Perrotta v. Bank of America: Loan-Modification Paperwork and Oral Foreclosure Postponements Under the Texas Statute of Frauds

I. Introduction

In Perrotta v. Bank of America, N.A., No. 24-50948 (5th Cir. Dec. 2, 2025) (per curiam) (unpublished), the United States Court of Appeals for the Fifth Circuit confronted a familiar modern foreclosure scenario: borrowers fall behind, seek a loan modification shortly before a scheduled foreclosure sale, receive oral assurances that the lender will “request” a postponement once documents are provided, and then attempt to block foreclosure via state-law claims after the sale is not stopped.

Bryan and Nicole Perrotta sued Bank of America National Association (“BANA”) in Texas state court, alleging, among other things, breach of contract and negligent misrepresentation based on BANA’s alleged promise to request postponement of a December 5, 2023 foreclosure sale if the Perrottas submitted requested loan-modification documents. After removal to federal court and dismissal under Rule 12(b)(6), the borrowers appealed only:

dismissal of their breach of contract claim;
dismissal of their negligent misrepresentation claim; and
denial of their motion for leave to amend to add fraud-based claims.

The Fifth Circuit affirmed in full. Though designated as nonprecedential under 5th Cir. R. 47.5, the opinion consolidates and applies a line of Texas and Fifth Circuit authorities on three recurring issues in mortgage litigation:

The reach of the Texas statute of frauds for credit agreements, Tex. Bus. & Com. Code § 26.02, particularly as to oral agreements to delay foreclosure;
The narrowness of the partial performance exception in this context;
The distinction between negligent misrepresentation (misstatements of existing fact) and non-actionable promises of future conduct; and
The meaning of futility in denying leave to amend to assert fraud claims under Federal Rule of Civil Procedure 15 and the heightened pleading standard of Rule 9(b).

II. Summary of the Opinion

A. Factual and Procedural Background

The critical timeline, as alleged by the Perrottas, is:

2006: The Perrottas enter into a deed of trust with BANA and receive a general warranty deed to their home.
October 26, 2023: Due to financial hardship, they submit a loan-modification application to BANA.
October 27, 2023: They are informed that a foreclosure sale is scheduled for December 5, 2023.
Late November 2023: BANA allegedly tells their counsel that once all “necessary supporting documents” are received, BANA would request postponement of the foreclosure sale.
December 1, 2023: BANA confirms receipt of all requested documents and states it will request that foreclosure be stopped, but the approval of that request could take up to five days—beyond the scheduled foreclosure date. BANA declines to stop foreclosure immediately.
December 1, 2023 (same day): The Perrottas file suit in Texas state court, seeking to restrain the foreclosure and alleging:
- breach of contract,
- negligent misrepresentation,
- wrongful foreclosure, and
- violation of the Texas Deceptive Trade Practices Act (DTPA).
BANA removes the case to federal court on diversity grounds and moves to dismiss under Rule 12(b)(6).
The borrowers respond and simultaneously move for leave to amend, seeking to add:
- fraud in a real estate transaction, and
- common-law fraud.
The district court dismisses all claims and denies leave to amend as futile. The Perrottas appeal only as to breach of contract, negligent misrepresentation, and denial of leave to amend.

B. Holdings

The Fifth Circuit, applying Texas law under Erie, affirms the judgment:

Breach of contract: No enforceable contract existed because the alleged agreement to delay foreclosure was oral and therefore barred by the Texas statute of frauds for credit agreements, Tex. Bus. & Com. Code § 26.02. The partial performance exception does not apply because:
- Even assuming the exception can apply to § 26.02, the borrowers failed to allege that denying enforcement would itself "amount to a fraud" by conferring an "unearned benefit" on BANA.
- Sending loan-modification documents to BANA is not alleged to provide BANA such an unearned benefit.
Negligent misrepresentation: The claim fails because the alleged misstatements relate to future conduct (a promise to request postponement/consider the application), not misstatements of existing fact, which Texas law requires for negligent misrepresentation liability.
Leave to amend (fraud claims): Denial of leave to amend is affirmed as futile because:
- The proposed amended complaint does not plead specific facts supporting an inference of fraudulent intent (only conclusory statements that BANA "never intended" to perform), and
- It fails Rule 9(b)’s requirement to plead the “who, what, when, where, and why” of the alleged fraud with particularity.

