MILLER v. BAC HOMELOAN SERVICING | 5th District Court of Appeals - Win for Texas Homeowner

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MILLER v. BAC HOMELOAN SERVICING | 5th District Court of Appeals – Win for Texas Homeowner

MILLER v. BAC HOMELOAN SERVICING | 5th District Court of Appeals – Win for Texas Homeowner

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 12-41273

JAMES R. MILLER; ALLENE S. MILLER,
Plaintiffs-Appellants,

v.

BAC HOME LOANS SERVICING, L.P.; NATIONAL DEFAULT
EXCHANGE, L.P.,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of Texas

Before STEWART, Chief Judge, and DAVIS and WIENER, Circuit Judges.
CARL E. STEWART, Chief Judge:

This case pertains to the foreclosure sale of the property located at 810
Corey Drive in Whitehouse, Texas, by Defendants-Appellees, BAC Home Loans
Servicing (“BAC”) and National Default Exchange (“NDE”). Plaintiffs-
Appellants, James and Allene Miller, appeal the district court’s dismissal with
prejudice of their claims against BAC and NDE under the Texas Debt Collection
Act (“TDCA”), Tex. Fin. Code § 392.304(a), the Texas Deceptive Trade Practices
Act (“DTPA”), Tex. Bus. & Com. Code § 17.41 et seq., and Texas common law.
For the reasons provided herein, we AFFIRM the district court’s dismissal
of the Millers’ DTPA and Texas common law claims. We also AFFIRM the
district court’s dismissal of the Millers’ TDCA claims under §§ 392.304(a)(8),
(18), and (19). We REVERSE the district court’s dismissal of the Millers’ TDCA
claims under § 392.304(a)(14) as well as the district court’s denial of the Millers’
request for an accounting from NDE. We REMAND for further proceedings
consistent with this opinion.

I.

In December 2001, the Millers obtained a purchase money mortgage for
the Corey Drive property from Nexstar Financial Corp (“Nexstar”). The
mortgage note was secured by a deed of trust lien. Effective April 7, 2010,
Nexstar assigned the note and lien to BAC, which proceeded to act as the loan
servicer.

The Millers fell behind on their mortgage payments. Notwithstanding the
effective assignment date of April 7, 2010, the Millers first received notice that
their loan was in default from BAC on March 10, 2010.1 The written notice
warned the Millers that they faced loan acceleration and sale of the property at
foreclosure auction unless they cured the default by April 9, 2010.
The Millers allege that between March 10, 2010 and May 3, 2010, they
called BAC at least three times, and that each call resulted in an unfulfilled
promise from a BAC call center representative to send them a loan modification
application. Further, the Millers allege that at least one of the call center
representatives assured them that there would be no need to make a premodification
payment to cure the default.

On May 3, 2010, the Millers received a letter from BAC’s foreclosure law
firm stating that a foreclosure sale of the property would occur on June 1, 2010.

The Millers allege that sometime between May 3, 2010, and May 18, 2010, a
BAC foreclosure specialist named Victoria Masters informed them that she
would make sure a loan modification application arrived, and that the
foreclosure sale would be postponed while they attempted to modify their loan.
The loan modification application arrived on May 18, 2010.

The Millers returned their completed application by mail on May 28, 2010.
That same day, they were contacted by an agent of BAC who informed them that
the foreclosure auction would proceed on June 1, 2010. On May 31, 2010, the
Millers again spoke with Ms. Masters, the BAC foreclosure specialist. She
informed them that no postponement had yet been approved, but that she would
attempt to obtain such approval from Fannie Mae. Later that day, the Millers
allege Ms. Masters represented to them that she had obtained approval from
Fannie Mae for foreclosure postponement pending disposition of their loan
modification application.

Notwithstanding this alleged representation of postponement, the
foreclosure sale proceeded as scheduled on June 1, 2010. An individual named
Carol Hampton acted as substitute trustee. The Millers allege that Ms.
Hampton was an agent of NDE, acting at the behest of BAC.2 The Corey Drive
property sold at public auction. Sometime the following month, the Millers
voluntarily vacated the property at the request of the purchaser.

II.

The Millers filed suit on January 14, 2011, and amended their complaint
on September 22, 2011, ultimately raising claims under the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., the TDCA, the DTPA, and
Texas common law. On October 17, 2011, BAC moved to dismiss the amended
complaint under Federal Rule of Civil Procedure (“Rule”) 12(b)(6). The
magistrate judge filed her report on March 23, 2012, in which she recommended
that the district court dismiss all claims against both defendants.3
After the Millers timely objected to the magistrate judge’s report, the
district court proceeded to adopt the report upon de novo review. The district
court entered final judgment against the Millers on April 11, 2012.

