Whiting et al v. Bank of America NA, No. 4:2014cv00905 - Document 25 (S.D. Tex. 2014)
Court Description: MEMORANDUM AND ORDER granting 4 Motion to Dismiss. (Signed by Judge Ewing Werlein, Jr) Parties notified.(gkelner, 4)
Download PDF
<![CDATA[
Whiting et al v. Bank of America NA Doc. 25 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION JOHNNY WHITING and ELISA WHITING, § § § § Plaintiffs, § § § § § § § v. BANK OF AMERICA, N.A., and FREO TEXAS, LLC, Defendants. CIVIL ACTION NO. H-14-905 MEMORANDUM AND ORDER Pending Dismiss are Defendant (Document No.4), joined,l and Plaintiffs' (Document No. 24). Bank of America, which Defendant N .A. 's Motion FREO Texas, to LLC has Application for Preliminary Injunction After carefully considering the motions, response, reply, notice of supplemental authority, and applicable law, the Court concludes that Defendants' Motion to Dismiss should be granted. I. Background Plaintiffs Johnny Whiting and Elisa Whiting ("Plaintiffs") purchased a home at 3306 Coldwater Canyon Lane, Katy, Texas 77449 ("the Property") on May 5, 2008. 2 Plaintiffs executed a promissory 1 Document No. 12. 2 Document No. 1-3 at 8 of 106, 44 of 106. Dockets.Justia.com note secured by a Deed of Trust ("Deed of Trust") on the Property in favor of Defendant Bank of America, N.A. ("Bank of America").3 After Plaintiffs defaulted on their loan, Bank of America initiated foreclosure proceedings and ultimately sold the Property at a foreclosure sale to Defendant FREO Texas, LLC ("FREO") on July 2, 2013. 4 Nine months after the foreclosure, Plaintiffs filed this case in state court alleging causes of action for: (1) violations of the Texas Property Code, lack of standing, and wrongful fore-closure; (2) (4) fraud in the concealment; (3) fraud in the intentional infliction of emotional distress; title; (6) quiet title; (7) declaratory relief; the Truth in Lending Act Protection Settlement Act ("TILA") ("HOEPA"); Practices Act (9) inducement; (5) slander of (8) violations of and the Home Ownership Equity violation ("RESPA") ; of and the (10) Real Estate rescission. 5 3 Id. at 8 of 106, 44 of 106. See id. at 3 of 106; Document No. 4-1 (Notice of Foreclosure Sale); Document No. 10 at 2 (PIs.' Resp.) ("Plaintiffs fell into default due to financial difficulties, and thereafter [Bank of America] began to initiate foreclosure activity . . . . The home was sold at foreclosure on July 2, 2013 to FREO Texas, LLC for 4 $90,000.00.") . 5 Document No. 1-3 (Orig. Pet.). Although Plaintiffs named several other Defendants in their Original Petition, only Bank of America and FREO have made appearances, and Plaintiffs at the scheduling conference on August 29, 2014 dismissed without prejudice all claims against the other defendants, none of whom had been served. See Document No. 19 (Minute Order) . 2 Defendants removed the case, and now move to dismiss for failure to state a claim. 6 II. Motion to Dismiss A. Legal Standard Rule 12 (b) (6) provides for dismissal of an action for "failure to state a claim upon which relief can be granted." P. 12 (b) (6) . FED. R. Crv. When a district court reviews the sufficiency of a complaint before it receives any evidence either by affidavit or admission, its task is inevitably a limited one. See Scheuer v. Rhodes, 94 S. Ct. 1683, 1686 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 102 S. Ct. 2727 (1982). whether the plaintiff ultimately will prevail, The issue is not but whether the plaintiff is entitled to offer evidence to support the claims. Id. In considering a motion to dismiss under Rule 12(b) (6), the district court must construe the allegations in the complaint favorably to the pleader and must accept as true all well-pleaded facts 117 in F.3d the 242, complaint. 247 See (5th Cir. Lowrey v. 1997). To Tex. A&M Uni v . survive Sys., dismissal, a complaint must plead "enough facts to state a claim to relief that is plausible on its face." 1955, 1974 6 (2007). Bell Atl. Corp. v. Twombly, 127 S. Ct. "A claim has Document Nos. 1, 4, 12. 3 facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference misconduct alleged." (2009) . While a allegations . . that the defendant Ashcroft v. complaint "does not liable 129 S. Iqbal, is Ct. need for 1937, detailed the 1949 factual [the] allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true fact) ." Twombly, 127 S. Ct. at 1964-65 (even if doubtful in (citations and internal footnote omitted) . B. Discussion Plaintiffs at the scheduling conference on August 29, 2014 and in their subsequent Application for Preliminary Injunction have affirmatively abandoned their federal claims under the Truth in Lending Act, the Home Ownership Equity Protection Act, and the Real Estate Settlement Practices Act, and those claims are dismissed. 