Smith v. Freedom Mortgage Corporation

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ROBIN MARIE SMITH, §
Plaintiff, §
§
v. § CIVIL ACTION NO. 25-CV-3345
§
FREEDOM MORTGAGE CORPORATION, §
Defendant. §
MEMORANDUM AND RECOMMENDATION
Proceeding pro se, Plaintiff for the second time has sued Defendant Freedom
Mortgage Corporation for wrongful foreclosure and fraud. ECF 1; ECF 19. Before the
Court is Defendant’s Motion to Dismiss Plaintiff’s Amended Complaint. ECF 24. The
Court granted Plaintiff leave to file a late Response and the Motion is now fully briefed
and ripe for determination. ECF 29; ECF 32. The Court recommends that Defendant’s
Motion to Dismiss be granted.1
I. Background
On February 5, 2024, prior to filing this case, Plaintiff filed a Complaint asserting
wrongful foreclosure and a variety of other claims against Defendant Freedom
Mortgage Corporation. Smith v. Freedom Mortgage Corporation, Civil Action No.
4:24-cv-0422 (ECF 1). Plaintiff’s Complaint in Civil Action No. 24-0422 alleged that
Plaintiff and her then-husband (Borrowers) executed a note in favor of Eagle Home
1 The District Judge referred this case to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1)(A) and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act, and
Federal Rule of Civil Procedure 72. ECF 13.
United States District Court
Southern District of Texas
ENTERED
June 09, 2026
Nathan Ochsner, Clerk
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Mortgage, LLC for $390,136 secured by a deed of trust on property located at 15514
Royal Trace, Cypress, Texas (Property) in favor of Mortgage Electronic Registration
Systems, Inc. (MERS). Id. (ECF 42 at 1-2). Two loan modifications followed, one
executed by Borrowers and one executed by Plaintiff alone. Id. On February 26, 2025
United States District Judge George Hanks dismissed Plaintiff’s Complaint without
prejudice as a “shotgun pleading that is insufficient state a claim plausible on its face.”
Id. at 5; Id. (ECF 43).
Although the allegations in Plaintiff’s current Complaint2 filed on July 18, 2025
are vague and confusing, it is apparent that this case involves the same note and deed
of trust and the same Property as Civil Action 24-0422. Plaintiff was awarded the
Property in her Divorce Decree and a Special Warranty Deed was executed by
Plaintiff’s ex-husband and recorded with the County Clerk for Harris County, Texas on
July 8, 2019. ECF 19-1; ECF 19-2. In this case, Plaintiff asserts claims against
Defendant for “wrongful foreclosure, fraud, violations of the Real Estate Settlement
Procedures Act (RESPA), Fair Debt Collection Practices Act (FDCPA), breach of
contract, and nondisclosure rendering the mortgage contract voidable.” ECF 1 at 1.
The Complaint contains factual allegations that Plaintiff was awarded sole ownership
2 Plaintiff filed what she labeled an “Amended Complaint” on January 7, 2026. ECF 19. The
Amended Complaint consists of two Exhibits, the Divorce Decree and the Special Warranty Deed.
ECF 19-1; ECF 19-2. The Exhibits are referenced in the Complaint as Exhibit A and B but apparently
were inadvertently not attached. ECF 1 at 3. Because the Exhibits are referenced in the Complaint
and there are no additional factual allegations in the “Amended Complaint,” the Court deems the
Amended Complaint to be a Supplement that does not supersede the Complaint and considers ECF 1
and ECF 19 together as Plaintiff’s operative Complaint.
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of the property, Defendant improperly communicated with her ex-husband, and that as
a result of the Divorce Decree and/or Special Warranty Deed transferring the Property
to her, “Freedom Mortgage Corporation removed its security interest in the [P]roperty
and is no longer the proper holder of the mortgage.” Id. at 3-4. No other specific facts
are alleged.
II. Rule 12(b)(6) Standards
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead “enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant
is liable for the conduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Gonzalez
v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). In reviewing a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6), this Court “accepts all well-pleaded facts as
true, viewing them in the light most favorable to the plaintiff.” Alexander v. AmeriPro
Funding, Inc., 848 F.3d 698, 701 (5th Cir. 2017) (citing Martin K. Eby Constr. Co. v.
Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). However, the court does
not apply the same presumption to conclusory statements or legal conclusions. Iqbal,
556 U.S. at 678-79.
Generally, the court may consider only the allegations in the complaint and any
attachments thereto in ruling on a Rule 12(b)(6) motion. If a motion to dismiss refers to
matters outside the pleading it is more properly considered as a motion for summary
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judgment. See FED. R. CIV. P. 12(d). However, the court may take judicial notice of
public documents and may also consider documents a defendant attaches to its motion
to dismiss under 12(b)(6) if the documents are referenced in the plaintiff’s complaint
and central to the plaintiffs’ claims. See Norris v. Hearst Trust, 500 F.3d 454, 461 n.9
(5th Cir. 2007); Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir.
2000); King v. Life Sch., 809 F. Supp. 2d 572, 579 n.1 (N.D. Tex. 2011). Here, the
Court properly considers the Divorce Decree and Special Warranty Deed referenced in
the Complaint and attached to the Supplemental Complaint. The Court also takes
judicial notice of filings in Civil Action No. 4:24-cv-0422.
III. Analysis
Plaintiff’s Complaint is entirely void of facts to support a plausible cause of
action against Defendant. The Court addresses each claim below.
A. Wrongful Foreclosure
The elements of a wrongful-foreclosure claim are: “(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.” Vitorino v. Post Oak
Crossing Council of Co-owners, No. 01-24-00717-CV, 2026 WL 1391424, at *5 (Tex.
App.—Houston [1st Dist.] May 19, 2026, n.p.h.) (identifying elements of wrongful
foreclosure claim). Plaintiff fails to allege that Defendant initiated foreclosure
proceedings, the proceedings were defective, the Property sold at foreclosure for a
grossly inadequate sales price, or a causal connective between the defect and the sales
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price. ECF 1. In her Response, Plaintiff asserts that a foreclosure sale occurred on
February 6, 2024 and attempts to correct the defects in her pleading by stating that
notice was given to the wrong party, the Property was sold at auction, and the defective
notice caused the inadequate price. ECF 29 at 3. Even if these facts had been included
in Plaintiff’s Complaint, they cannot save her wrongful foreclosure claim.
Plaintiff allegations, even as supplemented in her Response, are entirely
conclusory. First, Plaintiffs’ Exhibits establish Plaintiff’s ex-husband as a borrower on
the note, so her barebones pleading does not support her claim of defective notice.
Further, Plaintiff’s assertion that the sale was by auction and not a competitive bidding
process does not allege a grossly inadequate sales price. See Vinitski v. Fed. Nat'l
Mortg. Ass'n, No. CV H-14-780, 2014 WL 12600163, at *3 (S.D. Tex. Apr. 28, 2014)
(a “grossly inadequate sales price” is one that is “so little as to shock a correct mind,”
and courts routinely find sales of 60% of fair market value to be adequate (citing cases)).
In addition, Plaintiff makes only a conclusory statement without supporting facts that
the defective notice caused an inadequate sales price. Therefore, Plaintiff has not stated
a plausible claim for wrongful foreclosure.
B. Fraud
The elements of a claim for fraud under Texas law are: (1) a material
representation that was false; (2) Defendant knew the representation was false or made
recklessly as a positive assertion without any knowledge of its truth; (3) Defendant
intended to induce Plaintiff to act upon the representation; and (4) Plaintiff actually and
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justifiably relied upon the representation and thereby suffered injury. Ernst & Young,
L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001) (citation omitted).
