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CAUSE NO. 2018-68559
MANSON GUY MAHAFFEY, JR., § IN THE DISTRICT COURT OF
§
§ HARRIS COUNTY, TEXAS
§
ZB, NATIONAL ASSOCIATION, §
SUCCESSOR BY MERGER TO §
AMEGY BANK, N.A., §
AMEGY MORGTAGE, LLC, §
CENLAR FSB and §
BARRET DAFFIN FRAPPIER §
TURNER & ENGEL § 269 JUDICIAL DISTRICT
PLAINTIFF’S RESPONSE TO DEF NDANTS’ MOTION FOR SUMMARY
JUDGMENT
TO THE HONORABLE JUDGE OF SAID COURT:
COMES NOW Plaintiff, Manson Guy Mahaffey, Jr. and files this Response to Defendants,
CENLAR FSB and ZB, NATIONAL ASSOCIATION, successor by merger to AMEGY BANK,
N.A. and AMEGY MORTGAGE, LLC (collectively, “Defendants”), Motion for Summary
Judgment, and respectfully shows the Court as follows:
INTRODUCTION
The crux of the Defendants’ argument is the Loan Documents and the Deed of Trust cannot
be modified by an oral agreement. The Loan Documentsand the Deed of Trust were modified in
writing by the Defendants, which was accepted by the Plaintiff; this, creating an enforceable
Modificationof the Loan Documents andDeed of Trust . The Defendants actions and att pts to
foreclose, not only prove breach of the written Hurricane Harvey Forbearance greement but also
constitute fraud, as an affirmative claim and defense.
SUMMARY JUDGMENT EVIDENCE
Exhibit 1 Affidavit of Cenlar; (attached to Defendants’ Motion and incorporated,
herein.)
Exhibit 1 Note dated May 9,
Exhibit 1 Forbearance Letter dated September 11, 2017;
Exhibit Forbearance Letter dated December 4, 2017;
Exhibit 1 Notice of DEFAULTdated June 27,
Exhibit September 19, 2018 Letter and Blank Loss Mitigation
Application;
Exhibit October 10, 2018 Follow Up Letter;
Exhibit Affidavit of Barrett Daffin Frappier Turner & Engel;(attached to
Defendants’ Motion and incorporated, herein.)
Exhibit Notice of Acceleration and Notice of Sale dated August 23,
Exhibit 3 Certified Copy of Deed of Trust
Exhibit Certificate of Merger;
Exhibit Assumed Name Certificate; and
Exhibit 6 Amendment to Registration by an Out State Financial Institution (attached to
efendants’ Motion and incorporated, herein.)
Exhibit 7 Deposition of Guy Mahaffey Pg. 113 120 (the oral conversations are consistent
with the written Hurricane Harvey Forbearance Agreement)
OBJECTIONS TO SUMMARY JUDGMENT EVIDENCE
Plaintiff objects to the Affidavits of Cenlar and Affidavit of Barrett Daffin Frappier Turner
& Engel, as the Affidavits are controverted by the sworn deposition testimony of the Plaintiff, not
based on personal knowledge, not relevant and contain improper parole evidence.
IV.
BACKGROUND
This is a mortgage case. Plaintiff sued to stop a fraudulent and improper foreclosure sale
by the DefendantsPlaintiff is the owner of the property located at dward Street, Houston,
Texas 77007 Home”), more specifically described in the Deed of Trust Clerk File No. Z295027.
After Hurricane Harvey, Plaintiff was offered a Hurricane Harvey Forbearance Agreement
by the Defendants. As a result of Hurricane Harvey, Plaintiff sustained loss to his business and
health. The term of the Hurricane Harvey Forbearance Agreement was from September 2017 to
February 2018.The Defendant modified the terms of the mortgage agreement, in writing, and sent
the Plaintiff the following Hurricane Harvey Forbearance Agreement
EX.1
EX.1
The Hurricane Harvey Forbearance Agreement does NOTstate the loan will be held
in DEFAULTThe Hurricane Harvey Forbearance Agreement does NOT state Plaint ff will
be forced to comply with subjective, onerous, expensive and impossible loan requalificatio
processes, loss mitigation processes or refinance obligations, solely controlled by the
Defendants. In the material portions, he Hurricane Harvey Forbearance Agreement
repeats the payments will be SUSPENDED. See Ex. 7.
Plaintiff accepted the terms of the Hurricane Harvey orbearance Agreement, agreed to
pay the suspended payments and timely resumed payments in February 2018. Plaintiff even made
an earlier good faith payment. Defendants accepted payments until September 2018. Plaintiff
spoke with Defendants multiple times related to the Hurricane Harvey orbearance Agreement
and payments and was assured his loan was in compliance. In September 2018, the Defendant
refused to accept payments and proceeded with immediate foreclosure proceedings, setting the
sale for October 2, 2018. Until this time, the Plaintiff had communicated with the Defendants and
was assured the Hurricane Harvey orbearance Agreement would be honored, his type of loan
automatically allowed for the deferred payments to be placed at the end of the Note term.These
conversations were consistent with the term SUSPENDED in the Hurricane Harvey Forbearance
Agreement.Plaintiff never failed to make a timely payment. Further, the Hurricane Harvey
Forbearance Agreement complied with the terms of Loan Documents and the Deed of Trust, as it
was a written Modificationof those documents.
In September , Plaintiff and his counsel contact with Defendants related to a
possible loan Modification. The Defendants cite internal policies for the premise any loan
Modification has to be within so many days of the October 2, 2018 sale of the property. Plaintiff
requested these documents and was told “sorry there is not enough time.” Enough time would
exist if the Defendants would postpone the sale. Instead, the Defendants cite arbitrary internal
deadlines and refuse to allow the Plaintiff to apply for the “Modification,” to which the Defendant
already agreed. Plaintiff requested that the sale be postponed so the loan Modification application
can be completed within the internal guidelines. Despite the timely made payments in accordance
with the terms of the Hurricane Harvey Forbearance Agreement, a term the Defendants still
fraudulently market, the Defendants refuse to postpone the sale. The Defendants have even
represented they are forbidden from extending sale, which is statement that is untrue in Texas.
Instead, in furtherance of the Defendants’ fraud, the Defendants refuse to extend the sale for thirty
days, citing alleged internal guidelines.
Finally, the Defendants refused to accept further timely payments.. Notwithstanding,
Defendants began adverse credit reports against the Plaintiff starting on the very date, the
agreed to in writing Hurricane Harvey Forbearance Agreement began.
On October 5, 2018, the Court entered a temporary injunction preventing Defendants from
proceeding with foreclosure.
Although not required by the Hurricane Harvey Forbearance Agreement, written by the
Defendant, Plaintiff endeavored to comply with the onerous and subjective loan requalification
process. These efforts were hampered by regaining business footing and his accountants declining
health.
On July 8, 2019, Cenlar filed a Motion to Dissolve the Temporary InjunctionCenlar
sought an expedited hearing on the Motion to Dissolve
In August, Plaintiff submitted a loss mitigation application. After reviewing Plaintiff’s
financials, Defendant unilaterally determined “Plaintiff did not qualify for loss mitigation and in
September the application was denied. The Plaintiff was confused by this result and ordered his
credit report. The only negative reports on his edit report were from the Defendant, which
absolutely factored into the denial of the loss mitigation, which was never required by the
Hurricane Harvey Forbearance Agreement, in the first place. The Defendants cite some immediate
need to dissolve the temporary injunction entered by the Court. The need is money and wrongfully
obtain the equity in the Plaintiff’s home. The Plaintiff posted a bond. Further, the Defendant
decided not to accept any further payments. Up until that time, the Plaintiff made every payment
in accordance with the Hurricane Harvey Forbearance Agreement. If the Defendant was truly
concerned about the money, then at i s sole optionit could have kept taking the paymen which
were being timely made by the Plaintiff.
SUMMARY JUDGMENT STANDARD
The Defendant’s Motion should be treated as a Traditional Motion for Summary Jud ent.
