Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Tex.: Mortgage loan not a good or service under Texas Deceptive Trade Practices Act, (Jan 10, 2014)
Law Firms Mentioned:Berent Law Firm, PLLC | Locke Lord Bissell & Liddell LLP
Organizations Mentioned:Aurora Bank FSB | Aurora Bank, FSB | Aurora Commercial Corp. | Locke Lord, LLP | Newtek Business Services, Inc. | Ralph Segars & Associates, Inc. | Segars Properties, LLC | US Bank, NA
By Edward L. Puzzo, J.D.
Mortgage loan borrowers did not qualify as consumers under the Texas Deceptive Trade Practices Act (DTPA), because borrowing money is not a good or service under state law, the federal district court in Dallas has ruled (Segars Properties, LLC v. US Bank, NA, January 7, 2014, Lindsay, S.). Thus, the borrowers lacked standing to bring a claim under the Act.
Plaintiffs failed to timely pay their December 2009 mortgage payment. The lender, one of the defendants, treated the failure to pay as a default, accelerated the balance due, and gave the borrower a deadline and the sum necessary to cure the default. Plaintiffs made their January 2010 monthly payment, which was rejected, but did not cure the default. Foreclosure proceedings ensued.
As part of a motion for a preliminary injunction to halt the foreclosure, plaintiffs alleged violations of the Texas DTPA, among other claims.
Standing. The court ruled that plaintiffs’ DTPA claim failed because they did not qualify as consumers, so they did not have standing. One who seeks to only borrow money is not a consumer, because the lending of money, or the servicing of an existing loan, or modification of an existing loan, without more, is not a good or service under Texas law, the court explained.
Because any DTPA claim alleged by plaintiffs arises out of their mortgage loan, or the servicing of that loan, or an alleged unfinalized modification of that loan, they cannot be considered consumers for purposes of the DTPA and therefore lacked standing, the court ruled. The DTPA claim was therefore dismissed.
The case is Civil Action No. 3:13-CV-4895-L.
Attorneys: Jason M. Berent (Berent Law Firm, PLLC) for Segars Properties, LLC and Ralph Segars and Associates, Inc. Jason M. Hopkins (Locke Lord Bissell & Liddell LLP) for US Bank, NA, Newtek Business Services, Inc., and Aurora Commercial Corp.
Companies: Segars Properties, LLC; Ralph Segars & Associates, Inc.; US Bank, NA; Newtek Business Services, Inc.; Aurora Commercial Corp.; Aurora Bank FSB
Cases: StateUnfairTradePractices TexasNews