McKay et al v. US Bank, National Association
MEMORANDUM OPINION AND ORDER that Defendant U. S. Bank's 12 Motion to Dismiss the Complaint is GRANTED and that this case is due to be dismissed with prejudice. A separate Order will be issued. Signed by Honorable Judge Terry F. Moorer on 9/24/2015. (dmn, )
IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE MIDDLE DISTRICT OF ALABAMA
WAYNE MCKAY and SHONDRA
U.S. BANK, NATIONAL ASSOCIATON,
as trustee for the Certificate Holders of the
LXS 2007-15N Trust Fund,
MEMORANDUM OPINION and ORDER
Plaintiffs filed this declaratory judgment action against Defendant U.S. Bank, National
Association, as trustee for the Certificate Holders of the LXZ 2007-15N Trust Fund (“U.S.
Bank”) asking this Court to declare “that Defendant is not a party in interest as against Plaintiffs
and or Plaintiff’s [sic] real property.” and seeking “a declaration to quiet title in favor of
Plaintiffs and against Defendants [sic].” (Doc. 1 p. 2). The defendant filed a Motion to Dismiss
and Brief in Support (Docs. 12 and 13) to which it attached as exhibits the following: a copy of
the Plaintiffs’ Mortgage on the property identified as 2722 Albemarle Road Montgomery,
Alabama 36107 (Doc. 13-1) 1; a copy of the Adjustable Rate Note for the property identified
above (Doc. 13-2); and a copy of the Assignment of Mortgage from MERS as nominee for
The Lender identified in the Mortgage is Bayrock Mortgage Corporation for whom Mortgage Electronic
Registration Systems, Inc. (“MERS”) acts as nominee. (Doc. 13-1 pp. 2-3).
Bayrock Mortgage Corporation to Defendant U.S Bank. (Doc. 13-3). The plaintiffs filed a
Response to the Motion to Dismiss (Doc. 17) to which they attached an affidavit from Rosemary
A. Parks, “the substitute of the holder of the power of Attorney” for Plaintiffs. (Doc. 17-1).
Standard of Review
When considering the appropriate standard to apply on a motion to dismiss where parties
have filed documents outside the complaint with the Court, the Eleventh Circuit has held that
“the court may consider a document attached to a motion to dismiss without
converting the motion into one for summary judgment if the attached document is (1)
central to the plaintiff’s claim and (2) undisputed. In this context, ‘undisputed’ means
that the authenticity of the document is not challenged.”
D.L. Day, v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) citing Horsley v. Feldt, 304 F.3d
1125, 1134 (11th Cir. 2002). Further, “[a] Rule 12(b)(6) motion tests the legal sufficiency of the
complaint. . . .[I]n order to survive a motion to dismiss for failure to state a claim, the plaintiff
must allege ‘enough facts to state a claim to relief that is plausible on its face.’” Coggins v.
Abbett, 2008 WL 2476759 *4 citing Bell Atlantic Corp., v. Twombly, 550 U.S. 544, 127 S.Ct.
The standard for a motion to dismiss under Rule 12(b)(6) was explained in Twombly and
refined in Ashcroft v. Iqbal, 129 S.Ct.1937, 1949 (2009) as follows:
Two working principles underlie our decision in Twombly. First, the tenet that a
court must accept as true all the allegations contained in a complaint is
inapplicable to legal conclusions. Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not suffice. Rule 8 marks
a notable and generous departure from the hypertechnical, code-pleading regime
of a prior era, but it does not unlock the doors of discovery for a plaintiff armed
with nothing more than conclusions. Second, only a complaint that states a
plausible claim for relief will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense. But where
the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged - but it has not shown - that
the pleader is entitled to relief.
Iqbal, 129 S.Ct. at 1949-50 (citations and internal edits omitted).
The Twombly-Iqbal two-step analysis begins “by identifying the allegations in the
complaint that are not entitled to the assumption of truth” because they are conclusory. Id., at
195; Mamani v. Berzain, 2011 U.S. App. Lexis 17999, at *12 (11th Cir. Aug. 29, 2011)
(“Following the Supreme Court’s approach in Iqbal, we begin by identifying conclusory
allegations in the Complaint.”). After conclusory statements are set aside, the Twombly-Iqbal
analysis requires the Court to assume the veracity of well-pleaded factual allegations, and then to
determine whether they “possess enough heft to set forth ‘a plausible entitlement to relief.’”
