Unreported / Non-Citable
Background
Napoleon Madrid sued Shellpoint Mortgage Servicing in state court after learning that property he claimed to own was scheduled for a foreclosure sale. He alleged that Shellpoint had refused payments, rejected a certified check, and declined an offer of $3,000 to bring the mortgage account current. Madrid sought a temporary restraining order and preliminary injunction and asserted claims for wrongful or attempted wrongful foreclosure, breach of contract, breach of the duty of good faith and fair dealing, and violations of Texas foreclosure law.
The loan documents identified Mary A. Ximines, formerly Mary Villarreal, and Frank F. Villarreal—not Madrid—as the borrowers and owners. A Texas court had authorized a nonjudicial foreclosure sale in April 2026. After filing this action in May, Madrid conveyed his interest in the property to Aline Holdings, Inc. Shellpoint removed the case and moved to dismiss; Madrid did not respond, although he received the motion and notice of the asserted pleading deficiencies.
The Court’s Holding
The court granted Shellpoint’s motion to dismiss for failure to state a claim. Although local rules permitted the court to grant the unopposed motion on that basis alone, the court instead addressed the merits. It held that Texas does not recognize attempted wrongful foreclosure and that Madrid alleged neither a completed foreclosure nor dispossession.
The court also held that Madrid could not maintain a contract claim because he did not allege that he was a party to the note or deed of trust, establish third-party-beneficiary status, or identify a contractual provision that Shellpoint breached. His good-faith-and-fair-dealing claim failed because he alleged no contract provision or special relationship creating such a duty. Finally, any claim directly under Texas Property Code § 51.002 failed because the statute provides no private right of action, and the allegations did not support a wrongful-foreclosure claim.
Because the substantive claims were dismissed, the court dismissed Madrid’s pending motion for a temporary restraining order and preliminary injunction as moot. It also dismissed all other pending motions as moot.
Key Takeaways
- Texas law does not recognize an independent cause of action for attempted wrongful foreclosure when no foreclosure sale or dispossession has occurred.
- A person who is neither a party to the mortgage documents nor an adequately pleaded third-party beneficiary cannot pursue a breach-of-contract claim based on those documents.
- Texas Property Code § 51.002 does not create a private right of action, and Texas generally imposes no duty of good faith and fair dealing in a lender-borrower relationship absent a contractual provision or special relationship.
Why It Matters
The decision underscores that property ownership and efforts to make mortgage payments do not, without more, confer contractual rights under loan documents executed by others. A plaintiff challenging foreclosure must plead a legally recognized cause of action and facts establishing entitlement to enforce the relevant agreement.
The ruling also distinguishes dismissal of substantive claims from the disposition of related emergency relief: after dismissing Madrid’s claims, the court dismissed—not denied—the TRO and preliminary-injunction motion as moot.