Defendants filed what purports to be a “no evidence” summary judgment motion and a traditional
motion for summary judgment. TEX.R. CIV. P. 166a(i). In support of the motion, Defendants
attached summary judgment evidence. The Courts have previously determined that a no evidence
summary judgment motion should be made without presenting evidence to support the motion.
Williams v. Bank One, N.A., 15 S.W.3d 110, 116 (Tex.App. Waco 1999, no pet.); Ethridge v.
Hamilton County Elec. Coop. Ass'n, 995 S.W.2d 292, 295 (Tex.App. Waco 1999, no pet.).
DEFENDANTS argue that the evidence attached to its motion demonstrated no genuine issue of
material fact. Black v. Victoria Lloyds Ins. Co.,797 S.W.2d 20, 27 (Tex.1990); see TEX.R. CIV.
P. 166a(c).
Although Defendantslabeled its summary judgment motion as a “no evidence” motion, it
presented it with evidence that it contended would conclusively show that there was no genuine
issue of material fact regarding one of the essential elements of Plaintiff’s claims. See Jacobo v.
Binur, 70 S.W.3d 330, 333 (Tex.App. Waco 2002, pet. granted). Therefore, Defendants Motion
for Summary Judgment should examined and denied under the traditional summary judgment
standard of review.
The Defendant’s motion fails under the No evidence Motion for Summary Judgment
standard, as well. A no evidence motion for summary judgment is essentially a pretrial motion for
directed verdict. Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex.2009). Under Texas Rule
of Civil Procedure 166a(i), a party without the burden of proof may seek summary judgment on
the ground that, after adequate time for discovery, there is no evidence to support one or more
essential elements of the nonmovant's claim or defense. TEX.R. CIV. P. 166a(i); see Gish
S.W.3d at 310. The trial court is required to grant the motion unless the nonmovant produces
evidence raising a genuine issue of material fact as to each challenged element. See TEX.R. CIV.
P. 166a(i).
The Plaintiff presents competent summary judgment proof which raises a material fact
issue as to each of the challenged elements of its causes of actions.
VI.
ARGUMENTS AND AUTHORITIES
Plaintiff alleged causes of actions as follows:
TEXAS PROPERTY CODE VIOLATION
TEXAS BUSINESS & COMMERCE CODE VIOLATION
TEXAS FINANCE CODE VIOLATION
DECLARATORY JUDGMENT
FRAUD/NEGLIGENT MISREPRESENTATION
Fraud
Defendants mistakenly argue Plaintiff sued Defendants for common law fraud, asserting
that Defendants misrepresented that the Note could be orally modified and that the foreclosure
sale could not be postponed.Defendant modified the contract orally and in writing.
The elements for fraud/fraudulent inducement are
(1) the defendant made a false material misrepresentation with knowledge that
it was false when made or that the defendant asserted without knowledge of
truth or falsity;
(2) the defendant intended the misrepresentation to be acted on;
(3) the plaintiff relied on the misrepresentation and
(4) the misrepresentation caused injury.
Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994); DeSantis v. Wackenhut
Corp., 793 S.W.2d 670, 688 (Tex.1990), cert. denied, 498 U.S. 1048, 111 S.Ct. 755, 112 L.Ed.2d
775 (1991);see also Stone v. Lawyers Title Ins. Corp.,554 S.W.2d 183, 185 (Tex.1977).
A promise of future performance constitutes an actionable misrepresentation, if the
promise was made with no intention of performing at the time it was made. Formosa Plastics v.
Presidio Engineers, 960 S.W.2d 41, 4647 (Tex.1998) (allowing fraud the inducement claim
in contract scenario) Schindler v. Austwell Farmers Coop., 841 S.W.2d 853, 854 (Tex.1992).
Texas law has long imposed a duty to abstain from inducing another to enter into a contract through
the use of fraudulent misrepresentations. As a rule, a party is notbound by a contract procured by
fraud. E.g., Prudential Ins. Co. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 162 (Tex.1995); Weitzel
v. Barnes, S.W.2d 598, 601 (Tex.1985); Town North Nat'l Bank v. Broaddus, 569 S.W.2d 489,
491 (Tex.1978); Dallas Farm Mach. Co. v. Reaves, 158 Tex. 1, 307 S.W.2d 233, 239 (1957).
Moreover, it is well established that the legal duty not to fraudulently procure a contract is separate
and independent from the duties established by the contract itself. See Dallas Farm Mach., 307
S.W.2d at 239 (“ ‘[T]he law long ago abandoned the position that a contract must be held sacred
regardless of the fraud of one of the parties in procuring it.’ ”) (quoting Bates v. Southgate, 308
Mass. 170, 31 N.E.2d 551, 558 (1941)). The Texas Supreme Court has also repeatedly recognized
that a fraud claim can be based on a promise made with no intention of performing, irrespective of
whether the promise is later subsumed within a contract. For example, in Crim Truck & Tractor
Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 597 (Tex.1992), the Texas Supreme Court
noted: “As a general rule, the failure to perform the terms of a contract is a breach of contract, not
a tort. However, when one party enters into a contract with no intention of performing, that
misrepresentation may give rise to an action in fraud.” Similarly, in Spoljaric v. Percival Tours,
Inc., 708 S.W.2d 432, 434 (Tex.1986), the Texas Supreme Court held that a fraud claim could be
maintained for breach of an agreement to pay a bonus because a “promise to do an act in the future
is actionable fraud when made with the intention, design and purpose of deceiving, and with no
intention of performing the act. See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218,
222 (Tex.1992); tanfield v. O'Boyle, 462 S.W.2d 270, 272 (Tex.1971). See Halper v. Univ. of
the Incarnate Word, 90 S.W.3d 842, 847 (Tex.App. San Antonio 2002, no pet.) (even assuming
employment was at will, an “at will” defense was unavailable because the employee's fraud claim
was based on a representation made before his employment began); Offshore Petroleum Divers,
Inc. v. Cromp, 952 S.W.2d 954 (Tex.App. Beaumont 1997, pet. denied). The Offshore Petroleum
Court stated that “the cause of action for fraud, which encompasses misrepresentations made
before employment, as well as those made during employment, is not barred by the employment at
will doctrine.”Id. at 956(emphasis added).
To prove an action for fraud by nondisclosure, the plaintiff must establish the defendant
had a duty to disclose because (1) there was a fiduciary or other special relationship requiring
disclosure, (2) the defendant discovered new information that made an earlier representation
misleading or untrue, (3) the defendant created a false impression by making a partial disclosure,
or (4) the defendant voluntarily disclosed some information and therefore had a duty to disclose
the whole truthBP AM. Prod. V. Marshall ,288 S.W.3d 430, 446 (Tex. App. San Antonio
2008), rev’d on other grounds2 S.W.3d 59 (Tex. 2011); Solutioneers Consulting, Ltd. V. Gulf
Greyhound Partners, 237 S.W.3d 378, 385 (Tex. App. Houston [14 Dist] 2007, no pet.); Lesikar
v. Rappeport, 33 S.W.3d 282, 299 (Tex. App. Texarkana 2000, Pet. denied); Hoggett v. Brown
971 S.W.2d 472, 487 (Tex. App. Houston [14 Dist.] 1997, pet. denied); see alsoCitizens Nat’l
Bank v. Allen Rae Invs., 142 S.W.3d 459, 476 77 (Tex. App. Fort Worth 2004, no pet.) (duty to
disclose in commercial context).
The defendant is almost always the person who actually made the representation or
withheld material facts, but the following parties may also be held liable:
(1) Principal.A principal may be vicariously liable for the fraudulent conduct
of itsagent of the agent acted with actual or apparent authority or ifthe
principal ratified the conduct. See NationsBank v. Drilling, 922 S.W2d
53 (Tex. 1996) (apparent authority); City Nat’l Bank v. Martin, 8
S.W.507, 509 (Tex. 1888) (apparent authority); Disney Enters. V. Esprit
Fin., Inc., 981 S.W.2d 25, 31 (Tex. App. San Antonio, 1988, pet. dism’d)
(ratification). On the issue of apparent authority, only the principal’s
onduct, not the agent’s conduct, is relevant. NationsBank,922 S.W.2d at
953. See “Ratification,” ch. 38 D, p. 1236.
(2) Employer.An employer may be viciously liable for the fraudulent act of
its employee if the employee was acting within the scope of employment.
