Austin et al v. Bank of America, N.A., No. 2:2016cv08726 - Document 10 (E.D. La. 2016)
Court Description: ORDER & REASONS granting 8 Motion to Dismiss for Failure to State a Claim. Party Bank of America, N.A. dismissed. Signed by Judge Sarah S. Vance on 11/16/2016. (mmm)
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Austin et al v. Bank of America, N.A. Doc. 10 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA GLENDA WILLIAMS AUSTIN AND CLAUDE AUSTIN, J R. VERSUS CIVIL ACTION NO. 16-8726 BANK OF AMERICA, N.A. SECTION “R” (2) ORD ER AN D REASON S Before the Court is Defendant Bank of Am erica, N.A.’s unopposed m otion to dism iss pro se plaintiffs’ complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, the Court GRANTS defendant’s m otion. I. BACKGROU N D This lawsuit arises out of an executory process foreclosure action initiated by Bank of Am erica against Glenda Austin, individually and in her capacity as the surviving spouse of Claude Austin, Sr., in Louisiana state court. 1 In J anuary, 1998, the Austins purchased property in Houm a, Louisiana. 2 On October 18, 20 0 6, the Austins executed a prom issory note in 1 2 R. Doc. 8 at 1. R. Doc. 8-1 at 2. Dockets.Justia.com the principal am ount of $ 94,395 in favor of GMFS, LLC. 3 The note was secured by a m ortgage on the Austins’ property. 4 GMFS endorsed the note to Countrywide Bank, N.A., and Countrywide ultim ately endorsed the note to Bank of Am erica. 5 On September 2, 20 11, Mortgage Electronic Registration System s, Inc. (MERS) assigned the m ortgage to Bank of Am erica. 6 On August 30 , 20 13, Glenda Austin entered into a Loan Modification Agreem ent with Bank of Am erica, whereby the parties agreed to am end and m odify the term s of the note. 7 On Novem ber 6, 20 15, after Glenda Austin and Claude Austin, Sr. defaulted on the note and m ortgage, Bank of Am erica filed a Petition for Executory Process in Louisiana state court. 8 The state court executed an Order of Executory Process directing the Terrebonne Parish Sheriff to seize and sell the property. 9 Glenda Austin did not appeal this order. The sale was held on March 16, 20 16, and Bank of Am erica successfully bid on and purchased the property for $ 10 2,240 . 10 3 4 5 6 7 8 9 10 R. Doc. 8-3 at 12. R. Doc. 8-1 at 3. Id.; R. Doc. 8-3 at 15. R. Doc. 8-6 at 10 . R. Doc. 8-1 at 3. R. Doc. 8-3. R. Doc. 8-1 at 4. Id. 2 Before the sale occurred, on February 25, 20 16, Glenda Austin sought an injunction and restraining order in the state court foreclosure action. 11 The state court did not hold a hearing on the injunction petition until May 16, 20 16, two m onths after the property had been sold. 12 As the property had already been sold, the state court dism issed the injunction petition as m oot. 13 On J une 7, 20 16, plaintiffs filed this lawsuit. In their com plaint, plaintiffs allege that Bank of America wrongfully foreclosed on their property because the chain of title from GMFS to Bank of Am erica is “corrupted.”14 More specifically, plaintiffs claim that the assignment of the m ortgage from MERS to Bank of Am erica is fraudulent because MERS is no longer in existence and “robo-signed” the assignm ent. 15 Plaintiffs also allege that under the Truth in Lending Act (TILA), they are entitled to rescind the Mortgage Loan because the original lender, GMFS, allegedly failed to provide the Austins with the required disclosures under TILA and its regulations. 16 Additionally, plaintiffs allege that they are entitled to rescission because GMFS did not sign the actual note and m ortgage. 17 Finally, plaintiffs appear 11 12 13 14 15 16 17 R. Doc. 8-7. R. Doc. 8-1 at 4. R. Doc. 8-8 at 2. R. Doc. 1 at 1 ¶ A. Id. Id. at 2 ¶ C. Id. at 3 ¶ D. 3 to claim that Bank of Am erica made plaintiffs a “third-party contractee” to an unspecified Pooling and Servicing Agreement, and that plaintiffs have an interest in the funds generated under the agreement. 