Mack v. City of High Springs, 486 Fed. App’x 3, 6 (11th Cir. 2012) (quotation omitted.) “To
survive a motion to dismiss, a complaint need not contain ‘detailed factual allegations’ but
instead the complaint must contain ‘only enough facts to state a claim to relief that is plausible
on its face.’” Maddox v. Auburn Univ. Fed. Credit Union, 2010 U.S. Dist. Lexis 127043 at *4.
Establishing facial plausibility, however, requires more than stating facts that establish mere
possibility. Mamani,, 2011 U.S. App. Lexis 17999, at *22-*23 (“The possibility that -if even a
possibility has been alleged effectively - these defendants acted unlawfully is not enough for a
plausible claim.”). Plaintiff is required to “allege more by way of factual content to nudge [her]
claim . . . across the line from conceivable to plausible.” Iqbal, 129 S. Ct. at 1952 (internal
editing and citation omitted.)
The claims in this case arise from U.S. Bank’s status as mortgagee of Plaintiffs’
Mortgage. (Doc. 1 para. 2). On December 12, 2006, Plaintiffs executed a Mortgage in favor of
MERS, as nominee for Bayrock Mortgage Corporation (“Bayrock”) to secure a Note evidencing
an $82,400.00 home loan from Bayrock to Plaintiffs. The defendant has filed with the Court a
copy of the Mortgage, the Note and the Assignment at issue in this case (Docs. 13-1, 13-2, 13-3).
The Plaintiffs have not objected to the authenticity of these documents; nor does the Court have
any reason to doubt that these documents are anything other than what they appear to be on their
face. Thus, the authenticity of these documents is “undisputed”. Furthermore, these documents
form the basis of Plaintiffs’ claim and as such are “central” to Plaintiffs’ claim. D.L. Day, 400
F.3d at 1276. Accordingly, the Court concludes that these documents are properly before the
Court for its consideration on the Motion to Dismiss. Id.
Plaintiffs allegedly mailed U.S. Bank a “notarial presentment” on July 17, 2014, which U.S.
Bank allegedly received on July 21, 2014. (Doc. 1 para. 4). This “notarial presentment”
purportedly asserted that U.S. Bank was not the party of interest to enforce Plaintiff’s Mortgage,
and apparently requested that U.S. Bank produce the original Note and Mortgage. (Id. at para.
5). Plaintiffs also allegedly mailed U.S. Bank a “notarial notice of Dishonor” on August 4, 2014,
which was allegedly received by U.S. Bank on August 11, 2014. (Id. at para. 7). Plaintiffs
alleged that U.S. Bank has not responded to either the “notarial presentment” or the “notarial
notice of dishonor.” (Id. paras. 6, 8). Plaintiffs claim that U.S. Bank is not in possession of the
original Note or original Mortgage – notwithstanding that U.S. Bank has attached copies of the
same to this motion. (Id. para. 9); see (Doc. 13-1 and 13-2). Plaintiffs’ Note and Mortgage are
now part of a securitized pool, of which U.S. Bank is Trustee. (Doc. 1, paras. 2, 10); see (Doc.
Plaintiffs now seek a declaratory judgment (1) against U.S. Bank declaring that U.S.
Bank is not a party in interest as to Plaintiffs or Plaintiffs’ property, and (2) to quiet title in favor
of Plaintiffs and against U.S. Bank. (Id. at p.2).
It is undisputed that Plaintiffs have not made a mortgage payment since June 2013, yet
are still living in their house. Defendant argues that the Plaintiffs’ Complaint is due to be
dismissed for three reasons. First, Plaintiffs incorrectly argue that the principles of presentment
and dishonor of negotiable instruments apply to this case. Second, Plaintiffs incorrectly argue
that U.S. Bank is not a party in interest to this case. Third, Plaintiffs fail to adequately plead a
quiet title claim. The Court will address each of these arguments below. The Court notes that
Plaintiffs’ response to Defendant’s Motion to Dismiss is simply a restatement, almost verbatim,
of the claims in their complaint and offers no factual or legal argument to rebut those arguments
presented by Defendant . (Doc. 17). The Court will address each of Defendants arguments in
(1) Ala. Code §§ 7-3-501 to 503 do not apply to this case.
Plaintiffs claim that U.S. Bank has “admitted that it is not the party to enforce the note
and mortgage on Plaintiffs’ property and [U.S. Bank] is not in possession of the original note.”
