Hernandez et al v. Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QS3 et al, No. 4:2018cv00724 - Document 19 (S.D. Tex. 2018)

Court Description: MEMORANDUM OPINION AND ORDER denying 13 Amended MOTION to Remand; granting 12 MOTION to Dismiss and Brief in Support. (Signed by Judge Sim Lake) Parties notified.(gclair, 4)

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Hernandez et al v. Deutsche Bank Trust Company Americas,...rough Certificates, Series 2007-QS3 et al Doc. 19 United States District Court Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXA S HOUSTON DIVISION August 23, 2018 David J. Bradley, Clerk LUIS HERNANDEZ and ALEXI HERNANDEZ, Plaintiffs, CIVIL ACTION NO . H-18-0724 RESIDENTIAL ACCREDIT LOANS INC ., MORTGAGE A SSET-BACKED PASS-THROUGH CERTIFICATES, SERIES 2007-QS3, DEUTSCHE BANK TRUST COMPANY AMERICA S as TRUSTEE with WELLS FARGO BANK, N .A . as the Mortgage Servicer, Defendants . MEMORANDUM OPINION AND ORDER Plaintiffs, Hernandez and Alexi Hernandez, Husband and Wife (uplaintiffs'/), sued defendants Deutsche Bank Trust Company Americas, as Trustee Asset-Backed Pass-Through Certificates, Series 2007-Q531 (uDeutsche Bank'') and Wells Fargo Bank, N.A . C'Wells Fargo/') (collectively, uDefendants/') the County, Texasx Defendants timely removed courtx Pending before the court and Brief Harris Judicial District action Defendants' Motion to Dismiss Support (uMotion to Dismiss/') (Docket Entry and Plaintffs' Motion to Remand (nMotion to Remand'') (Docket lsee Plaintiff's gsicq Original Petition Seeking Declaratory Judgment and Application for Temporary Restraining Order (noriginal Petition''), Exhibit D-1 to Notice of Removal, Docket Entry No. 1-5. 2See Notice of Removal, Docket Entry No . Dockets.Justia.com Entry No. 13) For the reasons stated below, the Motion to Remand will be denied, the Motion Dismiss will be granted , and this action will be dismissed with prejudice. 1. Factual Allega tions and Procedural Backcround3 - - In their Original Petition Plaintiffs allege that they owned the real property located at 13138 Chatfield Manor Lane, Tomball, Texas 77375 (uthe Property'/). On December Hernandez obtained the amount of $225,000.00 from Wachovia Mortgage Corporation , secured by Trust (collectively, 2006, Plaintiff Luis Note a Deed uLoan'').4 Only Luis Hernandez signed the Note, and 50th Luis and Alexi Hernandez signed the Deed of Trustx December 2009, the Loan was assigned Wells Fargo was Wells Fargo Bank, mortgage servicer for Deutsche Bank, mortgagee of the Note and Deed of Trustx 3see Original Petition, Exhibit Docket Entry No . 1-5, pp . 2-4. On January Notice 2018, Removal, 4See Note, Exhibit 5 to Original Petition , Exhibit D-1 to Notice of Removal, Docket Entry No. 1-57 Deed of Trust, Exhibit 1 to Motion to Dism iss, Docket Entry No . 12-1. ssee id . 6Assignment of Note and Deed of Trust, Exhibit 2 to Motion to Dismiss, Docket Entry No . 12-2, 2. Rsee Notice of Acceleration, Exhibit 2 to Original Petition, Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 16 . Wells Fargo issued notice acceleration connection w ith Plaintiffs' Loan and initiated foreclosure proceedings.' On March 1, 2018, Plaintiffs filed suit against Defendants in state court seeking restraining orderx declaratory judgment and temporary On March 2, 2018, the State Court issued a Temporary Restraining O rder and suspended foreclosure sale of the Propertyx o Defendants move to dismiss a1l claims for failure to state claim upon which relief can be granted under Federal Rule of Civil Procedure l2 (b) (6) Plaintiffs oppose Defendants' Motion to Dismisslz and move to remand this action to State Courtx 3 II . Plaintiffs' Motion to Remand Defendants removed this action on March 7, 2018, arguing that the court has subject matter jurisdiction under because there 5 1332 complete diversity of citizenship and the amount 8see Notice of Acceleration , Exhibit 2 to Original Petition, Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 16; Notice of Sub stitute Trustee Sale , Exhib it 2 to Original Petition, Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 18. goriginal Petition , Exhibit Entry No . 1-5, 2. Notice of Removalr Docket loTemporary Restraining Order, Exhibit Removal, Docket Entry No . 1-6, pp . 