Reported / Citable
Background
Latasha Whiting sued NewRez, doing business as PHH Mortgage Corporation, over the foreclosure of her Houston property. The deed of trust was transferred to U.S. Bank, which appointed several substitute trustees in 2010. After PHH issued notice of a substitute-trustee sale in May 2025, substitute trustee Michael Zientz conducted the sale on August 5, 2025, and a third-party buyer purchased the property for $267,000.
Whiting sued in Texas state court, and NewRez removed the case to federal court. Her amended complaint asserted claims for declaratory judgment and quiet title, wrongful foreclosure, fraud and misrepresentation, violations of the Texas Property Code, and a conditional claim under the Fair Debt Collection Practices Act. She also sought a temporary restraining order staying execution of a state-court writ of possession. NewRez moved to dismiss under Rule 12(b)(6).
The Court’s Holding
The court denied the temporary restraining order and conditionally granted NewRez’s motion to dismiss. Whiting did not plausibly plead wrongful foreclosure because she failed to allege facts showing a defect in the sale, a grossly inadequate sale price, or a causal connection between the two. The documents before the court showed that U.S. Bank had appointed Zientz as a substitute trustee and that he conducted the sale. Her single-sentence fraud allegation also failed Rule 9(b) because it did not identify the who, what, when, where, and how of any misrepresentation.
The Texas Property Code and FDCPA theories likewise rested on conclusory allegations without identifying violated provisions or supporting facts. Because Whiting pleaded no viable substantive claim, her derivative requests for declaratory and injunctive relief also failed, and she could not show a substantial likelihood of success necessary for a temporary restraining order. The dismissal was conditional: the court allowed Whiting 60 days to file a second amended complaint, after which NewRez would have 21 days to respond. If she did not amend, the court stated that it would dismiss the case.
Key Takeaways
- A Texas wrongful-foreclosure claim requires facts supporting a sale defect, a grossly inadequate price, and causation between them; alleging a procedural defect alone is insufficient.
- Fraud allegations must satisfy Rule 9(b) by specifying the circumstances of the alleged misrepresentation, while conclusory references to statutory violations do not satisfy Rule 12(b)(6).
- Declaratory and injunctive remedies cannot proceed without a viable underlying claim, and failure to show likely success on the merits defeats a request for emergency injunctive relief.
Why It Matters
The order illustrates the factual specificity required when challenging a completed Texas foreclosure, particularly where recorded documents facially support the substitute trustee’s authority, notice, and sale. Borrowers must connect an adequately pleaded defect to a grossly inadequate price and must identify concrete facts supporting any fraud or statutory theory.
The ruling was not yet a final dismissal. By conditionally granting the motion and allowing amendment, the court gave Whiting an opportunity to cure the pleading defects before the action would be dismissed.