Clinton v. PennyMac Loan Services, LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SYLVESTER CLINTON, §
§
Plaintiff, §
§
v. §
§
RUSHMORE LOAN MANAGEMENT §
SERVICES, LLC; NATIONSTAR §
MORTGAGE, LLC d/b/a MR. COOPER; §
and PENNYMAC LOAN SERVICES, §
LLC, §
§
Defendants. §
CIVIL ACTION NO. H-25-5421
MEMORANDUM OPINION AND ORDER
Sylvester Clinton ("Plaintiff") brought this action against
Rushmore Loan Management Services, LLC; NationStar Mortgage, LLC
d/b/a Mr. Cooper; and PennyMac Loan Services, LLC ("PennyMac")
(collectively, "Defendants") in the 333rd District Court of
Harris County, Texas, alleging that Defendants violated Texas
Property Code§ 51.002 and federal mortgage servicing regulations,
breached their contracts, and breached their duty to exercise
reasonable care. Plaintiff also requested a full and accurate
accounting of the mortgage. 1 Pending before the court is
PennyMac's Motion to Dismiss and Brief in Support ("PennyMac' s
Motion to Dismiss") (Docket Entry No. 9). For the reasons stated
1Plaintiff1 s Original Petition, Exhibit D to PennyMac's Notice
of Removal, Docket Entry No. 1-4, pp. 3-4. For purposes of
identification, all page numbers refer to the pagination imprinted
by the court's electronic filing system, CM/ECF.
United States District Court
Southern District of Texas
ENTERED
January 13, 2026
Nathan Ochsner, Clerk
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below PennyMac's Motion to Dismiss will be granted, and this case
will be dismissed with prejudice.
I. Background
On August 6, 2001, Plaintiff and his wife obtained a mortgage
loan from Kaufman and Broad Mortgage Company. 2 "After a series of
assignments, the Loan was eventually assigned to PennyMac Corp. on
March 13 and April 8, 2015." 3 On August 14, 2018, PennyMac assigned
the Loan to Citibank, N.A., as Trustee for CMLTI Asset Trust.4
On November 3, 2025, Plaintiff brought this action in the
333rd District Court of Harris County, Texas, alleging that
"Defendants failed to properly apply and record" his mortgage
payments and "failed to provide Plaintiff with the required
statutory and contractual notices regarding servicing changes,
payment applications, and potential default actions" .5 On the same
day, the state court signed an ex parte temporary restraining
order, halting any scheduled foreclosure sale.6
2Deed of Trust, Exhibit A to PennyMac' s Motion to Dismiss,
Docket Entry No. 9-1, p. 2.
3 PennyMac's Motion to Dismiss, Docket Entry No. 9, p. 2;
Corporate -Assignment of Deed of Trust, Exhibit B to PennyMac's
Motion to Dismiss, Docket Entry No. 9-2, p. 2.
4Assignment of Deed of Trust, Exhibit E to PennyMac's Motion
to Dismiss, Docket Entry No. 9-5, p. 2.
5 Plaintiff's Original Petition, Exhibit D to PennyMac's Notice
of Removal, Docket Entry No. 1-4, pp. 3-4.
6 Temporary Restraining Order, Exhibit E to PennyMac's Notice
of Removal, Docket Entry No. 1-5, p. 2.
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On November 13, 2025, PennyMac removed the action to this
court based on federal question jurisdiction and supplemental
jurisdiction.7 On December 19, 2025, PennyMac filed a 12(b}(6)
Motion to Dismiss.8 Plaintiff has not filed a response.
II. Legal Standard
Under Federal Rule of Civil Procedure 8(a), a complaint "must
contain . . . a short and plain statement of the claim showing that
the pleader is entitled to relief." Fed. R. Civ. P. 8(a) (2). "To
survive a [Rule 12(b}(6)] motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to 'state a
claim to relief that is plausible on its face. '" Ashcroft v.
Igbal, 129 S. Ct. 1937, 1949 (2009} (quoting Bell Atlantic Corp. v.
Twombly, 127 S. Ct. 1955, 1974 (2007}}.
