Taylor v. U.S. Bank National Association, as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass-Through Certificates, Series 2005-NC1, No. 4:2013cv03783 - Document 23 (S.D. Tex. 2014)
Court Description: MEMORANDUM OPINION AND ORDER granting 10 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
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IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION DARRYL TAYLOR, Plaintiff, v. U.S. BANK NATIONAL ASSOCIATION, as Trustee for Residential Asset Mortgage Products, Inc., Mortgage Asset-Backed Pass-Through Certificates, Series 2005-NC1, Defendant. § § § § § § § § § § § § § § CIVIL ACTION NO. H-13-3783 MEMORANDUM OPINION AND ORDER Plaintiff Darryl Taylor brought this action against defendant U.S. Bank National Association, as Trustee for Residential Asset Mortgage Products, Inc. , Mortgage Asset-Backed Pass-Through Certificates, Series 2005-NC1 ("U.S. Bank") in the 234th Judicial District Court of Harris County, Texas, where it was filed under Cause No. 2013-72202. Pending before the Failure No. 10). to State a U.S. Bank removed the action to this court. court is Defendants' Claim ("Motion to Motion to Dismiss Dismiss") (Docket for Entry For the reasons explained below, U.S. Bank's Motion to Dismiss will be granted. I. On October 14, 2005, Background Taylor executed a Texas Home Equity Security Instrument granting Home123 Corporation a lien on his Harris County homestead in order to secure a home equity loan.l u.s. Bank, foreclosure the current holder of the on Taylor's homestead under Instrument. 2 On September 19, 2013, Note, sought the Note Taylor sent judicial and Security a Notice of Request to Cure ("Request to Cure") to U.S. Bank alleging several violations of the Texas Constitution in the origination of his home equi ty loan. 3 On December 2, 2013, Taylor brought this action in the 234th Judicial District Court of Harris County, Texas, where it was filed under Cause No. 2013-72202. 4 U.S. Bank removed the action to this court.5 a The parties filed Stipulation on January 2, 2014, stating that Taylor would file an amended complaint and that U.S. Bank would respond within twenty-one days of its filing. 6 The IFirst Amended Complaint, Docket Entry No.7, pp. 2-3 10-11; Texas Home Equity Fixed/Adjustable Rate Note ("Note"), Exhibit 1 to First Amended Complaint, Docket Entry No. 7-1, p. 2; Texas Home Equity Security Instrument ("Security Instrument"), Exhibit 2 to First Amended Complaint, Docket Entry No. 7-1, p. 8. Page citations to exhibits are to the pagination imprinted by the federal court's electronic filing system at the top and right of the document. Page citations to the briefs are to the native page numbers at the bottom of the page in the documents. ~~ ~ 2First Amended Complaint, Docket Entry No.7, p. 1 12; Motion to Dismiss, Docket Entry No. 10, p. 2 ~ 7. ~ I, p. 3 3Notice of Request to Cure ("Request to Cure"), Exhibit 3 to First Amended Complaint, Docket Entry No.7-I, p. 26. 40 r iginal Petition and Request for Disclosures, Exhibit A-2 to Notice of Removal of Civil Action ("Notice of Removal"), Docket Entry No. 1-2, p. 4. 5Notice of Removal, Docket Entry No.1. 6Stipulation, Docket Entry No.5. -2- court incorporated the Stipulation into an Order dated January 3 r 2014.7 On January 6 r 2014 r Taylor filed his First Amended Complaint. 8 On January Dismiss. 