On May 8, 2012, the Millers moved to alter or amend the judgment
pursuant to Rule 59(e). Among other things, the Millers argued that it was not
fair for the district court to have dismissed their claims against NDE. The
Millers emphasized that BAC’s motion to dismiss had not addressed their
request for an accounting of the foreclosure sale from NDE or for a distribution
of excess profits from the sale.4 The Millers contended that they had not had a
prior meaningful opportunity to justify those claims and, in their Rule 59(e)
motion, provided legal arguments as to why those claims should survive scrutiny
under Rule 12(b)(6).

In a second report, dated September 24, 2012, the magistrate judge
addressed the Millers’ Rule 59(e) motion. The magistrate judge recommended
denial of the motion, explaining that the Millers’ written objections to her first
report had not encompassed the request for an accounting and distribution, even
though the Millers could have objected to her prior failure to address the
request. The magistrate judge further concluded that the Millers had not stated
a claim for an accounting independent of their claims for wrongful foreclosure,
which she already had addressed in her first report and the district court
already had dismissed.

The Millers timely objected to this second report. Nevertheless, the
district court proceeded to adopt it upon de novo review, thereby denying the
motion to alter or amend the judgment. The Millers timely appealed. However,
they only pursue some of their claims on appeal, namely their: (i) TDCA claims
against BAC; (ii) DTPA claims against BAC; (iii) promissory estoppel claims
against BAC; (iv) wrongful foreclosure claims against both BAC and NDE; and
(v) request for an accounting from NDE and distribution of any excess profits.

III.

“We review de novo the grant of a 12(b)(6) motion to dismiss.” Gregson v.
Zurich Am. Ins. Co., 322 F.3d 883, 885 (5th Cir. 2003). “We generally review a
decision on a motion to alter or amend judgment under Rule 59(e) for abuse of
discretion.” Pioneer Natural Res. USA, Inc. v. Paper, Allied Indus., Chem. &
Energy Workers Int’l Union Loc. 4-487, 328 F.3d 818, 820 (5th Cir. 2003)
(citations omitted). “To the extent that a ruling was a reconsideration of a
question of law, however, the standard of review is de novo.” Id. (citations
omitted).

IV.

A. TDCA Claims Against BAC

We acknowledge at the outset that the Millers do not appeal the district
court’s dismissal of their FDCPA claims. With respect to those claims, the
magistrate judge rightly explained that the FDCPA distinguishes between
“creditors” and “debt collectors.” Compare 15 U.S.C. § 1692a(4) (creditors), with
15 U.S.C. § 1692a(6) (debt collectors). She then observed that the FDCPA
generally applies to debt collectors, but not to creditors, except “to the extent
that [a creditor] receives an assignment or transfer of a debt in default solely for
the purpose of facilitating collection of such debt for another.” 15 U.S.C. §
1692a(4).5 The magistrate judge finally noted that we previously have held that
“mortgage servicing companies” and “debt assignees” are not debt collectors, and
therefore are not regulated by the FDCPA, “as long as the [mortgage] was not
in default at the time it was assigned” by the originator. Perry v. Stewart Title
Co., 756 F.2d 1197, 1208 (5th Cir. 1985) (citations omitted). Applying these
principles, the magistrate judge concluded that BAC was not a debt collector,
and thus was not subject to the FDCPA because, on the Millers’ pleadings, BAC
already had acquired the mortgage when the Millers defaulted on it.6

We recount the magistrate judge’s FDCPA analysis because, immediately
thereafter, the magistrate judge analyzed the Millers’ comparable claims under
the TDCA. The TDCA similarly distinguishes between creditors and debt
collectors. Compare Tex. Fin. Code § 392.001(3) (creditors), with Tex. Fin. Code
§ 392.001(6) (debt collectors). Its prohibitions apply only to debt collectors. See
Catherman v. First State Bank of Smithville, 796 S.W.2d 299, 302 (Tex. App.
1990). The TDCA, however, also breaks out a third class of lien-holders, which
it calls “third-party debt collectors.” See Tex. Fin. Code § 392.001(7). It defines
third-party debt collectors by expressly referencing the FDCPA definition of debt
collectors found in 15 U.S.C. § 1692a(6).

