Reported / Citable
Background
Yvonne Bonner filed suit against PHH Mortgage Corporation in Texas state court on August 29, 2025, alleging unlawful foreclosure. She claimed that her property was scheduled for foreclosure on September 2, 2025, but she did not receive the required statutory notice of foreclosure. The state court granted a Temporary Restraining Order preventing the foreclosure from proceeding.
PHH removed the case to federal court based on diversity jurisdiction and moved to dismiss. After Bonner retained counsel in December 2025, the district judge denied the initial motion but ordered her to file an amended complaint by January 20, 2026, addressing deficiencies raised by PHH. The order explicitly warned that additional leave to amend was unlikely. Bonner failed to file an amended complaint, and PHH filed another Motion to Dismiss, which Bonner did not oppose.
The Court’s Holding
The magistrate judge recommended granting PHH’s Motion to Dismiss. The court found that Bonner failed to state a viable cause of action. To the extent that Bonner alleged a violation of Texas Property Code § 51.002 (which requires foreclosure notice), the court held that this statute does not create a private right of action. Such claims are instead construed as wrongful foreclosure claims, which require an actual foreclosure sale to have occurred.
The court found that no foreclosure sale ever took place—the state court enjoined the scheduled September 2025 foreclosure before removal to federal court, and Bonner alleged no other foreclosure events. Therefore, she failed to state a claim for wrongful foreclosure. The court also rejected Bonner’s requests for an accounting and attorney’s fees as unsupported by her pleadings. Finally, the court denied any leave to amend because Bonner failed to provide notice of proposed amendments or explain how defects could be cured despite the prior opportunity and warning.
Key Takeaways
- An actual completed foreclosure sale is a precondition to maintaining a wrongful foreclosure claim; enjoined foreclosures do not support such claims.
- Texas Property Code § 51.002 does not create a private right of action; violations must be pleaded as wrongful foreclosure claims under common law.
- Failure to amend a complaint when ordered, failure to respond to dispositive motions, and failure to explain how defects could be cured will result in dismissal without leave to amend.
Why It Matters
This decision clarifies that borrowers challenging foreclosure procedures must allege facts showing an actual foreclosure sale occurred. Statutory violations alone, without an underlying tort, do not provide a basis for liability. The case also reinforces Fifth Circuit procedural rules: districts courts should grant leave to amend, but only when the plaintiff provides notice of amendments and explains how prior defects will be cured. Bonner’s failure to respond to the motion or to amend despite judicial instruction resulted in dismissal.