See Nationsbank, 922 S.W.2d 953 54; Millan v. Dean Witter Reynolds,
Inc.,90 S.W.3d 760, 767 68 (Tex. App. San Antonio 2002, pet. denied);
ITT Consumer Fin. Corp. v. Tovar, 932 S.W.2d 147, 158 (Tex. App El
Paso 1996, writ denied).
(3) neficiary of the fraud.A person may be vicariously liable for the
fraudulent act of another if the person benefited from a fraudulent
transaction and had knowledge of the fraud. See First State Bank v.
Fatheree, 847 S.W.2d 391, 396 (Tex. App. Amarillo 1993, writ denied);
Corpus Christi Area Teachers Credit Un. V. Hernandez, 814 S.W.2d 195,
198 (Tex. App. San Antonio 1991, no writ).
(5) Agent.An agent may be individually liable for its own act of fraud performed
for its principal. See Kingston v. Helm, 82 S.W.3d 755, 759 (Tex. App. Corpus
Christi 2002, pet. denied); Hyman Farm Serv. V. Earth Oil & Gas Co., 920
S.W.2d 452, 455 (Tex. App. Amarillo 1996, no writ).
laintiff presents evidence that Defendants made a material representation that was
false.
The Defendants represented to the Plaintiff
Defendant would provide Plaintiff a Hurricane Harvey Forbearance Agreement
with suspension of payments
Plaintiff s loan would not be held in Default
Plaintiff’s loan did not require any additional paperwork or requalification.
Payments subject of the Hurricane Harvey Forbearance Agreement would be
added to the end of his loan.
Defendant would not cause injury to Plaintiff’s credit report.
The representations were false because the Defendant declared the Plaintiff’s loan was in Default
offered only a dification , sought to foreclose, damaged his credit and disavow the enforceability
of the written Hurricane Harvey Forbearance agreement. See Hurricane Harvey Forbearance
Agreement and Ex. 7, above
Plaintiff presents evidence that Defendants knew the representation was false or
made it recklessly as a positive assertion without any knowledge of its truth.
The Defendants, then, unilaterally declared the loan in Default. The Defendants declared
the Plaintiff had to requalify for the loan, pay fees and expenses and comply with an onerous and
subjective approval process. The Defendants represent it is forbidden in Texas to postpone
the sale of the property. The Defendants refused to take any further payments and increase its
damages and create the “emergency” he complains of now. The Plaintiff complied with all terms
of the forbearance agreement, the Defendants drafted, and then said no, the forbearance agreement
is no longer any good, Mr. Mahaffey you are in Default, comply with this process, or else. In
doing so, the Defendants unilaterally ignored the terms of the Hurricane Harvey Forbearance
Agreemen Forbearance the Defendant drafted and made repeated representations the
Hurricane Harvey Forbearance Agreementwould be honored.
Plaintiff presents evidence that Defendants intended to induce Plaintiff to act upon
the alleged representation.
The Defendants sent the client what it contended was an enforceable written Hurrican Harvey
Forbearance greement Defendants intentionally omitted the words Default or Modific tion to
induce the Plaintiff to accept the forbearance and unknowingly risk losing his home or incurring
onerous fees and expenses
Plaintiff actually and justifiably relied upon the representation and suffered injury
as a result.
Justifiable reliance usually presents a question of fact. See Prize Energy Res., L.P. v. Cliff
Hoskins, Inc., 345 S.W.3d 537, 584 (Tex. App.San Antonio 2011, pet. denied). But the element
can be negated as a matter of law when circumstances exist under which reliance cannot be
justified. See Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 424 (Tex. 2015) (per
curiam) (“We hold that, as a matter of law, th[e] reliance was not justifiable.”); AKB Hendrick, LP
v. Musgrave Enters., Inc., 380 S.W.3d 221, 232 (Tex. App.Dallas 2012, no pet.) (holding that
reliance on a representation made in a business or commercial transaction can be unjustified as a
matter of law).
In determining whether justifiable reliance is negated as a matter of law, courts “must
consider the nature of the [parties'] relationship and the contract.” AKB, 380 S.W.3d at 232. “In an
arm's length transaction[,] the defrauded party must exercise ordinary care for the protection of his
own interests. ... [A] failure to exercise reasonable diligence is not excused by mere confidence in
the honesty and integrity of the other party.” Westergren, 453 S.W.3d at 425 (quoting Thigpen v.
Locke, 363 S.W.2d 247, 251 (Tex. 1962) ). And when a party fails to exercise such diligence, it
is “charged with knowledge of all facts that would have been discovered by a reasonably prudent
person similarly situated.” See AKB, 380 S.W.3d at 232. To this end, that party “cannot blindly
rely on a representation by a defendant where the plaintiff's knowledge, experience, and
background warrant investigation into any representations before the plaintiff acts in reliance upon
those representations.” See Shafipour v. Rischon Dev. Corp., No. CV, 2015 WL
3454219, at *8 (Tex. App.Eastland May 29, 2015, pet. denied) (mem. op.).
The Plaintiff’s lienholder offered a forbearance agreement after the devastating Hurricane
Harvey. The Defendants never mentioned Default of Modification. The Defendants followed
with a written Hurricane Harvey Forbearance Agreement, which never mentioned Default
Modific ion or harm to his credit. Given the above factors, the Plaintiff’s reliance was justifiable
and/or a fact issue for the jury exists.
Negligent Misrepresentation
Plaintiff sued Defendants for negligent misrepresentation because the Defendants
misrepresented that the Note could be modified, orally and in writing, and that the foreclosure sale
could not be postponed.
To prevail on a negligent misrepresentation claim, a plaintiff must demonstrate that “(1) a
defendant provides information in the course of his business, or in a transaction in which he has a
pecuniary interest; (2) the information supplied is false; (3) the defendant did not exercise
reasonable care or competence in obtaining or communicating the information; (4) the plaintiff
justifiably relies on the information; and (5) the plaintiff suffers damages proximately caused by
the reliance.” JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653
(Tex. 2018), reh’g denied (June 15, 2018)(quotations omitted).
Plaintiff incorporates the fact section and fraud section above. Plaintiff provides evidence
that Defendants provide information in the course of their business, or in a transaction in which
they have a pecuniary interest. The information was false. Defendants did not exercise reasonable
care or competence in obtaining or communicating the information. Plaintiff justifiably relied on
the information. Plaintiff has no evidence that he has suffered damages proximately caused by the
reliance. Defendants are entitled to summary judgment on Plaintiff’s negligent misrepresentation
claim.
Declaratory Judgment
Plaintiff sued Defendants for a declaratory judgment for an interpretation of the Hurricane
Harvey Forbearance Agreement. The Hurricane Harvey Agreement is in writing and enforceable.
To prove an action for breach of contract, a plaintiff must establish the existence of an
enforceable contract. See Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex.App. Houston
[1st Dist.] 1997, no writ) (listing elements of breach of contract action and including "the existence
of a valid contract" as one of the necessary elements). The elements of an enforceable contract are:
(1) an offer;
(2) an acceptance in strict compliance with terms of offer;
(3) a meeting of the minds;
(4) a communication that each party consented to the terms of the contract;
(5) execution and delivery of the contract with an intent it become mutual and
binding on both parties; and
(6) consideration.
Angelou v. African Overseas Union, 33 S.W.3d 269, 278 (Tex. App. Houston [14th Dist.] 2000,
no pet.).
Whether the parties reached an agreement is a question of factBeal Bank, S.S.B., v.
Schleider, 124 S.W.3d 640, 653 n. 8 (Tex.App. Houston [14th Dist.] 2003, pet. denied). Whether
an agreement is legally enforceable is a question of law. Id; see also Gaede v. SK Investments
Inc., 38 S.W.3d 753, 757 58 (Tex. App. Houston [14th Dist.] 2001, pet. denied) ("Whether an
agreement constitutes a valid contract is generally a legal determination for the court. However,
whether parties intended to make a contractual agreement is usually a fact issue for the jury.