III. Precedents and Authorities Cited

A. Procedural and Standard-of-Review Authorities

In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007):
- Reaffirmed the Rule 12(b)(6) standard: courts accept well-pleaded facts as true and view them in the light most favorable to the plaintiff but require enough facts to state a plausible claim.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007):
- Supreme Court’s foundational decision requiring that a complaint contain enough factual matter to state a claim that is “plausible on its face.”
City of Clinton v. Pilgrim’s Pride Corp., 632 F.3d 148, 152 (5th Cir. 2010):
- When denial of leave to amend is based solely on futility, the Fifth Circuit reviews de novo under the same standard applied to Rule 12(b)(6) dismissals.
Legate v. Livingston, 822 F.3d 207, 211 (5th Cir. 2016):
- An amendment is futile if it would fail to state a claim upon which relief can be granted; a district court need not allow such amendments.
Erie R.R. v. Tompkins, 304 U.S. 64 (1938):
- In diversity cases, federal courts apply state substantive law (here, Texas law) and federal procedural rules.

B. Contract and Statute-of-Frauds Authorities

Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 767 (5th Cir. 2016):
- Restates the elements of a breach-of-contract claim under Texas law:
  1. Existence of a valid contract;
  2. Performance or tendered performance by plaintiff;
  3. Breach by defendant; and
  4. Damages resulting from the breach.
Tex. Bus. & Com. Code § 26.02 (Texas Credit Agreement Statute of Frauds):
- Requires that certain credit agreements, including promises to modify, forbear, or delay foreclosure on loans exceeding $50,000, be in writing and signed to be enforceable.
Milton v. U.S. Bank Nat’l Ass’n, 508 F. App’x 326, 328–29 (5th Cir. 2013) (per curiam) (unpublished):
- Expressly holds that an agreement to delay foreclosure falls within § 26.02 and must be in writing to be enforceable.
Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013):
- Reiterates that in Texas, loan agreements for more than $50,000—and modifications of such agreements—must be in writing to be enforceable.

C. Partial Performance Exception Authorities

Bank of Texas v. Gaubert, 286 S.W.3d 546, 554 (Tex. App.—Dallas 2009, pet. dism’d w.o.j.):
- Articulates the partial performance exception: an oral agreement not compliant with the statute of frauds may be enforced if:
  1. It has been partially performed,
  2. The performance is "unequivocally referable" to the agreement, and
  3. Denying enforcement would itself "amount to a fraud."
Sullivan v. Leor Energy, LLC, 600 F.3d 542, 548–49 (5th Cir. 2010):
- Echoes that partial performance must be:
  - unequivocally referable to the alleged agreement, and
  - denial of enforcement must cause the other party to reap an unearned benefit.
Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 439–40 (Tex. App.—Dallas 2002, pet. denied):
- Clarifies that performance is “unequivocally referable” only if it is conduct that “could have been done with no other design than to fulfill” the specific oral agreement sought to be enforced.

D. Negligent Misrepresentation Authorities

Fed. Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991):
- Sets the elements of negligent misrepresentation under Texas law, including the requirement that the defendant provide false information for the guidance of others in their business.
BCY Water Supply Corp. v. Residential Inv., Inc., 170 S.W.3d 596, 603 (Tex. App.—Tyler 2005, pet. denied):
- Clarifies that the “false information” in negligent misrepresentation must be a misstatement of existing fact, not merely a broken promise of future conduct.
James v. Wells Fargo Bank, N.A., 533 F. App’x 444, 448 (5th Cir. 2013) (per curiam) (unpublished):
- Holds that a bank’s promise to postpone foreclosure is a representation about conditional future events, not a statement of existing fact, and therefore is not actionable under negligent misrepresentation.
Scherer v. Angell, 253 S.W.3d 777, 781 (Tex. App.—Amarillo 2007, no pet.):
- Similarly, a promise of future action cannot support a negligent misrepresentation claim under Texas law.

