Randy Warren v. Bank of America, N.A.
UNPUBLISHED OPINION FILED. [13-10353 Affirmed ] Judge: CDK , Judge: WED , Judge: JWE Mandate pull date is 05/27/2014 [13-10353]
Date Filed: 05/06/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
May 6, 2014
Lyle W. Cayce
Plaintiff - Appellant
BANK OF AMERICA, N.A., as Successor by Merger to B.A.C. Home Loans
Servicing L.P., formerly known as Countrywide Home Loan Servicing, L.P.,
Defendant - Appellee
Appeal from the United States District Court
for the Northern District of Texas
Before KING, DAVIS, and ELROD, Circuit Judges.
Randy Warren appeals the district court’s judgment dismissing his
complaint against Bank of America, N.A., for quiet title to a residential
property. For the reasons that follow, we AFFIRM the judgment of the district
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Date Filed: 05/06/2014
Factual and Procedural Background
On September 20, 2006, Plaintiff-Appellant Randy Warren obtained a
home equity loan for $255,200 from American Brokers Conduit, and he signed
a promissory note, which he secured by executing a deed of trust conveying a
residential property located at 4131 Buena Vista Street, in Dallas, Texas (“the
property”). The note and the deed of trust identify American Brokers as the
“Lender,” and the deed of trust names Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the “nominee” for Lender and its successors and
assigns, as well as the beneficiary. The deed of trust grants MERS the right
to exercise any or all of the interests Warren granted in the deed of trust,
including the right to foreclose and sell the property, and to take any action
required of the Lender, including releasing and cancelling the deed of trust.
In December 2008, MERS assigned the note and deed of trust to
Countrywide Home Loan Servicing, L.P. (“Countrywide”). The assignment
identified MERS as the assignor and specified that MERS was acting as a
“nominee for Lender and Lender’s successors and assigns.” The assignment
was recorded with the Dallas County Clerk.
became known as B.A.C., and Bank of America, N.A. (“BOA”) became a
successor by merger to B.A.C. BOA then attempted to foreclose on the property
by filing a notice of substitute trustee sale.
On December 6, 2011, Warren filed this quiet title action in state court,
challenging BOA’s authority to conduct a foreclosure sale. That same day, the
state court issued a temporary restraining order preventing BOA from
foreclosing on the property. On December 30, 2011, BOA removed this action
to federal court based on diversity jurisdiction. BOA then moved to dismiss
the complaint for failure to state a claim. Warren opposed the motion and, in
the alternative, requested leave to amend his complaint. The district court
referred the matter to a magistrate judge, and the magistrate judge
Date Filed: 05/06/2014
recommended that the court grant the motion to dismiss with prejudice and
deny Warren’s request to amend. The district court entered an order adopting
the magistrate judge’s findings and conclusions on July 24, 2012.
On November 9, 2012, Warren, with the assistance of a new attorney,
filed a motion to vacate the final judgment on the ground that he had not
received the magistrate judge’s findings, conclusions, and recommendation.
The district court granted the order and permitted Warren to file objections.
BOA responded to the objections, noting that many were not based on the
complaint’s original claims and that some of his new claims were barred by the
statute of limitations.
On March 19, 2013, the district court accepted the magistrate judge’s
findings, conclusions, and recommendation.
It overruled all of Warren’s
objections, dismissed Warren’s complaint with prejudice, and entered
judgment in BOA’s favor.
Warren timely appealed the district court’s
dismissal of his complaint, but he does not challenge the court’s denial of his
request to amend.
Standard of Review
This court reviews a district court’s grant of a motion to dismiss de novo.
Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). In reviewing the
complaint, we accept all well-pleaded facts as true and view those facts in the
light most favorable to the plaintiff. Id. The facts taken as true must, however,
“state a claim that is plausible on its face.” Amacker v. Renaissance Asset
Mgmt. LLC, 657 F.3d 252, 254 (5th Cir. 2011). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This includes the basic requirement
that the facts plausibly establish each required element for each legal claim.
Id. at 682–83; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). However,
Date Filed: 05/06/2014
a complaint is insufficient if it offers only “labels and conclusions,” or “a
formulaic recitation of the elements of a cause of action.” Iqbal, 556 US. at 678
(quoting Twombly, 550 U.S. at 555).
Warren’s claim to quiet title rests on the theory that BOA is not the
present owner of the note and, therefore, BOA does not have the right to sell
the property at a foreclosure sale. Specifically, he argues that he is entitled to
quiet title because: (1) the Federal National Mortgage Association (“Fannie
Mae”) has asserted a claim of ownership on his home; (2) MERS could not
assign any interest in the loan due to the “ambiguities” in the loan contract;
and (3) the note was securitized and transferred to unknown investors, so this
further proves that BOA did not legally own the note. Thus, Warren concludes
that he has quiet title to the property over all third-party claims. 1 We disagree.
Warren’s appeal raises several other legal issues, all of which have been waived and
will not be considered here. Warren argues on appeal that (1) the loan was a Texas home
equity loan governed by the Texas State Constitution; (2) the loan was a refinancing for a
property already owned by Warren; and (3) the loan was void ab initio because the loan-tovalue ratio exceeded eighty percent. Warren raised these arguments for the first time in his
objections to the magistrate judge’s findings and conclusions. “[A] party who objects to the
magistrate judge’s report waives legal arguments not made in the first instance before the
magistrate judge.” Freeman v. Cnty. of Bexar, 142 F.3d 848, 851 (5th Cir. 1998) (citing Cupit
v. Whitley, 28 F.3d 532, 535 (5th Cir. 1994)); see also Requena-Rodriguez v. Pasquarell, 190
F.3d 299, 307 n.27 (5th Cir. 1999). Warren claims that, based on the documents attached to
his complaint, it was apparent that the loan was a home equity loan from the initial filing of
the case, so these arguments have not been waived. However, his complaint never mentioned
a “home equity loan,” and made several references to mortgages. His response in opposition
to BOA’s motion to dismiss likewise never distinguished between a “conventional mortgage”
and a home equity loan. More importantly, his objections were the first time that he raised
legal arguments concerning the validity of the home equity loan under Texas law and alleged
that BOA engaged in predatory lending practices. We consider these arguments waived.