7 1. Texas Property Code Violations Plaintiffs allege that Defendants violated Texas Property Code Section 51.0075(e) because the April 3, 2013 Notice of Acceleration and Notice of Foreclosure Sale sent to Plaintiffs listed nineteen different substitute trustees, because it was unsigned, and because 7 Document No. 24 at 2 of 9. ("Plaintiffs have waived all federal question claims brought in their original State Court Petition.") . 4 the Notices of Sale filed in the county records were signed by a different person than the substitute trustee who conducted the sale. 8 None of these alleged facts, however, violates Section 51.0075(e), which provides in full that "[t]he name and a street address for a trustee or substitute trustees shall be disclosed on the notice [of sale] required by Section 51.002 (b) . § 51.0075(e). The Notice of Foreclosure II Sale TEX. PROP. CODE about which Plaintiffs complain contains the name and address for substitute trustees, including Wayne Wheat, whom Plaintiffs allege conducted the sale. 9 Accordingly, Defendants complied with the requirements of Section 51.0075(e). Plaintiffs further allege that Defendants violated Section 51.002(b) of the Texas Property Code because "[n]o notice of the purported July 2013 sale was sent by certified mail to either plaintiff, and if it was it was not timely, nor was such purported sale posted at the courthouse or filed in the office of the county clerk. 1110 Section 51.002(b) provides: 8 Document No. 1-3 at 15 of 106; Document No. 10 at 12-14. 9 Document No. 1-3 at 89 of 106. Id. at 15 of 106 to 16 of 106. Oddly, Plaintiffs also assert that "the purported Substitute Trustee for the August 2009 sale, Wayne Wheat, was substituted within 21 days of the August 2009 sale date, in violation of Texas law. Id. at 16 of 106, (emphasis added). However, all of Plaintiffs' other allegations are that the foreclosure sale was conducted July 2, 2013, and the 2009 allegation appears to be a non sequitur. 10 II 5 Except as provided by Subsection (b-1), notice of the sale, which must include a statement of the earliest time at which the sale will begin, must be given at least 21 days before the date of the sale by: (1) posting at the courthouse door of each county in which the property is located a written notice designating the county in which the property will be sold; (2) filing in the office of the county clerk of each county in which the property is located a copy of the notice posted under Subdivision (1); and (3) serving written notice of the sale by certified mail on each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt. TEX. PROP. CODE § 51.002(b). The Court takes judicial notice of the Notice of Foreclosure Sale filed with Harris County on June 10, 2013, at least 21 days before the July 2, Foreclosure Sale Deed and accompanying Plaintiffs- -stating that notice of Harris County Plaintiffs. 12 courthouse and the mailed 2013 sale, 11 and the Affidavit- -produced by sale was posted on the by certified mail to See Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004) ("Documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim."); Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 11 Document No. 4-1. 12 Document No. 1-3 at 56 of 106 to 58 of 106. 6 2007) (" [I] t is clearly proper in deciding a 12 (b) (6) motion to take judicial notice of matters of public record."); Associated Builders, 1974) Inc. v. Alabama Power Co., (on motion to dismiss for 505 F.2d 97, failure to 100 state (5th Cir. a claim, "[c]onclusory allegations and unwarranted deductions of fact are not admitted as true, contradicted by facts complaint. complaint reveals especially when disclosed by a such conclusions are document appended to the If the appended document, to be treated as part of the for facts all purposes which under Rule foreclose dismissal is appropriate.") 10(c), recovery as (citation omitted) a FED. R. matter Crv. of P., law, Accordingly, the pleading and documents properly considered on this motion establish that Defendants complied with the requirements of Section 51.002(b), and Plaintiffs have not stated a claim for violations of the Texas Property Code. 2. Wrongful Foreclosure / Lack of Standing to Foreclose Plaintiffs allege that Defendants lack standing to foreclose on the Property because "Defendants, and each of them, have failed to perfect any security interest in the Property, or cannot prove to the court that they have a valid interest as a real party in interest to foreclose. "13 Relatedly, Plaintiffs allege that "the only individual who has standing to foreclose is the holder of the 13 Id. at 16 of 106. 