Vasquez v. Wells Fargo Bank, N.A.

MARYSABEL VASQUEZ, Plaintiff,

v. WELLS FARGO BANK, N.A., BARRETT DAFFIN FRAPPIER TURNER & ENGEL, L.L.P.,and LEE STEVENSON, JR., Defendants.

CIVIL ACTION H-11-4086

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

SIGNED: January 8, 2013

OPINION AND ORDER OF REMAND

Pending before the Court in the above referenced action to set aside foreclosure sale or to recover damages relating to Plaintiff Marysabel Vasquez's allegedly wrongfully foreclosed real property at 3806 Flatwood Drive, Katy, Texas 77449 ("the property"), removed from state court, are Defendant Wells Fargo Bank, N.A.'s ("Wells Fargo's" or "Defendants'"¹ ) (1) motion to expunge lis pendens (instrument #10) on that property and (2) motion for summary judgment and motion to dismiss with prejudice (#11).

The Second Amended Petition² asserts only state-law causes ofaction for wrongful foreclosure, common law fraud, fraudulent misrepresentation, statutory fraud, breach of contract, negligence, negligent misrepresentation, gross negligence, violations of the Texas Deceptive Trade Practices Act ("DTPA") and the Texas Debt Collection Act ("TDCA"). Originally filed in state court, this case was removed by Wells Fargo on the grounds that the state-law causes of action were preempted by the Home Owner's Loan Act ("HOLA"), 12 U.S.C. § 1461, et seq., and its implementing regulation, 12 C.F.R. § 560.

Allegations of Plaintiff's Second Amended Petition

The Second Amended Petition asserts the following. Plaintiff purchased the property on March 4, 2003 for $135,025.00. She made a 20% cash-down payment of $27,005.00 and borrowed the balance of $108,020.00 from World Savings Bank FSB, evidenced by a note entitled "Adjustable Rate Mortgage Note Pick-A-Payment Loan" ("the note").³ The note is secured by a Deed of Trust⁴ also dated March 4, 2003. Plaintiff's real property taxes were escrowed and paid by the Bank, beginning in 2004. Over time, different entities, including Wachovia and Wells Fargo (collectively, "the Bank"), were authorized to and did collect her mortgage payments.⁵

When Plaintiff closed on the property on March 5, 2003, the bank presented Plaintiff with a number of documents for her signature. She claims that the HUD closing statement incorrectly identified the seller's address and the property as being in Houston, not Katy, with the wrong zip code, 77024. The same was true of the Deed of Trust. She also claims that the Bank's agents represented that the loan was a fixed rate loan, but she later discovered it was an adjustable rate loan after speaking with representative Gerardo on August 12, 2004 after she called customer service to ask about the unexpected increases in her loan payments. She asserts that to convert the loan to a fixed interest rate involved "draconian requirements."

The Notice of Fire/Hazard Insurance Requirements, dated March 5, 2003, required Plaintiff to maintain insurance on the property and provide the Bank with proof. Plaintiff purchased the insurance and sent proof to the Bank, but each year the Bank claimed it had not received the proof of insurance, so Plaintiff would keep re-sending it and the Bank would claim it never received it. Furthermore, the Bank year after year purchased forced-placeinsurance on top of that already purchased by Plaintiff, and each time that added $250 to Plaintiff's monthly mortgage payment. She identifies as the cause of the problem that the correct address on the proof of insurance did not match the incorrect property address on file with the Bank. Plaintiff pointed out the error to the Bank several times, but it continued to occur year after year.

In 2009 Plaintiff fell behind on her mortgage payments because her husband fell ill and lost his job. In February 2010 she called the Bank to see how she could work out the arrearage. The Bank representative offered a loan modification, and told her that if she did not qualify, she could apply for a payment plan. The representative interviewed her over the telephone and found that she pre-qualified for the modification. Plaintiff sent the Bank documents requested by the representative. But on March 15, 2010, the Bank advised her that she did not qualify for a modification.

The following month Plaintiff called the Bank and was told that the property was about to go to foreclosure. The Bank representative told her that she should immediately make a payment by mail or bank transfer. When Plaintiff asked if the payment would be accepted, the representative assured her it would even if it was not for the full amount of the arrearage. So on April 22, 2012, Plaintiff made a bank transfer of $3,085.00 to cover part of the arrearage, which through February 2010 amounted to $6,950.19.