18 Plaintiffs seek $ 2,0 0 0 ,0 0 0 in dam ages, or in the alternative, ask this Court to order Bank of Am erica to quitclaim the foreclosed property back to plaintiffs. 19 On J uly 25, 20 16, Bank of Am erica filed this 12(b)(1) and 12(b)(6) m otion to dism iss. 20 Bank of Am erica argues that the Court lacks subject m atter jurisdiction under the Rooker-Feldm an doctrine, that plaintiffs’ claim s are barred by res judicata, and even if not precluded, the claim s fail as a m atter of law. 21 Plaintiffs have not responded to Bank of America’s m otion. II. LEGAL STAN D ARD A. Ru le 12 ( b) ( 1) Bank of Am erica argues that the Court cannot hear plaintiffs’ claims under the Rooker-Feldm an doctrine, which lim its the Court's subject matter jurisdiction. See Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 18 19 20 21 Id. at 2 ¶ B. Id. at 3-4 ¶ F. R. Doc. 8. Id. at 2. 4 280 , 291 (20 0 5) (Rooker-Feldm an doctrine im plicates subject m atter jurisdiction). Fed. R. Civ. P. 12(b)(1) requires dism issal of an action if the court lacks jurisdiction over the subject m atter of the plaintiff’s claim . Motions subm itted under that rule allow a party to challenge the court’s subject m atter jurisdiction based upon the allegations on the face of the com plaint. Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996); see also Lopez v. City of Dallas, No. 0 3-2223, 20 0 6 WL 1450 420 , at *2 (N.D. Tex. May 24, 20 0 6). In ruling on a Rule 12(b)(1) m otion to dism iss, the court m ay rely on (1) the com plaint alone, presum ing the allegations to be true, (2) the com plaint supplem ented by undisputed facts, or (3) the com plaint supplem ented by undisputed facts and by the court’s resolution of disputed facts. Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420 , 424 (5th Cir. 20 0 1); see also Barrera-Montenegro, 74 F.3d at 659. When exam ining a factual challenge to subject m atter jurisdiction that does not im plicate the m erits of plaintiff’s cause of action, the district court has substantial authority “to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Garcia v. Copenhaver, Bell & Assocs., 10 4 F.3d 1256, 1261 (11th Cir. 1997); see also Clark v. Tarrant County , 798 F.2d 736, 741 (5th Cir. 1986). Accordingly, the Court m ay 5 consider m atters outside the pleadings, such as testim ony and affidavits. See Garcia, 10 4 F.3d at 1261. A court’s dism issal of a case for lack of subjectm atter jurisdiction is not a decision on the merits, and the dism issal does not necessarily prevent the plaintiff from pursuing the claim in another forum . See Hitt v. City of Pasadena, 561 F.2d 60 6, 60 8 (5th Cir. 1977). B. Ru le 12 ( b) ( 6 ) Bank of Am erica also m oves to dism iss the com plaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) m otion to dism iss, plaintiffs m ust plead enough facts “to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atlantic Corp. v. Tw om bly , 550 U.S. 544, 547 (20 0 7)). A claim is facially plausible when a plaintiff pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for the m isconduct alleged.” Iqbal, 556 U.S. at 678. A court m ust accept all wellpleaded facts as true and m ust draw all reasonable inferences in favor of the plaintiffs. Lorm and v. U.S. Unw ired, Inc., 565 F.3d 228, 232-33 (5th Cir. 20 0 9); Baker v. Putnal, 75 F.3d 190 , 196 (5th Cir. 1996). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. 