Mendoza et al v. Lakeview Loan Servicing, LLC

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
ISAIAH MENDOZA, et al.,
Plaintiffs.
V.
LAKEVIEW LOAN SERVICING,
LLC,
Defendant.
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CIVIL ACTION NO. 3:25-cv-00301
MEMORANDUM AND RECOMMENDATION
Plaintiffs Isaiah Mendoza, Raymond Mendoza Jr., and Abigail Mendoza
have sued Defendant Lakeview Loan Servicing, LLC for wrongful foreclosure and
breach of contract. Lakeview has filed a motion to dismiss Plaintiffs’ First
Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). See
Dkt. 19. Because Lakeview submitted evidence outside the pleadings with its
motion to dismiss, I exercised my discretion and converted Lakeview’s motion to
dismiss into a motion for summary judgment. See Dkt. 22. I gave Plaintiffs two full
weeks to “present all the material that is pertinent to the motion.” Id. at 3 (quoting
Fed. R. Civ. P. 12(d)). Plaintiffs timely filed a response to the motion for summary
judgment, attaching two affidavits executed by Abigail Mendoza as evidence. See
Dkt. 24. The discovery deadline has passed. 1
1 The docket control order I issued in this matter set an April 18, 2026 discovery deadline.
See Dkt. 15 at 2. On July 1, 2026, Plaintiffs asked the court to re-open the discovery period.
See Dkt. 23. A scheduling order “may be modified only for good cause and with the judge’s
consent.” Fed. R. Civ. P. 16(b)(4). Plaintiffs have not established good cause for re-
opening discovery. Plaintiffs readily acknowledge that they failed to conduct any
discovery during the discovery period other than exchanging initial disclosures. See
Dkt. 23. The only justification Plaintiffs offer for re-opening discovery is that Lakeview
has not produced the documents identified in its initial disclosures. This argument is
meritless. “Rule 26(a)(1)(A)(ii) does not require a party to produce documents; the
disclosing party has the option of producing a ‘copy’ of the identified documents or
providing a ‘description by category and location’ of those documents.” Lopez v. Don
United States District Court
Southern District of Texas
ENTERED
July 07, 2026
Nathan Ochsner, Clerk
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For the reasons discussed below, I recommend that summary judgment be
granted in Lakeview’s favor.
BACKGROUND
In August 2023, Plaintiffs purchased the property located at 257 San Saba,
Richwood, Texas 77531 (the “Property”) and executed a Promissory Note (the
“Note”) in the amount of $397,267. To secure repayment of the Note, Plaintiffs
executed a deed of trust, granting a security interest in the Property. Lakeview is
the current owner of the note and beneficiary of the deed of trust.
Lakeview insists that Plaintiffs defaulted on the Note and that its loan
servicer sent Plaintiffs a notice of default on October 7, 2024. Plaintiffs maintain
that they never received a notice of default. Lakeview also contends that its
foreclosure counsel sent a notice of acceleration and a notice of sale to Plaintiffs on
February 4, 2025, by certified mail, informing Plaintiffs that the Property would
be sold at a foreclosure sale on April 1, 2025. The Property was sold at a foreclosure
sale on April 1, 2025, for $141,645.00. See Dkt. 19-5 at 2. Lakeview purchased the
Property at the foreclosure sale.
SUMMARY JUDGMENT STANDARD
Summary judgment is proper when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “A genuine issue of material fact exists when there is evidence
sufficient for a rational trier of fact to find for the non-moving party.” Schnell v.
State Farm Lloyds, 98 F.4th 150, 156 (5th Cir. 2024) (quotation omitted). “The
movant has the burden of showing that there is no genuine issue of fact.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). If the movant makes such a
showing, “the burden shifts to the non-movant to produce evidence of the existence
of such an issue for trial.” Brandon v. Sage Corp., 808 F.3d 266, 270 (5th Cir.
