Wilmington et al v. Bay Area Utilities, LLC et al, No. 4:2015cv03031 - Document 21 (S.D. Tex. 2015)
Court Description: MEMORANDUM OPINION AND ORDER granting 16 MOTION to Dismiss and Brief in Support, denying as moot 18 MOTION to Quash Discovery AND MOTION to Stay of Discovery. Defendant Nationstar Mortgage, LLC is dismissed with prejudice. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
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Wilmington et al v. Bay Area Utilities, LLC et al Doc. 21 United States District Court Southern District of Texas ENTERED December 02, 2015 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION DEVON WILMINGTON, Plaintiff, v. BAY AREA UTILITIES, LLC, NATIONSTAR MORTGAGE, LLC, and LEB KEMP, SUBSTITUTE TRUSTEE, Defendants. § § § § § § § § § § § David J. Bradley, Clerk CIVIL ACTION NO. H-15-3031 MEMORANDUM OPINION AND ORDER Devon Wilmington ("Plaintiff" or "Wilmington") has sued Bay Area Utilities, LLC ("Bay Area Utilities"), Nationstar Mortgage, LLC and Leb Kemp, ("Nations tar") , Substitute Trustee, reciting various causes of action relating to the foreclosure sale of her home in July of 2014. 1 Pending before the court is defendant Nationstar Mortgage, LLC's Motion to Dismiss and Brief in Support ("Motion to Dismiss") (Docket Entry No. 16), to which Wilmington has filed an opposition (Docket Entry No. 19) . 2 1 See First Amended Original Petition for Plaintiff's Petition to Remove Cloud and Quiet Title ("Amended Petition"), Exhibit B-4 to Defendant Nationstar Mortgage, LLC's Notice of Removal ("Notice of Removal"), Docket Entry No. 1-2, pp. 27-35. 2 See Devon Wilmington's Opposition to Nationstar Mortgage LLC' s Motion to Dismiss and Brief in Support ("Opposition to Motion to Dismiss"). Dockets.Justia.com I. Factual and Procedural Background Wilmington executed a Deed of Trust granting a lien on her property on February 19, loan. 3 Mortgage 2009, in exchange for a purchase money The Deed of Trust was later assigned to Nationstar by Electronic Registration Systems, Inc. 4 Wilmington defaulted, and Nationstar noticed a foreclosure sale. 5 The sale was held on July 1, 2014, and Nationstar purchased the property. 6 Wilmington filed a "Motion for Judicial Review of Documentation or Instrument Purporting to Create a Lien or Claim" See Deed of Trust, Exhibit F to Motion to Dismiss, Docket Entry No. 16-6; See also Special Warranty Deed with Vendor's Lien dated February 18, 2009, Exhibit A to Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 37. Nationstar attached seven exhibits to its Motion to Dismiss. Exhibits A through E are prior court filings. Nationstar requests the court take judicial notice of these matters of public record. The court will do so, as they may be considered in a motion to dismiss without converting it to a motion for summary judgment. See Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) ("[I]t is clearly proper in deciding a 12 (b) (6) motion to take judicial notice of matters of public record."); Cinel v. Connick, 15 F.3d 133 8, 1343 n. 6 (5th Cir. 1994) (" [C] onsideration of the consent judgment [in deciding this 12(b) (6) motion] does not convert this motion into one for summary judgment")). The other exhibits are the Deed of Trust (Exhibit F to Motion to Dismiss, Docket Entry No. 16-6) and the Corporate Assignment of Deed of Trust (Exhibit G to Motion to Dismiss, Docket Entry No. 16-7), both recorded in the Official Public Records of Harris County, Texas, and properly the subject of consideration here. See also Fed. R. Evid. 201. 3 4 See Corporate Assignment of Deed of Motion to Dismiss, Docket Entry No. 16-7. Trust, Exhibit G to 5 See Notice of Trustee's Sale, Exhibit D to Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 52. 6 See Substitute Trustee's Deed, Exhibit C to Amended Petition, id. at 46. -2- that was dismissed for want of prosecution. 7 Subsequently, Area from Utilities (which acquired the obtained a judgment for eviction. 9 property Bay Nationstar 8 ) Wilmington filed for Chapter 13 bankruptcy before her appeal from the judgment of eviction went to trial. 10 The bankruptcy judge granted Bay Area Utilities's subsequent Motion for Relief from Stay on June 30, 2015, allowing Bay Area Utilities to continue with the eviction proceeding. 