6 A legally sufficient com plaint m ust establish m ore than a “sheer possibility” that plaintiffs’ claim is true. Id. It need not contain detailed factual allegations, but it m ust go beyond labels, legal conclusions, or form ulaic recitations of the elements of a cause of action. Tw om bly , 550 U.S. at 555. In other words, the face of the com plaint m ust contain enough factual m atter to raise a reasonable expectation that discovery will reveal evidence of each elem ent of the plaintiffs’ claim . Lorm and, 565 F.3d at 255-57. If there are insufficient factual allegations to raise a right to relief above the speculative level, Tw om bly , 550 U.S. at 555, or if it is apparent from the face of the com plaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (20 0 7); Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 20 0 7), the claim m ust be dism issed. In deciding a m otion to dism iss for failure to state a claim , a court m ay consider the contents of the pleadings, including attachm ents thereto, as well as docum ents attached to the m otion to dism iss that are referred to in plaintiffs’ com plaint and are central to their claim . Collins v. Morgan Stanley Dean W itter, 224 F.3d 496, 498-99 (5th Cir. 20 0 0 ). Thus, the Court will consider docum ents attached to the m otion to dism iss that are central to the state court foreclosure proceeding. 7 III. D ISCU SSION A. R o o k e r -Fe ld m a n D o ctrin e Bank of Am erica contends that by challenging the foreclosure and sale of their property, plaintiffs are asking this Court to invalidate a state court judgm ent. Under the Rooker-Feldm an doctrine, federal district courts lack jurisdiction to hear collateral attacks on state court judgments. See Rooker v. Fidelity Trust Co., 263 U.S. 413, 415 (1923); D.C. Court of Appeals v. Feldm an, 460 U.S. 462, 476, 482 (1983). In Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (20 0 5), the Suprem e Court clarified that the Rooker-Feldm an doctrine applies only to “cases brought by state-court losers com plaining of injuries caused by state-court judgm ents rendered before the district court proceedings com m enced and inviting district court review and rejection of those judgments.” Id. at 284. In such cases, federal courts lack subject m atter jurisdiction. This doctrine is not lim ited to review of claim s actually raised in state court proceedings. “If the district court is confronted with issues that are ‘inextricably intertwined’ with a state judgm ent, the court is ‘in essence being called upon to review the state-court decision,’ and the originality of the district court’s jurisdiction precludes such a review.” United States v. Shepherd, 23 F.3d 923, 924 (5th Cir. 1994) (quoting Feldm an, 460 U.S. at 8 482 n.16). On the other hand, the Rooker-Feldm an doctrine does not preclude a district court’s jurisdiction over a plaintiff’s “independent claim,” even “one that denies a legal conclusion that a state court has reached.” Exxon Mobil, 544 U.S. at 293 (quoting GASH Assocs. v. Rosem ont, 995 F.2d 726, 728 (7th Cir. 1993)). In support of its argum ent, Bank of Am erica has subm itted its Petition for Executory Process 22 and the Louisiana state court order com m anding the Sheriff of Terrebonne Parish to seize and sell the plaintiffs’ property. 23 There is nothing in the record indicating that the plaintiffs appealed the state court order, and it appears that the state court litigation has ended. Therefore, the state court judgment is a final order that cannot be appealed to this Court under the Rooker-Feldm an doctrine. See Exxon Mobil, 544 U.S. at 291 (Rooker-Feldm an doctrine applies when “the losing party in state court filed suit in federal court after the state proceedings ended, com plaining of an injury caused by the state-court judgment and seeking review and rejection of that judgm ent”); see also Carter v. Deutche Bank N at. Trust Co., 20 10 WL 30 74323, at *2 (E.D. La. Aug. 2, 20 10 ) (applying Rooker-Feldm an doctrine to state court order to issue writ of seizure and sale). 22 23 R. Doc. 8-3. R. Doc. 8-4. 