     Case: 15-40748       Document: 00513431552         Page: 1     Date Filed: 03/21/2016




         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT


                                     No. 15-40748
                                   Summary Calendar
                                                                          United States Court of Appeals
                                                                                   Fifth Circuit

                                                                                 FILED
                                                                            March 21, 2016
LARRY GRESHAM,
                                                                            Lyle W. Cayce
                                                                                 Clerk
               Plaintiff - Appellant

v.

WELLS FARGO BANK, N.A.,

               Defendant - Appellee


                   Appeal from the United States District Court
                        for the Eastern District of Texas
                             USDC No. 4:13-CV-711


Before HIGGINBOTHAM, ELROD and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       Appellant Larry Gresham defaulted on his loans from Appellee Wells
Fargo Bank in 2010. In January 2011, Gresham filed suit in a Texas state court
to prevent foreclosure upon property securing the debt, claiming wrongful
acceleration, breach of contract, and negligence. The state court granted
summary judgment to Wells Fargo in May 2013, and the bank reinstituted
foreclosure proceedings. Two months later, Gresham sued Wells Fargo’s
foreclosure counsel, later adding the bank, which removed the case to federal

       * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.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. 15-40748

court. Gresham then filed an Emergency Application for a Temporary
Restraining Order. Upon its denial, Wells Fargo foreclosed. Gresham amended
his complaint, and Wells Fargo responded with a motions to Dismiss and for
Summary Judgment, which the district court granted. Gresham appealed. We
affirm, persuaded that Gresham has failed to state a claim upon which relief
may be granted.
                                           I.
       We turn first to Gresham’s Motion for Leave to File Second Amended
Complaint. In determining whether to grant the request to leave to amend, a
district court may consider five factors: (1) undue delay, (2) bad faith or dilatory
motive, (3) repeated failure to cure deficiencies by prior amendments, (4) undue
prejudice to the opposing party, and (5) futility of the amendment. 1 We review
for abuse of discretion. 2
      The court focused on two of these factors. First, it concluded that
granting the motion would cause undue delay. The motion itself was untimely
under the Court’s Scheduling Order. Gresham had already amended his
complaint twice, and he did not show good cause or otherwise attempt to
explain his tardiness in seeking to amend again. Meanwhile, Gresham had not
made a payment on his mortgage in over four years, and this suit had been
pending for over a year. The court reasonably found that another amendment
would cause undue delay.
      Second, the court determined that the amendment would be futile.
Gresham sought to add the same causes of action as the previous complaint;
specifically, that Wells Fargo failed to provide the required pre-foreclosure



      1  Smith v. EMC Corp., 393 F.3d 590, 593 (5th Cir. 2004).
      2  Sigaran v. U.S. Bank Nat. Ass'n, 560 Fed. Appx. 410, 412 (5th Cir. 2014) (citing
Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667, 672 (5th Cir.2013)).
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notice. 3 Such an amendment would be futile, the court concluded, because it
had already held that the Wells Fargo gave Gresham proper notice of default.
       For these reasons, the district court did not abuse its discretion is
denying Gresham’s Motion for Leave to File Second Amended Complaint.
                                              II.
       Gresham also appeals the district court’s grant of Wells Fargo’s Motion
to Dismiss and Motion for Summary Judgment. 4 Specifically, Gresham appeals
the court’s dismissal with prejudice of his claims that (1) Wells Fargo
trespassed on his property by having his home insurance canceled and his
electricity turned off and (2) that Wells Fargo violated Consumer Finance
Protection Bureau (“CFPB”) rules. 5 To avoid dismissal under Rule 12(b)(6), “a