11 Wilmington, Plaintiff's pro Petition se, to initiated Remove this Cloud and case when Quiet she Title filed in the District Court for the 133rd Judicial District of Harris County, Texas on August 14, 2015, against Bay Area Utilities. 12 She amended her petition on August 31, 2015, and added Nationstar Mortgage, LLC 7 See Exhibit A to Motion to Dismiss, Docket Entry No. 16-1; Final Order, Exhibit B to Motion to Dismiss, Docket Entry No. 16-2. 8 See Warranty Deed dated July 31, 2014, Exhibit B to Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, pp. 41-45. 9 See Motion of Bay Area Utilities, LLC's for Relief From the Stay, Exhibit C to Motion to Dismiss, Docket Entry No. 16-3, p. 6 ~ 17; see also Memorandum Opinion in Case. No. 15-31207-H3-13, Exhibit E to Motion to Dismiss, Docket Entry No. 16-5, pp. 2-3. 10 See Motion of Bay Area Utilities, LLC's for Relief From the Stay, Exhibit C to Motion to Dismiss, Docket Entry No. 16-3, p. 6 ~ 18; see also Voluntary Petition for Bankruptcy, Exhibit D to Motion to Dismiss, Docket Entry No. 16-4. 11 See Memorandum Opinion in Case. No. 15-31207-H3-13, Exhibit E to Motion to Dismiss, Docket Entry No. 16-5. 12 See Exhibit B-2 to Notice of Removal, Docket Entry No. 1-2, pp. 6-13. -3- and Leb Kemp, Substitute Trustee, as defendants. 13 a Notice of Removal, October 14, 2015. 14 Nationstar filed and the case was removed to this court on Defendant Leb Kemp's Rule 12(b) (6) Motion to Dismiss (Docket Entry No. 3) was granted on November 9, 2015. 15 On that day, Nationstar filed its Motion to Dismiss (Docket Entry No. 16), which is now before the court. II. Under Rule 8 of Standard of Review the Federal Rules of Civil Procedure a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." 8 (a) (2). Fed. R. Civ. P. A Rule 12 (b) (6) motion tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert. denied sub nom. Cloud v. United States, 122 S. Ct. 2665 (2002). The court must 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. To defeat a motion to dismiss pursuant to Rule 12(b) (6), a plaintiff must plead "enough facts to state a claim to relief that 13 See Amended Petition, Exhibit Docket Entry No. 1-2, pp. 27-36. 14 B-4 to Notice of Removal, See Notice of Removal, Docket Entry No. 1. 15 0rder Granting Defendant Leb Kemp's Rule 12(b) (6) Motion to Dismiss, Docket Entry No. 15. -4- is plausible on its face." Ct. 1955, 1974 (2007). s. Bell Atlantic Corp. v. Twombly, 127 "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference (citing Twombly, than a unlawfully." a complaint defendant's defendant is liable Iqbal, 129 S. Ct. pleads 1937, a defendant has (quoting Twombly, 127 S. Ct. at 1965). facts liability, the 1949 'probability requirement,' but it asks sheer possibility that Id. for "The plausibility 127 S. Ct. at 1965). standard is not akin to a for more the Ashcroft v. misconduct alleged." (2009) that that it are 'stops 'merely consistent short of the line acted "Where with' between possibility and plausibility of "entitlement to relief."'" (quoting Twombly, 127 S. Ct. at 1966). to dismiss, a Id. When considering a motion district courts are "limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). proper in deciding a 12(b) (6) matters of public record." However, "it is clearly motion to take judicial notice of Norris, 500 F.3d at 461 n.9. III. Analysis Wilmington's Amended Petition contains a number of claims. It seeks declaratory judgment that "a certain document and claim made -5- by the defendant" is invalid. 16 It asks the court to remove the cloud and quiet title to the property. 17 It argues that defendants have made •false claims" 18 and slandered Wilmington's title to the property. 19 It lists causes of action for fraud, intentional infliction of emotional distress, rescission, and violations of the Truth in Lending Act Procedures Act ( "TILA") and the Real Estate Settlement ("RESPA") based "upon the facts and circumstances surrounding Plaintiff's original loan transaction and subsequent securitization". 20 Wilmington attached the following to her Amended Petition: (1) Special February 19, 2009; 21 (2) Warranty Deed With Vendor's Warranty Deed dated July 31, Lien dated 2014; 22 (3) Substitute Trustee's Deed dated July 15, 2014; 23 and (4) Notice of Trustee's Sale dated May 21, 2014. 