'' [W] hen 'matters outside the pleading' are presented with a
motion to dismiss under Rule 12(b)(6), a district court has
complete discretion to either accept or exclude the evidence."
General Retail Services, Inc. v. Wireless Toyz Franchise, LLC, 255
F. App'x 775, 783 (5th Cir. 2007) (quoting Fed. R. Civ. P. 12(d)).
"If, on a motion under Rule 12(b)(6) or 12(c}, matters outside the
pleadings are presented to and not excluded by the court, the
motion must be treated as one for summary judgment under Rule 56."
Fed. R. Civ. P. 12(d}. If the court converts the motion to one for
7 PennyMac's Notice of Removal, Docket Entry No. 1, pp. 4-5.
8 PennyMac's Motion to Dismiss, Docket Entry No. 9, pp. 1-2.
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summary judgment, "[a] 11 parties must be given a reasonable
opportunity to present all the material that is pertinent to the
motion." Id.
Pursuant to Local Rules 7.3 and 7.4, because Plaintiff has not
responded to Defendant's Motion to Dismiss within 21 days, the
motion is treated as unopposed.9 But Plaintiff's failure to
respond is not in itself grounds for granting the motion.
Servicios Azucareros de Venezuela, C.A. v. John Deere Thibodeaux,
Inc., 702 F.3d 794, 806 (5th Cir. 2012). The court must assess the
legal sufficiency of the complaint to determine whether dismissal
is warranted. Id.
III. Analysis
Plaintiff alleges that Defendants (1) failed to provide proper
notice required by Texas and federal law, (2) breached their
contracts by failing to properly apply payments, (3) breached their
duty to exercise reasonable care in servicing his mortgage, and
that (4) he is entitled to an accounting.10
"'Global allegations of wrongdoing' by 'Defendants, '
collectively, 'are insufficient to state a claim for relief.'"
9 See Local Rules of the United States District Court for the
Southern District of Texas, Rule 7. 3 ("Opposed motions will be
submitted to the judge 21 days from filing without notice from the
clerk and without appearance by counsel.") and Rule 7.4 ("Failure
to respond to a motion will be taken as a representation of no
opposition.").
10 Plaintiff's Original Petition, Exhibit D to PennyMac's Notice
of Removal, Docket Entry No. 1-4, pp. 3-4.
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SCHST, Inc. v. Arthur J. Gallagher & Co., Case No. 4:21-cv-02935, •
2022 WL 4022054, at *9 (S.D. Tex. Aug. 23, 2022) (quoting
Armendariz v. Bank of America, N.A., No. EP-15-CV-00020-DCG, 2015
WL 3504961, at *8 (W.D. Tex. May 21, 2015). The court may dismiss
an action when the plaintiff alleges "malfeasance by a global group
of unspecified 'defendants'-without alleging any particular acts by
the present Defendant." Chyba v. EMC Mortgage Corp., 450 F. App'x
404, 406 (5th Cir. 2011) (per curiam) (affirming the lower court's
decision to dismiss all of plaintiff's claims because the vague
allegations did not allege any particular acts by the present
defendant).
Therefore, because Plaintiff merely asserts global allegations
against the Defendants as a group and has not alleged any
particular acts by PennyMac, PennyMac's Motion to Dismiss should be
granted. However, even if Plaintiff's claims are not global
allegations, Plaintiff fails to allege facts that if proved true
would establish each alleged claim.
A. Plaintiff has not alleged facts which, if proved true would
establish that PennyMac violated § 51.002 of the Texas
Property Code.
Plaintiff alleges that Defendants failed to provide proper
notice as required by Texas Property Code § 51. 002.11 Because
"[§ 51.002]- does not provide plaintiffs with a private right of
action for damages," courts "have construed claims brought under
at 3-4.
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§ 51.002 as wrongful foreclosure claims." Agustin v. U.S. Bank,
N,A., Civil Action No. 4:22-CV-00671, 2023 WL 6536154, at *3 (S.D.
Tex. Aug. 15, 2023).
