit
withheld by a landlord could not be transformed into a DTPA action. See
Holloway v. Dannenmaier, 581 S.W.2d 765, 767 (Tex. Civ. App. 1979) (cited in
Crawford, 917 S.W.2d at 14). The court posited that the landlord ignored the
lease agreement, refused to return the deposit and, compounding the tenant’s
difficulty, shielded itself with a plea of privilege to be sued two hundred miles
away. The court asked:
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                                     No. 14-40114
       Would this be a misrepresentation of the rights, remedies or
       obligations stated in the contract? No. Although tenant might
       believe that he could get a refund or a written explanation without
       going to court for same, he had no more guaranty than any other
       party to any contract that the same would not be breached. He
       still has the same rights spelled out in the contract. As in any
       breach of contract, he has the right to bring an action to enforce
       them. 7

Id. So it was here, only the McCaigs never had to file suit to enforce their
rights against Wells Fargo under the Forbearance Agreement.
       The TDCA should be interpreted consistently with Texas law that, in the
closely related area of deceptive trade practices, has diligently discriminated
between violations of the statute and mere breaches of contract. I respectfully
dissent.




       7 The court noted that no fraud or continuing scheme had been alleged, nor are there
such allegations here.
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