24 484 F.3d 776, 780 (5th Cir. 2007) See Ferrer v. Chevron Corp., ("A written document that is attached to a complaint as an exhibit is considered part of the 16 See Amended Petition, Exhibit B-4 Docket Entry No. 1-2, pp. 27, 29 17 See id. at 30. 19 See id. at 33. 20 Removal, See id. 18 to Notice of See id. at 29. 21 Exhibit A to Amended Petition, Removal, Docket Entry No. 1-2, p. 37. Exhibit B-4 22 Exhibit B to Amended Petition, id. at 41. 23 Exhibit 24 Exhibit D to Amended Petition, id. at 52. c to Amended Petition, id. at 46. -6- to Notice of complaint and may be considered in a 12(b) (6) dismissal proceeding."). Nationstar asserts that the "[Amended Petition] is premised on the notion that the foreclosure sale was wrongful because Nationstar is required to prove it owns and holds the original note in open court. " 25 Nationstar quotes from the Amended Petition: 26 • Plaintiff hereby claims the powers, protections and benefits of the Statute of Frauds Annotated, especially where it speaks to the fact that in order to have standing to sue on a debt . . the defendant or moving party must prove the existence of a debt which may only be established by submission of the "original contract," "original promissory note" or agreement in open court, on the record, as evidenced through the testimony of a competent fact witness with personal firsthand knowledge, under oath, and be subject to the test and "fire" of cross examination. 27 • Defendant or moving party must 28 Holder in Due Course . prove it is the • Further, any party that asserts a claim upon Plaintiffs [sic] property must prove with specificity that Plaintiff received equal value, as consideration to the contract, by demonstrating, possession of the 29 original unaltered promissory note . • [T] o streamline the securitization process, the investment banks created an entity called Mortgage Electronic Registrations System ( "MERS") [and] 25 Motion to Dismiss, Docket Entry No. 16, pp. 3-4. 26 Id. at 4. 27 Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 28. -7- would transfer deeds of trust to MERS, thereby separating the mortgage note from the deed of trust. 30 • Plaintiff alleges that Defendants, and each of them, cannot show proper receipt, possession, transfer, negotiations, assignment, and ownership of the borrower's 31 original Promissory Note and Deed of Trust . Nationstar characterizes Wilmington's "underlying theories" as "show-me-the-note" and "split-the-note," which it argues fail as a matter of law, causing her claims to fail as well. 32 In Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253 (5th Cir. 2013), the plaintiff argued that the defendant could not foreclose "because it was assigned only the mortgage, and not the note itself . . the assignment split the note from the deed of trust and [the defendant] therefore had a meaningless piece of paper rather than a debt on which it could foreclose." "split-the-note" theory. "Show-me-the note" argues that a party must produce the original note bearing a order to foreclose. Id. That is the "wet ink signature" in The Fifth Circuit rejected both theories, finding that Texas courts have "rejected the argument that a note and its security are inseparable . II Id. at 255. It also found no authority in Texas requiring production of the "original" note. Id. at 254 30 (citing Blankenship v. Robins, 899 S.W.2d 236, Id. at 32. 31Id. 32 Motion to Dismiss, Docket Entry No. 16, pp. 4, 6-7. -8- 238 (Tex. App.-Houston [14th Dist.] 1994, no writ)). Therefore, to the extent Wilmington's claims rely on these two theories, the Amended Petition fails to state claims upon which relief can be granted. The Fifth Circuit has also rejected quiet title claims relying on challenges to Nationstar here. 379, 383 assignments by MERS, like the assignment to See Warren v. Bank of America, N.A., 566 F. App'x (5th Cir. 2014) ("Additionally, we have previously held that arguments that merely question the validity of an assignment of a deed of trust from MERS to another mortgage servicer are not a sufficient basis for a quiet title action under Texas law. 11 ) • Therefore, Wilmington's quiet title claim cannot survive the motion to dismiss based solely on challenges to that assignment. Nationstar also argues that Wilmington's related challenges to the securitization process have been "repeatedly rejected. 