"Under Texas law, a foreclosure sale is a precondition to a
valid wrongful foreclosure claim." Id. Because Plaintiff has not
alleged that a foreclosure sale has occurred and because it is
undisputed that Plaintiff obtained a temporary restraining order in
the 333rd Judicial District of Harris County, Texas, 12 Plaintiff
does not have a valid claim under§ 51.002 at this time.
B. Plaintiff has not alleged facts that, if proved true, would
establish that PennyMac violated the federal mortgage
servicing regulations.
Plaintiff alleges that Defendants failed to provide proper
notice regarding servicing changes, payment applications, and
potential default actions as required by the federal mortgage
servicing regulations found at 12 C.F.R.§ 1024.35 et seq.13
A claim asserted under 12 C.F.R. § 1024.35 is enforceable
under 12 U.S.C.§ 2605. Madrid v. Wells Fargo Bank, N.A., EP-14-
CV-00152-DCC, 2017 WL 5653906, at *8 (W.D. Tex. Mar. 17, 2017).
Because Plaintiff merely asserts that he did not receive proper
notice, 14 Plaintiff's claim can only be construed as a claim under
12Temporary Restraining Order, Exhibit E to PennyMac's Notice
of Removal, Docket Entry No. 1-5, p. 2.
13Plaintiff' s Original Petition, Exhibit D to PennyMac's Notice
of Removal, Docket Entry No. 1-4, p. 3.
at 3-4.
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12 U.S.C. § 2605{b)(1), which requires a servicer to notify a
borrower in writing of any assignment of the servicing loan.15
To assert a claim under 12 U.S.C. § 2605(b)(1), "the borrower
must allege either (1) that actual damages resulted from the RESPA
violations or (2) that the defendant engaged in a 'pattern or
practice of noncompliance' entitling the Plaintiff to up to $2,000
in statutory damages." Henry v. Carrington Mortgage Services, LLC,
Civil Action No. H-18-4414, 2019 WL 2491950, at *5 {S.D. Tex.
June 14, 2019) (quoting 12 U.S.C. 2605(f)(1){A)-{B)).
Because Plaintiff does not allege any facts establishing that
actual damages resulted from the RESPA violations or that the
defendant engaged in a pattern or practice of noncompliance,
Plaintiff has not alleged facts that would establish that PennyMac
violated 12 U.S.C. § 2605{b)(1).
C. Plaintiff has not alleged facts that, if proved true, would
establish that PennyMac breached its contract.
Plaintiff alleges that Defendants breached their contracts by
"failing to properly apply payments, maintain accurate records, and
provide required notices." 16
To assert a breach of contract claim under Texas law, a
plaintiff must show: "'(1) the existence of a valid contract;
15Violations of 12 U.S.C. § 2605(b)(2) and (3) involve
defective notices that do not conform wi'th the requirements under
the Act. Because Plaintiff does not state any facts about the
content of the notice, his claim can only be enforced under 12
u.s.c. § 2605 (b) (1).
16 Plaintiff' s Original Petition, Exhibit D to P_ennyMac' s Notice
of Removal, Docket Entry No. 1-4, p. 4.
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(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.'" Smith
International, Inc. v. Egle Group, LLC, 490 F.3d 380, 387 (5th Cir.
2007) (quoting Valero Mktg. & Supply Co. v. Kalama International,
L.L.C., 51 S.W.3d 345, 351 (Tex. App.-Houston [1st Dist.] 2001)).
Additionally, a plaintiff must "plead the date of the contract, the
parties to the contract, and the provisions of the contract
allegedly breached." Sandhar v. Grewal, Civil Action No. H-08-
2348, 2009 WL 175073, at *4 (S.D. Tex. Jan. 23, 2009).
Because Plaintiff merely asserts that Defendants breached
their contracts by "failing to properly apply payments, maintain
accurate records, and provide required notices," 17 Plaintiff has
not alleged facts that would establish that PennyMac breached its
contract.
D. Plaintiff has not alleged facts that, if proved true, would
establish negligent servicing.