       3  Gresham argues that the claim he sought to add dealt with a “separate and distinct”
notice from the notice that the district court had already found to be sufficient. But he also
concedes that Wells Fargo was aware of the claim he sought to add because he had raised it
earlier in an Emergency Application for a Temporary Restraining Order against foreclosure
in late March, 2014. A Magistrate Judge considered that Emergency Application and
determined that the service of the requisite pre-foreclosure notices was sufficient, a finding
which the district court adopted. The district court therefore did not abuse its discretion in
determining that it had already considered the claim Gresham wanted to add.
        4 Gresham objects to Wells Fargo’s reference to materials outside the pleadings. In its

motion for summary judgment, Wells Fargo mentioned the state court proceedings between
the parties, including referring to its own earlier detailed recitation of facts from its motion
for summary judgment in state court. Gresham argues that these facts are conclusory and
irrelevant, having nothing to do with the present proceedings because they predate the most
recent foreclosure proceedings. We disagree. The factual and procedural background of the
conflict between Gresham and Wells Fargo is of course relevant. Further, the district court
based its 12(b)(6) ruling on the insufficiency of the facts plead by Gresham; even if Wells
Fargo’s reference to documents outside the pleadings was in error, it did not impact the
district court’s ruling.
        While Gresham bases his objection on the relevance of those materials, not on the
legal validity of referencing them in a 12(b)(6) motion, we note that such court documents are
matters of public record and may be considered in connection with a motion to dismiss
brought pursuant to Fed. R. Civ. P. 12(b)(6). See Coleman v. Bank of New York Mellon, No.
3:12-CV-04783-MBH, 2013 WL 4761111, at *8 (N.D. Tex. Sept. 4, 2013) (quoting Norris v.
Hearst Trust, 500 F.3d 454, 461 n. 9 (5th Cir.2007)) (“It is also ‘clearly proper in deciding a
12(b)(6) motion to take judicial notice of matters of public record.’”).
        5 The district court also ruled in favor of Wells Fargo regarding Gresham’s Motion to

Compel Mediation and Stay Proceedings as well as the lis pendens over the property in
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                                       No. 15-40748

complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” 6 We review de novo. 7
                                             A.
       We begin with Gresham’s claim of trespass to real property. He alleges
that Wells Fargo had his homeowner’s insurance and electrical utilities
cancelled on the day of the foreclosure sale. The district court concluded that,
even if true, Gresham’s allegations did not support a claim for trespass. We
agree.
         In order to state a plausible claim for trespass to real property, Gresham
must establish the following elements: (1) the Gresham owned or had a lawful
right to possess real property, (2) the Wells Fargo entered the Gresham’s land
(or intentionally caused a third person to enter), and the entry was physical,
intentional, and voluntary, and (3) the Wells Fargo’s trespass caused injury to
the Gresham’s right of possession. 8 Gresham’s claim fails to establish these
elements. First, he did not plead any facts indicating that Wells Fargo
physically entered nor caused another to physically enter his property. 9
Without physical entry, there is no trespass. Second, Gresham had no legally
cognizable interest in the property at the time of the alleged trespass. Under



question. Because Gresham did not raise these issues in his briefing, they are waived. See
Med. Ctr. Pharmacy v. Holder, 634 F.3d 830, 835 (5th Cir. 2011).
       6 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007)).
       7 Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 206

(5th Cir. 2009).
       8 Wilen v. Falkenstein, 191 S.W.3d 791, 798 (Tex. App.—Fort Worth 2006, pet. denied).
       9 Gresham points to Cargal v. Cargal, 750 S.W.2d 382, 385 (Tex. App.—Fort Worth

1988, no writ) for the proposition that interference with utilities can support a trespass to
real property claim. However, Cargal is distinguishable from the facts at hand. In Cargal,
the defendant stated that “he was locking the door . . . and turning off the utilities”
immediately. Id. Thus, the claim involving utilities was coupled with physical entry – locking
the door – and thereby deprived the Gresham of physical use of the property. There are no
such allegations in this case.
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                                      No. 15-40748