7 note," and that "[t]he only individuals who are the holder of the note are the certificate holders of the securitized trust because they are the end users and pay taxes on their interest gains.,,14 However, the Deed of Trust, Notice of Acceleration, and Foreclosure Sale Deed- -which Original Plaintiffs attach Peti tion- -uniformly and identify incorporate Bank of into America their as the lender, beneficiary, mortgagee (both originally and at the time of foreclosure), and mortgage servicer of Plaintiffs' loan, with power to foreclose on the Property.1S Accordingly, Plaintiffs' challenge to Bank of America's standing to foreclose fails. See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 255 (5th Cir. 2013) ("A deed of trust 'gives the lender as well as the beneficiary the right to invoke the power of sale,' even though it would not be possible for both to hold the note.") (citation omitted) TEX. PROP. CODE foreclosure § of mortgagee . . .") 51.0025 id. § see also ("A mortgage servicer may administer the property i i under Section 51. 0001 (3) 51.002 on behalf of a ('" Mortgage servicer' means the last person to whom a mortgagor has been instructed by the current mortgagee to send payments instrument. for the debt secured by a security A mortgagee may be the mortgage servicer.") . Plaintiffs also allege that their loan "was securitized by [Bank of America], with the Note not being properly transferred to 14 rd. at 17 of 106. 1S rd. at 44 of 106, 56 of 106, 88 of 106. 8 Defendant, Ginnie Mae, acting as the Trustee for the Ginnie 2008-38 Trust Trust (sic) holding plaintiff's note," and that Defendants violated the Pooling and Servicing Agreement ("PSA") governing the securitization, depriving them of the right to foreclose on the property. 16 Assuming these allegations are true, 17 Plaintiffs do not allege that they are parties to or intended beneficiaries of the PSA, or that there are any facts to support such an allegation, and therefore Plaintiffs have no rights to enforce its terms. See Reinagel v. Deutsche Bank Nat. Trust Co., 735 F.3d 220, 228 (5th Cir. 2013) (rejecting claim that mortgage assignments are void for violating PSA, because plaintiffs, who were not party to the PSA and failed to state any facts indicating that the parties to the PSA intended to benefit plaintiffs, "have no right to enforce its terms"). Accordingly, Plaintiffs' claim for wrongful foreclosure based on lack of standing to foreclose is dismissed. 3. Fraud Plaintiffs allege fraud in the concealment and fraud in the inducement, asserting that Defendants concealed the fact that the loans were securitized and misrepresented that they were entitled 16 rd. at 8 of 106, 17 of 106. Defendants point out that "Plaintiffs provide no specific factual allegations that the Deed of Trust or Note in this case were ever pooled with other mortgage loans in a securitized transaction" or that it was subject to a PSA. Document No. 11 at 2-3. 17 9 to exercise the power of sale provision in the Deed of Trust. 18 Plaintiffs allege that Defendants engaged in this fraud in order to induce Plaintiffs to enter into a loan agreement with Defendants. 19 Because the loan agreement between Plaintiffs and Defendants originated in 2008, any fraudulent statements made or other conduct to induce Plaintiffs to enter into that occurred no later than 2008. necessarily 2008 loan Thus, agreement Defendants correctly argue, Plaintiffs' fraud claims, which were not alleged until March 2014, limitations. See are time barred by the TEX. CIV. PRAC. REM. CODE & statute of limitations on fraud claims) § four-year statute of 16.004(a) (4) (four-year Accordingly, Plaintiffs' claims for fraud in the concealment and fraud in the inducement are dismissed. 20 4. Intentional Infliction of Emotional Distress Plaintiffs allege that Defendants intentionally inflicted emotional distress on Plaintiffs by intentionally or recklessly misrepresenting that Defendants were entitled to exercise the power of sale provision in the Deed of Trust, in order 18 render Document No. 1-3 at 20 of 106 to 23 of 106. 19 to Id. 20 It is worth opposing Defendants' their allegations of distress, slander of noting that Plaintiffs in their Response Motion to Dismiss do not attempt to defend fraud, intentional infliction of emotional title, or rescission. See Document No. 10. 