In light of this reference, the magistrate judge concluded that the Millers’
TDCA claims must fail for the same reasons that their FDCPA claims do. We
reject this conclusion, which erroneously affords the lone third-party debt
collectors reference talismanic significance despite the fact that the FDCPA is
a “distinguishable, federal statute.” See Monroe v. Frank, 936 S.W.2d 654, 660
(Tex. App. 1996) (citation and footnote omitted) (listing differences between the
two statutes). The TDCA’s definition of debt collector is broader than the
FDCPA’s definition. See Perry, 756 F.2d at 1208 (citation omitted). Unlike the
TDCA, the FDCPA expressly excludes from its definition of debt collector: “any
person collecting or attempting to collect any debt owed or due or asserted to be
owed or due another to the extent such activity . . . concerns a debt which was
not in default at the time it was obtained by such person.” 15 U.S.C.
§ 1692a(6)(F)(iii).

As noted above, we held in Perry that this FDCPA exclusion encompasses
mortgage servicing companies and debt assignees “as long as the [mortgage] was
not in default at the time it was assigned” by the originator. 756 F.2d at 1208
(citations omitted). However, we also held in Perry that servicers and assignees
are debt collectors, and therefore are covered, under the TDCA. See id. (citation
omitted). In light of Perry, we conclude that BAC qualifies as a debt collector
under the broader TDCA, irrespective of whether the Millers’ mortgage was
already in default at the time of its assignment.

The Millers’ TDCA claims allege violations of Tex. Fin. Code §§
392.304(a)(8), (14), (18), and (19). Those provisions prohibit the following:

(8) misrepresenting the character, extent, or amount
of a consumer debt, or misrepresenting the
consumer debt’s status in a judicial or governmental
proceeding; . . .

(14) representing falsely the status or nature of the
services rendered by the debt collector or the debt
collector’s business; . . .

(18) representing that a consumer debt is being
collected by an independent, bona fide organization
engaged in the business of collecting past due
accounts when the debt is being collected by a
subterfuge organization under the control and
direction of the person who is owed the debt; or

(19) using any other false representation or
deceptive means to collect a debt or obtain
information concerning a consumer.

The Millers allege that BAC repeatedly promised to send them a loan
modification application and to delay foreclosure. They further allege that,
notwithstanding its promises, BAC never responded to their submitted
application once it arrived and proceeded to foreclose upon their property.
Accepting these allegations as true at the Rule 12(b)(6) stage, we conclude that
the Millers have stated a claim upon which relief may be granted under §
392.304(a)(14).

1. Section 392.304(a)(8)
The Millers’ allegations do not demonstrate that BAC misrepresented the
character, extent, or amount of the Millers’ debt in violation of § 392.304(a)(8).
This is because the Millers always were aware (i) that they had a mortgage debt;
(ii) of the specific amount that they owed; (iii) and that they had defaulted.
Nothing in the Millers’ allegations suggests the BAC led them to think
differently with respect to the character, extent, amount, or status of their
debt—only that BAC promised to send them a loan modification application and
to delay foreclosure. Accordingly, the Millers have not stated a claim upon
which relief may be granted under § 392.304(a)(8).

2. Section 392.304(a)(14)
As for § 392.304(a)(14), however, the Millers’ allegations demonstrate that
BAC may have misrepresented the status or nature of the services it rendered.
The Millers allege that BAC “informed [Mr. Miller] that the terms of his loan
could be modified to cure the default and avoid foreclosure if he qualified for the
available options.” They further allege that BAC agents repeatedly promised to
send them an application for a loan modification, but never did until May 18,
2010. On the one hand, these allegations, at most, show that BAC promised to
send the Millers an application, which BAC ultimately did. The Millers do not
allege that BAC promised to grant the application.

Notwithstanding the above, the Millers also allege that BAC “informed Mr.
Miller that he did not need to make payments on the loan because delinquent
payments would be subsumed into the modified loan when it was concluded.”
Moreover, the Millers allege “[t]hey were informed that the completed
application must be submitted by June 17, 2010.” Finally, the Millers allege
that Ms. Masters “informed Mr. Miller that she had obtained approval to
postpone the [June 1] foreclosure sale.” These allegations, at the least, show
that BAC promised to consider the application before foreclosing on June 1,
which the Millers allege that BAC did not do.