E. Fraud and Pleading-Standard Authorities

Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001):
- States the elements of common-law fraud in Texas, including that the defendant:
  - knew a representation was false, or
  - made it recklessly as a positive assertion without knowledge of its truth.
Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 564–65 (5th Cir. 2002):
- Explains that to plead fraud with requisite specificity under Rule 9(b), a plaintiff must:
  - specify the allegedly fraudulent statements,
  - identify the speaker,
  - state when and where the statements were made, and
  - explain why the statements were fraudulent.
- Also emphasizes that plaintiffs must allege specific facts supporting an inference of fraudulent intent, not just conclusory allegations.
Fed. R. Civ. P. 9(b):
- Requires that allegations of fraud be pleaded with “particularity,” supplementing but not supplanting Rule 8’s general plausibility standard.

IV. Legal Reasoning and Application

A. Breach of Contract and the Statute of Frauds

1. Existence of a “valid contract” under Texas law

The court begins with a straightforward application of Villarreal v. Wells Fargo: without a valid, enforceable contract, a breach-of-contract claim must fail at the threshold. The alleged contract here is an oral agreement that BANA:

would consider the Perrottas’ loan-modification application, and
would request postponement of the December 5 foreclosure sale upon receipt of specified documents.

Assuming these facts as true, the court asks whether such an oral agreement is enforceable in light of the Texas statute of frauds for credit agreements.

2. Application of Tex. Bus. & Com. Code § 26.02

Relying on Milton and Miller, the court reaffirms a key principle of Texas law:

An agreement to delay foreclosure on a loan over $50,000 is part of a “credit agreement” under § 26.02 and must be:
- in writing and
- signed by the party to be bound (here, the bank).

Because the alleged foreclosure-postponement promise is oral, it falls squarely within the statute of frauds and is unenforceable absent a valid exception. Thus, the first element of a Texas breach-of-contract claim—existence of a valid contract—is not satisfied, unless an exception to the statute of frauds saves the agreement.

B. The Partial Performance Exception

1. The borrowers’ theory

The Perrottas argued that the district court erred by not applying the partial performance exception to the statute of frauds. They contended that:

BANA made a unilateral contract offer: if the borrowers submitted specified documents, BANA would consider the application and request postponement;
The borrowers accepted that offer and partially performed by submitting all requested documents;
Their performance—sending those specific documents—was conduct that could only be explained as fulfilling the agreement (i.e., it was “unequivocally referable” to it).

2. Court’s treatment of partial performance

The Fifth Circuit, following Gaubert and Sullivan, identifies two prongs relevant to the partial performance exception:

The party seeking enforcement must show that performance was:
- “unequivocally referable” to the alleged oral agreement, meaning the performance makes sense only if the contract existed.
They must also show that denying enforcement would:
- “amount to a fraud” because the party invoking the statute of frauds would thereby obtain an “unearned benefit”.

Critically, the court does not decide two potentially controversial questions:

Whether the partial performance exception is available at all to overcome § 26.02 (it assumes “even if” it applies);
Whether the borrowers’ conduct was in fact “unequivocally referable” to the alleged contract.

Instead, the court resolves the issue solely on the second prong: fraud / unearned benefit.

3. No “unearned benefit” to the bank

Citing Sullivan, the court emphasizes that partial performance is an equitable doctrine—it allows enforcement of an otherwise-unenforceable oral contract only where refusing enforcement would allow the other party to reap an “unearned benefit.” The classic example is where a party:

makes improvements to land,
pays money, or
otherwise confers a concrete benefit

in reliance on the oral agreement, and the other party takes the benefits while disavowing the agreement.