Herring 	Ltd., 	327 	F.R.D. 	567, 	589 	(N.D. 	Tex. 	2018) (quoting 	Fed. 	R. 	Civ. 	P.
26(a)(1)(A)(ii)). Plaintiffs could have requested production of the documents identified in
Lakeview’s initial disclosures during the discovery period, but they failed to do so. It is too
late now.
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2015) (quotation omitted). The nonmoving party “must go beyond the pleadings
and come forward with specific facts indicating a genuine issue for trial to avoid
summary judgment.” Id. (quotation omitted). At this stage, I “view all facts, and
the inferences to be drawn from them, in the light most favorable to the
nonmovant.” Id. at 269 (quotation omitted).
ANALYSIS
A. 	WRONGFUL F ORECLOSURE
Plaintiffs’ first cause of action is wrongful foreclosure. To prevail on a
wrongful 	foreclosure 	claim, 	Plaintiffs 	must 	establish: 	“(1) a 	defect 	in 	the
foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a
causal connection between the defect and the grossly inadequate selling price.”
Charter Nat’l Bank–Houston v. Stevens, 781 S.W.2d 368, 371 (Tex. App.—
Houston [14th Dist.] 1989, writ denied). Summary judgment is proper because
Plaintiffs fail to present any evidence creating a genuine issue of material fact on
the second element: grossly inadequate selling price.
Under Texas law, “a grossly inadequate price would have to be so little as ‘to
shock a correct mind.’” Fed. Deposit Ins. Corp. v. Blanton, 918 F.2d 524, 531 (5th
Cir. 1990) (quoting Richardson v. Kent, 47 S.W.2d 420, 425 (Tex. Civ. App.—
Dallas 1932, no writ)). To determine whether the consideration received is grossly
inadequate, “[t]he cash consideration paid at foreclosure sale for the land must be
compared with or balanced against the fair cash market value of the property at
the time of the sale.” Gainesville Oil & Gas Co. v. Farm Credit Bank of Tex., 847
S.W.2d 655, 663 (Tex. App.—Texarkana 1993, no writ) (emphasis added). The
price Lakeview paid for the Property at the April 1, 2025 foreclosure sale was
$141,645.00.
The record is devoid of any evidence as to the market value of the Property
on April 1, 2025. Although I gave Plaintiffs a full and fair opportunity to present all
material pertinent to the summary judgment issues, Plaintiffs did not submit any
evidence concerning the Property’s fair market value on April 1, 2025. Because
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Plaintiffs have not presented any admissible evidence “regarding the fair market
value of the property at the time of the [April 1, 2025 foreclosure] sale . . . , there is
no evidence to raise a fact issue tending to prove the consideration received for the
property was grossly inadequate.” Obaro v. Mosaic Residential N. Condo. Ass’n,
No. 4:23-cv-01249, 2025 WL 3003690, at *3 (S.D. Tex. Oct. 27, 2025) (quoting
Benitez v. Perales, No. 01-00-00211, 2002 WL 1981189, at *6 (Tex. App.—Houston
[1st Dist.] Aug. 29, 2002, no pet.)) (cleaned up).
The only evidence Plaintiffs offer relating to the value of the Property is
affidavit testimony from Abigail Mendoza. In one affidavit, dated October 16, 2025,
Mendoza explains that the Property “was purchased for $185,000 [in August
2023]. . . . Houses in our area have increased in value significantly in the last two
years. I believe the home is now worth $215,000.” Dkt. 24-1 at 1. In an affidavit
dated July 1, 2026, Mendoza states:
The sales price, stated in the Substitute Trustee’s Deed as $141,645.00
is 	also 	grossly 	in 	adequate 	[sic] 	compared 	to 	values 	in 	the
neighborhood that this home is located. My opinion is that the home
is valued at $215,000. That is approximately $73,000 short, which I
contend is “grossly inadequate”.