In light of this showing, we conclude that BAC may have harmed the
Millers by causing them, for example, to decline to liquidate property or seek
alternative financing before the June 1 foreclosure date—pending BAC’s
disposition of their application. Accordingly, the Millers have alleged sufficient
facts to state a claim against BAC, pursuant to § 392.304(a)(14), for
misrepresenting the status or nature of the services that it rendered. We
reverse the district court’s dismissal of the Millers’ TDCA claims as to that basis,
and remand for further proceedings consistent with this opinion.

3. Section 392.304(a)(18)
With respect to § 392.304(a)(18), the Millers contended before the district
court that BAC had misrepresented it was an independent organization
responsible for collecting the Millers’ debt when, in fact, Bank of America, N.A.
owned the Millers’ mortgage by assignment, and BAC was merely Bank of
America’s servicer. Irrespective of this contention’s possible validity, the Millers’
amended complaint contained no allegation about any representation by BAC
that it was an independent debt collector. Because the Millers have not alleged
any facts stating that BAC was a subterfuge organization for Bank of America,
they have not stated a claim upon which relief may be granted under §
392.304(a)(18).

4. Section 392.304(a)(19)
Finally, even though § 392.304(a)(19) appears to be a catch-all, or residual,
provision for proceeding under the TDCA, the Millers did not allege any specific
deceptive acts or practices by BAC that could constitute a violation of the
provision. Instead, their amended complaint refers vaguely to BAC “using a
false representation or deceptive means to collect a debt.” See Am. Compl. ¶
41(d). Such a pleading is not sufficient to overcome dismissal under Rule
12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555-56 (2007) (citations omitted). The Millers, thus,
have not stated a claim upon which relief may be granted under § 392.304(a)(19).

B. DTPA Claims Against BAC
The magistrate judge rejected the Millers’ claims under the DTPA,
explaining that the statute protects “consumers” and that mortgagors (loan
borrowers) are not consumers within the meaning of the statute. We agree that
this is the general rule, but restate the test slightly differently to account for a
necessary nuance.

“The DTPA protects consumers; therefore, consumer status is an essential
element of a DTPA cause of action.” Mendoza v. Am. Nat’l Ins. Co., 932 S.W.2d
605, 608 (Tex. App. 1996) (citation omitted). “In order to qualify as a consumer
under the DTPA, two requirements must be established. First, the person must
seek or acquire goods or services by purchase or lease. Second, the goods or
services purchased or leased must form the basis of the complaint.” Id. (citations
omitted); see also Tex. Bus. & Com. Code § 17.45(4) (providing the statutory
definition of consumer).

“Generally, a pure loan transaction lies outside the DTPA because money
is considered to be neither a good nor a service. However, subsequent cases have
limited [this] doctrine.” Ford v. City State Bank of Palacios, 44 S.W.3d 121, 133
(Tex. App. 2001) (citations omitted). A loan sometimes may constitute a basis
for consumer status under the DTPA. See, e.g., Walker v. F.D.I.C., 970 F.2d 114,
123 (5th Cir. 1992) (collecting citations in which Texas courts have departed
from the “facially simple statement” that a “pure loan transaction lies outside
the DTPA”); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 706-08
(Tex. 1983) (rejecting the argument that plaintiffs could not qualify as
consumers because their transaction with the defendant bank was a lending
transaction, where the loan was used to finance the construction of a house).

A mortgagor qualifies as a consumer under the DTPA if his or her primary
objective in obtaining the loan was to acquire a good or service, and that good or
service forms the basis of the complaint. Compare Flenniken, 661 S.W.2d at 708
(“[T]he Flennikens make no complaint as to the Bank’s lending activities.
Unlike Lewis, the Flennikens did not seek to borrow money; they sought to
acquire a house. The house thus forms the basis of their complaint.”), with
Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 175 (Tex. 1980) (“Lewis
approached Riverside Bank with one objective; he sought to acquire money.”).

Here, the Millers have alleged that their mortgage was a purchase money
loan, meaning they obtained it to acquire their property on Corey Drive.
However, the purchase money loan does not form the basis of the Millers’
complaint; rather, the Millers’ DTPA claim against BAC is based entirely on
their attempted modification of that loan. Such modification is akin to
refinancing in that it is not sought for the acquisition of a good or service, but
rather to finance an existing loan on previously acquired property. See Ayers v.
Aurora Loan Servs., LLC, 787 F. Supp. 2d 451, 455 (E.D. Tex. 2011) (“[A]
modification of an existing loan . . . is analogous to refinancing services.
Refinancing is simply an extension of credit that does not qualify Plaintiff as a
consumer.” (citations omitted)); Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 160
(Tex. App. 2007) (holding that “the refinance cannot qualify as a good or service
under the DTPA” because the plaintiffs “had already purchased their house [and
thus the] refinance merely extended credit” (citation omitted)).