10 Plaintiffs so emotionally distressed and debilitated as unable to exercise legal rights in the Property.21 An intentional infliction of emotional distress claim has four elements: defendant acted intentionally or recklessly, to be (2) (1) the the conduct was extreme and outrageous, (3) the actions of the defendant caused the plaintiff emotional distress, 65 (4) the resulting emotional Standard Fruit & Vegetable v. Johnson, distress was severe. S . W. 2 d 62, and (Tex. 1998). "Extreme and 985 outrageous conduct is conduct 'so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a Hoffman-La Roche Inc. 2004) v. Zeltwanger, civilized community.'" 144 S.W.3d 438, 445 (Tex. (quoting Twyman v. Twyman, 855 S.W.2d 619, 621 (Tex. 1994)). None of the specific conduct that Plaintiffs Defendants is either extreme or outrageous. ascribe to As discussed above, Plaintiffs' allegations fail to state a claim that Defendants were not entitled to representation foreclose that on the they did have Property, the power and to Defendants' foreclose therefore not extreme or outrageous as a matter of law. was See Wieler v. United Sav. Ass'n of Texas, FSB, 887 S.W.2d 155, 159 (Tex. App.Texarkana 1994, writ denied) ("Clearly, a foreclosure sale that complies with the terms of the loan agreements and the applicable law would not justify a claim for intentional 21 Document No. 1-3 at 23 of 106 to 25 of 106. 11 infliction of emotional distress. ") . Accordingly, Plaintiffs' claim for intentional infliction of emotional distress is dismissed. 5. Slander of Title Plaintiffs allege that Defendants slandered Plaintiffs' title by recording documents including the Notice of Default, Notice of Trustee's Sale, and Trustee's Deed, which falsely cast doubt on Plaintiffs' exclusive legal title to the Property.22 claim of slander of title, Plaintiffs must utterings and publishing of disparaging words; false; (3) that they were malicious; sustained thereby; (5) To advance a allege: (1) the (2) that they were (4) that special damages were that the plaintiff possessed an estate or interest in the property disparaged; and (6) the loss of a specific sale. Williams v. Jennings, 755 S.W.2d 874, 879 (Tex. App.-Houston [14th Dist.] 1988, writ denied). Plaintiffs' allegation that the documents Defendants filed falsely disparaged Plaintiffs' circuitously Defendants' derives from foreclosure was their conclusory wrongful. As allegations already title that observed, however, Plaintiffs fail to state a claim for wrongful foreclosure. Regardless, Plaintiffs do not allege that they lost any specific sale of the property because of the filings, which is a necessary element of a slander of title claim. claim for slander of title is dismissed. 22 rd. at 25 of 106 to 27 of 106. 12 Accordingly, Plaintiffs' 6. Quiet Title Plaintiffs seek to quiet title in their favor, alleging that Defendants are falsely claiming rights in the Property which cloud Plaintiffs' title to the Property. 23 "The elements of the claim for relief to quiet title are (1) an interest in a specific property, (2) title to the property is affected by a claim by the defendant, and (3) the claim, unenforceable." 4:11-CV-02085, although Bell v. Bank of Am. 2012 WL 568755, (Ellison, J.) facially at *7 valid, Home (S.D. is invalid or Loan Servicing LP, Tex. Feb. 21, 2012) (citing u.S. Nat. Bank Ass'n v. Johnson, 01-10-00837- CV, 2011 WL 6938507, at *3 (Tex. App.-Houston [1st Dist.] Dec. 30, 2011) ) . Plaintiffs "must allege right, title, or ownership in [themselves] with sufficient certainty to enable the court to see [they have] a right of ownership that will warrant judicial interference." Wright v. Matthews, 26 S.W.3d 575, 578 (Tex. App.- Beaumont 2000, pet. strength of their adversary's title. denied). own Plaintiffs title, not on Fricks v. Hancock, must the recover on the weakness 45 S.W.3d 322, of their 327 (Tex. App.-Corpus Christi 2001, no pet.). The facts pled by Plaintiffs together with the documents referred to that are central to Plaintiffs' claims demonstrate that Plaintiffs 23 executed the Deed of Trust Id. at 27 of 106 to 28 of 106. 13 to secure payment of a purchase money note, that Plaintiffs fell into default, and that Bank of America sold the mortgaged property at foreclosure pursuant to the Deed of Trust. support a plausible Plaintiffs have not asserted facts that claim to their having superior title. Accordingly, Plaintiffs' quiet title action is dismissed. 7. Declaratory Judgment Plaintiffs seek a declaratory judgment that Plaintiffs own the Property outright and that no Defendants have any interest in the Property. 24 Plaintiffs argue that "[t] he existing controversy between Plaintiffs and Defendant is the disputed right of Defendant to foreclose on the property in 2013. ,,25 As already discussed, Plaintiffs have not alleged facts to state a cause of action upon which relief can be granted that the foreclosure was wrongful. Accordingly, Plaintiffs' claim for a declaratory judgment is dismissed. 