Allison v. J.P. Morgan Chase Bank, N.A.

Facts

On August 7, 2007, Ps obtained a mortgage loan with Chase Home Finance. Ps live in this residence with their three children, one of whom is disabled. On September 2008, their residence was flooded as a result of Hurricane Ike. Ps lost their home and business but continued to make their mortgage payments at this time, exhausting their life savings. In the spring and summer of 2009, when they 'got behind on their mortgage loan payments.' Chase (D) 'suggested and offered to modify the terms of the mortgage loan under a program for persons affected by Hurricane Ike.' Chase (D) 'represented that Ps were required to be behind on their mortgage payments for two months to qualify for the modification program.' Ps did not pay the mortgage for two months.' Over the course of the next sixteen months, Chase (D), 'either by negligence or intentional mismanagement, clumsily performed the administering of the modification to the loan.' Chase (D) would continually lose documents and/or property received from the Allisons and the modification process had to 'start all over again.' Ps received a notice of foreclosure but Chase (D) advised that the foreclosure notice was a mistake and the modification process was ongoing. This process occurred several times. On May 1, 2011, Chase (D) notified Ps that their mortgage loan had been transferred to Morgan (D). Chase (D) served Ps with a forcible detainer and eviction suit. Ps claim that Chase (D) did not have standing to file the suit because the loan had been transferred to Morgan (D) before Chase (D) filed the suit. Ps contend that Ds are vicariously liable for the acts of their employees. Ps are claiming breach of contract, detrimental reliance, promissory estoppel, quantum merit, breach of fiduciary duty, negligent misrepresentation, fraudulent misrepresentation, fraud, fraud by nondisclosure, tortious interference with a contract, participatory liability - conspiracy, participatory liability - aiding and abetting, intentional infliction of emotional distress, negligence, negligence per se, conversion, violation of the Texas Theft Liability Act, trespass to real property, private nuisance, negligent hiring, negligent entrustment, negligent supervision, negligent hiring/retention, gross negligence, malicious prosecution, defamation, and wrongful foreclosure in violation of the Texas DTPA. Ps are seeking actual damages, exemplary damages, injunctive relief precluding the taking of their property, attorneys' fees, costs, interest, and judgment for title to and possession of the property at issue. On July 25, 2011, Ds filed their notice of removal in this Court, asserting federal jurisdiction based on diversity of citizenship. On August 2, 2011, Ds filed their motion to dismiss or an alternative motion for a more definite statement pursuant to Federal Rules of Civil Procedure 12(b)(6) and (e). Chase (D) argues that the breach of contract claim should be dismissed because Ps failed to attach the contract or state the terms of the contract that Ds allegedly breached. Ds also contend that the breach of contract claim is barred by the Statute of Frauds. Ds argue that Texas does not recognize detrimental reliance as an independent cause of action and that Ps' promissory estoppel claim is also barred by the statute of frauds. Ds contend that quantum meruit is barred by the existing contract and there is no fiduciary duty between a debtor and a creditor. Ds argue that Ps' tort claims for negligent misrepresentation, fraudulent misrepresentation, fraud, fraud by nondisclosure, tortious interference, intentional infliction of emotional distress, negligence, negligence per se, conversion, trespass, private nuisance, negligent hiring/retention, gross negligence, and defamation should all be dismissed under the economic-loss doctrine. Ds argue that Ps' negligent misrepresentation claim not only fails because of the economic loss doctrine, but also because it is based on the promise of future conduct. Ds allege that Ps' claims for fraudulent misrepresentation, fraud, and fraud by nondisclosure are insufficiently pled to withstand dismissal. Ds contend that the tortious interference claim is barred by the doctrine of economic loss. Ds argue that Ps have not pled for intentional infliction of emotional distress should be dismissed because the plaintiffs have not pled any act or omission which would rise to the necessary level to support a cause of action for intentional infliction of emotional distress. Ds argue that Ps' conversion claim is insufficiently pled and that the deed of trust at issue defeats the Ps' Theft Liability Act Claim. Ds argue that Ps have failed to state a claim for trespass to real property or for malicious prosecution. Ds again assert that the economic loss doctrine precludes Ps' private nuisance claim.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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