Tarasiewicz v. PNC Bank

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IZABELA TARASIEWICZ, THOMAS CROSIER, Plaintiffs v. PNC BANK, NATIONAL ASSOCIATION, Defendant

No. SA-22-CV-00816-XR

United States District Court, W.D. Texas, San Antonio Division

April 13, 2023

ORDER

XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE.

On this date, the Court considered Defendant's motion to dismiss (ECF No. 12), Plaintiffs' response (ECF No. 19), and Defendant's reply (ECF No. 20). After careful consideration, the Court issues the following order.

BACKGROUND

Plaintiffs Izabela Tarasiewicz and Thomas Crosier filed this action to prevent the foreclosure of their home located at 4042 Wilderness Ridge, San Antonio, Texas (the “Property”) by Defendant PNC Bank, National Association (“PNC”).

In July 2014, non-party Sergio Chavez (“Chavez”) executed a Note and Deed of Trust in favor of Compass Bank, in connection with a construction loan secured by the Property in the principal amount of $455,036,00. See ECF No 8-1 at 17. PNC is the current mortgagee and holder of the Note. See ECF No. 1-1 at 31.

On or about February 2, 2022, non-party TEN400, LLC purchased the Property at an HOA foreclosure sale. Id. ¶¶ 48, 66. On February 25, 2022, Plaintiffs purchased the Property from TEN400, LLC for $20,000.00 through Special Warranty Deed following an HOA foreclosure sale subject to PNC's superior lien.^[1],^[2] ECF No. 8 ¶¶ 10 11, 13, 15. At the time of the purchase, the Property was allegedly abandoned and had broken windows, rotting wood, and mold. Id. ¶¶ 1617. To preserve it “Plaintiffs immediately began substantial construction,” which included repairing the roof, gutting the floors and walls, and replacing the windows and doors. Id. ¶ 18. Plaintiffs estimate that they have invested $233,504.83 in improvements to the Property. Id. ¶ 14.

Sometime after the purchase, Plaintiffs searched the county records and discovered that the Property was scheduled for a trustee's sale on July 5, 2022. Id. ¶ 12. Plaintiffs allege that neither they nor the previous homeowner received notice of the upcoming sale as required under the Deed of Trust. Id. ¶ 38; see ECF No. 8-1, Ex. B § 16.

On July 1, 2022, Plaintiffs filed suit in the 225th Judicial District Court of Bexar County, asserting a claim for breach of contract and seeking to enjoin Defendant from selling the Property. ECF No. 1-1 at 21-27. The state court issued an ex parte temporary restraining order (“TRO”), preventing the foreclosure sale. See id. at 18-20. On July 27, 2023, PNC removed the case to this Court on the basis of diversity jurisdiction. ECF No. 1. Shortly thereafter, it moved to dismiss. ECF No. 5. In response, Plaintiffs filed their first amended complaint (“FAC”), mooting the pending motion to dismiss. In the FAC, Plaintiffs allege claims for (1) breach of contract; (2) quantum meruit; (3) unjust enrichment; and (4) suit to quiet title. ECF No. 8.

PNC now moves to dismiss the FAC for several reasons. ECF No. 12. First, PNC argues that Plaintiffs do not have standing to sue for breach of contract because they are not a party to or a third-party beneficiary of the Deed of Trust. ECF No. 12 at 6-7. Second, PNC argues that Plaintiffs cannot support their claim for quantum meruit because they did not perform the repairs to the Property for PNC's benefit. Id. at 9-10. Third, PNC contends that Plaintiffs' unjust enrichment claim fails because the FAC does not allege that PNC “employed fraud, duress, or took undue advantage over the Plaintiffs.” Id. at 12. Finally, PNC argues that Plaintiffs' suit to quiet title must be dismissed because the FAC acknowledges that Plaintiffs purchased the Property subject to PNC's valid lien. Id. at 12-13.

DISCUSSION

I. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) allows a party to move for the dismissal of a complaint for “failure to state a claim upon which relief can be granted.” To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A claim for relief must contain: (1) “a short and plain statement of the grounds for the court's jurisdiction”; (2) “a short and plain statement of the claim showing that the pleader is entitled to the relief”; and (3) “a demand for the relief sought.” FED. R. CIV. P. 8(a). A plaintiff “must provide enough factual allegations to draw the reasonable inference that the elements exist.” Innova Hosp. San Antonio, L.P. v. Blue Cross & Blue Shield of Ga., Inc., 995 F.Supp.2d 587, 602 (N.D. Tex. Feb. 3, 2014) (citing Patrick v. WalMart, Inc.-Store No. 155, 681 F.3d 614, 617 (5th Cir. 2012)); see also Torch Liquidating Tr. ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 384 (5th Cir. 2009) (“[T]he complaint must contain either direct allegations or permit properly drawn inferences to support every material point necessary to sustain recovery”) (internal quotation marks and citations omitted).