As in Ayers, “[h]ere, the alleged loan modification was not a part of the
financing scheme to acquire a house. It is an entirely separate and distinct
transaction, sought after the purchase of the house was complete.” 787 F. Supp.
2d at 455. The Millers’ complaint is therefore based on “a pure loan
transaction,” meaning the Millers do not qualify as consumers under the DTPA.
See Ford, 44 S.W.3d at 133 (citations omitted). Accordingly, we affirm the
district court’s dismissal of the Millers’ DTPA claims.

C. Promissory Estoppel Claims Against BAC
The Millers allege that they would have borrowed other funds, or
liquidated property, to cure their default but for their detrimental reliance on
repeated assurances from BAC’s agents that (i) a loan modification application
was forthcoming; (ii) it would not be necessary to cure their default in the
interim; and (iii) the foreclosure sale would be delayed pending disposition of
their application. Adopting the magistrate judge’s recommendation, the district
court dismissed these claims for common law promissory estoppel as barred by
Texas’s statute of frauds.

On appeal, the Millers focus their challenge on a question of civil
procedure. They contend that the district court erred in ruling on the statute of
frauds because the statute of frauds is an affirmative defense that BAC never
pled in an answer but, rather, raised only in its Rule 12(b)(6) motion.7 We
conclude that the district court’s dismissal was not error.

“[W]hen a successful affirmative defense appears on the face of the
pleadings, dismissal under Rule 12(b)(6) may be appropriate.” Kansa Reins. Co.
v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994) (citation
omitted); see also Fisher v. Halliburton, 667 F.3d 602, 608-09 (5th Cir. 2012)
(citing Kansa, 20 F.3d at 1366, and noting that a claim may properly be subject
to a Rule 12(b)(6) motion where the complaint itself establishes the applicability
of an affirmative defense). It is well-settled in Texas that agreements pertaining
to loans in excess of $50,000 must be in writing, including modifications of those
agreements. See Tex. Bus. & Com. Code § 26.02.

Here, the entirety of the Millers’ allegations against BAC concern oral
promises by either Ms. Masters or unnamed call center representatives.
Importantly, the Millers do not allege that BAC promised to sign a prepared
document that comports with Texas’s statute of frauds, which would have
memorialized those promises. This omission is fatal to the Millers’ promissory
estoppel claims. See Martins v. BAC Home Loans Servicing, L.P., ___ F.3d ___,
2013 WL 3213633, at *5 (5th Cir. June 26, 2013) (collecting citations and holding
that promissory estoppel only overcomes Texas’s statute of frauds where the
alleged oral agreement to modify a loan is accompanied by the lender’s or its
agent’s promise to sign a written agreement validating the oral agreement that
itself satisfies the statute of frauds).8

For these reasons, BAC was permitted to raise the statute of frauds as a
defense in its Rule 12(b)(6) motion. The district court did not err in dismissing
the Millers’ promissory estoppel claims on that basis.

D. Wrongful Foreclosure Claims Against BAC and NDE
The Millers argue that the district court erred in dismissing their common
law wrongful foreclosure claims against BAC and NDE. Under Texas law, a
wrongful foreclosure claim ordinarily requires a showing of (i) “a defect in the
foreclosure sale proceedings”; (ii) “a grossly inadequate selling price”; and (iii) “a
causal connection between the defect and the grossly inadequate selling price.”
Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App. 2008) (citing
Charter Nat’l Bank—Hous. v. Stevens, 781 S.W.2d 368, 371 (Tex. App. 1989)).
The district court adopted the magistrate judge’s finding that the Millers had
satisfied the first element of a wrongful foreclosure claim, but had not alleged
facts satisfying the second and third elements. On appeal, the Millers do not
dispute the magistrate judge’s finding. Instead, the Millers argue that they are
entitled to a less stringent standard because they are not attacking the validity
of the foreclosure sale but, rather, are seeking only compensatory damages
arising from the sale.