(Doc. 1, paras 4-8). This claim is not supported by any relevant law or fact. First, Plaintiffs
claim that they mailed U.S. Bank a “notarial presentment alleging that [U.S. Bank] was not the
party of interest to enforce the mortgage and that for [U.S. Bank] to produce the original
mortgage and note under Code of Alabama 7-3-501.” (Doc. 1, para. 4). This section defines
“presentment” as follows:
“a demand made by or on behalf of a person entitled to enforce an instrument (i)
to pay the instrument made to the drawee or party obliged to pay the instrument,
or in the case of a note or accepted draft payable at a bank, to the bank, or (ii) to
accept a draft made to the drawee.”
Ala. Code 7-3-501 (emphasis added). By the clear terms of the statute, presentment is a power to
be exercised “by or on behalf of a person entitled to enforce the instrument,” and against “a party
obliged to pay the instrument”. Id. Plaintiffs appear to claim that they are entitled to make a
demand for presentment, and that they are entitled to demand payment from U.S. Bank. This is a
backwards reading and interpretation of the statute. As the parties indebted under their home
loan and obliged to pay the Note, Plaintiffs are the parties to whom presentment could be made.
There is no allegation that U.S. Bank, as the party entitled to enforce the Note, has made any
demand for presentment on Plaintiffs. Thus the doctrine of presentment is inapplicable to the
facts of this case and is not a basis for this Court to conclude that U.S. Bank has “admitted”
anything related to Plaintiffs’ Mortgage as Plaintiffs claim. (Doc. 1, paras 4-8).
Similarly, Plaintiffs’ contentions related to dishonor are inapplicable and without merit.
(Doc. 1 paras. 6-8). Ala. Code 7-3-502(a)(1)-(3) provides generally that a note is dishonored if
the note is not paid on the day of presentment (if necessary) or on the day it becomes payable.
For the concept of dishonor to apply, the party obligated to pay it, must fail to pay it. Thus,
Plaintiffs, as the parties obligated to pay the amount of the Note, are the only parties who could
dishonor the Note. Thus the doctrine of dishonor is inapplicable 2 to the facts of this case and is
not a basis for this Court to conclude that U.S. Bank has “admitted” anything related to
Plaintiffs’ Mortgage as Plaintiffs claim. (Doc. 1, paras 4-8).
(2) 12 U.S.C. § 2605(k)(1)(d) does not apply.
Plaintiffs cite 12 U.S.C. § 2605(k)(1)(d) for the proposition that U.S. Bank had “ten (10)
business days to rebut the Notarial Presentment of Plaintiffs or the same is deemed admitted as
presented. “ (Doc. 1, para. 5). This Section states as follows:
(k) Servicer prohibitions
(1) In general
A servicer of a federally related mortgage shall not –
(D) fail to respond within 10 business days to a request from a borrower to
provide the identity, address, and other relevant contact information about the owner or
assignee of the loan.
Further, Ala. Code 7-3-503 which relates to notice of dishonor, is similarly inapplicable to this case.
By its clear terms, this statute applies to a “servicer of a federally related mortgage”. Plaintiffs
have not alleged that U.S. Bank is the servicer of their Mortgage; nor do Plaintiffs allege in their
Complaint that they ever actually requested identity and contact information about the owner or
assignee of the loan. Rather they assert that their “Notarial Presentment alleg[ed] that [U.S.
Bank] was not the party of interest to enforce the mortgage and that for [U.S. Bank] to produce
the original mortgage or note.” (Doc. 1, para. 4). The information sought by Plaintiff is clearly
not contemplated by this Code section. Thus, this Code section is inapplicable to the facts of this
case and is not a basis for this Court to conclude that U.S. Bank has “admitted” anything related
to Plaintiffs’ Mortgage as Plaintiffs claim. (Doc. 1, paras. 4-8).
(3) U.S. Bank is a party in interest as to Plaintiffs’ Mortgage
Plaintiffs seek declaratory relief that U.S. Bank “is not a party in interest as against
Plaintiffs and or Plaintiff’s [sic] real property.” (Doc. 1, p. 2). Plaintiffs first theory to support
this argument is that U.S. Bank failed to comply with the statutory requirements relating to
presentment, dishonor, and information requests. For the reasons stated in sections (1) and (2)
above, the Court concludes this theory has no merit.
Plaintiffs’ second theory to support their request for declaratory relief is based partly
upon their claim that U.S. Bank “must possess both [the Note and Mortgage] to be the party in
interest to enforce the mortgage.” (Doc. 1 para. 9). The law is clear; this “split the note” theory
has been consistently rejected by Alabama courts. See, e.g., Coleman v. BAC Servicing, 104 So.