1133 Wilmington's claims regarding this process are not entirely clear. The Amended Petition has no distinct statement of facts; three pages are devoted to a general description of the "securitization process. 1134 Courts in the 5th Circuit have commonly dismissed claims based on challenges to the securitization process. ~. Shaver v. Barret Daffin Frappier Turner & Engel, L.L.P., 593 33 Id. at 7. 34 Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, pp. 30-32. -9- F. App'x 265 1 270-71 (5th Cir. 2014) ("The Shavers have not stated a claim for fraud by nondisclosure because NCM did not have a duty or other transaction related to disclose any securitization . to the loan."); Gibbs v. Ocwen Loan Servicing, LLC, No 3:14-CV1153-M, 2014 WL 4414809, at *4-5 (N.D. Tex. Sept. 5, 2014) ("Plaintiff's arguments that his mortgage was destroyed when it was packaged and sold as security 1 part of a collateralized mortgage-backed that there are flaws within the chain of title, and Plaintiffs similar allegations concerning the securitization of the mortgage are merely "show-me-the-note" iterations theories circuit."); Marban v. that of the have PNC Mortgage, No. 3356285, at *10 (N.D. Tex. July 3, 2013) claims based on a challenge to the "split-the-note" been rejected in 3:12-CV-3952-M, and this 2013 WL (listing cases rejecting securitization process). Wilmington's description of the securitization process, lacking any information about these defendants' conduct 1 is not sufficient to state a claim challenging the creation, assignment, or transfer of the security interest in her property. Nationstar argues that Wilmington has also failed to state a claim as to fraud, 35 intentional infliction of emotional distress, 35 Although the fraud pleading suffers from the same infirmities as the other claims, Fed. R. Civ. P. 9(b) provides a heightened pleading standard under which "a party must state with particularity the circumstances constituting fraud . " See also Benchmark Electronics, Inc. v. J.M. Huber Corg., 343 F.3d 719, 724 (5th Cir. 2003) ("Put simply, Rule 9(b) requires the who, what, (continued ... ) -10- TILA violations, 36 and RESPA violations because Wilmington has not pleaded any facts to support these causes of action. 37 The Amended Petition does not contain factual statements regarding Nationstar's conduct. For example, one paragraph- in the middle of the generic historical recitation- states: "When the Plaintiff, in this case closed on the property at issue, Plaintiff's original lender (or other entity claiming ownership of the note) signed a PSA that governed plaintiff's particular mortgage note. The PSA agreement, as described in more detail below, which the homeowner's loan must detailed the closing date by be 'sold' to the REMIC, and described exactly how the homeowner's note is to find its way from the original lender to the REMIC trust." 38 35 However, the following continued) when, where, and how to be laid out.") (quotations omitted). Amended Petition falls short of this requirement. ( ••• The 36 Nationstar also argues that Wilmington's claim for "rescission" under TILA is barred by the statute of limitations. See Motion to Dismiss, Docket Entry No. 16, p. 8. "[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 & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982); see also Simmons v. Local 565 Air Transp. Div. Transp. Workers Union of Am. AFL-CIO, No. 3:09-CV-1181-B, 2010 WL 2473840, at *4 (N.D. Tex. June 16, 2010). Because the Amended Petition does not contain facts that give rise to a plausible claim for a violation of TILA, the court need not address this argument. 37 Motion to Dismiss, Docket Entry No. 16, pp. 8-10. 