2-3 . H see Motion Notice Dismiss, Docket Entry No . Hsee Plaintffs' (sicq Second Amended Response in Opposition to Motion to Dismiss for Failure to State a Claim CAplaintiffs' Response''), Docket Entry No. 18. l3see Motion to Remandr Docket Entry No . in controversy exceeds $75,000.11 Plaintiffs argue that the action should be remanded because the Loan violates the Texas Constitution supplemental jurisdiction 1367 ,15 under they argue that complete diversity does not exist or that the jurisdictional minimum is not A. Standard of Review 28 U .S.C. 5 1441(a) provides that civil action brought State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, the district the United States district and division embracing the place where such action pending.'' Original federal jurisdiction exists where the civil action arises uunder the Constitution , laws, United States .'' 1331. treaties addition, u gtqhe district courts shall have original jurisdiction of a11 civil actions where matter exclusive value controversy exceeds the sum interest and costs, and is between $75,000, citizens different States.'' 28 5 1332. jurisdiction is based on diversity an be removed if any of the parties interest properly joined and served as defendants l4Notice Removal, Docket Entry No . issee Motion Remand, Docket Entry No . p. pp . a citizen the State which Ethe) action 1441 (b )(2). That brought .'' 28 5 district court cannot exercise diversity the plaintiffs shares the same state jurisdiction citizenship as one of the defendants.'' Whalen v . Carter, 954 1087, 1094 (5th Cir. 1992). A fter removal uEif) case, the plaintiff may move for remand and appears that the district court lacks subject matter jurisdiction, the case shall be remanded.'' 28 l447(c). Removal jurisdiction depends the plaintiffs' state court pleadings at the time of removal. Cavallini v . State Farm Mutual Auto Insurance Co., 44 F.3d 256, 259 (5th Cir. 1995). The removing party bears the burden of showing that subject matter jurisdiction existed and that the removal procedure was properly followed . Manguno v . Prudential Propertu & Casualtv Insurance Co ., 276 F.3d 2002). Fifth Circuit has held that removal statutes are to be construed ustrictly against removal and for remand .'' Eastus v . Blue 5ell Creameries, L .P., 97 F .3d 100, (5th Cir. 1996) (citing Shamrock Oil & Gas Coro . v. Sheets, 868, B. (1941)). Analysis Because Plaintiffs are domiciled in Harris County, Texas , where they have their fixed residence and an intent l6original Petition , Exhib it Entry No . 1-5, p . 3. remain,lf to Notice of Rem oval, Docket they are citizens of Texas for diversity purposes . See Freeman v . Northwest Accertance Corr w 754 F.2d 555-56 1985). Deutsche Bank is a New York corporation with its principal place of business in New YorkxR Deutsche Bank is therefore a citizen of New York, Plaintiffs do not argue otherwise . 28 5 l332 (c) (1); Bynane v . Bank of New York Mellon, (5th 2017) (holding that a trustee's citizenship controls for diversity purposes when party sued capacity as a trustee). Defendant Wells Fargo is a national banking association which , under articles of association , has South Dakota. Wells Fargo is therefore a citizen Plaintiffs diversity purposes, Wachovia Bank v. Schmidt, 126 set forth articles South Dakota argue otherwisex 8 941, 945 (2006) (u EAq national a citizen of the State in which bank main office in association, main office, as located .rr). The parties are therefore completely diverse . For diversity jurisdiction under 28 U.S.C. 5 1332(a), actions enjoining lender from transferring property and preserving an individual's ownership interest , property represents GMAC Mortcace L .L.C., amount the value of controversy .'' F.3d 338, 341 (5th omitted). Because Plaintiffs seek injunctive relief Farkas v . (citation preclude foreclosure of the Property and seek a declaration that the lien is lRNotice 18Id . Removal, Docket Entry No . void, and because the current market value of the Property $290,091,19 amount controversy exceeds jurisdictional minimum of $75,000. Because the parties are completely diverse and the amount-incontroversy requirement has been met, the court has original diversity U .S .C . 1332 . Plaintiffs' arguments that the court should abstain from adjudicating this case have merit because federal district court may exercise any civil action that diversity requirem ents satisfies Energv Manacement Services , LLC v . Citv of Alexandria, 739 F.3d 255, 259-60 (5th The court therefore will deny Plaintiffs' Motion to Remand . 