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Addison law firm receives summary judgment dismissal from property foreclosure suit

SOUTHEAST TEXAS RECORD

Monday, December 23, 2024

Addison law firm receives summary judgment dismissal from property foreclosure suit

Federal Court
Webp edisonandrew

Edison | https://www.txs.uscourts.gov/

GALVESTON – A federal judge has dismissed through summary judgment claims of fraud, violation of the Texas Debt Collection Act, Texas Deceptive Trade Act, Federal Debt Collection Practices Act and intentional infliction of emotional distress against an Addison law firm, brought by a pair of Galveston County-based plaintiffs.

Casey Rainey (individually and as the Independent Administrator of the Estate of Linda Ann Castleberry, deceased and on behalf of all those similarly-situated and Ed Rainey (individually and as Next Friend of B.M.R., minor) of Galveston County initially filed suit in the County Court at Law No. 3 of Galveston County on July 26, 2023 versus Barrett Daffin Frappier Turner & Engel, LLP of Addison, plus Manufacturers and Traders Trust Company (doing business as “M&T Bank”), of Buffalo, N.Y.

“Barrett Daffin is a law firm. Manufacturers and Traders Trust Company (“M&T”) retained Barrett Daffin as its counsel to assist in the non-judicial foreclosure of real property located at 1081 Cayman Bend Lane, League City, TX 77573. To obtain the property, Linda Castleberry executed a Note and Deed of Trust. Plaintiff Casey Rainey obtained an ownership interest in the property by deed from Castleberry and was previously the administrator of Castleberry’s estate. M&T sought to foreclose on the property after the loan fell into default,” U.S. Magistrate Judge Andrew M. Edison said.

“Plaintiffs filed this lawsuit against M&T and Barrett Daffin in state court. M&T timely removed the case to federal court. In the original state court lawsuit, and a supplemental complaint filed in federal court, plaintiffs complain that M&T improperly terminated a contract for modification of the mortgage loan. According to plaintiffs, Barrett Daffin, acting as M&T’s foreclosure counsel, moved forward with foreclosure proceedings despite not having the legal right to do so. Plaintiffs arguably bring causes of action against Barrett Daffin for fraud, violation of the Texas Debt Collection Act, violation of the Texas Deceptive Trade Practices Act, violation of the Federal Debt Collection Practices Act and intentional infliction of emotional distress. Barrett Daffin has moved for summary judgment, offering a number of reasons why plaintiffs’ claims against it fail as a matter of law.”

In his analysis, Edison explained that the attorney immunity doctrine bars plaintiffs’ common law claims against Barrett Daffin for fraud and intentional infliction of emotional distress, since “Texas staunchly protects lawyers from liability to non-clients for conduct within the scope of lawyers’ representation of their clients.”

“Dismissal based on the attorney immunity defense is proper when ‘the scope of the attorney’s representation – and thus entitlement to the immunity – is apparent on the face of the complaint.’ In this case, plaintiffs’ common law claims against Barrett Daffin are premised entirely on allegations of conduct that constituted the discharge of Barrett Daffin’s duties in representing its client, M&T. As such, it is unsurprising that the Fifth Circuit has repeatedly recognized that claims against an attorney arising from conduct in foreclosure proceedings must be dismissed when the lawyer is acting within the scope of representation of his client. Federal district courts in Texas have uniformly followed suit,” Edison stated.

“The outcome in this case should be no different. Plaintiffs have sued Barrett Daffin for actions it took as counsel for M&T in connection with the attempted foreclosure of the property. That is exactly the type of conduct the attorney immunity doctrine is intended to protect. Barrett Daffin is entitled to summary judgment on plaintiffs’ common law fraud and intentional infliction of emotional distress claims against it.”

Edison stated he “need not decide today whether the attorney immunity doctrine protects attorneys from liability under the TDCA or the DTPA, because there are independent reasons why the plaintiffs’ TDCA and DTPA claims fail.”

“Plaintiffs allege Barrett Daffin violated Section 392.301(a)(3), which prohibits debt collectors from making representations ‘to any person other than the consumer that a consumer is willfully refusing to pay a non-disputed consumer debt when the debt is in dispute and the consumer has notified in writing the debt collector of the dispute.’ This claim fails because plaintiffs have produced no evidence that Barrett Daffin made any representations to anyone that plaintiffs were refusing to pay a non-disputed consumer debt. Plaintiffs allege Barrett Daffin violated Section 392.301(a)(7), which prohibits debt collectors from ‘threatening that non-payment of a consumer debt will result in the seizure, repossession, or sale of the person’s property without proper court proceedings.’ But the TDCA clarifies that a debt collector is not prohibited from ‘exercising or threatening to exercise a statutory or contractual right of seizure, repossession or sale that does not require court proceedings.’ In that vein, the Fifth Circuit has held that ‘Section 392.301(a)(7) simply does not apply to non-judicial foreclosure.’ This claim thus fails as a matter of law,” Edison said.

“Plaintiffs allege Barrett Daffin violated Section 392.301(a)(8), which prohibits debt collectors from ‘threatening to take an action prohibited by law.’ Because plaintiffs have produced no evidence that Barrett Daffin has done any such thing, this claim also fails as a matter of law. Finally, plaintiffs allege Barrett Daffin violated Section 392.304(a)(19), which prohibits a debt collector from ‘using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer.’ Because plaintiffs have produced no evidence that Barrett Daffin made any false representation or used any deceptive means, this claim also fails as a matter of law.”

The DTPA and FDCPA claims fared no better, according to Edison.

“Here, plaintiffs have alleged no facts that suggest that they are consumers under the DTPA. In particular, there are no allegations, much less evidence, that plaintiffs acquired any goods or services. This case, according to plaintiffs, ‘arises out of a contract for modification of a mortgage loan.’ In short, summary judgment is proper on plaintiffs’ DTPA claim because there is no genuine dispute that plaintiffs are not consumers,” Edison said.

“Plaintiffs allege Barrett Daffin violated the FDCPA by threatening to foreclose and then misrepresenting that the firm was ‘stopping collection efforts’ until Castleberry’s ‘probate case was resolved.’ Although plaintiffs do not cite a specific statutory provision of the FDCPA, such a claim would arise under Section 1692e, which provides that ‘a debt collector may not use any false, deceptive or misleading representation or means in connection with the collection of any debt.’ To begin, I observe that the attorney immunity doctrine does not apply to plaintiffs’ FDCPA claim. FDCPA claims may be brought against attorneys, even in their roles as litigators. Even so, plaintiffs’ FDCPA claim still fails as a matter of law. The prohibitions of the FDCPA apply only to ‘debt collectors.’ The United States Supreme Court has held that, but for an FDCPA provision not applicable here, ‘those who engage in only non-judicial foreclosure proceedings are not debt collectors within the meaning of the [FDCPA].’ Because Barrett Daffin is not a ‘debt collector’ within the meaning of the FDCPA provision that would outlaw the conduct of which plaintiffs complain, Barrett Daffin is entitled to summary judgment on plaintiffs’ FDCPA claim.”

Edison then granted the motion for summary judgment.

The plaintiffs are represented by Edwin Q. Rainey Jr. of Rainey Law Firm, in League City.

The defendants are represented by Robert Davis Forster II and Shawnika LaShone Brooks of Barrett Daffin Frappier in Addison, plus Mark Daniel Hopkins and Shelley L. Hopkins of Hopkins Law, in Austin.

U.S. District Court for the Southern District of Texas case 3:23-cv-00272

County Court at Law No. 3 of Galveston County case CV-0091871

From the Southeast Texas Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com

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