Ojiambo v. Freedom Mortgage Corporation

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
CATHERINE OJIAMBO
v.
FREEDOM MORTGAGE
CORPORATION
§
§
§
§
§
§
§
CIVIL NO. 4:25-CV-01295-SDJ-BD
MEMORANDUM OPINION AND ORDER
Pro se Plaintiff Catherine Ojiambo filed an Emergency Motion for Temporary
Restraining Order (“TRO”), seeking to enjoin a foreclosure sale scheduled to occur the
afternoon of March 3, 2026. (Dkt. #63). After considering the TRO application,
Defendant’s response, (Dkt. #68), Plaintiff’s reply, (Dkt. #69), the record, and the
applicable law, the Court concludes that Plaintiff is not entitled to the extraordinary
remedy of a TRO.
I. B ACKGROUND
In 	November 	of 	last 	year, 	Plaintiff 	sued 	Defendant 	Freedom 	Mortgage
Corporation, 	the 	servicer 	of 	the 	mortgage 	on 	her 	property, 	(Dkt. #1), 	and,
concurrently with her original complaint, moved ex parte for a TRO, (Dkt. #2). That
motion asserted that Defendant had scheduled a foreclosure sale of her home in six
days. Id. The Court denied the motion because Plaintiff had failed to satisfy the notice
requirement of Federal Rule of Civil Procedure 65(b)(1)(B) and sought relief under a
federal law that does not authorize injunctive relief. (Dkt. #11). On the day the
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foreclosure sale had been scheduled to occur, Plaintiff notified the court that
Defendant had cancelled the sale the day before. (Dkt. #13).
The next day, Plaintiff amended her Complaint. (Dkt. #18). The operative
Amended Complaint alleges violations of the Real Estate Settlement Procedures Act
(“RESPA”) and its implementing regulations and state-law claims, including one for
breach of contract. Id. Plaintiff alleges that, after she became unemployed, she
contacted Defendant and completed a hardship and loss-mitigation application. Id.
at 2. She further alleges that, “[o]n the same date, [she] sent Defendant a written
message confirming that she wished to be considered only for a loan modification and
not for a refinance or any option creating a junior lien.” Id.
Plaintiff alleges that, the next month, Defendant issued a “decision letter” and
proposed 	modification 	agreement 	that 	offered 	one 	loss-mitigation 	option 	and
indicated that several others were “unevaluated.” Id.; see (Dkt. #70-1) (decision letter
listing various “Program[s]” as “Un-Evaluated,” “Non-Approved,” “Approved,” and
“Eligible”). Plaintiff alleges that “Defendant failed to complete the FHA waterfall
because it left multiple options unevaluated and proceeded directly to a single
modification offer.” (Dkt. #18 at 2).
Plaintiff alleges that she rejected that offer and insisted that Defendant
evaluate other loss-mitigation options. Id. The next month, Defendant’s online portal
indicated 	that 	Plaintiff’s 	application 	had 	been 	rejected 	for 	failure 	to 	provide
documents, then switched to indicating that the loss-mitigation review remained
ongoing, and then finally switched back. Id. at 3. Shortly thereafter, Defendant
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noticed a foreclosure sale and Plaintiff submitted a notice of error objecting that
Defendant’s loss-mitigation review was incomplete. Id. She states that Defendant
received the notice of error but never corrected the error or conducted a reasonable
investigation. Id.
Plaintiff alleges that Defendant then flip-flopped again, indicating that her
loss-mitigation application was “in progress” and calling to collect information “‘in
support’ of loss mitigation” that Plaintiff alleges was irrelevant to her application. Id.
at 4. At the time of the amended complaint, Plaintiff alleges that the originally
noticed foreclosure sale had been cancelled but that “Defendant had not instructed
[the substitute trustee] to permanently stop foreclosure.” Id.
Plaintiff argues that Defendant’s conduct violates RESPA because Defendant
“fail[ed] to exercise reasonable diligence, fail[ed] to evaluate all FHA Home Retention
Options, and issu[ed] a decision letter with multiple options marked ‘unevaluated.’”
Id. She explains that, in her view, Defendant engaged in “dual-tracking,” id., the
prohibited 	practice 	of 	“actively 	pursu[ing] 	foreclosure 	while 	simultaneously
considering the borrower for loss mitigation options.” Gresham v. Wells Fargo Bank,
N.A., 642 F. App’x 355, 359 (5th Cir. 2016); see 12 C.F.R. § 1024.41(g) (generally
prohibiting dual tracking).