111 . A. Defendants' Motion to Dismiss Standard of Review Civil Procedure Under the Federal Rules contain ua short and plain statement pleader entitled the claim showing that the relief .'' plaintiff's pleading must provide the grounds of relief, and N'a formulaic recitation of the elements action will not 1955, 1965 pleading must entitlement cause of Dell Atlantic Corp . v . Twombly , (2007). u'gNlaked assertion gsq' devoid 'further factual enhancement''' ultjhreadbare recitals lgHarris county Appraisal District Real Property Account Information, Exhibit E to Notice of Removal, Docket Entry No . 1-8, p. 2. elements of a cause action , supported not suffice .'' statements, mere conclusory See Ashcroft v . Iqbal, 1937, 1949 (2009). nlcqonclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent motion to dismiss .'' Fernandez-Montes v . A llied Pilots Rss 'n, 987 F .2d 1993). Instead, ''Eaq claim has facial plausibility the court that allows draw the reasonable inference that the defendant liable for the misconduct alleged .'' Igbal, l29 1949. Rule l2 (b)(6) motion tests the formal sufficiency p leadings and complaint because uappropriate fails when state defendant attacks the legally cognizable claim .'' Ramminc v. United States, 281 F.3d 158, denied sub nom . Cloud v . United States, 2001), cert. 2665 (2002). defeat a motion to dism iss, a plaintiff must plead nenough facts state claim to relief that favorable plausible on face .'' Twomblv, 1974. The court find inferences the plaintiffs'' ''accept conclusory allegations, unwarranted deductions, or legal conclusions .'' Southland Securities Corr. v. INsrire Ins. Solutions, Incw 365 F.3d 353, (5th Cir. 2004) (internal quotation marks and citations omitted). nlclourts are required to dismiss, pursuant ERule 12 (b) (6)2, claims based invalid legal theories, even though they may otherwise be wellpleaded.'' Flynn v . State Farm Fire and Casualtv Insurance Co. - 8- (Texas), 605 F. Supp . 2d 811, 82O (W.D. Tex. 2009) (citing Neitzke v. Williams, 109 Ct. 1827, 1832 (1989)). B . Analysis Plaintiffs allege that the Loan violates Texas Constitution because Plaintiff Alexi Hernandez sign Note or consent to the Loan .20 Plaintiffs appear to assert a cause action quiet title, and seek an injunction preclude foreclosure of the Property, a declaratory judgment, and damages .zl Plaintiffs also argue that Defendants have standing to foreclose on the Property because the Loan violates the Texas Constitution.zz Plaintiffs assert one sentence of their Original Petition b reach contract claim against Defendants.z3 Defendants move dism iss Plaintiffs' claims arguing that Plaintiffs' quiet title claim fails M original Petition, Exhibit Entry No. 1-5, p . 4 . matter to Notice and that Removal, Docket 21See id . a t 22zci. at 23Id. at 4. (MThus Plaintiffs pleading using the Texas constitution should resolve this conflict in Plaintiffs favor according where M rs. Hernandez did not sign the loan note thus the Hernandez promissory loan was a written agreement where the applicable law the and thus a breach of contract since the Defendants purchased a note which did not follow the strict Constitution standards there is no Mrs. Hernandez consent .''). Plaintiffs are entitled injunctive relief.24 In response Plaintiffs reiterate the arguments in their Original Petition and argue that Defendants have cured the constitutional defect after Plaintiffs served a notice right to cure .25 Quiet Title Action remove cloud quiet title exists u Ato enable the holder of the feeblest equity to rem ove from his way to legal any unlawful hindrance having appearance right.''' Essex Crane Rental Corr . v . Carter, (Tex. App. Houston n.r.e.)). The plaintiff has superior equity and right property affected by facially Waco 1980, ref'd burden of proof to establish his relief. Id . do so the plaintiff specific property , an interest claim , although S .W .3d 366, 388 Dist.q 2012, pet. denied) (quoting Bell v. Ott, 606 S.W .2d 942, 952 (Tex. App. must show better title the claim by the defendant, and valid , invalid unen forceable . Vernon v. Perrien, 39O S.W .3d 61-62 (Tex. App . - E1 Paso 2012, pet.) (citation omitted). The plaintiff must recover on the strength of his own title , the weakness a defendant 's Hurd v . BAC Home Loans Servicing, LP, 88O F . Supp . 