Here, the borrowers claimed partial performance in the form of submitting loan-modification documentation. But the court finds:

The borrowers did not allege any facts showing that BANA derived a material, “unearned” benefit from receiving these documents.
There is no allegation, for example, that BANA used the documents in some other advantageous way, or that the documents had independent economic value beyond their use in the promised loan-review process.

Thus, even if their actions were “unequivocally referable” to an oral agreement (a question the court leaves open), the unearned-benefit / fraud requirement is not met. Therefore, the partial performance exception cannot salvage the oral agreement, and the statute-of-frauds defense remains intact.

Result: No enforceable contract; the breach-of-contract claim fails at the first element and was properly dismissed.

C. Negligent Misrepresentation: Future Promises vs. Existing Facts

1. Nature of the alleged misrepresentation

For negligent misrepresentation under Texas law (Sloane), the plaintiff must show that the defendant supplied false information for their guidance in business. Texas courts, as reiterated in BCY Water Supply, are clear: the “false information” must be a misstatement of existing fact.

The Perrottas attempted to characterize BANA’s conduct as negligently misrepresenting its then-present intent to:

consider their application upon receipt of documents, and
request postponement of foreclosure.

They contended that this misrepresented BANA’s present intention (an existing state of mind), not simply a promise to act in the future.

2. Texas law: negligent misrepresentation excludes future promises

The court rejects this characterization by relying on:

James v. Wells Fargo Bank: A bank’s promise to postpone foreclosure is a representation about a conditional future event and therefore cannot ground a negligent misrepresentation claim.
Scherer v. Angell: Promises of future action are not actionable as negligent misrepresentation.

Even framed as a “then-present intent,” Texas courts generally treat broken promises and unfulfilled plans as promises about future conduct, not as misstatements of present fact—unless pled as fraud with specific facts indicating that the promisor never intended to perform at the time of the promise. Negligent misrepresentation, by contrast, concerns careless misstatements about what is presently true, not negligent predictions or promises.

Result: Because the alleged misrepresentation is about future action (considering the application and seeking a postponement), not a concrete existing fact, the negligent misrepresentation claim fails as a matter of law.

D. Denial of Leave to Amend: Futility and Rule 9(b)

1. The proposed amendments

The borrowers sought to amend their complaint to add claims for:

Fraud in a real estate transaction (likely under Tex. Bus. & Com. Code § 27.01), and
Common-law fraud.

These claims were based on essentially the same core allegation: that BANA promised to request postponement of the foreclosure but allegedly never intended to follow through.

2. Futility: failure to plead fraudulent intent

To state a fraud claim under Texas law (Ernst & Young), a plaintiff must adequately allege that the defendant:

made a material representation,
knew it was false (or made it recklessly),
intended the plaintiff to rely,
the plaintiff did rely, and
suffered injury as a result.

The Fifth Circuit focuses on fraudulent intent / knowledge of falsity. Under Herrmann Holdings, conclusory assertions that a defendant “never intended” to perform are insufficient; plaintiffs must plead specific facts that support an inference of fraudulent intent (for example, a pattern of conduct indicating that similar promises were consistently broken under similar circumstances).

The proposed amended complaint, however, alleged only that:

BANA made the promise “without intention of fulfilling performance,” and
That the representation was made “knowingly” false.

The court characterizes these statements as bare legal conclusions, not grounded in factual allegations (such as internal communications, prior patterns of conduct, or contradictory instructions within the bank) that would allow a court to infer intent to deceive at the time of the statements.

3. Rule 9(b): failure to plead fraud with particularity

Even aside from intent, fraud claims are subject to Rule 9(b)’s heightened pleading standard. Under Herrmann Holdings and Fifth Circuit practice, a plaintiff must:

identify the specific statement(s) alleged to be fraudulent,
identify the specific speaker(s),
allege when and where each statement was made, and
explain why each statement was fraudulent.