Plaintiff’s breach-of-contract claim is based on the allegation that the Deed of
Trust incorporates RESPA’s requirements and that seeking to foreclose on her
property without complying with RESPA put Defendant in breach. (Dkt. #18 at 5; see
id. at 4 (citing 12 C.F.R. § 1024.41(b), (c), (g)). The Deed of Trust (of which the court
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may take judicial notice, Smith v. MTGLQ Investors, L.P., 851 F. App’x 514, 514 (5th
Cir. 2021)), provides that it “does not authorize acceleration or foreclosure if not
permitted by regulations of the Secretary [of the Department of Housing and Urban
Development (“HUD”)],” (Dkt. #69-1 at 5 (Denton Cnty., Tex., Prop. Recs., Doc.
No. 2016-69774, at 5 (June 14, 2016)).
In her TRO application, Plaintiff claims a likelihood of success on the merits of
her breach-of-contract claim premised on the allegation that “foreclosure was pursued
while 	required 	loss-mitigation 	evaluations 	were 	incomplete 	and 	while 	error-
resolution obligations remained outstanding.” (Dkt. #63 at 2; see also Dkt. #69 at 6
(stating that “[t]he TRO does not depend on the [second] amended pleading being
operative”)). She attached a copy of Defendant’s notice of foreclosure (Dkt. #63-1
(Denton Cnty., Tex., Prop. Recs., Doc. No. 2026-03/014)), which is also a public record
of which the court may take judicial notice. She states, and the notice of foreclosure
indicates, that Defendant has scheduled a new foreclosure sale to occur on March 3,
2026, no earlier than 1:00 p.m. (Dkt. #63-1 at 1).
II. LEGAL S TANDARD
A TRO is “an extraordinary and drastic remedy.” Anderson v. Jackson, 556
F.3d 351, 360 (5th Cir. 2009) (citation omitted). TROs “should be restricted to serving
their underlying purpose of preserving the status quo and preventing irreparable
harm just so long as is necessary to hold a hearing, and no longer.” Granny Goose
Foods, Inc. v. Bhd. of Teamsters Loc. No. 70, 415 U.S. 423, 439, 94 S.Ct. 1113, 39
L.Ed.2d 435 (1974); see also Norman Bridge Drug Co. v. Banner, 529 F.2d 822, 829
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(5th Cir. 1976) (explaining that “the office of a temporary restraining order is to
preserve, for a very brief time, the status quo, so as to avoid irreparable injury
pending a hearing on the issuance of a preliminary injunction”).
There are four prerequisites to the entry of a TRO or preliminary injunction.
The movant must demonstrate “(1) a substantial likelihood of success on the merits;
(2) a substantial threat that the movant will suffer irreparable injury if the injunction
is denied; (3) that the threatened injury outweighs any damage that the injunction
might cause the defendant; and (4) that the injunction will not disserve the public
interest.” Affiliated Pro. Home Health Care Agency v. Shalala, 164 F.3d 282, 285 (5th
Cir. 1999); see Clark v. Prichard, 812 F.2d 991, 993 (5th Cir. 1987) (noting that the
standards for TROs and preliminary injunctions are the same). A party seeking
injunctive relief must “unequivocally show the need for its issuance,” Valley v.
Rapides Parish Sch. Bd., 118 F.3d 1047, 1050 (5th Cir. 1997), by introducing
sufficient evidence to justify the granting of a preliminary injunction or TRO, PCI
Transp. Inc. v. Fort Worth & W. R.R. Co., 418 F.3d 535, 546 (5th Cir. 2005). The
movant must prove each of the four elements before injunctive relief can be granted.
See Miss. Power & Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir.
1985). The decision to grant or deny a TRO lies within the court’s discretion. Id.
III. DISCUSSION
A. Likelihood of Success on the Merits
Plaintiff bases her application for a TRO on her breach-of-contract claim,
(Dkt. #63 at 2), so she must show a substantial likelihood of success on the merits of
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that claim. To state a claim for breach of contract under Texas law, a plaintiff must
allege 	that “(1) a valid contract 	exists; 	(2) the 	plaintiff 	performed or tendered
performance as contractually required; (3) the defendant breached the contract by
failing to perform or tender performance as contractually required; and (4) the
plaintiff sustained damages due to the breach.” Pathfinder Oil & Gas, Inc. v. Great
W. Drilling, Ltd., 574 S.W.3d 882, 890 (Tex. 2019). Plaintiff has not demonstrated a
substantial likelihood of prevailing on each of those elements.