24see Motion to Dismiss, Docket Entry M plaintiffs' Responser Docket Entry No . 18, pp . (N .D. 2012); Ventura v. Wells Farco Bank, N.A., Civil Action No . 4:17-O75-A, 2017 WL 1194370, 20177 Martin v. Amerman, (N .D. Tex. March 30, S.W.3d 262, (Tex. 2004) (citation omitted). seek removal Plaintiffs appear Property arguing the cloud on title Defendants do not have standing foreclose and that the Loan violates the Texas Constitutionx 6 Plaintiffs argue Defendants assert an interest , although L oan facially valid, invalid and Defendants' uncured constitutional Defendants' underlying Defendants' claim lien therefore void .27 force violations effect because have Plaintiffs interferes rendered allege their that title .2' Defendants contend that Plaintiffs' claim fails as a matter Plaintiffs' claim superior title based the strength of Plaintiffs' title to the Property , but on the weakness Defendants' title the Property resulting from the alleged violations of the Texas Constitution . Therefore, Plaintiffs' quiet 26original Petition, Exhibit D-1 to Notice of Rem oval, Docket Entry No. 1-5, p. 7 (nWas the title to the property affected by a claim by the Defendant?//). 27(gd . 28jd . 29Motion to Dismiss, Docket Entry No . title claim fails as matter law . See Ventura, 2017 WL 1194370, at *2-*3 (dismissing the plaintiff's quiet title claim because rested on the weakness of the defendant's title rather than on the strength the plaintiff's title) Breach of Contract and Constitutional V iolations Although Plaintiffs' argument Constitution is not applicable court will evaluate Constitution suit validity order quiet title, Loan under determine whether Plaintiffs Texas have of contract . Plaintiffs argue that because Alexi Hernandez did their Loan, Constitution sign the Note that secured violates Section 5O(a)(6)(A ) therefore ''Plaintiffs' lien does constitutional provision because va1id .30 Texas Defendants argue that fall within scope that a purchase-money lien , a home-equity lien ./'3C prohibits a forced sale if the extension of credit secured by a voluntary under a written agreement was created without the consent of each owner and each owner's spouse . TEx. CoNsT. art. XVI, 5 50(a) (6)(A). Section 50 (a)(1) states that Moriginal Entry No . 1-5, p . Exhibit D-1 to Notice of Removal, Docket 3lMotion to Dism iss, Docket Entry No . p. the homestead is 'Aprotected from forced sale, the payment of debts except for: the purchase money thereof, or a part of such purchase money E.q'' Id. 50 (a)(1). Section 50(a) the Texas Constitution does not create a separate cause of action, describes what a home-equity the option must look like foreclose usimply a lender wants homestead upon borrower default .'' Garofolo v. Ocwen Loan Servicina, L.L.C., S.W .3d 474, (Tex. 2016). But a borrower may assert constitutional violations through breach provision contract action when the constitutional forfeiture incorporated Alexander v. Wells Farco Bank, N.A., 867 F.3d 593 (5th Cir. 2017)7 Johnson v . Citiqrour Mortgage No. 5:16-cv-ll14-RCL, 2017); Garofolo, Loan Trust WL 3337268, S.W .3d at Incw Action (W .D. Tex. Aug. Wood v . HSBC Bank USA , N .A ., S.W .3d 542, 546 (Tex. 2016). measured by the loan includes exists origination and whether term s and conditions required eligible .'' Garofolo, 497 S .W .3d at 478. foreclosure- Deed Trust connection with Loan that b0th plaintiffs signed identifies the Loan as a purchase money 1ien32 and states that : Loan is Not a Home Equity Loan . The Loan evidenced by the Note is not an extension of credit as defined by Section 50(a)(6) or Section 50(a) (7), Article XVI, of the Texas Constitution .B3 Because the Loan is a purchase money lien, not home equity lien, the requirements and protections of the Texas Constitution do not apply to 836 S.W.2d TEX. CoNsT. art. XVI, 145, 146 (Tex. 1992) 50(a); HegGen v. Pemelton, (''The Texas Constitution specifically protects homesteads from forced sale except to satisfy liens securing purchase money, tax, home improvement debts./') The court therefore concludes that Plaintiffs have failed to state contract based claim for breach violations of the Texas Constitution . 