The court finds that the proposed amended complaint does not materially expand the factual detail beyond the original pleadings. It does not:

separately identify which particular individual at BANA made each promise;
provide precise dates, locations, and circumstances (beyond general time frames);
explain why the statements were knowingly false when made.

Result: Because the proposed fraud claims would be dismissed under Rule 12(b)(6) for lack of plausibility and under Rule 9(b) for lack of particularity, amendment would be futile. The district court’s denial of leave to amend is thus affirmed.

V. Impact and Significance

A. Reinforcing the Strictness of § 26.02 in Foreclosure-Postponement Contexts

Perrotta reinforces a growing body of Fifth Circuit authority that:

Borrowers cannot enforce oral promises by lenders to delay or postpone foreclosure on loans exceeding $50,000.
Such agreements are squarely governed by Tex. Bus. & Com. Code § 26.02 and require a written, signed instrument.

In practice, this means:

Borrowers who rely solely on phone calls, emails, or informal verbal assurances from bank representatives do so at substantial legal risk.
Lenders’ repeated litigation successes on statute-of-frauds grounds may incentivize them to maintain a strict policy of refusing to treat oral representations as binding—and to include conspicuous written disclaimers to borrowers.

B. Tightening the Partial Performance Exception in Loan-Modification Settings

The decision’s most notable contribution is its treatment of partial performance in the loan-modification context. Without definitively ruling on whether the exception applies to § 26.02, the court makes a significant practical pronouncement:

Merely submitting loan-modification paperwork, even in alleged reliance on promises to consider an application or seek foreclosure postponement, is not partial performance that confers an “unearned benefit” on the lender.

This makes it substantially more difficult for borrowers to invoke equitable doctrines to overcome the statute of frauds. Future plaintiffs will likely need to allege:

more concrete, value-conferring acts (e.g., making specific additional payments, paying significant fees, or taking actions that improve the lender’s collateral position), and
how, specifically, the lender gained an unjust advantage from those acts.

C. Limiting Tort Workarounds: Negligent Misrepresentation vs. Future Promises

The affirmation that promises to consider a loan-mod application or seek foreclosure postponement are promises of future conduct—and therefore non-actionable as negligent misrepresentation—closes off another common path by which borrowers attempt to avoid the statute of frauds.

The message is clear:

If the lender’s alleged wrongdoing consists of not doing what it said it would do in the future (e.g., “we will postpone the sale”), that is:
- a matter for contract law, and
- subject to the statute of frauds if it concerns credit agreements.
It cannot be repackaged as negligent misrepresentation unless the plaintiff can identify:
- a present-tense factual statement (e.g., “we have already stopped the foreclosure sale” when in fact they have not).

D. High Bar for Fraud Claims in This Context

The futility ruling on the proposed fraud amendments signals that, in this doctrinal area, courts are wary of:

conclusory allegations that a lender “never intended” to honor loan-modification-related promises, without supporting factual content; and
fraud claims that simply relabel the same conduct underlying failed contract or negligent-misrepresentation claims.

Plaintiffs wishing to allege fraud must bring:

Detailed factual allegations showing inconsistent internal policies, prior history, or concrete evidence that the bank did not intend to perform at the time of the promise; and
Specificity as to dates, speakers, locations, and the precise content of alleged misrepresentations.

Absent such detail, fraud claims are likely to be dismissed at the pleading stage as both implausible (Rule 12(b)(6)) and insufficiently particular (Rule 9(b)).

VI. Complex Concepts Simplified

A. The Texas Statute of Frauds for Credit Agreements (§ 26.02)

The statute of frauds is a rule that says certain kinds of agreements must be in writing to be legally enforceable. For large loans in Texas:

Any agreement to:
- make a loan,
- extend a loan,
- modify the terms of a loan,
- forbear (delay) repayment, or
- delay or stop foreclosure
must be:
- in writing, and
- signed by the lender (or its authorized representative).