Advantage Physical Therapy, Inc. v. Cruse, 165 SW 3d 21, 24 (Tex.App. Houston [14th Dist.]
2005, no pet.)
In addition, we note that the Supreme Court of Texas has instructed, "Each contract should
be considered separately to determine its material terms." TO Stanley Boot Co. v. Bank of El Paso
847 SW2d 218, 221 (Tex.1992). The Fifth Circuit Court of Appeals has recognized that, under
Texas law, essential or material terms are those that parties would reasonably regard as vitally
important elements of their bargain. Neeley v. Bankers Trust Co., 757 F.2d 621, 628 (5th
Cir.1985).
It is undisputed:
Defendants offered a Hurricane Harvey Forbearance agreement, which modified
the Loan Documents and Deed of Trust and no mention of Default or Modification
Plaintiff discussed the terms of the agreement and accepted the terms in strict
compliance;
A meeting of the minds existed as exhibited by the parties’ behavior, until
September2108
The Defendants offered, executed and delivered urricane Harvey Forbearance
Agreement
The agreement was supported the consideration of suspension of the payments
in exchange for the affirmation the Plaintiff would still be responsible to pay the
suspended payments.
The Plaintiff is entitled to the Declaration from this court that the payments were suspended, the
Plaintiff is to pay the suspended payments and the Defendant is not allowed to declare Default or
seek a Modificationof the loan document. If the Defendantdid not intend for Hurricane Harvey
Forbearance Agreement to be an enforceable Modification of the Loan Documents and the Deed
of Trust, then this is a fact issue for the Jury to Decide.
Violation of the Texas Property Code (Wrongful Foreclosure)
Plaintiff sued Defendants for a violation of the Texas Property Code for failure to record
the transfer of lien from the original lender to the current holder.Plaintiff incorporates the Fact
and Fraud Section, above.
To prevail on a claim for wrongful foreclosure, a plaintiff must demonstrate that a
defendant either (1) fails to comply with statutory or contractual terms, or (2) complies with such
terms, yet takes affirmative action that detrimentally affects the fairness of the foreclosure
roceedings; and (3) the plaintiff has suffered a loss or injury due to inconsistencies or
irregularities in the foreclosure process.
efendants failed to comply with statutory or contractual terms of the Hurricane Harvey
Forbearance Agreement by declaring Defaultand seeking a Mod fication
Defendants took affirmative action that detrimentally affected the fairness of the
foreclosure proceedings by failing to disclose the Hurricane Harvey Forbearance Agreement and
the inability to declare the loan in Defaultfor the suspended payments.
Defendant attempted foreclosure
Plaintiff suffered a loss or injury due to inconsistencies or irregularities in the foreclosure
process. Plaintiff was forced to retain counsel, seek an injunction, pay costly a bond and risk
losing his home.
Defendants are not entitled to summary judgment on Plaintiff’s claim for violation of Texas
Property Code.
Violation of the Texas Finance Code (TDCA)
Plaintiff sued Defendants for a violation of the Texas Finance Code stating that
fendants’ efforts to collect on the loan without first producing the original Note and the
Hurricane Harvey Forbearance Agreement is fraudulent, deceptive, and/or misleading under the
Texas Debt Collection Act (“TDCA”).
To establish a claims under the TDCA, a plaintiff must prove “(1) the debt is a consumer
debt; (2) the defendant is a debt collector, as defined under the TDCA; (3) the defendant committed
a wrongful act in violation of the TDCA; (4) the wrongful act was committed against the plaintiff;
d (5) the plaintiff was injured as a result of the defendant's wrongful act.” Fix v. Flagstar Bank,
FSB, 242 S.W.3d 147, 159 (Tex. App. Fort Worth 2007, pet. denied) (citing Brown v. Bank of
Galveston, Nat'l Ass’n, 963 S.W.2d 511, 513 (Tex.1998); Wingate v. Acree, No. 14
CV, 2003 WL 1922569, at *3 (Tex.App.Houston [14th Dist.] Apr. 24, 2003, no pet) (mem.
op.)).
Plaintiff is a consumer. Defendants are debt collectors, as defined under the TDCA.
Defendants committed a wrongful act in violation of the TDCA by violating the Hurricane Harvey
Forbearance Agreement, declaring a Default of suspended payments and seeking Mod fication
he wrongful act was committed against Plaintiff. Plaintiff was injured as a result of Defendants’
wrongful act. Defendants are entitled to summary judgment on Plaintiff’s TDCA claim.
Plaintiff Dismisses the DTPA Claim
As the Courts have recently clarified the Cameron exception as to lenders, nly a
“consumer” may maintain an action under the DTPA. See ODE § 17.5 0 (“A
consumer may maintain an action ....”); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 538
(Tex. 1981). The statute defines “consumer,” and part of the definition is the consumer “seeks or
acquires by purchase or lease, goods or services.” ODE § 17.45(4). “Goods”
are “tangible chattels or real property” and “services” are “work, labor or service.” Id. §§ 17.5(1),
(2). The goods or services must form the basis of the consumer’s DTPA complaint. Cameron
S.W.2d at 539. Texas courts and the Fifth Circuit have held that a money loan is neither goods nor
services under the DTPA. E.g., James v. Wells Fargo Bank, N.A., 533 F. App’x 444, 447 (5th Cir.
2013); Riverside National Bank v. Lewis, 603 S.W.2d 169, 17475 (Tex. 1980). Even if money
was borrowed to purchase chattel or real property, the borrower whose complaint arises from the
loan and not the purchased goods does not qualify as a DTPA consumer. Central Texas Hardware,
Inc. v. First City, Texas Bryan, N.A., 810 S.W.2d 234, 23637 (Tex. App. Houston [14th Dist.]
1991, writ denied) (citing Cameron, 618 S.W.2d at 539). And a refinance of loans attached to an
already purchased good does not qualify as a DTPA good or service. Fix v. Flagstar Bank, FSB,
242 S.W.3d 147, 160 (Tex. App.Fort Worth 2007, pet. denied).
Economic Loss Rule Does Not Apply to Fraud and Negligent Misrepresentation
The economic loss rule generally precludes recovery in tort for economic losses resulting
from a party's failure to perform under a contract when the harm consists only of the economic
loss of a contractual expectancy. Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445
S.W.3d 716, 718 (Tex. 2014). But see Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d
407, 419 (Tex. 2011) (“[T]he ‘economic loss’ rule has never been a general rule of tort law; it is a
rule in negligence and strict product liability.”) (emphasis in original) (quoting William Powers,
Jr. & Margaret Niver, Negligence, Breach of Contract, and the “Economic Loss” Rule, 23 Tex.
Tech. L. Rev. 477, 492 (1992)). But the rule does not bar all claims arising out of a contractual
setting. Chapman Custom Homes, 445 S.W.3d at 718. As the supreme court has said, “a party
[cannot] avoid tort liability to the world simply by entering into a contract with one party
[otherwise the] economic loss rule [would] swallow all claims between contractual and
commercial strangers.” Id. quoting Sharyland, 354 S.W.3d at 419). Thus, a party states a
noncontractual 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. Id. See
Hilburn v. Storage Trust, NO. 14 CV. 2019 WL 4432625 (Tex. App. Houston (14th
Dist.). September 17, 2019).
The Plaintiff has produced competent summary judgment evidence of each element of his
fraud and negligent and misrepresentation. Therefore, the economic loss rule does not apply.
VII.
CONCLUSION AND PRAYER
WHEREFORE, PREMISES CONSIDERED, Plaintiff respectfully requests that the Court
deny Defendants Motion for Summary Judgment. Plaintiff requests all other and further relief to
which Plaintiff may be justly entitled.
Respectfully submitted,
ARTON AW IRM
Sharyland, 354 S.W.3d at 415 (“ ‘[T]here is not one economic loss rule broadly applicable throughout the field of
torts, but rather several more limited rules that govern recovery of economic losses in selected areas of the law.’ ”)
(quoting Vincent R. Johnson, The Boundary Line Function of the Economic Loss Rule, 66 WASH. & LEE L.REV.