9 24 r 2014 r U. S. Bank filed the pending Motion to On January 29 r 2014 r Taylor filed a Motion to Remand r 10 which the court denied. ll On February 14 r 2014 r Taylor filed his response to the pending Motion to Dismiss.12 On February 27 r 2014 r u.S. Bank filed its reply.13 II. A motion to dismiss Procedure 12 (b) (6) Applicable Law pursuant to Federal Rule of Civil for failure to state a claim for which relief may be granted tests the formal sufficiency of the pleadings and is "appropriate when a defendant at tacks the complaint because it fails legally to state a cognizable Ramming claim." United States r 281 F.3d 158 r 161 (5th Cir. 2001). v. The court must 70r der r Docket Entry No.6. 8First Amended Complaint r Docket Entry No.7. 9Motion to Dismiss r Docket Entry No. 10. lOPlaintiffrs Motion to Remand r Docket Entry No. 11i see also Defendantrs Response to Plaintiffrs Motion to Remand r Docket Entry No. 14. llOrder r Docket Entry No. 18. 12Plaintiff r S Response to Defendantrs ("Reponse") r Docket Entry No. 13. Motion to Dismiss 13Reply in Further Support of Defendant r s Motion to Dismiss for Failure to State a Claim ("ReplY")r Docket Entry No. 17. -3- accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in the plaintiff's favor. Id. "When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Swierkiewicz v. Sorema N.A., 122 S. Ct. 992, 997 Scheuer (1974)). v. Rhodes, 94 S. Ct. 1683, 1686 (2002) (quoting To avoid dismissal a plaintiff must allege "enough facts to state a claim to Bell Atlantic Corp. v. relief that is plausible on its face." Twombly, 127 S. Ct. 1955, 1974 (2007). Plausibility requires "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference defendant is liable for the misconduct alleged." complaint pleads facts defendant's liability, possibility and that stops plausibility of (quoting Twombly, omitted). it are 127 S. Ct. merely short entitlement at 1966) the to the "Where a consistent of that line with a between relief." rd. (internal quotation marks "Further, a complaint that shows relief to be barred by an affirmative defense, such as the statute of limitations, may be dismissed for failure to state a cause of action." Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). -4- When considering a motion to dismiss courts are generally "limited to the complaint t any documents attached to the complaint t and any documents attached to the motion to dismiss that central to the claim and referenced by the complaint." Fund V (U.S.), L.P. v. Barclays Bank PLC t 594 F.3d 383 Cir. 2010) 496 t are Lone Star 387 t (5th (citing Collins v. Morgan Stanley Dean Witter t 224 F.3d 498-99 (5th Cir. 2000)). When a party presents "matters outside the pleadings" with a Rule 12 (b) (6) motion to dismiss t the "complete discretion tt court has to either accept or exclude the evidence for purposes of the motion to dismiss. Isquith ex reI. Isquith v. Middle South Utilities, Inc. t 847 F.2d 186 t 194 n.3 (5th Cir. 1988) Taylor has attached copies of the Note Request to Cure and t a printed report t Security Instrument t from the Harris County Appraisal Districtts website to his First Amended Complaint. "A written document that is attached to a complaint as an exhibit 1S considered part of the complaint 12 (b) (6) dismissal proceeding." 776 t 780 (5th Cir. 2007). and may be considered Ferrer v. Chevron Corp. The court will exclude t in a 484 F. 3d all other documents attached to other pleadings for purposes of the Motion to Dismiss. See Isquith t 847 F.2d at 194 n.3. III. In his First Amended Analysis Complaint action for six violations of t Taylor alleges the Texas Constitution t -5- causes of breach of contract, and quiet He title. also seeks declaratory and injunctive relief. A. Violations of the Texas Constitution Taylor alleges violations of six provisions of Article XVI, 50 (a) (6) § loan. He of the alleges Texas Constitution regarding his home equity (1) that the principle amount of the loan exceeded 80% of the homestead's