If there is only an oral promise (for example, a phone call where a bank employee says, “we will postpone foreclosure”), Texas courts will not enforce it, unless a recognized exception applies.

B. Partial Performance Exception (and “Unearned Benefit”)

The partial performance exception is an equitable safety valve. It says: even if an agreement should have been in writing, a court may enforce an oral contract if:

One party has already performed part of the agreement (e.g., making improvements, paying money, taking significant steps);
The performance clearly only makes sense if the agreement existed (“unequivocally referable”); and
If the court refuses to enforce the deal, the other party would get an “unearned benefit” or “unjust enrichment” (i.e., they get to keep the benefits of the other’s performance while denying the deal ever existed).

In Perrotta, the alleged “partial performance” was the borrowers sending documents. The court holds that:

Sending paperwork did not confer an obvious unearned benefit on the bank;
Therefore, the partial performance exception cannot apply, regardless of whether the borrowers’ actions were “unequivocally referable.”

C. Negligent Misrepresentation vs. Promises of Future Conduct

Under Texas law, negligent misrepresentation is about careless lies about the present. It is not about:

Promising to do something in the future and failing to do it, even if the promise later turns out to be wrong.

Examples:

Actionable negligent misrepresentation: “We have already approved your modification” if, at that moment, no such approval exists.
Not negligent misrepresentation (but possibly contract/fraud): “We will approve your modification next week” if they later refuse or never process it.

Perrotta confirms that statements like “we will request postponement after you submit documents” fall into the second category—they are promises about the future, not statements about present fact, and so cannot ground a negligent-misrepresentation claim.

D. Pleading Fraud under Rule 9(b)

When alleging fraud in federal court, plaintiffs must do more than allege general wrongdoing. Rule 9(b) requires them to:

Say exactly what was said or written that was fraudulent;
Specify who said or wrote it (the speaker);
State when and where it was said or written; and
Explain why it was false at the time (for example, by showing that internal records contradicted it or that the speaker knew it would not be honored).

General statements that “the bank made promises it never intended to keep” are insufficient without detailed supporting facts. Perrotta underscores that such conclusory allegations are not enough to avoid dismissal.

VII. Conclusion

Perrotta v. Bank of America fits within, and reinforces, a well-established pattern of Texas and Fifth Circuit authority in mortgage and foreclosure litigation:

Agreements to delay foreclosure or to consider loan modifications for loans over $50,000 must be written and signed to be enforceable, as required by Tex. Bus. & Com. Code § 26.02.
The partial performance exception is narrow; mere submission of documentation does not by itself confer an “unearned benefit” sufficient to overcome the statute of frauds.
Promises about future conduct—such as statements that a lender will postpone foreclosure or will consider a modification—cannot be recast as negligent misrepresentation, which requires misstatements of existing, present fact.
Fraud claims require specific, concrete factual allegations both to infer fraudulent intent and to satisfy Rule 9(b)’s particularity standard; conclusory assertions that a bank “never intended to perform” are inadequate.

While unpublished and therefore nonbinding under Fifth Circuit Rule 47.5, Perrotta is a detailed application of these principles to a fact pattern that is common in foreclosure and loan-modification disputes. Practically, it signals to borrowers and their counsel that:

They should insist on written, signed agreements when relying on lender promises regarding foreclosure postponements or loan modifications; and
Pleading around the statute of frauds through tort labels like negligent misrepresentation or underdeveloped fraud theories is unlikely to succeed without significantly stronger factual allegations than were present here.

For lenders and servicers, the decision reinforces the protective strength of § 26.02 and underscores the importance of:

carefully managing communications with borrowers,
maintaining written documentation of any binding agreements, and
clearly disclosing that oral assurances are not contractually binding unless reduced to writing.

In the broader legal landscape, Perrotta continues the trend of treating loan-modification and foreclosure-related promises under a strict formalist lens: in high-value credit transactions, words must be written to be enforceable, and equitable or tort-based end-runs around that rule face a high bar at the pleading stage.