Federal Rule of Civil Procedure 9(b) requires that a Plaintiff plead fraud with
“particularity,” which “demands ‘the who, what, when, and where [to] be laid out before
access to the discovery process is granted.” Elson v. Black, 56 F.4th 1002, 1009 (5th
Cir. 2023) (quoting Williams v. WMX Tech., Inc., 112 F.3d 175, 178 (5th Cir. 1997)
(emphasis in original)). Plaintiff’s Response adds only that Defendant misrepresented
that it had a valid lien and her ownership interest by sending notices during the
foreclosure process to her ex-husband. ECF 29 at 3-4. Plaintiff’s Complaint, even as
supplemented by the Response, fails to allege a specific false statement made by
Defendant, with knowledge of its falsity, with the intent that Plaintiff rely on the
statement, and on which Plaintiff relied to her detriment. Ernst & Young, 51 S.W.3d at
577. Plaintiff not only fails to plead a plausible claim for fraud, but she fails to plead
the fraud claim with the particularity required by the Fifth Circuit. Williams., 112 F.3d
at 177.
C. RESPA
RESPA, codified at 12 U.S.C. § 26012 et. seq., “is a consumer protection statute
to promote transparency and communication between borrowers and lenders.” Osorio
v. Martin, No. 5:25-CV-1191-DAE, 2025 WL 3771341, at *4 (W.D. Tex. Nov. 24,
2025). Section 2605 of RESPA sets forth multiple duties a mortgage servicer owes to
a mortgagee. Plaintiff alleges “Defendant failed to properly process Plaintiff’s loan
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modification request and did not comply with federal mortgage servicing laws.” ECF
1 at 7. Plaintiff fails to state the manner in which Defendant failed to properly process
her loan modification request. In fact, she fails to allege in the Complaint that she even
made a loan modification request. Plaintiff attempts to bolster the allegations in her
Complaint by adding them to her Response, but she still fails to identify any specific
RESPA provision or other “federal mortgage servicing law” with which Defendant
failed to comply and in what way. ECF 29 at 4. Plaintiff’s Complaint falls far short of
stating a plausible claim for relief under RESPA.
D. FDCPA
Plaintiff alleges “Defendant communicated with a third party without Plaintiff’s
consent, violating federal debt collection laws.” ECF 1 at 7. This conclusory allegation
fails to state a FDCPA claim, which requires factual allegations demonstrating: “(1) the
plaintiff has been the object of collection activity arising from consumer debt; (2) the
defendant is a debt collector defined by the FDCPA; and (3) the defendant has engaged
in an act or omission prohibited by the FDCPA.” Woodley v. Resurgent Cap. Servs.,
L.P., No. CV H-24-1587, 2024 WL 2806189, at *2 (S.D. Tex. May 31, 2024) (internal
quotation marks and citation omitted). Plaintiff has alleged no facts demonstrating (1)
she has been the object of debt collection activity, (2) supporting Defendant’s status as
a debt collector as defined in 15 U.S.C.A. § 1692a(6), or (3) showing Defendant violated
any provision of the FDCPA. In her Complaint, Plaintiff contends Defendant is a debt
collector but this is a misrepresentation of the law. ECF 29 at 4 (citing Henson v.
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Santander Consumer USA, Inc., 1327 S. Ct. 1718 (2017) for contention that Defendant
is a debt collector). “The Fifth Circuit has repeatedly held that a mortgage servicing
company . . . is not a ‘debt collector’ under the FDCPA.” Bishop Glob. Fam. Tr. v.
Mackie Wolf Zientz & Mann P.C., No. 4:25-CV-00560, 2026 WL 549913, at *2 (S.D.
Tex. Feb. 26, 2026) (citations omitted). Therefore, Plaintiff fails to state a plausible
FCPA claim against Defendant.
E. Breach of Contract
The elements of a claim for breach of contract under Texas law are: (1) the
existence of a valid contract; (2) performance or tendered performance by the plaintiff;
(3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff
as a result of the breach. Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009)
(citing Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex.App.—Houston [14th Dist.] 2005,
pet. denied). Plaintiff appears to have divided her breach of contract claim into two
parts: voidability of contract due to non-disclosure (ECF 1 at 7, Count 5) and lack of
security interest based on alleged improper loan transfers (Id., Count 6).