3. Standing Foreclose Plaintiffs' arguments that Defendants do not have standing to foreclose are based on alleged constitutional violations . Because the court has concluded the 32Deed of Trust , Exhibit 1 to Motion to Dismiss, Docket Entry No. 12-1, p. 11 % 27 (marking an A'X'' in the box for nPurchase Money'' and stating that A'Etqhe funds advanced to Borrower under the Note were used to pay all or part of the purchase price of the Property.'/). 33Id . at % 28. the Loan , Plaintiffs' arguments have no merit . Moreover, under Texas Property Code, party has standing nonjudicial foreclsoure sale party EverBank, N .A . v . Seedergy Ventures, Incw initiate mortgagee.'' 499 S .W .3d 534, 539 (Tex. App.--Houston (14th Dist.q 2016, reh'g overruled) (citing Tex. Prop . Code 55 51.002, 51.0025). grantee, beneficiary, owner, such as mortgagee includes holder of a security instrument, deed security interest has been assigned of record, the last person has been assigned record.''' whom the security interest Id . (citing Tex. Prop . Code 55 51.0001(4), (6)). Because the Note and Deed of Trust were assigned to Wells Fargo3l and Wells Fargo served as the mortgage servicer Deutsche Bank, the mortgagee,3s Defendants have standing foreclose on the Property. Request for Declaratory Judgment Plaintiffs also seek a declaratory judgment. Chapter the Texas Practice and Remedies Code, titled the uTexas Declaratory Judgments Act r'' procedural, substantive, provision and therefore does not apply to actions in federal court . Vera v . Bank of America, N .A ., App 'x Cir . MA ssignment of Note and Deed of Trust , Exhibit Defendants' Motion to Dism iss, Docket Entry No . 12-2, p . 2 . 35See Notice of Acceleration, Exhibit 2 to Original Petition, Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 16. 2014). request for declaratory judgment under state law is thus considered as a claim under the federal Declaratory Judgment Act . See 2201. existence of nBoth Texas and federal justiciable case controversy require the order grant declaratory relief .'' Val-com A cguisitions Trust v . CitiMortgaqe, App'x 398, Inc ., Bank v . Beadle, judgment Cir. 2011) (citing Bonham State S.W .2d 465, (Tex. 1395)). UA declaratory litigate some underlying parties requires claim or cause of action .'' Conrad v . SIB Mortaale Corp w No . 4:14- CV-9l5-A, 2015 WL 1026159, this as (N.D. Tex. March plaintiff's claims 2015). When, be dismissed, Wheeler v . U .S . Bank request Nat'l A ssrn , Civil Action No . H-14-0874, 2016 WL 554846, (S.D. Tex. Feb. 2016). Plaintiffs request a declaratory judgment that nthe Defendant must produce the one and only Original Prom issory Note signed the Plaintiff for inspection document examiner prior to proceeding with judgment that pursuant declare that foreclosure proceedings; attempt Texas Property Code Sec . 51.001 foreclose seq . an Plaintiffs do not support this request 36original Petition , Exhibit Entry No. 1-5, p . 9 . - 16- Notice of Removal, Docket with any legal factual Plaintiffs' request title, breach arguments . based contract, underlying claim s will To the extent that their arguments regarding quiet standing, because dism issed , Plaintiffs' w ill not grant declaratory relief. Request Plaintiffs Injunctive Relief have requested injunction against Defendants. a temporary and uunder Texas a permanent request injunctive relief is not itself a cause of action but depends on an underlying cause of action .'' Cook v . Wells Fargo Bank, N .A ., Civil Action No. 3:1O-CV-0592-D, 2010 WL 2772445, 2010); Butnaru v. Ford Motor Co., (N.D. S.W.3d 198, July (Tex. Because Plaintiffs have failed to state a claim upon which relief can be granted, they IV . For the relief . Conclusions and Order reasons discussed Part above , court concludes that Defendants have met their burden to prove that the court has diversity jurisdiction. Accordingly, Plaintiffs' Motion Remand (Docket Entry No. discussed their Original DENIED. above, Plaintiffs have failed Petition any claims upon which relief reasons state be granted . Nor have Plaintiffs provided the court with any reason to conclude that amending their pleadings would cure the deficiency. Defendants' Motion Dismiss (Docket Entry No. therefore GRANTED, and this action will be dismissed with prejudice. SIGNED Houston, Texas, on this day of August, 2018. < r SIM LAKE UNITED STATES DISTRICT JUDGE

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