1. 	The existence of a valid contract and Plaintiff’s damages
The first and fourth elements are straightforward. The Deed of Trust is a
contract sufficient to support a breach-of-contract claim, Williams v. Wells Fargo
Bank, N.A., 884 F.3d 239, 244 (5th Cir. 2018) (noting that, under Texas law, a claim
for breach of a deed of trust is a breach-of-contract claim), and Plaintiff has shown at
least a “reasonable probability” that Defendant will foreclose on her home in alleged
violation of the Deed of Trust, MCI Telecommunications Corp. v. Tex. Utils. Elec. Co.,
995 S.W.2d 647, 654–55 (Tex. 1999) (explaining that a plaintiff may recover in breach
of contract for injuries that there is a “reasonable probability” she will incur); see
Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993) (holding that a temporary
injunction is appropriate in a breach-of-contract case “if the applicant establishes a
probable right on final trial to the relief sought, and a probable injury in the interim”).
2. 	Plaintiff’s performance
Ordinarily, “a party to a contract who is h[er]self in default cannot maintain a
suit for its breach.” Cruz v. Compu-Link Corp., No. 2:22-cv-00243, 2023 WL 4543584,
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at *5 (S.D. Tex. May 9, 2023). Here, Plaintiff does not dispute that she was in default
of her duty to “pay when due the principal of, and interest on, the debt evidenced by
the Note.” (Dkt. #69-1 at 2; id. (defining the “Note” as the “note dated the same date
as [the Deed of Trust], which provides for monthly payments, with full debt, if not
paid earlier, due and payable on July 01, 2046”)). But the Fifth Circuit has explained
that there are several exceptions to that general rule. Williams, 884 F.3d at 244. “One
of these exceptions is that a party’s default under a contract will only excuse the other
party’s performance of the contract’s terms that are dependent upon the promises
that the defaulting party failed to perform.” Id.
Williams involved a servicer’s duty under a deed of trust to provide certain
notices 	to 	the 	borrowers 	before 	foreclosing. 	Id. 	at 	245. 	That 	obligation 	“was
independent of the [borrowers’] agreement . . . to pay monthly installments to satisfy
the debt” because it “would not even arise unless and until the [borrowers] were in
default.” Id. Because “Texas courts ‘must . . . attempt to give effect to all contract
provisions so that none will be rendered meaningless,’” provisions that can take effect
only after a borrower’s default are exempted from the borrower’s usual duty to show
that she was not in default. Id. (quoting Kelley-Coppedge, Inc. v. Highlands Ins. Co.,
980 S.W.2d 462, 464 (Tex. 1998)).
Here, Plaintiff alleges that Defendant breached the Deed of Trust by taking
steps to foreclose before it had satisfied its duties under RESPA even though the Deed
of Trust prohibits foreclosure in that circumstance. The provision of the Deed of Trust
incorporating RESPA governs acceleration of the loan and foreclosure, which the
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Deed of Trust allows only when Plaintiff is in default. (Dkt. #69-1 at 4–6). The
prohibition on foreclosures or accelerations when prohibited by HUD would not come
into play until foreclosure or acceleration is otherwise authorized by the Deed of
Trust—in other words, after Plaintiff’s default. That duty is therefore independent of
Plaintiff’s duty to make payments on her debt. The relevant performance is Plaintiff’s
duty to file a complete application for loss-mitigation review in order to invoke
RESPA. See 12 C.F.R. § 1024.41(b)(1). Because Plaintiff alleges that she “completed
a hardship and loss-mitigation application,” (Dkt. #18 at 2), she satisfies that element
at this stage.
3. 	Defendant’s breach
“Federal statutes and regulations can form the basis of a breach-of-contract
claim if the parties expressly incorporate them into their contract.” Smith v.
JPMorgan Chase Bank, N.A., 519 F. App’x 861, 864 (5th Cir. 2013). Plaintiff alleges
that Defendant breached the Deed of Trust by moving to foreclose on her property
when not permitted by RESPA and its implementing regulations. That makes her
breach-of-contract claim dependent on a showing that Defendant was not permitted
to foreclose by HUD regulations. See (Dkt. #69-1 at 5.)
