In Hagood v. Countrywide Home Loans, Inc., a borrower sued a lender for several claims, including breach of fiduciary duties. No. A-17-CA-00784-SS, 2017 U.S. Dist. LEXIS 165943 (W. D. Tex. October 6, 2017). The defendant filed a motion to dismiss for failure to state a claim, and the district court granted same:

Without providing details, Plaintiff contends Defendants breached their fiduciary duties to him. However, “[u]nder Texas law, a mortgage lender or servicer generally does not owe a fiduciary duty to a borrower.” Plaintiff has failed to allege extraordinary circumstances giving rise to a fiduciary duty owed to him in this case. To the extent Plaintiff relies on fiduciary duties between Defendants themselves, such claims also fail because Plaintiff himself was owed no duty.


In Adams v. United States Bank, N.A., a borrower sued a former lender for breaching fiduciary duties in assigning the loan to another lender. No. 3:17-cv-723-B-BN, 2017 U.S. Dist. LEXIS 165378 (N. D.Tex. October 1, 2017). The plaintiff contended that the first lender breached a fiduciary duty by either assigning the loan to the new lender or selecting it as the mortgage servicer because the first lender had “knowledge of the pattern and practice of [U.S. Bank’s] disregard of applicable law in the servicing of mortgage loans, and should not have attempted to assign ownership and/or servicing of the Loan to [U.S. Bank], thus jeopardizing Plaintiff’s ownership and use of the Property.” Id. The defendant filed a motion to dismiss for failure to state a claim, and the magistrate recommended that it be granted:

Texas recognizes two types of fiduciary relationships. “The first is a formal fiduciary relationship,” such as “the relationship of an attorney-client, principal-agent, or trustee-beneficiary relationship.” The second is an informal fiduciary relationship — that is, a confidential relationship “where one person trusts and relies on another, whether the relation is a moral, social, domestic or purely personal one.” The Texas Supreme Court has recognized that “confidential relationships may arise not only from the technical fiduciary relationships such as attorney-client, trustee-cestui que trust, partner and partner, etc. – which as a matter of law are relationships of trust and confidence — but may arise informally from moral, social, domestic or purely personal relationships.” “The existence of the fiduciary relationship is to be determined for the actualities of the relationship between the parties involved.” Texas courts have consistently held that the mortgagor-mortgagee relationship is not a special relationship that generally gives rise to a fiduciary duty.

. . .

Courts have therefore only entertained the notion that a mortgage lender or service might owe a mortgagee a fiduciary duty where its relationship to the mortgagee was such that the mortgagee could reasonably expect the lender or service to act in his or her best interest. “‘[A] person is justified in placing confidence in the belief that another will act in his or her best interest only where he or she is accustomed to being guided by the judgment or advice of the other party, and there exists a long association in a business relationship as well as personal friendship.’” The parties’ special relationship must also have existed prior to and apart from the agreement in the suit.

Ms. Adams alleges that Guild breached a fiduciary duty to her by either assigning the Loan to U.S. Bank or selecting it as the mortgage service even though it knew of U.S. Bank’s alleged issue with complying with the law. But she fails to provide any explanation in her complaint or in her brief as to why she was “justified in placing confidence in the belief that” Guild would act in her best interest in the first place. She has not suggested that she had some long-standing relationship with Guild — separate from its relationship to the Property. Nor is there any other indication in her pleadings that Ms. Adams had some objective reason to believe that she would be justified in placing her confidence in Guild or its employees to act in her best interest. The State Court Petition, at most, suggests that Ms. Adams may have had some subjective,  unspecified belief that she could trust Guild. But Plaintiff’s “subjective trust and feelings of trust and confidence [are] not … enough to create a fiduciary relationship.”

Ms. Adams’s claim for breach of fiduciary duty should be dismissed. But — because it is not yet clear that Ms. Adams has pleaded her best case — the dismissal should be without prejudice.

Id. Therefore, the magistrate recommended that the district court grant the motion to dismiss without prejudice.