fair market value, in violation of § 50 (a) (6) (B);14 (2) that the loan closed within twelve days of when the lender provided the notice required under of § 50 (a) (6) (M) (1) ;15 (3) § that he did not receive a copy of the final loan documents at closing, in violation of (4) § 50(g), in violation § 50 (a) (6) (Q) (v) ; 16 that he did not receive notice of his right to rescind under 50 (a) (6) (Q) (viii) ;17 consistent with (5) that there was no appraisal 50 (h) (1) ;18 and § (6) that there was no written acknowledgment of the homestead's fair market value, of § 50 (a) (6) (Q) (ix) .19 in violation Taylor argues that because of U. S. Bank's 14First Amended Complaint, Docket Entry No.7, p. 3, 15Id. at 3-4 ~ prepared ~ 13.1. 13.2. 16Id. at 4 ~ 13.3. l7Id. ~ 13.4. The court notes that notice of Taylor's right to rescind appears in capitalized bold type in a box directly above the signature block in Taylor's Security Instrument. Security Instrument, Exhibit 2 to First Amended Complaint, Docket Entry No.7-I, p. 23. 18First Amended Complaint, Docket Entry No.7, p. 4 ~ 13.5. Taylor incorrectly cites § 50 (a) (6) (h) (1), which does not exist. 19Id. at 4-5 ~ 13.6. -6- --------------------------- failure to cure these violations within sixty days of his Request to Cure, the lien against his homestead must "be declared void" and U. S. Bank must "forfeit [] all principal and interest on the loan. ,,20 U.S. Bank argues that Taylor's causes of action based on these alleged violations of the Texas Constitution are barred by the four-year statute of limitations provided in Civil Practice and Remedies Code. 16.051 of the Texas § The court agrees with U.S. Bank. In Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667 (5th Cir. 2013), the Fifth Circuit held that the four-year statute of limitations found in § 16.051 of the Texas Civil Practice and Remedies Code "applies to constitutional infirmities under Section 50 (a) (6) ." 708 F. 3d at 674. The court also held that the statute of limitations begins to run on the date of the injury, which for violations of Id. 50 (a) (6) § at 675-76. claims under Although the plaintiffs in Priester had brought 50 (a) (6) (M) (I) § holding applies to Fargo Aug. Bank, 12, is the date of the closing of the lien. § N.A., and 50 (a) (6) in its entirety." No. H-12-3565, 2013 WL "Priester's Prutzman v. Wells 4063309 (S.D. see also Moran v. Ocwen Loan Servicing, 2013)i No. 13-20242, 2014 WL 1193510, at *1-3 Wiltse v. 50 (a) (6) (N), § Carrington Mortg. Servs., (5th Cir. Mar. 24, L.L.C., 540 F. Tex. L.L.C., 2014); App'x 342, 342-43 (5th Cir. Sept. 20, 2013); Ausmus v. Deutsche Bank Trust Co. Nat. Ass'n, No. 3:13-CV-148, 2013 WL 3938515, at n.3 (S.D. Tex. July 29, 2013). 2°Id. at 5 ~ 15. -7- -_. __ ........ _--------------- Taylor advances three arguments why in this case: (1) § 16.051 should not apply Priester was wrongly decided,21 limitations would not bar the use of § 50 (a) (6) (2) because as a defense to foreclosure,22 limitations should not bar its use "offensively in a declaratory action,u23 and (3) Taylor's causes of action accrued when u.s. Bank failed to cure the alleged defects after receiving the Request to Cure. 24 The Fifth Circuit addressed arguments in Moran and found each to have no merit. identical Moran, 2014 WL 1193510, at *2-3. 21Response, Docket Entry No. 13, pp. 9-11 " 23~28. 