12 C.F.R. § 1024.41 subjects mortgage servicers to several requirements
related 	to 	“loss 	mitigation 	application[s].” 	Subsection 	(b) 	requires 	a 	mortgage
servicer, 	if 	it 	receives 	a 	loss-mitigation 	application 	from 	a 	borrower 	before 	a
foreclosure sale, to “review the loss mitigation application to determine if the loss
mitigation application is complete” and “[n]otify the borrower in writing within 5 days
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(excluding legal public holidays, Saturdays, and Sundays) after receiving the loss
mitigation application that the servicer acknowledges receipt of the loss mitigation
application and that the servicer has determined that the loss mitigation application
is either complete or incomplete.” Subsection (c) requires servicers to “[e]valuate the
borrower for all loss mitigation options available to the borrower” and “[p]rovide the
borrower with a notice in writing stating the servicer’s determination of which loss
mitigation options, if any, it will offer to the borrower on behalf of the owner or
assignee of the mortgage.”
Titled “Prohibition on foreclosure sale,” subsection (g) provides:
If a borrower submits a complete loss mitigation application after a
servicer has made the first notice or filing required by applicable law for
any judicial or non-judicial foreclosure process but more than 37 days
before a foreclosure sale, a servicer shall not move for foreclosure
judgment or order of sale, or conduct a foreclosure sale, unless:
(1) 	The 	servicer 	has 	sent 	the 	borrower 	a 	notice 	pursuant 	to
paragraph (c)(1)(ii) of this section that the borrower is not eligible for
any loss mitigation option and the appeal process in paragraph (h) of
this section is not applicable, the borrower has not requested an
appeal within the applicable time period for requesting an appeal, or
the borrower’s appeal has been denied;
(2) The borrower rejects all loss mitigation options offered by the
servicer; or
(3) The borrower fails to perform under an agreement on a loss
mitigation option.
See 12 C.F.R. § 1024.41(h) (describing the appeal process).
Plaintiff 	alleges 	that 	she 	submitted 	a 	loss-mitigation 	application, 	but
Defendant’s decision letter proposed one loss-mitigation option and indicated that
others were “unevaluated.” (Dkt. #18 at 2). Although Defendant was not required to
offer any particular loss-mitigation option, 12 C.F.R. § 1024.41(a), it was required to
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evaluate “all loss mitigation options available.” Id. § 1024.41(c)(1)(i); see Engle v.
Carrington Mortg. Servs., LLC, No. 3:19-cv-101, 2020 WL 4505900, at *4 (N.D. W. Va.
Aug. 5, 2020).
Plaintiff, 	however, 	does 	not 	identify 	which 	loss-mitigation 	options 	were
“available” within the meaning of that provision, much less show that any of the
options that Defendant indicated were “Un-Evaluated,” (Dkt. #70), were among the
options available to her. As a Consumer Financial Protection Bureau guide explains,
the “loss mitigation options available to the borrower” within the meaning of
§ 1024.41(c)(1)(i) “include only those programs available from the borrower’s lender
for which the borrower qualifies.” ¶ 30-269 CFPB Guide to the Mortgage Servicing
Rules Housing Counseling Requirements, Mortgage Compl. Guide P 30-269 n.112
and accompanying text (footnote omitted) (citing 12 C.F.R. part 1024, Supplement I,
Comment 41(c)(1)–(2)).
Stated differently, the word “available” in § 1024.41(c)(1)(i) limits the scope of
the duty that provision establishes. The Bureau’s relevant final rule explained that
[t]he loss mitigation options available to a borrower are those options
offered by an owner or assignee of the borrower’s mortgage loan. Loss
mitigation options administered by a servicer for an owner or assignee of
a mortgage loan other than the owner or assignee of the borrower’s
mortgage loan are not available to the borrower solely because such
options are administered by the servicer.
Mortgage 	Servicing 	Rules 	Under 	the 	Real 	Estate 	Settlement 	Procedures 	Act
(Regulation X), 78 Fed. Reg. 10696, 10896 (Feb. 14, 2013); see id. at 10827 (finding
“the requirements in § 1024.41(c)(1) to evaluate a loss mitigation application for all
loss 	mitigation 	options 	available 	to 	the 	borrower 	. . . 	not 	inconsistent 	with 	a
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determination by an owner or assignee of a mortgage loan to evaluate a borrower for
loss mitigation options by using a ‘waterfall’ method,” which “is simply an evaluation
rule”). Again, Plaintiff has not even shown what options Defendant administers,
much less what options the owner or assignee of her loan offered, so she has not met
her burden to establish a likelihood of success on a claim premised on Defendant’s
alleged 	failure 	to 	evaluate 	one 	or 	more 	of 	those 	options. 	See 	also 	12 	C.F.R.