8. Rescission Plaintiffs seek to "rescind the loan and all accompanying loan documents. ,,26 "Rescission is a remedy only and not an independent cause of action." Siens v. Trian, LLC, A-11-CV-07S-AWA, 24 Id. at 28 of 106 to 30 of 106. 25 Document No. 10 at 23. 26 Document No. 1-3 at 32 of 106 to 33 of 106. 14 2014 WL (citing Cantu v. Guerra & 1900737, at *5 (W.D. Tex. May 13, 2014) Moore, Ltd., LLP, 328 S.W.3d 1, 8 (Tex. App.-San Antonio 2009, no pet.)). Plaintiffs have not alleged facts demonstrating that they are entitled to rescission as an equitable remedy. the extent equitable that remedy [plaintiffs] of claim rescission, they they are id. See entitled failed to ("To to plead the facts sufficient to show that they are entitled to such relief" where plaintiffs "have not alleged that they are able or willing to return the money loaned to them to purchase the Subj ect Property") . Plaintiffs' rescission claim is therefore dismissed. III. Leave to Amend Plaintiffs pleadings at request least one in the more alternative time to "to remedy amend any their defects." Plaintiffs have not submitted a proposed amendment or proffered any additional facts or claims that they would state in an amended complaint that would meet the requirements of Rule 11(b). Indeed, Plaintiffs commenced this case with an exhaustive petition 40 pages in length alleging the numerous claims listed on page two of this Memorandum. Plaintiffs later filed their 25 pages-long opposition to the present motion in which they argued at length in defense of what they regarded as their best claims. filing a month ago, an Application for In their most recent Preliminary Injunction (Document No. 24), Plaintiffs state that Plaintiffs' 15 surviving allegations from [their] State Court Petition are state law claims for: (1) declaratory relief to set aside the foreclosure sale for violations of the Texas Property Codei (2) declaratory relief to set aside the foreclosure sale for lack of standing as a real party in interest to foreclosei (3) common law fraudi and (4) common law rescission. Plaintiffs have waived all federal question claims brought in their original State Court Petition. As seen above, Plaintiffs' four remaining allegations state no cause of action upon which relief can be granted, susceptible to being pled better documents, precedent, and time bar. because of the and are not controlling Plaintiffs have no wrongful foreclosure claim--based on either violations of the Texas Property Code or the notion foreclose- -because that of Bank the of content America of the had no standing to controlling mortgage documents submitted in the filings on this motion and central to Plaintiffs' claims, and the legal precedents set forth above. Plaintiffs' common law fraud claims are doomed as time barred, and Plaintiffs' "common law rescission" is not a claim at all but merely a remedy to which Plaintiffs have stated no claim for which such relief can be granted. yet another round of overcome the It would be futile to allow Plaintiffs flawed pleading and briefing that cannot dispositive force of the documents exhibited by Plaintiffs themselves and controlling legal precedents. Given the futility of any prospective amendment and failure of Plaintiffs to demonstrate otherwise, it is not in the interest of justice to allow an amended complaint. 16 FED. R. CIV. P. 15 (a) (2) i see Sigaran v. (5th Cir. U.S. Bank National Association, 2014) when it denies futile. ("A district court acts wi thin leave Amending amendment 560 F. Appx. 410 a [its] discretion to amend because any amendment would be complaint is futile when 'the proposed . could not survive a motion to dismiss,' or when 'the theory presented in the amendment lacks legal foundation.''') (internal citations omitted). As in Sigaran, "all of [Plaintiffs'] claims are either foreclosed by precedent, time-barred, or waived. They have never explained how complaint to avoid these problems." they Id. could amend their Plaintiffs' request to amend is DENIED. IV. Order For the foregoing reasons, it is ORDERED that Defendant Bank of America, Dismiss (Document No.4), joined, is GRANTED, and which Defendant Plaintiffs' N .A. 's Motion to FREO Texas, cause is LLC has DISMISSED with PREJUDICE for failure to state a claim upon which relief can be granted. FED. R. Crv. P. 12 (b) (6) . The Clerk will enter this Order, providing a correct copy to all counsel of record. SIGNED in Houston, Texas, this of October, 2014. ~-~CL-, G WERLEIN, JR. TATES DISTRICT JUDGE 17 71'-
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