523, 534 535 (2009)); see RESTATEMENT, T.D. 1, § 1 cmt. b (“[D]uties of care with respect to economic loss are
not general in character; they are recognized in specific circumstances according to the principles stated in Comment
c.”). Another scholar also thought there was no single “economic loss rule” but instead a “constellation of somewhat
similar doctrines that tend to limit liability” that seemed to work in different ways in different contexts, for not
necessarily identical reasons, “with exceptions where the reasons for limiting liability were absent.” Oscar S. Gray,
Some Thoughts on “The Economic Loss Rule” and Apportionment, 48 ARIZ. L.REV. 897, 898 (2006) (“The core
concept of this constellation, not quite a ‘rule’, seems to me to be an inhibition against liability in negligence for
economic harm not resulting from bodily injury to the claimant or physical damage to property in which the claimant
has a proprietary interest.”) (footnotes omitted).
Preview
CAUSE NO. 2018-68559 MANSON GUY MAHAFFEY, JR., § IN THE DISTRICT COURT OF § § HARRIS COUNTY, TEXAS § ZB, NATIONAL ASSOCIATION, § SUCCESSOR BY MERGER TO § AMEGY BANK, N.A., § AMEGY MORGTAGE, LLC, § CENLAR FSB and § BARRET DAFFIN FRAPPIER § TURNER & ENGEL § 269 JUDICIAL DISTRICT PLAINTIFF’S RESPONSE TO DEF NDANTS’ MOTION FOR SUMMARY JUDGMENT TO THE HONORABLE JUDGE OF SAID COURT: COMES NOW Plaintiff, Manson Guy Mahaffey, Jr. and files this Response to Defendants, CENLAR FSB and ZB, NATIONAL ASSOCIATION, successor by merger to AMEGY BANK, N.A. and AMEGY MORTGAGE, LLC (collectively, “Defendants”), Motion for Summary Judgment, and respectfully shows the Court as follows: INTRODUCTION The crux of the Defendants’ argument is the Loan Documents and the Deed of Trust cannot be modified by an oral agreement. The Loan Documentsand the Deed of Trust were modified in writing by the Defendants, which was accepted by the Plaintiff; this, creating an enforceable Modificationof the Loan Documents andDeed of Trust . The Defendants actions and att pts to foreclose, not only prove breach of the written Hurricane Harvey Forbearance greement but also constitute fraud, as an affirmative claim and defense. SUMMARY JUDGMENT EVIDENCE Exhibit 1 Affidavit of Cenlar; (attached to Defendants’ Motion and incorporated, herein.) Exhibit 1 Note dated May 9, Exhibit 1 Forbearance Letter dated September 11, 2017; Exhibit Forbearance Letter dated December 4, 2017; Exhibit 1 Notice of DEFAULTdated June 27, Exhibit September 19, 2018 Letter and Blank Loss Mitigation Application; Exhibit October 10, 2018 Follow Up Letter; Exhibit Affidavit of Barrett Daffin Frappier Turner & Engel;(attached to Defendants’ Motion and incorporated, herein.) Exhibit Notice of Acceleration and Notice of Sale dated August 23, Exhibit 3 Certified Copy of Deed of Trust Exhibit Certificate of Merger; Exhibit Assumed Name Certificate; and Exhibit 6 Amendment to Registration by an Out State Financial Institution (attached to efendants’ Motion and incorporated, herein.) Exhibit 7 Deposition of Guy Mahaffey Pg. 113 120 (the oral conversations are consistent with the written Hurricane Harvey Forbearance Agreement) OBJECTIONS TO SUMMARY JUDGMENT EVIDENCE Plaintiff objects to the Affidavits of Cenlar and Affidavit of Barrett Daffin Frappier Turner & Engel, as the Affidavits are controverted by the sworn deposition testimony of the Plaintiff, not based on personal knowledge, not relevant and contain improper parole evidence. IV. BACKGROUND This is a mortgage case. Plaintiff sued to stop a fraudulent and improper foreclosure sale by the DefendantsPlaintiff is the owner of the property located at dward Street, Houston, Texas 77007 Home”), more specifically described in the Deed of Trust Clerk File No. Z295027. After Hurricane Harvey, Plaintiff was offered a Hurricane Harvey Forbearance Agreement by the Defendants. As a result of Hurricane Harvey, Plaintiff sustained loss to his business and health. The term of the Hurricane Harvey Forbearance Agreement was from September 2017 to February 2018.The Defendant modified the terms of the mortgage agreement, in writing, and sent the Plaintiff the following Hurricane Harvey Forbearance Agreement EX.1 EX.1 The Hurricane Harvey Forbearance Agreement does NOTstate the loan will be held in DEFAULTThe Hurricane Harvey Forbearance Agreement does NOT state Plaint ff will be forced to comply with subjective, onerous, expensive and impossible loan requalificatio processes, loss mitigation processes or refinance obligations, solely controlled by the Defendants. In the material portions, he Hurricane Harvey Forbearance Agreement repeats the payments will be SUSPENDED. See Ex. 7. Plaintiff accepted the terms of the Hurricane Harvey orbearance Agreement, agreed to pay the suspended payments and timely resumed payments in February 2018. Plaintiff even made an earlier good faith payment. Defendants accepted payments until September 2018. Plaintiff spoke with Defendants multiple times related to the Hurricane Harvey orbearance Agreement and payments and was assured his loan was in compliance. In September 2018, the Defendant refused to accept payments and proceeded with immediate foreclosure proceedings, setting the sale for October 2, 2018. Until this time, the Plaintiff had communicated with the Defendants and was assured the Hurricane Harvey orbearance Agreement would be honored, his type of loan automatically allowed for the deferred payments to be placed at the end of the Note term.These conversations were consistent with the term SUSPENDED in the Hurricane Harvey Forbearance Agreement.Plaintiff never failed to make a timely payment. Further, the Hurricane Harvey Forbearance Agreement complied with the terms of Loan Documents and the Deed of Trust, as it was a written Modificationof those documents. In September , Plaintiff and his counsel contact with Defendants related to a possible loan Modification. The Defendants cite internal policies for the premise any loan Modification has to be within so many days of the October 2, 2018 sale of the property. Plaintiff requested these documents and was told “sorry there is not enough time.” Enough time would exist if the Defendants would postpone the sale. Instead, the Defendants cite arbitrary internal deadlines and refuse to allow the Plaintiff to apply for the “Modification,” to which the Defendant already agreed. Plaintiff requested that the sale be postponed so the loan Modification application can be completed within the internal guidelines. Despite the timely made payments in accordance with the terms of the Hurricane Harvey Forbearance Agreement, a term the Defendants still fraudulently market, the Defendants refuse to postpone the sale. The Defendants have even represented they are forbidden from extending sale, which is statement that is untrue in Texas. Instead, in furtherance of the Defendants’ fraud, the Defendants refuse to extend the sale for thirty days, citing alleged internal guidelines. Finally, the Defendants refused to accept further timely payments.. Notwithstanding, Defendants began adverse credit reports against the Plaintiff starting on the very date, the agreed to in writing Hurricane Harvey Forbearance Agreement began. On October 5, 2018, the Court entered a temporary injunction preventing Defendants from proceeding with foreclosure. Although not required by the Hurricane Harvey Forbearance Agreement, written by the Defendant, Plaintiff endeavored to comply with the onerous and subjective loan requalification process. These efforts were hampered by regaining business footing and his accountants declining health. On July 8, 2019, Cenlar filed a Motion to Dissolve the Temporary InjunctionCenlar sought an expedited hearing on the Motion to Dissolve In August, Plaintiff submitted a loss mitigation application. After reviewing Plaintiff’s financials, Defendant unilaterally determined “Plaintiff did not qualify for loss mitigation and in September the application was denied. The Plaintiff was confused by this result and ordered his credit report. The only negative reports on his edit report were from the Defendant, which absolutely factored into the denial of the loss mitigation, which was never required by the Hurricane Harvey Forbearance Agreement, in the first place. The Defendants cite some immediate need to dissolve the temporary injunction entered by the Court. The need is money and wrongfully obtain the equity in the Plaintiff’s home. The Plaintiff posted a bond. Further, the Defendant decided not to accept any further payments. Up until that time, the Plaintiff made every payment in