§ 1024.41(c)(1)(ii) (requiring a servicer to “[p]rovide the borrower with a notice in
writing stating the servicer’s determination of which loss mitigation options, if any,
it will offer to the borrower on behalf of the owner or assignee of the mortgage”—not
to 	notify 	the 	borrower 	of 	which 	loss 	mitigation 	options 	are 	“available,” 	id.
§ 1024.41(c)(1)(i)); Bennett v. Bank of Am., N.A., 126 F. Supp. 3d 871, 884 (E.D. Ky.
2015). And she admits that she rejected the loss mitigation option that Defendant
offered her. (Dkt. #18 at 2); see 12 C.F.R. § 1024.41(g)(2).
Nor has Plaintiff shown a likelihood of success on her breach-of-contract claim
to the extent it is premised on an alleged violation of § 1024.35(e)(1). That provision
requires a mortgage servicer that receives a “notice of error” from a borrower to
respond either by “[c]orrecting the error or errors identified by the borrower and
providing the borrower with a written notification of the correction” or “[c]onducting
a reasonable investigation and providing the borrower with a written notification that
includes a statement that the servicer has determined that no error occurred.” See id.
§ 1024.35(a) (defining a “notice of error” as a written notice from a borrower that
asserts an error and contains information identifying the borrower, the loan, and the
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error); id. § 1024.35(b)(10) (defining an “error” as, among other things, moving for or
conducting 	a 	foreclosure 	sale 	in 	violation 	of 	12 	C.F.R. 	§ 1024.41(g)); 	id.
§ 1024.35(e)(3)(B) (providing that, when an error is based on § 1024.35(b)(10), the
servicer must comply with § 1024.35(e)(1) “[p]rior to the date of a foreclosure sale or
within 30 days (excluding legal public holidays, Saturdays, and Sundays) after the
servicer receives the notice of error, whichever is earlier”).
On this point, Plaintiff alleges that she submitted a notice of error to Defendant
based on its failure to comply with RESPA but that Defendant did not correct the
alleged error or reasonably investigate it. (Dkt. #18 at 4–5). But again, Plaintiff does
not show that Defendant’s alleged error was, in fact, an error, and she also does not
establish a likelihood of being able to show that Defendant did anything wrong under
the regulations. She alleges that she submitted a notice of error that “identified
failures 	to 	evaluate 	FHA 	options, 	conflicting 	communications, 	and 	improper
foreclosure posting.” Dkt. 18 at 3. But she has not attached or pointed the Court to
evidence demonstrating that Defendant failed to reasonably investigate her notice of
error.
To the contrary, the record shows that, three business days after Defendant
acknowledged receipt of the notice of error, (Dkt. #12-3), its representative contacted
Plaintiff 	stating 	that 	she 	intended 	to 	verify 	details 	regarding 	Plaintiff’s 	loss-
mitigation application, (Dkt. #12-2 at 1). The next business day after that, Defendant
cancelled 	the 	scheduled 	foreclosure 	sale. 	(Dkt. #13). 	Rather 	than 	supporting
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Plaintiff’s allegation that Defendant did not reasonably investigate her notice of
error, that evidence could reasonably support the inference that it did.
In short, Plaintiff has not established that she is likely to prevail on the merits
of her breach-of-contract claim, the sole claim on which her TRO application is based.
See (Dkt. #63 at 2). That means she is not entitled to the extraordinary remedy of a
TRO. See Anderson, 556 F.3d at 360; Affiliated Pro. Home Health Care Agency, 164
F.3d at 285.
B. Remaining Factors
When a TRO applicant establishes a substantial likelihood of success on the
merits, the Court must consider whether she has also established the remaining three
elements. See Affiliated Pro. Home Health Care Agency, 164 F.3d at 285. But when,
as here, the first element has not been satisfied, no further analysis is required. See
Sharing Servs. Glob. Corp. v. Oblon, No. 4:20-CV-989-SDJ, 2021 WL 3410670, at *2
(E.D. Tex. Jan. 8, 2021).
IV. Conclusion
It is ORDERED that Plaintiff Catherine Ojiambo’s Motion for a Temporary
Restraining Order, (Dkt. #63), is DENIED.
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