In May 2010, the Bank returned that transfer of funds. Plaintiff called and was transferred to the foreclosure department. She told the representative that she had $5,000.00 available to pay for the arrearage and was told that the Bank would accept that amount for partial payment and provide a subsequent payment plan if Plaintiff provided a hardship letter indicating why she had fallen behind, proof that she had the $5,000.00, and proof of income and bank statements. Plaintiff sent these requested documents. Also, as the representative requested, Plaintiff subsequently called the foreclosure department every week. She called the first week after sending in these documents and was told by a representative that he did not find anything in her file. Plaintiff re-sent all the documents and continued to call every week. In June 2010, a representative of the foreclosure department told her that approval of the payment plan was still pending. A week later a representative told Plaintiff that she did not qualify for a payment plan because the Bank's computer system showed that she was "in process of modification." She informed the representative that the Bank had already denied her request for modification and asked again for help with her arrearage, e.g., adding it to the back of the loan or to future payments. The representative said she would have to call back at a later date to revisit the payment plan option. On June 21, 2010, the Bank sent her a letter indicating it would help and stating that she could apply for a loan

modification.

In mid to late June Plaintiff received a letter ("acceleration letter") stating that payment of the past due balance on the debt has not been received by the mortgage servicer and therefore the mortgagee had elected to accelerate the maturity of the debt. Attached to the acceleration letter was a Notice of Substitute Trustee Letter ("notice of sale"). Both these documents erroneously listed the property as in "Houston, Texas 77024." The Bank posted the notice of sale with the incorrect address at the Harris County's Office of Real Property Records. Foreclosure Information & Listing Service, Inc. ("FILS") obtained the incorrect address from this document and incorporated it into its report, "Foreclosure Posting List Harris County, A List of Properties Scheduled for Mortgage Delinquency Foreclosure July 6, 2010" ("Posting List"), on which foreclosure buyers rely to determine the properties to purchase at each foreclosure sale. Attorneys, companies, and non-profit entities use the list to contact owners of the properties and provide them with options to and protection against foreclosure. Because of the error in the address, the Posting List did not include Plaintiff's property in any comprehensible, searchable, or researchable format. Plaintiff did not receive a single letter, advertisement, contact or visit from anyone with offers of services.

On July 3, 2010 Plaintiff called the Bank and again asked ifthere was some other solution to the arrearage problem. She then learned for the first time that her house was scheduled for foreclosure sale at 10:00 a.m. on July 6, 2010. On Sunday, July 4, 2010 she called the bank and requested a reinstatement quote so the she could make a payment and save the house from foreclosure. A representative told her to call the Bank's attorneys on a weekday, but not the next day because they were closed for the holiday. At 9:00 a.m. on Monday, July 5, 2010 she called the Bank's foreclosure attorneys. A representative of the office told Plaintiff it would take twenty-four hours to get a reinstatement quote and that he would call her back. The foreclosure attorneys never called Plaintiff back with a reinstatement quote.

On July 6, 2010 Plaintiff attended the foreclosure sale at the family courthouse. She told the trustee that she was waiting for a reinstatement quote. The Bank bought the property at the foreclosure sale, and shortly thereafter the Bank forcefully evicted Plaintiff from the property. At the time of the foreclosure sale the Bank did not have an interest recorded with Harris County Real Property Records and therefore did not have the legal right or authority to request or to go ahead with the foreclosure sale.

Regarding her wrongful foreclosure cause of action, Plaintiff alleges vaguely that there was a defect in the foreclosure sale that caused a grossly inadequate selling price and zero attendanceat the sale aside from the Bank, resulting in economic damages to Plaintiff. She maintains, "Because all mortgages are upside down, and because all property values have devalued tremendously, it would be impractical and impossible to prove a grossly inadequate selling price."

Regarding her common law fraud, fraudulent misrepresentation, and statutory fraud claims, Plaintiff identifies the misrepresentations as including but not limited to the following: (1) the loan had a fixed interest rate; (2) Plaintiff could convert her adjustable rate to a fixed rate; (3) Plaintiff would be given a workout but for the "in modification" annotation in the Bank's computer; (4) Plaintiff would be given a reinstatement quote so that she might cure the arrearage and stop the foreclosure; (5) the foreclosure of...