accordance with the Hurricane Harvey Forbearance Agreement. If the Defendant was truly concerned about the money, then at i s sole optionit could have kept taking the paymen which were being timely made by the Plaintiff. SUMMARY JUDGMENT STANDARD The Defendant’s Motion should be treated as a Traditional Motion for Summary Jud ent. Defendants filed what purports to be a “no evidence” summary judgment motion and a traditional motion for summary judgment. TEX.R. CIV. P. 166a(i). In support of the motion, Defendants attached summary judgment evidence. The Courts have previously determined that a no evidence summary judgment motion should be made without presenting evidence to support the motion. Williams v. Bank One, N.A., 15 S.W.3d 110, 116 (Tex.App. Waco 1999, no pet.); Ethridge v. Hamilton County Elec. Coop. Ass'n, 995 S.W.2d 292, 295 (Tex.App. Waco 1999, no pet.). DEFENDANTS argue that the evidence attached to its motion demonstrated no genuine issue of material fact. Black v. Victoria Lloyds Ins. Co.,797 S.W.2d 20, 27 (Tex.1990); see TEX.R. CIV. P. 166a(c). Although Defendantslabeled its summary judgment motion as a “no evidence” motion, it presented it with evidence that it contended would conclusively show that there was no genuine issue of material fact regarding one of the essential elements of Plaintiff’s claims. See Jacobo v. Binur, 70 S.W.3d 330, 333 (Tex.App. Waco 2002, pet. granted). Therefore, Defendants Motion for Summary Judgment should examined and denied under the traditional summary judgment standard of review. The Defendant’s motion fails under the No evidence Motion for Summary Judgment standard, as well. A no evidence motion for summary judgment is essentially a pretrial motion for directed verdict. Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex.2009). Under Texas Rule of Civil Procedure 166a(i), a party without the burden of proof may seek summary judgment on the ground that, after adequate time for discovery, there is no evidence to support one or more essential elements of the nonmovant's claim or defense. TEX.R. CIV. P. 166a(i); see Gish S.W.3d at 310. The trial court is required to grant the motion unless the nonmovant produces evidence raising a genuine issue of material fact as to each challenged element. See TEX.R. CIV. P. 166a(i). The Plaintiff presents competent summary judgment proof which raises a material fact issue as to each of the challenged elements of its causes of actions. VI. ARGUMENTS AND AUTHORITIES Plaintiff alleged causes of actions as follows: TEXAS PROPERTY CODE VIOLATION TEXAS BUSINESS & COMMERCE CODE VIOLATION TEXAS FINANCE CODE VIOLATION DECLARATORY JUDGMENT FRAUD/NEGLIGENT MISREPRESENTATION Fraud Defendants mistakenly argue Plaintiff sued Defendants for common law fraud, asserting that Defendants misrepresented that the Note could be orally modified and that the foreclosure sale could not be postponed.Defendant modified the contract orally and in writing. The elements for fraud/fraudulent inducement are (1) the defendant made a false material misrepresentation with knowledge that it was false when made or that the defendant asserted without knowledge of truth or falsity; (2) the defendant intended the misrepresentation to be acted on; (3) the plaintiff relied on the misrepresentation and (4) the misrepresentation caused injury. Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994); DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990), cert. denied, 498 U.S. 1048, 111 S.Ct. 755, 112 L.Ed.2d 775 (1991);see also Stone v. Lawyers Title Ins. Corp.,554 S.W.2d 183, 185 (Tex.1977). A promise of future performance constitutes an actionable misrepresentation, if the promise was made with no intention of performing at the time it was made. Formosa Plastics v. Presidio Engineers, 960 S.W.2d 41, 4647 (Tex.1998) (allowing fraud the inducement claim in contract scenario) Schindler v. Austwell Farmers Coop., 841 S.W.2d 853, 854 (Tex.1992). Texas law has long imposed a duty to abstain from inducing another to enter into a contract through the use of fraudulent misrepresentations. As a rule, a party is notbound by a contract procured by fraud. E.g., Prudential Ins. Co. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 162 (Tex.1995); Weitzel v. Barnes, S.W.2d 598, 601 (Tex.1985); Town North Nat'l Bank v. Broaddus, 569 S.W.2d 489, 491 (Tex.1978); Dallas Farm Mach. Co. v. Reaves, 158 Tex. 1, 307 S.W.2d 233, 239 (1957). Moreover, it is well established that the legal duty not to fraudulently procure a contract is separate and independent from the duties established by the contract itself. See Dallas Farm Mach., 307 S.W.2d at 239 (“ ‘[T]he law long ago abandoned the position that a contract must be held sacred regardless of the fraud of one of the parties in procuring it.’ ”) (quoting Bates v. Southgate, 308 Mass. 170, 31 N.E.2d 551, 558 (1941)). The Texas Supreme Court has also repeatedly recognized that a fraud claim can be based on a promise made with no intention of performing, irrespective of whether the promise is later subsumed within a contract. For example, in Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 597 (Tex.1992), the Texas Supreme Court noted: “As a general rule, the failure to perform the terms of a contract is a breach of contract, not a tort. However, when one party enters into a contract with no intention of performing, that misrepresentation may give rise to an action in fraud.” Similarly, in Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex.1986), the Texas Supreme Court held that a fraud claim could be maintained for breach of an agreement to pay a bonus because a “promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act. See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex.1992); tanfield v. O'Boyle, 462 S.W.2d 270, 272 (Tex.1971). See Halper v. Univ. of the Incarnate Word, 90 S.W.3d 842, 847 (Tex.App. San Antonio 2002, no pet.) (even assuming employment was at will, an “at will” defense was unavailable because the employee's fraud claim was based on a representation made before his employment began); Offshore Petroleum Divers, Inc. v. Cromp, 952 S.W.2d 954 (Tex.App. Beaumont 1997, pet. denied). The Offshore Petroleum Court stated that “the cause of action for fraud, which encompasses misrepresentations made before employment, as well as those made during employment, is not barred by the employment at will doctrine.”Id. at 956(emphasis added). To prove an action for fraud by nondisclosure, the plaintiff must establish the defendant had a duty to disclose because (1) there was a fiduciary or other special relationship requiring disclosure, (2) the defendant discovered new information that made an earlier representation misleading or untrue, (3) the defendant created a false impression by making a partial disclosure, or (4) the defendant voluntarily disclosed some information and therefore had a duty to disclose the whole truthBP AM. Prod. V. Marshall ,288 S.W.3d 430, 446 (Tex. App. San Antonio 2008), rev’d on other grounds2 S.W.3d 59 (Tex. 2011); Solutioneers Consulting, Ltd. V. Gulf Greyhound Partners, 237 S.W.3d 378, 385 (Tex. App. Houston [14 Dist] 2007, no pet.); Lesikar v. Rappeport, 33 S.W.3d 282, 299 (Tex. App. Texarkana 2000, Pet. denied); Hoggett v. Brown 971 S.W.2d 472, 487 (Tex. App. Houston [14 Dist.] 1997, pet. denied); see alsoCitizens Nat’l Bank v. Allen Rae Invs., 142 S.W.3d 459, 476 77 (Tex. App. Fort Worth 2004, no pet.) (duty to disclose in commercial context). The defendant is almost always the person who actually made the representation or withheld material facts, but the following parties may also be held liable: (1) Principal.A principal may be vicariously liable for the fraudulent conduct of itsagent of the agent acted with actual or apparent authority or ifthe principal ratified the conduct. See NationsBank v. Drilling, 922 S.W2d 53 (Tex. 1996) (apparent authority); City Nat’l Bank v. Martin, 8 S.W.507, 509 (Tex. 1888) (apparent authority); Disney Enters. V. Esprit Fin., Inc., 981 S.W.2d 25, 31 (Tex. App. San Antonio, 1988, pet. dism’d) (ratification). On the issue of apparent authority, only the principal’s onduct, not the agent’s conduct, is relevant. NationsBank,922 S.W.2d at 953. See “Ratification,” ch. 38 D, p. 1236. (2) Employer.An employer may be viciously liable for the fraudulent act of its employee if the employee was acting within the scope of employment. See Nationsbank, 922 S.W.2d 953 54; Millan v. Dean Witter Reynolds, Inc.,90 S.W.3d 760, 767 68 (Tex. App. San Antonio 2002, pet. denied); ITT Consumer Fin. Corp. v. Tovar, 932 S.W.2d 147, 158 (Tex. App El Paso 1996, writ denied). (3) neficiary of the fraud.A person may be vicariously liable for the fraudulent act of another if the person benefited from a fraudulent transaction and had knowledge of the fraud. See First State Bank v. Fatheree, 847 S.W.2d 391, 396 (Tex. App. Amarillo 1993, writ denied); Corpus Christi Area Teachers Credit Un. V. Hernandez, 814 S.W.2d 195, 198 (Tex. App. San Antonio 1991, no writ). (5) Agent.An agent may be individually liable for its own act of fraud performed for its principal. See Kingston v. Helm, 82 S.W.3d 755, 759 (Tex. App. Corpus Christi 2002, pet. denied); Hyman Farm Serv. V. Earth Oil & Gas Co., 920 S.W.2d 452, 455 (Tex. App. Amarillo 1996, no writ). laintiff presents evidence that Defendants made a material representation that was false. The Defendants represented to the Plaintiff Defendant would provide Plaintiff a Hurricane Harvey Forbearance Agreement with suspension of payments Plaintiff s loan would not be held in Default Plaintiff’s loan did not require any additional paperwork or requalification. Payments subject of the Hurricane Harvey Forbearance Agreement would be added to the end of his loan. Defendant would not cause injury to Plaintiff’s credit report. The representations were false because the Defendant declared the Plaintiff’s loan was in Default offered only a dification , sought to foreclose, damaged his credit and disavow the enforceability of the written Hurricane Harvey Forbearance agreement. See Hurricane Harvey Forbearance Agreement and Ex. 7, above Plaintiff presents evidence that Defendants knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth. The Defendants, then, unilaterally declared the loan in Default. The Defendants declared the Plaintiff had to requalify for the loan, pay fees and expenses and comply with an onerous and subjective approval process. The Defendants represent it is forbidden in Texas to postpone the sale of the property. The Defendants refused to take any further payments and increase its damages and create the “emergency” he complains of now. The Plaintiff complied with all terms of the forbearance agreement, the Defendants drafted, and then said no, the forbearance agreement is no longer any good, Mr. Mahaffey you are in Default, comply with this process, or else. In doing so, the Defendants unilaterally ignored the terms of the Hurricane Harvey Forbearance Agreemen Forbearance the Defendant drafted and made repeated representations the Hurricane Harvey Forbearance Agreementwould be honored. Plaintiff presents evidence that Defendants intended to induce Plaintiff to act upon the alleged representation. The Defendants sent the client what it contended was an enforceable written Hurrican Harvey Forbearance greement Defendants intentionally omitted the words Default or Modific tion to induce the Plaintiff to accept the forbearance and unknowingly risk losing his home or incurring onerous fees and expenses Plaintiff actually and justifiably relied upon the representation and suffered injury as a result. Justifiable reliance usually presents a question of fact. See Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 584 (Tex. App.San Antonio 2011, pet. denied). But the element can be negated as a matter of law when circumstances exist under which reliance cannot be justified. See Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 424 (Tex. 2015) (per curiam) (“We hold that, as a matter of law, th[e] reliance was not justifiable.”); AKB Hendrick, LP v. Musgrave Enters., Inc., 380 S.W.3d 221, 232 (Tex. App.Dallas 2012, no pet.) (holding that reliance on a representation made in a business or commercial transaction can be unjustified as a matter of law). In determining whether justifiable reliance is negated as a matter of law, courts “must consider the nature of the [parties'] relationship and the contract.” AKB, 380 S.W.3d at 232. “In an arm's length transaction[,] the defrauded party must exercise ordinary care for the protection of his own interests. ... [A] failure to exercise reasonable diligence is not excused by mere confidence in the honesty and integrity of the other party.” Westergren, 453 S.W.3d at 425 (quoting Thigpen v. Locke, 363 S.W.2d 247, 251 (Tex. 1962) ). And when a party fails to exercise such diligence, it is “charged with knowledge of all facts that would have been discovered by a reasonably prudent person similarly situated.” See AKB, 380 S.W.3d at 232. To this end, that party “cannot blindly rely on a representation by a defendant where the plaintiff's knowledge, experience, and background warrant investigation into any representations before the plaintiff acts in reliance upon those representations.” See Shafipour v. Rischon Dev. Corp., No. CV, 2015 WL 3454219, at *8 (Tex. App.Eastland May 29, 2015, pet. denied) (mem. op.). The Plaintiff’s lienholder offered a forbearance agreement after the devastating Hurricane Harvey. The Defendants never mentioned Default of Modification. The Defendants followed with a written Hurricane Harvey Forbearance Agreement, which never mentioned Default Modific ion or harm to his credit. Given the above factors, the Plaintiff’s reliance was justifiable and/or a fact issue for the jury exists. Negligent Misrepresentation Plaintiff sued Defendants for negligent misrepresentation because the Defendants misrepresented that the Note could be modified, orally and in writing, and that the foreclosure sale could not be postponed. To prevail on a negligent misrepresentation claim, a plaintiff must demonstrate that “(1) a defendant provides information in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the information supplied is false; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; (4) the plaintiff justifiably relies on the information; and (5) the plaintiff suffers damages proximately caused by the reliance.” JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653 (Tex. 2018), reh’g denied (June 15, 2018)(quotations omitted). Plaintiff incorporates the fact section and fraud section above. Plaintiff provides evidence that Defendants provide information in the course of their business, or in a transaction in which they have a pecuniary interest. The information was false. Defendants did not exercise reasonable care or competence in obtaining or communicating the information. Plaintiff justifiably relied on the information. Plaintiff has no evidence that he has suffered damages proximately caused by the reliance. Defendants are entitled to summary judgment on Plaintiff’s negligent misrepresentation claim. Declaratory Judgment Plaintiff sued Defendants for a declaratory judgment for an interpretation of the Hurricane Harvey Forbearance Agreement. The Hurricane Harvey Agreement is in writing and enforceable. To prove an action for breach of contract, a plaintiff must establish the existence of an enforceable contract. See Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex.App. Houston [1st Dist.] 1997, no writ) (listing elements of breach of contract action and including "the existence of a valid contract" as one of the necessary elements). The elements of an enforceable contract are: (1) an offer; (2) an acceptance in strict compliance with terms of offer; (3) a meeting of the minds; (4) a communication that each party consented to the terms of the contract; (5) execution and delivery of the contract with an intent it become mutual and binding on both parties; and (6) consideration. Angelou v. African Overseas Union, 33 S.W.3d 269, 278 (Tex. App. Houston [14th Dist.] 2000, no pet.). Whether the parties reached an agreement is a question of factBeal Bank, S.S.B., v. Schleider, 124 S.W.3d 640, 653 n. 8 (Tex.App. Houston [14th Dist.] 2003, pet. denied). Whether an agreement is legally enforceable is a question of law. Id; see also Gaede v. SK Investments Inc., 38 S.W.3d 753, 757 58 (Tex. App. Houston [14th Dist.] 2001, pet. denied) ("Whether an agreement constitutes a valid contract is generally a legal determination for the court. However, whether parties intended to make a contractual agreement is usually a fact issue for the jury. Advantage Physical Therapy, Inc. v. Cruse, 165 SW 3d 21, 24 (Tex.App. Houston [14th Dist.] 2005, no pet.) In addition, we note that the Supreme Court of Texas has instructed, "Each contract should be considered separately to determine its material terms." TO Stanley Boot Co. v. Bank of El Paso 847 SW2d 218, 221 (Tex.1992). The Fifth Circuit Court of Appeals has recognized that, under Texas law, essential or material terms are those that parties would reasonably regard as vitally important