9 In their com plaint, plaintiffs specifically ask this Court to order Bank of Am erica to quitclaim the foreclosed property back to the plaintiffs. This requested relief, which “im m ediately signal[s] a Rooker-Feldm an problem,” would be a clear attack on the state court’s order. Cano v. Deutsche Bank N at. Trust Co., No. 12-2328, 20 13 WL 3930 0 87, at *4 (E.D. La. J uly 29, 20 13) (citing Morris v. Am . Hom e Mortg. Servicing, Inc., 443 F. App’x 22, 24 (5th Cir. 20 11)). This Court cannot review the state court judgm ent, nor does this Court have jurisdiction over plaintiffs’ claims that are inextricably intertwined with that judgm ent. Therefore, as the Court lacks jurisdiction over plaintiffs’ claim s related to the state court judgm ent, these claim s m ust be dism issed. 24 B. Plain tiffs ’ TILA Claim s In addition to their claim s that the state foreclosure action was invalid, plaintiffs assert that GMFS, the initial lender, violated the Truth in Lending Act by allegedly failing to provide the Austins with the required disclosures under TILA and its regulations. Because of this failure, plaintiffs assert that they have the right to rescind the initial loan. Bank of Am erica responds that 24 Because the Court lacks jurisdiction over these claim s, the Court will not address Bank of America’s argum ents that these claim s are also barred by res judicata, or that they fail as a m atter of law because the foreclosure was valid under Louisiana law. 10 to the extent that plaintiffs seek to rescind the initial loan, these claim s are tim e-barred under TILA. Under TILA and its im plem enting regulation, Regulation Z, the creditor m ust disclose, am ong other things, the am ount financed, the annual percentage rate, the payment schedule, total paym ent, and total sale price. See 12 C.F.R. § 226.18. Additionally, the creditor must disclose the consum er’s right to rescind the transaction up to three business days after either the consumm ation of the transaction, the delivery of a notice of the right to rescind, or delivery of all m aterial disclosures, whichever occurs last. 15 U.S.C. § 1635(a). These disclosures m ust be m ade clearly and conspicuously. 15 U.S.C. § 1632(a). If the creditor does not disclose to the consum er the right to rescind or other m aterial disclosures, the right to rescind lasts up to three years after the consumm ation of the transaction. See Castrillo v. Am . Hom e Mortg. Servicing, Inc., 670 F. Supp. 2d 516, 527 (E.D. La. 20 0 9) (citing 15 U.S.C. § 1635(f); 12 C.F.R. § 226.23(a)(3)). A plaintiff need not actually file suit within three years to exercise his or her right of rescission, he or she merely has to notify the creditor in writing of his or her intent to rescind. Jesinoski v. Country w ide Hom e Loans, Inc., 135 S. Ct. 790 , 792 (20 15). 11 Here, the initial loan was executed on October 18, 20 0 6. 25 Therefore, regardless of what disclosures were or were not m ade to the Austins concerning that loan, 26 the right to rescind expired on October 18, 20 0 9. Plaintiffs filed this lawsuit on J une 7, 20 16, well after their right to rescind expired, and they have not alleged that they sent notice to Bank of Am erica or any of its predecessors in interest to notify them of plaintiffs’ intention to rescind the loan within three years of the loan’s execution. Plaintiffs also have not m ade any argument as to why equitable tolling should suspend the lim itations period. See Melancon v. Country w ide Bank, No. 10 -1723, 20 11 WL 6920 51, at *5 (E.D. La. February 18, 20 11). Therefore, plaintiffs’ rescission claim is barred by the statute of lim itations. Id. Plaintiffs also appear to be claim ing dam ages under TILA. Unlike rescission claims under the TILA, dam ages claims under TILA have a oneyear lim itations period. 15 U.S.C. § 1640 (e). This claim therefore expired, at the latest, on October 18, 20 0 7, and is also barred by the statute of lim itations. See Melancon, 20 11 WL 6920 51, at *5. 25 R Doc. 8-3 at 12. The record is unclear as to whether the initial lender com plied with the TILA disclosure requirements. 