22Under Texas law "[i]f a counterclaim or cross claim arises out of the same transaction or occurrence that is the basis of an action, a party to the action may file the counterclaim or cross claim even though as a separate action it would be barred by limitation on the date the party's answer is required." Tex. Civ. Prac. & Rem. Code Ann. § 16.069 (West); see also Sigaran v. U.S. Bank Nat. Ass'n, No. H-12-3588, 2013 WL 2368336, at *8 (S.D. Tex. May 29, 2013) (citing Hennigan v. Heights Sav. Ass'n, 576 S.W.2d 126, 130 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ ref'd n.r.e.); Schanzle v. JPMC Specialty Mortg. LLC, No. 03-09-00639-CV, 2011 WL 832170, at *4 & n.5 (Tex. App.-Austin Mar. 11, 2011, no pet. ) (mem. op.). Here, Taylor has not brought a counterclaim against u.S. Bank -- instead, he has brought a separate action barred by limitations. Cf. First Bank of Roxton v. Shankles (In re Shankles), No. 11-43075, 2013 WL 5348879, at *7-8 (Bankr. E.D. Tex. Sept. 23, 2013). Moreover, a lien securing a home equity loan "may be foreclosed upon only by a court order," Tex. Const. art. XVI § 50(a) (6) (D), and Taylor had the opportunity to assert his alleged "defense [s] to foreclosure" in the state-court judicial foreclosure proceedings. Response, Docket Entry No. 13, p. 11 , 28. 23Response, Docket Entry No. 13, p. 11 , 28. 24Id. at 13-14 " 34-35. -8- ---------_._--------- Here, the loan was closed on October 14, 2005. 25 brought on December 2, 2013, more than eight This suit was Therefore, Taylor's constitutional claims are barred by four-year statute of limitations and will be later. 26 years 16.051's § dismissed. See Priester, 708 F.3d 673-76; Moran, 2014 WL 1193510, at *2-3; Wiltse, 540 F. App'x at 342-43. B. Breach of Contract Taylor alleges that § 50 (a) (6) is "specifically incorporated" 27 "It is into the Security Instrument through a provision stating: Lender's and Borrower's intention to conform strictly to provisions of the Texas Constitution applicable to Extensions of Credit as defined by Section Constitution. 1128 Thus, 50 (a) (6) , Article XVI of the Texas Taylor's claim for breach of contract is based solely on the alleged violations of the Texas Constitution discussed above. 29 25First Amended Complaint, Docket Entry No.7, pp. 3-4 ~ 13.2; Note, Exhibit 1 to First Amended Complaint, Docket Entry No. 7-1, p. 2; Security Instrument, Exhibit 2 to First Amended Complaint, Docket Entry No. 7-1, p. 8. 260riginal Petition and Request for Disclosures, Exhibit A-2 to Notice of Removal, Docket Entry No. 1-2, p. 4. 27First Amended Complaint, Docket Entry No.7, p. 5 also Response, Docket Entry No. 13, pp. 14-15 ~~ 36-41. ~ 18; see 28Security Instrument, Exhibit 2 to First Amended Complaint, Docket Entry No. 7-1, p. 19 ~ 19. ~~ 29See 16-18. First Amended Complaint, -9- Docket Entry No.7, p. 5 Courts have held that claims for breach of contract premised on time-barred claims for violations of the Texas Constitution are subject to dismissal for failure to state a claim. See Nunez v. CitiMortgage, Inc., No. A-14-CA-89-SS, 2014 WL 819463, at *3 (W.D. Tex. Mar. 3, Skinner 2014) i v. Wells No. H-13-2613, 2013 WL 5781244, at *3 Underwood WL v. 3 7 8 8 0 94 , wells *2 at Fargo (S.D. Bank, Tex. Bank, N.A. , (S.D. Tex. Oct. 25, 2013) i N.A. , July Fargo 18, No. H:12-3437, 2013) i 2013 Schanzle, 2011 WL 832170, at *5. Furthermore, Taylor's cause of action for breach of barred contract limitations. is by § 16.051's four-year statute of See Phelps v. U.S. Bank Nat. Ass'n, No. 2:13-CV-361, 2014 WL 991803, at *4 (S.D. Tex. Mar. 13, 2014) (holding that the residual four-year statute of limitations of 16.051 applies to § claims for breach of contract under Texas law) . Taylor argues that his "cause of action for breach of contract did not accrue until very recently when [he] gave notice of the multiple constitutional violations and [U. S. Bank] [U.S. Bank] failed to cure, as required by the Texas Constitution. u30 However, even under a contract "' [w]here a demand is a condition precedent to suit, the plaintiff may not, by failing or refusing to perform the condition, toll the running of the statute and reserve for himself the right to sue within the statutory period from such time as he decides to make a demand.'u Priester, 708 F.3d at 676 n.6 (quoting Aetna Cas. & Sur. Co. v. State, 86 S.W.2d 826, 831 (Tex. 30Response, Docket Entry No. 13, p. 15 ~ 40. -10- ------"------------«~---<-<- Civ. App.