elements of their bargain. Neeley v. Bankers Trust Co., 757 F.2d 621, 628 (5th Cir.1985). It is undisputed: Defendants offered a Hurricane Harvey Forbearance agreement, which modified the Loan Documents and Deed of Trust and no mention of Default or Modification Plaintiff discussed the terms of the agreement and accepted the terms in strict compliance; A meeting of the minds existed as exhibited by the parties’ behavior, until September2108 The Defendants offered, executed and delivered urricane Harvey Forbearance Agreement The agreement was supported the consideration of suspension of the payments in exchange for the affirmation the Plaintiff would still be responsible to pay the suspended payments. The Plaintiff is entitled to the Declaration from this court that the payments were suspended, the Plaintiff is to pay the suspended payments and the Defendant is not allowed to declare Default or seek a Modificationof the loan document. If the Defendantdid not intend for Hurricane Harvey Forbearance Agreement to be an enforceable Modification of the Loan Documents and the Deed of Trust, then this is a fact issue for the Jury to Decide. Violation of the Texas Property Code (Wrongful Foreclosure) Plaintiff sued Defendants for a violation of the Texas Property Code for failure to record the transfer of lien from the original lender to the current holder.Plaintiff incorporates the Fact and Fraud Section, above. To prevail on a claim for wrongful foreclosure, a plaintiff must demonstrate that a defendant either (1) fails to comply with statutory or contractual terms, or (2) complies with such terms, yet takes affirmative action that detrimentally affects the fairness of the foreclosure roceedings; and (3) the plaintiff has suffered a loss or injury due to inconsistencies or irregularities in the foreclosure process. efendants failed to comply with statutory or contractual terms of the Hurricane Harvey Forbearance Agreement by declaring Defaultand seeking a Mod fication Defendants took affirmative action that detrimentally affected the fairness of the foreclosure proceedings by failing to disclose the Hurricane Harvey Forbearance Agreement and the inability to declare the loan in Defaultfor the suspended payments. Defendant attempted foreclosure Plaintiff suffered a loss or injury due to inconsistencies or irregularities in the foreclosure process. Plaintiff was forced to retain counsel, seek an injunction, pay costly a bond and risk losing his home. Defendants are not entitled to summary judgment on Plaintiff’s claim for violation of Texas Property Code. Violation of the Texas Finance Code (TDCA) Plaintiff sued Defendants for a violation of the Texas Finance Code stating that fendants’ efforts to collect on the loan without first producing the original Note and the Hurricane Harvey Forbearance Agreement is fraudulent, deceptive, and/or misleading under the Texas Debt Collection Act (“TDCA”). To establish a claims under the TDCA, a plaintiff must prove “(1) the debt is a consumer debt; (2) the defendant is a debt collector, as defined under the TDCA; (3) the defendant committed a wrongful act in violation of the TDCA; (4) the wrongful act was committed against the plaintiff; d (5) the plaintiff was injured as a result of the defendant's wrongful act.” Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 159 (Tex. App. Fort Worth 2007, pet. denied) (citing Brown v. Bank of Galveston, Nat'l Ass’n, 963 S.W.2d 511, 513 (Tex.1998); Wingate v. Acree, No. 14 CV, 2003 WL 1922569, at *3 (Tex.App.Houston [14th Dist.] Apr. 24, 2003, no pet) (mem. op.)). Plaintiff is a consumer. Defendants are debt collectors, as defined under the TDCA. Defendants committed a wrongful act in violation of the TDCA by violating the Hurricane Harvey Forbearance Agreement, declaring a Default of suspended payments and seeking Mod fication he wrongful act was committed against Plaintiff. Plaintiff was injured as a result of Defendants’ wrongful act. Defendants are entitled to summary judgment on Plaintiff’s TDCA claim. Plaintiff Dismisses the DTPA Claim As the Courts have recently clarified the Cameron exception as to lenders, nly a “consumer” may maintain an action under the DTPA. See ODE § 17.5 0 (“A consumer may maintain an action ....”); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 538 (Tex. 1981). The statute defines “consumer,” and part of the definition is the consumer “seeks or acquires by purchase or lease, goods or services.” ODE § 17.45(4). “Goods” are “tangible chattels or real property” and “services” are “work, labor or service.” Id. §§ 17.5(1), (2). The goods or services must form the basis of the consumer’s DTPA complaint. Cameron S.W.2d at 539. Texas courts and the Fifth Circuit have held that a money loan is neither goods nor services under the DTPA. E.g., James v. Wells Fargo Bank, N.A., 533 F. App’x 444, 447 (5th Cir. 2013); Riverside National Bank v. Lewis, 603 S.W.2d 169, 17475 (Tex. 1980). Even if money was borrowed to purchase chattel or real property, the borrower whose complaint arises from the loan and not the purchased goods does not qualify as a DTPA consumer. Central Texas Hardware, Inc. v. First City, Texas Bryan, N.A., 810 S.W.2d 234, 23637 (Tex. App. Houston [14th Dist.] 1991, writ denied) (citing Cameron, 618 S.W.2d at 539). And a refinance of loans attached to an already purchased good does not qualify as a DTPA good or service. Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 160 (Tex. App.Fort Worth 2007, pet. denied). Economic Loss Rule Does Not Apply to Fraud and Negligent Misrepresentation The economic loss rule generally precludes recovery in tort for economic losses resulting from a party's failure to perform under a contract when the harm consists only of the economic loss of a contractual expectancy. Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014). But see Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 419 (Tex. 2011) (“[T]he ‘economic loss’ rule has never been a general rule of tort law; it is a rule in negligence and strict product liability.”) (emphasis in original) (quoting William Powers, Jr. & Margaret Niver, Negligence, Breach of Contract, and the “Economic Loss” Rule, 23 Tex. Tech. L. Rev. 477, 492 (1992)). But the rule does not bar all claims arising out of a contractual setting. Chapman Custom Homes, 445 S.W.3d at 718. As the supreme court has said, “a party [cannot] avoid tort liability to the world simply by entering into a contract with one party [otherwise the] economic loss rule [would] swallow all claims between contractual and commercial strangers.” Id. quoting Sharyland, 354 S.W.3d at 419). Thus, a party states a noncontractual 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. Id. See Hilburn v. Storage Trust, NO. 14 CV. 2019 WL 4432625 (Tex. App. Houston (14th Dist.). September 17, 2019). The Plaintiff has produced competent summary judgment evidence of each element of his fraud and negligent and misrepresentation. Therefore, the economic loss rule does not apply. VII. CONCLUSION AND PRAYER WHEREFORE, PREMISES CONSIDERED, Plaintiff respectfully requests that the Court deny Defendants Motion for Summary Judgment. Plaintiff requests all other and further relief to which Plaintiff may be justly entitled. Respectfully submitted, ARTON AW IRM Sharyland, 354 S.W.3d at 415 (“ ‘[T]here is not one economic loss rule broadly applicable throughout the field of torts, but rather several more limited rules that govern recovery of economic losses in selected areas of the law.’ ”) (quoting Vincent R. Johnson, The Boundary Line Function of the Economic Loss Rule, 66 WASH. & LEE L.REV. 523, 534 535 (2009)); see RESTATEMENT, T.D. 1, § 1 cmt. b (“[D]uties of care with respect to economic loss are not general in character; they are recognized in specific circumstances according to the principles stated in Comment c.”). Another scholar also thought there was no single “economic loss rule” but instead a “constellation of somewhat similar doctrines that tend to limit liability” that seemed to work in different ways in different contexts, for not necessarily identical reasons, “with exceptions where the reasons for limiting liability were absent.” Oscar S. Gray, Some Thoughts on “The Economic Loss Rule” and Apportionment, 48 ARIZ. L.REV. 897, 898 (2006) (“The core concept of this constellation, not quite a ‘rule’, seems to me to be an inhibition against liability in negligence for economic harm not resulting from bodily injury to the claimant or physical damage to property in which the claimant has a proprietary interest.”) (footnotes omitted).