The Millers are correct that the above three-part standard—in particular
the requirement to show a grossly inadequate selling price—does not apply to
all wrongful foreclosure claims under Texas law. However, the cases on which
the Millers rely establish only a particularized exception whereby the plaintiffmortgagor
may avoid showing a grossly inadequate selling price if he or she
alleges that the defendant-mortgagee (lender) deliberately “chilled” the bidding
at the foreclosure sale. See, e.g., Charter Nat’l Bank, 781 S.W.2d at 371 (holding
that a mortgagor is not required “to prove a grossly inadequate selling price in
a situation where the bidding at a non-judicial foreclosure sale was deliberately
‘chilled’ by the affirmative acts of a mortgagee and the injured mortgagor seeks
a recovery of damages rather than a setting aside of the sale itself” (emphasis
omitted)). The cases do not stand for the Millers’ broader proposition that
mortgagors are entitled to a less stringent standard simply by pleading that they
confirm the foreclosure sale and seek only damages arising from that sale.

Here, the Millers never alleged that BAC and NDE interfered with the
bidding process of the foreclosure sale. The only defects they alleged were vague
failures to comply with Texas statutory requirements in effecting the sale, and
that BAC had agreed to postpone foreclosure. See, e.g., Am. Compl. ¶¶ 32-33, 65-
68. Thus, the “chilled bidding” exception does not apply. Because the exception
does not apply, and because the Millers do not dispute their failure to have
alleged a grossly inadequate selling price, we affirm the district court’s dismissal
of their wrongful foreclosure claims.

E. Request for an Accounting and Distribution from NDE
Finally, the Millers argue on appeal that the district court erred in
denying their motion to alter or amend the judgment pursuant to Rule 59(e). In
that motion, the Millers had contended to the district court that its Rule 12(b)(6)
dismissal of their claims had not contained any discussion of their request for an
accounting from NDE, and that NDE had not moved to dismiss their claims on
any basis.

In light of our holding reversing the district court’s dismissal of the
Millers’ TDCA claims under § 392.304(a)(14), we also reverse the district court’s
dismissal of the Millers’ request for an accounting from NDE.

V.

For the foregoing reasons, we AFFIRM the district court’s dismissal of the
Millers’ DTPA and Texas common law claims. We also AFFIRM the district
court’s dismissal of the Millers’ TDCA claims under Tex. Fin. Code §§
392.304(a)(8), (18), and (19). We REVERSE the district court’s dismissal of the
Millers’ TDCA claims under § 392.304(a)(14) as well as the district court’s denial
of the Millers’ request for an accounting from NDE. We REMAND for further
proceedings consistent with this opinion.

footnotes

1 It is not clear on the face of the Millers’ amended complaint why BAC would have
contacted the Millers about the default on March 10, 2010, when Nexstar’s assignment to it
did not become effective until April 7, 2010. See Am. Compl. ¶¶ 6, 9. It also is not clear
whether the mortgage already was in default at the time of the assignment.

2 We assume this allegation is true for purposes of reviewing the district court’s
dismissal of the Millers’ claims. That said, NDE disputes the Millers’ allegation that Ms.
Hampton was its agent. In its opening brief, NDE characterizes itself as merely an “affiliated”
service provider to the foreclosure law firm retained by BAC. It is not clear what NDE means
by “affiliated,” and whether Ms. Hampton instead would have been an agent of BAC or the
foreclosure law firm.

3 NDE did not move to dismiss the amended complaint. Nevertheless, the magistrate
judge recommended dismissal as to both defendants, and the district court adopted that
recommendation. On appeal, the Millers challenge the district court’s dismissal of their claims
as to NDE on the grounds that NDE did not move to dismiss and, indeed, filed answers to both
the initial complaint and the amended complaint. We address this issue infra.

4 Nor had the magistrate judge addressed the request in her March 23, 2012 report.

5 The magistrate judge relied on Pollice v. National Tax Funding, L.P., 225 F.3d 379,
403 (3d Cir. 2000) (citations omitted), in making this observation. We expressly adopt this
precedent from the Third Circuit.

6 As discussed supra, in note 1, this is not apparent from the Millers’ pleadings. See
Am. Compl. ¶¶ 6, 9. However, the Millers have not challenged the district court’s dismissal
of their FDCPA claims on appeal. Accordingly, the district court’s disposition of those claims
remains undisturbed and any challenge to that disposition is waived. See Swindle v.
Livingston Parish Sch. Bd., 655 F.3d 386, 392 & n.6 (5th Cir. 2011) (citations omitted).

7 Unlike NDE, BAC did not file an answer to either of the Millers’ complaints.

8 Garcia v. Karam, 276 S.W.2d 255 (Tex. 1955), which the Millers cite in their opening
brief, did not implicate promissory estoppel and did not arise in the home loan modification
context. Garcia therefore is not inconsistent with Martins.

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