In considering a motion to dismiss under Rule 12(b)(6), all factual allegations from the complaint should be taken as true, and the facts are to be construed in the light most favorable to the nonmoving party. Fernandez-Montes v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993). Still, a complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “‘[N]aked assertions' devoid of ‘further factual enhancement,'” and “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not entitled to the presumption of truth. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557); see also R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (stating that the Court should neither “strain to find inferences favorable to plaintiffs” nor accept “conclusory allegations, unwarranted deductions, or legal conclusions.”).

II. Analysis

A. Breach of Contract

Plaintiffs allege that PNC breached the Deed of Trust by failing to provide notice to them, see ECF No. 19 ¶ 16,^[3]and the former mortgagor. ECF No. 8 ¶ 27. In Texas, a claim for breach of contract requires “(1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.” Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009) (quoting Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.- Houston 2005, pet. denied)).

In Texas, “[p]arties are presumed to be contracting for themselves only.” Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347, 362 (5th Cir. 2003). Thus, only parties to a contract have standing to sue, unless a third party to the contract can demonstrate that the contract was made for their benefit. Kona Tech. Corp. v. S. Pacific Transp. Co., 225 F.3d 595, 602 (5th Cir. 2000). “To make such a showing, the third party must demonstrate that (1) it was not privy to the written agreement; (2) the contract was actually made for its benefit; and (3) the contracting parties intended for it to benefit by their agreement.” Chartis Specialty Ins. Co. v. Tesoro Corp., 113 F.Supp.3d 924, 936 (W.D. Tex. 2015), aff'd sub nom. AIG Specialty Ins. Co. v. Tesoro Corp., 840 F.3d 205 (5th Cir. 2016); see also Talman Home Fed. Sav. & Loan Ass'n of Ill. v. Am. Bankers Ins., 924 F.2d 1347, 1350-51 (5th Cir. 1991).

“The intention to contract or confer a benefit to a third party must be clearly and fully spelled out in order to show the contracting parties entered into the contract directly for the third party's benefit.” First Union Nat'l Bank v. Richmont Cap. Partner, 168 S.W.3d 917, 929 (Tex. App.-Dallas 2005, no pet.) (citing MCI Telecomms. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d 641, 651 (Tex. 1999)). “Furthermore, any intent of the contracting parties to benefit a third-party is to be derived solely from the language of the contract.” Talman, 924 F.2d at 1350-51. “The fact that a third party might receive an incidental benefit from a contract does not give that third party a right to enforce the contract.” First Union Nat'l Bank, 168 S.W.3d at 929 (citing MCI, 995 S.W.2d at 651). “If there is any reasonable doubt as to the intent of the contracting parties to confer a direct benefit on the third party, then the third-party beneficiary claim must fail.” Id. (citing Dallas Firefighters Ass'n v. Booth Rsch. Grp., Inc., 156 S.W.3d 188, 192-93 (Tex. App.-Dallas 2005, pet. denied) and Whitten v. Vehicle Removal Corp., 56 S.W.3d 293, 312 (Tex. App. -Dallas 2001, no pet.)). In sum, “‘[u]nder Texas law, a non-party to a contract has a heavy burden when it claims third-party beneficiary status.'” Staton Holdings, Inc. v. First Data Corp., No. Civ.A. 3:04-CV-2321P, 2006 WL 1343631, at *8 (N.D. Tex. May 16, 2006) (quoting Missouri Pac. R.R. Co. v. Harbison-Fischer Mfg. Co., 26 F.3d 531, 540 (5th Cir. 1994)).

Here the Deed of Trust evinces no intent to confer a benefit on a third party to the contract. It does not mention either Plaintiff or, for that matter, any third-party beneficiary. See generally ECF No. 8-1, Ex. B. Rather, the Deed of Trust was executed for the benefit of the contracting parties-PNC and Chavez-not on behalf of any subsequent purchasers of the Property. Cf. Brumitt, 519 S.W.3d at 103 (“‘[W]e must begin with the presumption' that the parties contracted solely ‘for themselves' and only a clear expression...