-Fort Worth 1935, writ dism'd)). Instead, "'it is the general rule that in such a case a demand must be made within a reasonable time after it may lawfully be made.'" Aetna, 86 S.W.2d at period 'reasonable' limitations." Here, The 831. of time Fifth Circuit to relate to Id. "has the (quoting found statute that of Id. the alleged breach of contract occurred when the original lender failed to "conform strictly to provisions of the Texas Constitution applicable to Extensions of Credit as defined by Section 50 (a) (6), Article XVI of the Texas Constitution, ,,31 at the loan's closing. Taylor's breach of contract claim therefore accrued on October 14, 2005,32 more than eight years before this case was filed. See Phelps, 2014 WL 991803, at *4 ("With respect to breach of contract, the cause of action accrues at the time of the breach." (citing Via Net v. TIG Ins., 211 S.W.3d 310, 314 (Tex. 2006))). Taylor's claim for breach of contract will therefore be dismissed as time-barred and for failure to state a claim. c. Quiet Title Taylor's cause of action for quiet title is based on his allegation that "[t] he Notice of Foreclosure upon which [U. S. Bank] asserts an interest, although facially valid, is in fact invalid 31Security Instrument, Exhibit 2 to First Amended Complaint, Docket Entry No.7-I, p. 19 ~ 19. 32First Amended Complaint, Docket Entry No.7, pp. 3-4 ~ 13.2; Note, Exhibit 1 to First Amended Complaint, Docket Entry No.7-I, p. 2; Security Instrument, Exhibit 2 to First Amended Complaint, Docket Entry No.7-I, p. 8. -11- and of no force or effect because constitutional violations have rendered lien void ab initio.,,33 in violation of § [U. S. [U.S. Bank's] 678; underlying However, as explained in Priester, liens 50(a) (6) are not void, but voidable, and become 708 F.3d at valid "once the period of limitations has passed." 674, uncured Bank's] see also Nunez, 2014 WL 819463, at *3; WL 5781244, at *3; Underwood, 2013 WL 3788094, at *2. Skinner, 2013 Accordingly, Taylor's quiet-title claim has no merit and will be dismissed. 34 IV. Conclusions and Order For the reasons explained above, the court concludes that Taylor has failed to state a plausible claim for relief under any cause of action advanced in his First Amended Complaint. Defendants' Motion to Dismiss for Failure to State a Claim (Docket Entry No. 10) is therefore GRANTED. SIGNED at Houston, Texas, on this 29th day UNITED STATES DISTRICT JUDGE 33First Amended Complaint, Docket Entry No.7, p. 6 also Response, Docket Entry No. 13, pp. 15-16 ~~ 43-47. ~ 22; see 34Because the court has concluded that Taylor has failed to state a plausible cause of action against U. S. Bank under any substantive law, no basis remains for the declaratory and injunctive relief requested in his First Amended Complaint. See Morlock, L.L.C. v. JPMorgan Chase Bank, N.A., No. H-13-0734, 2013 WL 5781240, at *10-*14 (S.D. Tex. Oct. 25, 2013) i Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., No. H-12-1448, 2012 WL 3187918, at *7 (S.D. Tex. Aug. 2, 2012), aff'd, No. 12-20623, 2013 WL 2422778 (5th Cir. June 4, 2013). Accordingly, Taylor's claims for declaratory and injunctive relief will be dismissed. -12-
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