38 Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 31. -11- paragraphs do not provide any details about the transactions in this case. 39 Another paragraph states: The Warranty Deed AND SUBSTITUTE TRUSTEE DEED, under which the defendants asserts and interest that interferes with the plaintiff's title, although appearing valid on its face, is in fact invalid and of no force or effect. The plaintiff will show that BAY AREA UTILITIES, NATIONSTAR MORTGAGE LLC, LEB KEMP, SUBSTITUTE TRUSTEE had no title or interest in the property described and had no authority, actual or apparent, to encumber the plaintiff IS property • 1140 However, no facts are provided to support these allegations. Elsewhere, the Amended Petition makes conclusory statements like "The defendants have been making false claims, record, contrary to the statues [sic] contrary to the regarding real estate and foreclosures and have denied Plaintiff Is due process. " 41 "A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not suffice. Likewise, a complaint that articulates 'naked assertions devoid of further factual enhancement' is similarly insufficient to satisfy the pleading requirements of Rule 8." Greater Houston Transp. Co. v. Uber Technolgies, Inc., No. 4:14-0941, 2015 WL 1034254, at *4 (S.D. Tex. March 10, 2015) (citing Twombly and Iqbal). the Amended Petition in its entirety, 39 See id. at 32. 40 Id. at 3 0. -12- Considering Wilmington has failed to allege sufficient factual matter that, when accepted as true, states any claim for relief that is plausible on its face. See Iqbal, 129 S. Ct. at 1949 (citing Twombly, 127 S. Ct. at 1973-74) . 42 The Texas Declaratory Judgment Act is remedial in nature. See Cheaton v. JPMorgan Chase Bank, Nat. Ass'n, No. H-11-1777, 2012 WL 298533, at *2 (S.D. Tex. Carbon & Gasoline Co. v. n.3 (5th Cir. 1996)). Feb. 1, 2012) Interenergy Resources, viable causes 99 F.3d 746, 752 A request for declaratory relief cannot form the basis of an independent cause of action. no (citing Sid Richardson of action remain, See id. at *1. Wilmington's Since request for declaratory judgment is subject to dismissal as well. Wilmington filed an Opposition to Motion to Dismiss. Her primary argument is that Nationstar failed to comply with Texas Property Code requirements in noticing the Trustee's Sale. 43 She argues that "there was no street address on the notice of trustee sale or notice NATIONSTAR. " 44 appointment However I of substitute the Notice of Trustee Is trustee sent by Sale contains the 42 To the extent the Amended Petition asserts a cause of action for slander of title (see Amended Petition at 33) or "making false claims" ( id. at 3 0) , it fails to provide any facts that could support a plausible claim for relief. 43 See Opposition to Motion to Dismiss, Docket Entry No. 19, pp. 2-3, 4-5. Wilmington also makes numerous arguments regarding standing. As the Motion to Dismiss does not challenge Wilmington's standing, the court will not address her arguments. 44 5. See Opposition to Motion to Dismiss, Docket Entry No. 19, p. This instrument contains numerous citations to "RR Vol. 3 11 with (continued ... ) -13- street address of Nationstar as noteholder and of the substitute trustee, c/o Shapiro Schwartz, LLP. 45 Wilmington's arguments do not point out factual allegations in the Amended Petition that state a plausible claim for relief. 46 IV. For the reasons See Iqbal, 129 S. Ct. at 1949-50. Conclusions and Order stated above, Wilmington's claims against Nationstar will be dismissed pursuant to Fed. R. Civ. P. 12(b) (6). Accordingly, Nationstar Mortgage, LLC's Motion to Dismiss and Brief in Support (Docket Entry No. 16) is GRANTED and Wilmington's claims against Nationstar Mortgage, LLC are DISMISSED WITH PREJUDICE. Because the court has granted Nationstar's Motion to Dismiss (Docket Entry No. 16), Nationstar Mortgage, LLC's Motion to Quash and for Stay of Discovery (Docket Entry No. 18) is DENIED AS MOOT. SIGNED at Houston, Texas, on this 2nd day CEMBER, 2015. SIM LAKE UNITED STATES DISTRICT JUDGE 44 ( • • • continued) a page number. It is unclear what Plaintiff is citing to. 45 See Notice of Trustee's Sale, Exhibit D to Amended Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 52. Brian Middleton is listed as substitute trustee with several names crossed through with pen under his, including Leb Kemp's. 46 Further, the court need not address claims not properly included in the complaint and raised for the first time in response to a motion to dismiss. See Water Dynamics, Ltd. v. HSBC Bank USA Nat. Ass'n, 2012 WL 34252, at *9 (N.D. Tex. Jan. 6, 2012). -14-
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