Dkt. 24-2 at 3. The problem with Mendoza’s testimony is that it does not shed light
on the Property’s value at the time of the foreclosure sale on April 1, 2025. At best,
the testimony indicates that Mendoza believes the Property was worth $215,000
at the time she signed the two affidavits—on October 16, 2025, and on July 1, 2026.
But the Property’s value on those dates offers me no assistance in determining the
value of the Property on April 1, 2025, the date of the foreclosure sale.
Even if I generously assume that Mendoza meant to say that she believes the
Property’s value on April 1, 2025, was $215,000, that testimony still would not
make a difference. A $215,000 fair market value on the date of foreclosure and an
actual sales price of $141,645 at foreclosure means that the Property sold for 65.88
percent of its fair market value. As a matter of Texas law, a foreclosure sale price
exceeding 	50 	percent 	of 	the 	property’s 	fair 	market 	value 	is 	never 	grossly
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inadequate. See Moreno v. Valencia, No. 13-23-00404-cv, 2025 WL 1074956, at
*4 (Tex. App.—Corpus Christi–Edinburg Apr. 10, 2025, no pet.); Terra XXI, Ltd.
v. Harmon, 279 S.W.3d 781, 788 (Tex. App.—Amarillo 2007, pet. denied); Kent,
47 S.W.3d at 425. The Fifth Circuit, applying Texas law, has held that a sale price
of 52 percent of a property’s fair market value at foreclosure sale is not, as a legal
matter, grossly inadequate. See Water Dynamics, Ltd. v. HSBC Bank USA, Nat’l
Ass’n, 509 F. App’x 367, 368–69 (5th Cir. 2013). The result should be no different
here. Lakeview is entitled to summary judgment on the wrongful foreclosure claim.
B. 	BREACH OF CONTRACT
Plaintiffs also advance a breach of contract claim. Under Texas law, the
elements of a breach of contract claim are: (1) the existence of a valid contract;
(2) plaintiffs’ performance or tendered performance; (3) breach of the contract by
the defendant; and (4) plaintiffs’ damages, sustained because of the breach. See
USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 501 n.21 (Tex. 2018).
Plaintiffs’ 	breach 	of 	contract 	claim 	fails 	because 	the 	undisputed 	summary
judgment record shows that Plaintiffs did not tender performance under the
contract—they have admittedly defaulted on their August 1, 2024 mortgage
payment. See Dkt. 24-2 at 2 (“August 1, 2024 – April Mendoza fails to pay, converts
funds”); see also Dkt. 19-3 at 5 (showing that Plaintiffs fails to make monthly
payments from August 1, 2024, through October 1, 2024).
Under Texas law, “[i]t is a well established rule that a party to a contract who
is himself in default cannot maintain a suit for its breach.” Dobbins v. Redden, 785
S.W.2d 377, 378 (Tex. 1990) (quotation omitted). “With this basic principle in
mind, federal courts routinely dismiss breach of contract actions brought by
borrowers in default.” Daigle v. AmeriHome Mortg. Co., No. 3:22-cv-00133, 2023
WL 8373179, at *3 (S.D. Tex. Dec. 4, 2023) (collecting cases). As such, Plaintiffs’
“own default of the deed of trust precludes [them] from asserting a cause of action
for breach of contract against [Lakeview].” Acosta v. Servank, SB, No. 3:25-cv-
00282, 2026 WL 1896130, at *2 (S.D. Tex. July 1, 2026) (cleaned up).
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CONCLUSION
For the reasons discussed above, Lakeview’s motion for summary judgment
(Dkt. 19), should be granted.
The 	parties 	have 	14 	days 	from 	service 	of 	this 	Memorandum 	and
Recommendation to file written objections. See 28 U.S.C. § 636(b)(1)(C); Fed. R.
Civ. P. 72(b)(2). Failure to file timely objections will preclude appellate review of
factual findings and legal conclusions, except for plain error.
SIGNED this 	day of July 2026.
______________________________
ANDREW M. EDISON
UNITED STATES MAGISTRATE JUDGE
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