3d 195, 205 (Ala. Civ. App. 2012) (holding that “Alabama law specifically contemplates that
there can be a separation” of the note and mortgage); See, also, Orton v. Matthews, 2013 WL
5890167 * 4 (N.D. Ala. Nov 1, 2013) (granting motion to dismiss on basis that the “’split the
note’ theory has been roundly rejected by Alabama courts”). Thus, the Court concludes that this
theory does not support the conclusion that U.S. Bank is not a party in interest to Plaintiffs’
mortgage, as Plaintiffs claim.
Further, the Court recognizes Plaintiffs acknowledge that U.S. Bank is Trustee of the
Trust (Doc. 1 para. 2). Under the law, if a trustee possesses “customary powers to hold, manage,
and dispose of assets,” then that trustee is a real party in interest. Navarro Sav. Ass’n v. Lee, 446
U.S. 458, 464 (1980). Section Q of the Mortgage provides as follows:
“MERS (as nominee for Lender and Lender’s successors and assigns) has the
right: to exercise any or all of those interests, including, but not limited to, the
right to foreclose and sell the property . . . [or] releasing and cancelling this
(Doc. 13-1 p. 4). Additionally, the Mortgage provides that
“[t[he Note or a partial interest in the Note (together with this Security
Instrument) can be sold one or more times without prior notice to [Plaintiffs].”
(Doc. 13-1 p. 16 para. 20). Also, the recorded U.S. Bank assignment provides that the Mortgage
was assigned to U.S. Bank, as trustee. (Doc. 13-3). Thus, the facts are undisputed that U.S.
Bank is now the mortgagee of Plaintiffs’ Mortgage, and Plaintiffs agreed to terms in the
Mortgage establishing that the mortgagee has the power to exercise enforcement rights granted
in the Mortgage.
Thus, the Court concludes that Plaintiffs claim that U.S. Bank is not a real
party in interest fails; and thus no declaratory relief is due on this claim.
(4) Plaintiffs’ Quiet Title claim is due to be dismissed.
Plaintiffs also seek “a declaration to quiet title in favor of Plaintiffs and against
Defendants.” (Doc. 1 p.2). An action to quiet title is the appropriate test to determine which
among the parties claiming right of title and possession holds superior title. Gardner v. Key, 594
So. 2d 43, 44 (Ala. 1991). Plaintiffs quiet title claim is based, in whole or in part, on the
arguments made pursuant to Alabama and federal law as discussed above in sections (1), (2) and
(3). To the extent that these arguments serve as the basis for Plaintiffs’ quiet title claim, the
Court concludes that the quiet title claim is due to be dismissed.
Furthermore, the Court concludes that Plaintiffs’ quiet title claim should be dismissed
because it does not meet the required pleading standards for a quiet title action. Under Alabama
law, any person “in peaceable possession of lands [and] . . . claiming to own the same, . . .
[whose] title thereto, or any party thereof, is . . . disputed . . . , may commence an action to
settle the title to such land and to clear up all doubts or disputes concerning the same.” Ala.
Code § 6-6-540. A plaintiff establishes a prima facie case to quiet title when “it is shown that
[the plaintiff] is in peaceable possession of the land, either actual or constructive, at the time of
the filing of the bill and that there was no suit pending to test the validity of the title. Woodland
Grove Baptist Church, v. Woodland Grove Cmty. Cemetery Ass’n, Inc., 947 So. 2d 1031, 1036
(Ala. 2006) (citations omitted.)
Indeed, in order to meet the “plausibility” pleading standard articulated by Twombly and
Iqbal, a plaintiff’s complaint must include enough factual allegations to lift the stated claim out
of the realm of mere speculation. Twombly, 550 U.S. at 555. Here, Plaintiffs fail to identify or
attempt to connect factual allegations to any of the elements of a quiet title cause of action.
Indeed, the only part of the Complaint that remotely relates to such a claim is the factual
allegation that Plaintiff’s “own a home”. (Doc. 1 para. 1). Thus, the Court concludes that under
the “plausibility” standard of Twombly and Iqbal, Plaintiffs fail to adequately plead a cause of
action to quiet title.
Accordingly, the Court concludes that Defendant U.S. Bank’s Motion to Dismiss the
Complaint (Doc. 12) is GRANTED and that this case is due to be dismissed with prejudice. A
separate Order will be issued.
DONE this 24th day of September, 2015.
/s/Terry F. Moorer
TERRY F. MOORER
UNITED STATES MAGISTRATE JUDGE
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