Warren also argues for the first time on appeal that the district court erred in
accepting the magistrate judge’s conclusions regarding the various allonges to the home
equity loan and allegedly concluding that it is irrelevant who owned the loan subject to
litigation for purposes of establishing a violation of the federal Fair Debt Collection Practices
Act, the Texas Debt Collection Practices Act, and the Emergency Economic Stabilization Act.
Since Warren raises these additional contentions for the first time on appeal, we will not
consider them. See Leverette v. Louisville Ladder Co., 183 F.3d 339, 342 (5th Cir. 1999).
Date Filed: 05/06/2014
Warren fails to allege sufficient facts to establish the superiority of his
title to the property. Because we have diversity jurisdiction over this action,
we must apply the substantive law of the forum state. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 78 (1938). It is undisputed that Texas law governs this
matter. Under Texas law, to prevail in a suit to quiet title, the plaintiff must
prove: (1) his right, title, or ownership in real property; (2) that the defendant
has asserted a “cloud” on his property, meaning an outstanding claim or
encumbrance valid on its face that, if it were valid, would affect or impair the
property owner’s title; and (3) that the defendant’s claim or encumbrance is
invalid. See Gordon v. W. Houston Trees, Ltd., 352 S.W.3d 32, 42 (Tex. App.—
Houston [1st Dist.] 2011, no pet.); see also Hahn v. Love, 321 S.W.3d 517, 531
(Tex. App.—Houston [1st Dist.] 2009, pet. denied) (“[T]he plaintiff has the
burden of supplying the proof necessary to establish his superior equity and
right to relief.”). Thus, the plaintiff “must prove and recover on the strength
of his own title, not the weakness of his adversary’s title.” Fricks v. Hancock,
45 S.W.3d 322, 327 (Tex. App.—Corpus Christi 2001, no pet.)
Warren first argues that BOA has no claim to the title based on the fact
that Fannie Mae allegedly claims an interest in the title. The district court
rejected this argument as a basis for quiet title on the ground that it was
conclusory and unsupported by specific factual allegations. Moreover, the
district court explained that the allegation that Fannie Mae has an interest in
the title did not demonstrate that Warren had superior title, which is essential
in a quiet title claim.
The district court concluded that “[t]his allegation
impermissibly relied on the weakness of BOA’s title and not on the strength of
his own title.” Specifically, Warren had not pled that he was current on his
mortgage payments, and he offered only “meritless theories to excuse his
failure to make those payments.” Warren responds in his appeal that he has
not had an opportunity to present evidence on this claim to determine the chain
Date Filed: 05/06/2014
of title for his loan. Since his pleadings merely state that Fannie Mae has
“claimed to own a loan at Plaintiff’s address,” we agree with the district court
that Warren’s allegations are insufficient to state a claim upon which relief
may be granted. Iqbal, 556 U.S. at 678. Additionally, his failure to establish
his own superior right to the property, such as by pleading that he was current
on his mortgage payments, also renders his quiet title claim defective. See, e.g.,
Gordon, 352 S.W.3d at 42.
Next, Warren contends that BOA was never legally assigned the note or
deed of trust because MERS, as a “nominee,” lacked the authority to assign
either to third parties. Warren cites cases applying other states’ law in order
to argue that MERS is a “straw man” and lacks authority to assign a mortgage
note. He concedes that this is not a valid interpretation of Texas law but
nonetheless urges us to apply the laws of the other states. However, it is well
settled that under Texas law, which applies in the present matter, MERS is a
mortgagee and may transfer to a mortgage servicer, such as B.A.C., authority
to foreclose. See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249,
255 (5th Cir. 2013). 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. See Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., No. 1220623, 2013 WL 2422778, at *2 (5th Cir. June 4, 2013) (per curiam)
Warren also claims that, even if we apply Texas law, there are
“ambiguities” in the loan contract.
He specifically states that the terms
“successors” and “assigns” fail to specify who MERS’s successors and assigns
are. Thus, he concludes that MERS had a “blank check” to transfer or sell the
beneficial interest to “unknown third parties.” However, he provides no legal
authority for his proposition that, under Texas law, the contract that grants a
Date Filed: 05/06/2014
mortgagee the right to transfer its interests to mortgage servicers not
specifically listed in the document is problematic, let alone that it shows that
he has superior title to the property.
Lastly, Warren argues that he is entitled to quiet title because the note
was allegedly securitized and transferred to unknown investors, thus making
it impossible for BOA to have acquired ownership. The district court rejected
this argument on the ground that Warren provided no legal authority for the
proposition that the securitization of debt renders the note and accompanying
deed of trust unenforceable. The district court explained that a number of
other district courts across the country have likewise found this argument
meritless. On appeal, Warren raises the same argument without providing
legal authority for his claims. Even had he provided legal authority for this
proposition, this argument suffers from the same defect as his previous
arguments—in attacking the validity of the transfer to BOA, Warren has still
not demonstrated that he has superior title. Fricks, 45 S.W.3d at 327. We
agree with the district court that this argument cannot substantiate his claim
to quiet title.
For the foregoing reasons, we AFFIRM the judgment of the district court.
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