12 26 Furtherm ore, to the extent that plaintiffs’ TILA claim s are not based on the initial loan but on the 20 13 Loan Modification Agreem ent, 27 the m odification did not give rise to new disclosure requirements or a new rescission right. Though loan m odifications with a different creditor, rather than the original creditor, can create a new right of rescission and disclosure requirements, this will occur only if the m odification satisfies the existing obligation com pletely and replaces it with a new m odification. See 12 C.F.R. § 226.20 (a); Official Staff Interpretation, Supp. I to 12 C.F.R. § 226.20 (a), ¶ 1. Modifications of existing obligations do not constitute a creation of a new obligation that would give rise to a new rescission right or disclosure requirements. Id.; see also Castrillo, 670 F. Supp. 2d. at 527-28. The 20 13 m odification did not replace the existing obligation with a new one, it m erely m odified the existing obligation by am ending the initial prom issory note. 28 Therefore, plaintiffs do not have a cause of action under TILA for the 20 13 Loan Modification Agreement. C. Plain tiffs ’ Re m ain in g Claim s Plaintiffs’ rem aining claim s are meritless and can be sum m arily dism issed. Plaintiffs’ argument that the note and m ortgage are invalid 27 28 R. Doc. 8-6 at 12. Id. 13 because they were not signed by GMFS and MERS, respectively, fails as a m atter of Louisiana law. The Louisiana Uniform Com m ercial Code governs prom issory notes. Under the Louisiana UCC, prom issory notes do not need to be signed by the lender to be valid and enforceable. La. Stat. Ann. §10 :310 4(a). Sim ilarly, the Louisiana Civil Code requires that only the m ortgagor sign a m ortgage for it to be valid and enforceable; the m ortgagee is not required to sign. La. Civ. Code arts. 3288-89; see also Butler v. Quicken Loans Inc., No. 15-6799, 20 16 WL 1383620 , at *3-4 (that m ortgagee did not sign mortgage does not invalidate m ortgage under Louisiana law). Therefore, the lack of a signature by GMFS or MERS, or a “robo-signed” signature, has no bearing on the validity and enforceability of the note or m ortgage. Additionally, plaintiffs’ claim that the m ortgage is invalid because neither GMFS nor Bank of Am erica actually loaned plaintiffs m oney appears to be based on the frivolous “vapor m oney” theory. This theory has been rejected consistently by federal courts across the country, including this Court, and any claim based on this theory is meritless. Richardson v. Deutsche Bank Trust Co. Am s., No. 0 8-10 857, 20 0 8 WL 5225824, at *7 (M.D. Pa. Dec. 12, 20 0 8) (collecting cases); Jackson v. Bank of Am erica, N .A., No. 13-5795, 20 13 WL 61850 37, at *3 (E.D. La. Nov. 26, 20 13). 14 Finally, plaintiffs appear to claim that the securitization of the m ortgage in the form of a pooling and servicing agreement (PSA) invalidates the m ortgage or gives plaintiffs an interest in the PSA’s proceeds, or both. 29 Plaintiffs have pointed to no provision in either the note or the m ortgage that prohibits securitization. Moreover, even if the alleged PSA exists, plaintiffs have not have shown that it is plausible that they are a party to the PSA or an identified third-party beneficiary. Thus, any claim s asserted by plaintiffs arising from the PSA are too speculative to state a claim for which relief can be granted. See, e.g., Sigaran v. U.S. Bank N at. Ass’n, 560 F. App’x 410 , 41314 (5th Cir. 20 14); Joseph v. Hospital Service Dist. N o. 2. of Parish of St. Mary , 939 So. 2d 120 6, 1212-14 (La. 20 0 6). IV. CON CLU SION For the foregoing reasons, Bank of Am erica’s m otion to dism iss is GRANTED. Plaintiffs’ claims are DISMISSED WITH PREJ UDICE. New Orleans, Louisiana, this _ 16th _ day of November, 20 16. ___ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 29 R. Doc. 1 at 2 ¶ B. 15
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