Texas law, a borrower becomes a tenant at sufferance following a foreclosure. 10
A tenant at sufferance has neither legal interest nor insurable interest in the
property. 11 For these reasons, the district court properly found that Gresham
failed to state a plausible claim for trespass.
                                            B.
       Gresham also appeals the district court’s dismissal of his claim that
Wells Fargo violated CFPB rules concerning residential mortgages. These
rules are codified in 12 C.F.R. §§1024, et seq., and became effective on January
10, 2014. Here, it is undisputed that Gresham defaulted in 2010, and that
Wells Fargo’s November 2013 foreclosure proceeding was initiated before the
CFPB rules became effective. The CFPB regulations do not apply
retroactively. 12 Nonetheless, Gresham argues that Wells Fargo was required
to comply with the regulations between their effective date, January 10, 2014,
and the date of foreclosure, April 1, 2014.
       Specifically, Gresham claims that Wells Fargo violated the regulations
with respect to “dual tracking” at 12 C.F.R. § 1024.41 and “early intervention”
at 12 C.F.R. § 1024.39. Dual tracking is the term given to situations in which
the lender actively pursues foreclosure while simultaneously considering the
borrower for loss mitigation options. 13 Section 1024.41(g) prohibits dual
tracking, and 1024.41(a) expressly provides for a private right of action in the
event the lender violates the provision. 14 However, Section 1024.41(g) only


       10 See Rhine v. Priority One Ins. Co., 411 S.W.3d 651, 660 (Tex. App.—Texarkana 2013,
no pet.) (finding that the borrower’s status is reduced to a tenant at sufferance following
foreclosure sale); see also Jones v. Texas Pac. Indem. Co., 853 S.W.2d 791, 795 (Tex. App.—
Dallas 1993, no writ) (finding that the plaintiffs “became tenants at sufferance after the
foreclosure”).
       11 See Jones, 853 S.W.2d at 795; Rhine, 411 S.W.3d at 661.
       12 See Ray v. U.S. Bank Nat. Ass’n, No. 15-1241, 2015 WL 5670841, at *4 (6th Cir.

Sept. 28, 2015).
       13 See 12 C.F.R. § 1024.41.
       14 Id.


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applies where “a servicer receives a complete loss mitigation application more
than 37 days before a foreclosure sale.” 15 Here, Gresham did not plead, nor is
there any evidence, that he submitted a complete loss mitigation application
more than 37 days before the April 1, 2014 foreclosure sale. The district court
therefore correctly concluded that Gresham failed to put forth any factual
content to support its claim that Wells Fargo violated dual tracking rules.
       Gresham has similarly failed to state a claim in regards to Section
1024.39, which reads
              (a) Live contact. A servicer shall establish or make good faith
       efforts to establish live contact with a delinquent borrower not
       later than the 36th day of the borrower's delinquency and,
       promptly after establishing live contact, inform such borrower
       about the availability of loss mitigation options if appropriate.

       (b) Written notice.
             (1) Notice required. Except as otherwise provided in this
       section, a servicer shall provide to a delinquent borrower a written
       notice with the information set forth in paragraph (b)(2) of this
       section not later than the 45th day of the borrower's delinquency.


Gresham claims that Wells Fargo did not properly give him notice of his
delinquency and loss mitigation options under this section. Unlike Section
1024.41, Section 1024.39 does not explicitly convey a private right of action to
borrowers. 16 Even it did, Gresham failed to plead sufficient facts or offer any
evidence in support of such claim. As the district court concluded, nothing in
this section requires a servicer to retrace these steps on the basis of a



       1512 C.F.R. § 1024.41(c).
       16 At least one court has held that 12 C.F.R. § 1024.35, which incorporates violations
of § 1024.39, does not provide a private right of action for damages. See Miller v. HSBC Bank
U.S.A., N.A., No. 13 CIV. 7500, 2015 WL 585589, at *11 (S.D.N.Y. Feb.11, 2015). Because
Gresham has failed to support his claim with any facts, we need not reach the issue of
whether a private right of action could be available under Section 1024.39.
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                                No. 15-40748

borrower’s continued delinquency. The court therefore did not err in dismissing
Gresham’s claims under the CFPB rules.
      We AFFIRM.




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