Plaintiff alleges that Defendants breached their duty to
exercise reasonable care in servicing his mortgage "by failing to
credit payments correctly, by mismanaging [his] account, and by
issuing inaccurate statements. " 18
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Because "there is no cause of action in Texas for 'negligent
servicing,' ordinary tort principles apply." Nwankwo v. U.S Bank,
N.A., Case No. 19-CV-869-L-BK, 2020 WL 10050710, at *4 (N.D. Tex.
Feb. 3, 2020). "Under Texas law, the elements of negligence are
the existence of a legal duty, breach of that duty, and damages
proximately caused by the breach." Id. However, "Texas does not
recognize a legal duty between parties to a contract absent some
special relationship, which does not exist in the lender-borrower
context." Id. Accordingly, this claim fails as a matter of law.
E. Plaintiff has not alleged facts that, if proved true, would
establish he is entitled to an accounting.
Plaintiff requests "a full and accurate accounting of all
payments made and applied to the mortgage loan from its inception
to the present." 19
"'An action for accounting may be a suit in equity, or it may
be a particular remedy sought in conjunction with another cause of
action.'" Saenz v. JP Morgan Chase Bank, N.A., Civil Action
No. 7:13-CV-156, 2013 WL 3280214, at *5 (S.D. Tex. June 27, 2013)
(quoting Michael v. Dyke, 41 S.W.3d 746, 754 (Tex.App.-
Corpus Christi 2001, no pet.) abrogated on other grounds as
recognized by Hoodye v. Wells Fargo Bank, N.A., Civ. No. 2:12-cv-
402, 2013 WL 672567, at *2 (S.D. Tex. Feb. 25, 2013)). As
discussed above, Plaintiff has failed to state a claim upon which
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relief can be granted in his Petition. Therefore, Plaintiff can
only assert an action for an account as a suit in equity.
"'An equitable accounting is proper when the facts and
accounts presented are so complex that adequate relief may not be
obtained at law.'" I.Ii... (quoting Hutchings v. Chevron U.S.A., Inc.,
862 S.W.2d 752, 762 (Tex.App.-El Paso 1993, writ denied)). Because
Plaintiff does not allege facts that even suggest that the accounts
presented are so complex that adequate relief may not be obtained
at law, he has not alleged facts that would establish he is
entitled to an accounting.
F. The court will not grant leave to amend.
Under Rule 15 (a) (2), "[t] he court should free:l.y give leave [to
amend] when justice so requires." Fed. R. Civ. P. lS(a) (2).
"Leave to amend is not automatic, but a district court needs
a substantial reason to deny a party's request for leave to amend."
North cypress Medical Center Operating Co.. Ltd. v. Aetna Life
Insurance Co., 898 F.3d 461, 477 (5th Cir. 2018) (internal
quotation marks omitted). "[A] movant [seeking to cure a defective
pleading] must give the court at least some notice of what his or
her amendments would be and how those amendments would cure the
initial complaint's defects." D.L. Markham DDS, MSD, Inc. 40l(K)
Plan v. Variable Annuity Life Insurance Co., 88 F.4th 602, 613-14
(5th Cir. 2023).
Plaintiff has not responded to PennyMac's Motion to Dismiss
and has not requested leave to amend. Plaintiff has not provided
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notice of any amendments he could make to cure the pleading
deficiencies explained in PennyMac's Motion to Dismiss. The court
will therefore not grant leave to amend, and the court's dismissal
of the Petition will be with prejudice.
IV. Conclusion and Order
For the reasons explained above, PennyMac's Motion to Dismiss
(Docket Entry No. 9) is GRANTED. This action will be dismissed
with prejudice as to PennyMac. Defendants Rushmore Loan Management
Services, LLC and NationStar Mortgage, LLC d/b/a Mr. Cooper were
not parties when the case was removed from state court20 and have
not entered an appearance before the court. The claims against
them will therefore be dismissed without prejudice.
SIGNED at Houston, Texas, on this 13th day of January, 2026.
�
7 SIM LAKE
SENIOR UNITED STATES DISTRICT JUDGE
20State Court Action Docket Transactions Sheet, Exhibit C to
PennyMac's Notice of Removal, Docket Entry No. 1 3, p. 3.
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