The first fatal flaw in Plaintiff’s breach of contract claim is her failure to allege
she performed her obligations under the loan documents. The second fatal flaw is the
conclusory nature of Plaintiff’s pleading. She fails to identify any material fact that
Defendant failed to disclose. She fails to identify any improper loan transfer. Third, to
the extent Plaintiff claims the security interest is invalid because it has been separated
from the note, the so-called “split-the-note” theory, the Fifth Circuit has roundly and
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recently rejected her theory as not viable under Texas law. White v. Fifth Third Bank,
No. 25-40647, 2026 WL 1135449, at *2 (5th Cir. Apr. 27, 2026) (citing Martins v. BAC
Home Loans Servicing, L.P., 722 F.3d 249, 255 (5th Cir. 2013)). Finally, to the extent
Plaintiff is asserting that the assignment of the deed of trust from MERS to Defendant
is voidable, she does not have standing to challenge the assignment because she was not
a party to the assignment. DHI Holdings, LP v. Legacy Mortg. Asset Tr. 2018-RPLS2,
No. 14-19-00987-CV, 2021 WL 4957023, at *4 (Tex. App. —Houston [14th Dist.] Oct.
26, 2021, pet. denied); Suniverse, LLC v. Universal Am. Mortg. Co., LLC, No. 09-19-
00090-CV, 2021 WL 632603, at *10 (Tex. App.—Beaumont Feb. 18, 2021, pet. denied)
(holding that “[a] mortgagor who is not a party to an assignment or a third-party
beneficiary of the assignment cannot defend against an assignee's efforts to enforce an
obligation (such as foreclosure) on a ground that renders the assignment merely
voidable at the election of the assignor—rather than void.”).
Plaintiff argues in her Response that Texas has not rejected the “split the note”
theory or held that a plaintiff lacks standing to challenge mortgage assignments. ECF
29 at 4. Plaintiff cites the over-150-year-old case Carpenter v. Longan, 83 U.S. 271,
276–77 (1872) for the proposition that the “note and mortgage are inseparable.” This
argument was rejected by the Fifth Circuit when it wrote that “Carpenter ‘is inapposite
[ ] because the Court was addressing Colorado Territorial law and federal common law.
Neither controls our interpretation of Texas law.’” White v. Fifth Third Bank, Nat'l
Ass'n, No. 4:23-CV-00847-SDJ-BD, 2025 WL 2591575, at *6 (E.D. Tex. Aug. 16,
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2025), report and recommendation adopted, No. 4:23-CV-00847-SDJ-BD, 2025 WL
2663660 (E.D. Tex. Sept. 17, 2025) (quoting Martins v. BAC Home Loans Servicing,
L.P., 722 F.3d 249, 254 (5th Cir. 2013)). In sum, Plaintiff fails to state a plausible claim
for breach of contract either by nondisclosure or because the assignment to Defendant
is voidable.
F. Dismissal with Prejudice
Plaintiff’s claims should be dismissed with prejudice because she has pled her
best case and amendment would be futile. See Yan v. Taylor, No. 24-10288, 2024 WL
4579606, at *1 (5th Cir. Oct. 25, 2024) (where amendment would be futile, there can
be no abuse of discretion in denying leave); Wiggins v. Louisiana State Univ.-Health
Care Servs. Div., 710 F. App'x 625, 627 (5th Cir. 2017) (denial of leave to amend is
appropriate where a plaintiff has already pleaded its “best case” after having been
apprised of the insufficiency of the complaint). First, Plaintiff’s Complaint in this case
fails to correct the defects that led to the dismissal of her prior case, Civil Action No.
4:24-cv-0422. Next, Plaintiff has had ample time to seek leave to amend her pleading
in this case and has not done so. Finally, Plaintiff was given leave to file a late Response
to the Motion to Dismiss and the Court has considered the new allegations in the
Response in determining amendment would be futile.
IV. Conclusion and Recommendation
For the reasons set forth above, the Court RECOMMENDS that Defendant’s
Motion to Dismiss (ECF 24) be GRANTED and this case be DISMISSED WITH
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PREJUDICE.
The Clerk of the Court shall send copies of the memorandum and
recommendation to the respective parties, who will then have fourteen days to file
written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). Failure to file written
objections within the time period provided will bar an aggrieved party from attacking
the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc), superseded by statute on other
grounds.
Christina A. Bryan
United States Magistrate Judge
Signed on June 08, 2026, at Houston, Texas.
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