Walker v. U. S. Bank National Association et al

Filing 15

ORDER granting Defendants' 3 Motion to Dismiss. Plaintiff's 10 Motion to Remand and 12 Motion for Leave to File a Surreply are DENIED. The Clerk is directed to enter judgment in favor of Defendants and to close the case. Signed by Judge Richard W. Story on 3/15/13. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RODERICK WALKER, TRUSTEE,
220 HIGHLAND LAKE LAND
TRUST,

:
:
:
:
Plaintiff ,
:
:
v.
:
:
U.S. BANK NATIONAL
:
ASSOCIATION AS TRUSTEE FOR :
CITIGROUP MORTGAGE LOAN
:
TRUST INC. ASSET BACK PASS- :
THROUGH CERTIFICATION
:
SERIES 2005 HE3,
:
:
Defendant,
:
:
MORTGAGE ELECTRONIC
:
REGISTRATION SYSTEMS, INC, :
COLLECTIVELY KNOWN AS
:
MERS, A/K/A MERS, Inc.,
:
:
Defendant.
:

CIVIL ACTION NO.
1:12-CV-02911-RWS

ORDER
This case comes before the Court on Plaintiff Roderick Walker, Trustee,
220 Highland Lake Land Trust’s (“Plaintiff”) Motion to Remand [10] and

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Motion for Leave to File a Surreply1 [12], and Defendants U.S. Bank National
Association as Trustee for Citigroup Mortgage Loan Trust Inc. Asset Back
Pass-Through Certification Series 2005 HE3 (“U.S. Bank”) and Mortgage
Electronic Registration Systems, Inc., Collectively Known as MERS, A/K/A
MERS, Inc.’s (“MERS”) (collectively “Defendants”) Motion to Dismiss [3].
After reviewing the record, the Court enters the following Order.
Background2
This case arises out of the foreclosure sale of real property formerly
owned by Tony R. Reese and Melissa R. Reese (the “Borrowers”), located at
220 Highland Lake Court, College Park, Georgia 30349 (the “Property”). (Pet.
Wrongful Foreclosure, Punitive Damages, Jury Trial Demand (“Compl.”), Dkt.
[1-1] at 16 of 32.) Plaintiff is the trustee for the 220 Highland Lake Land Trust
(the “Trust”) “through power of Article 13-Trustees’ Duties and Powers Part 2Trustees’ Powers § 53-12-261.” (Id. at 12 of 32.)

1

This motion is captioned “Motion Reply.” (Dkt. [12].) In light of its content,
the Court deems it to be a motion for leave to file a surreply and refers to it
accordingly.
2

As the case is before the Court on a motion to dismiss, the Court accepts as
true the facts alleged by Plaintiff in the Complaint. Cooper v. Pate, 378 U.S. 546, 546
(1964).
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On or about May 31, 2005, Borrowers executed a promissory note (the
“Note”) in favor of WMC Mortgage Corporation, obtaining a loan in the
principal amount of $348,555.00 (the “Loan”). (Defs.’ Mem. of Law in Supp.
of Mot. to Dismiss (“Defs.’ Mem.”), Dkt. [3-1] Ex. A (Security Deed).)3 To
secure repayment of the Loan, Borrowers also executed a security deed naming
Defendant MERS as nominee for the lender WMC Mortgage Corporation and
its successors and assigns. (Defs.’ Mem., Dkt. [3-1] Ex. A (Security Deed).)
The Security Deed was recorded at Deed Book 40208, Page 659, in the Fulton
County, Georgia real estate records. (Compl., Dkt. [1-1] at 18 of 32.)
On or about June 22, 2011, Defendant MERS assigned the Security Deed
to Defendant U.S. Bank. (Id.) On or about July 19, 2011, the Assignment was
filed and recorded at Deed Book 50226, Page 679, in the Fulton County,
Georgia real estate records. (Id.; Defs.’ Mem., Dkt. [3-1] Ex. C (Assignment).)
Borrowers’ Property was sold at a foreclosure sale on September 6, 2011.

3

The Court may take judicial notice of public records not attached to the
Complaint, including in this case the Security Deed filed in the Superior Court of
Fulton County, when considering a motion to dismiss. Bryant v. Avado Brands, Inc.,
187 F.3d 1271, 1280 (11th Cir. 1998). This does not convert the motion into one for
summary judgment. Universal Express, Inc. v. S.E.C., 177 F. App’x 52, 53 (11th Cir.
2006) (“A district court may take judicial notice of certain facts without converting a
motion to dismiss into a motion for summary judgment. . . . Public records are among
the permissible facts that a district court may consider.”) (citations omitted).
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(Compl., Dkt. [1-1] at 12 of 32.) Plaintiff does not dispute that Borrowers were
in default under the terms of the Note and Security Deed. However, “Plaintiff
asserts that Defendants illegally conducted a wrongful foreclosure violating
Georgia Foreclosure Laws.” (Id.)
On July 17, 2012, Plaintiff, acting pro se and as the trustee for the Trust,
filed this suit in the Superior Court of Fulton County, Georgia, challenging the
foreclosure of the Property and the Assignment of the Security Deed.4 (See
generally Compl., Dkt. [1-1].) Defendants removed the case from Superior
Court of Fulton County to the Northern District of Georgia on August 22, 2012,
pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. (Notice of Removal, Dkt. [1]
at 2.) Defendants then filed a Motion to Dismiss (Dkt. [3]), which motion is
currently before the Court. Subsequent to Defendants’ motion, Plaintiff filed a
Motion to Remand to State Court (Dkt. [10]) and a Motion for Leave to File a

4

The Court notes that the Complaint, captioned “Petition Wrongful
Foreclosure, Punitive Damages, Jury Trial Demand,” is composed primarily of legal
conclusions and largely incomprehensible factual assertions, making it difficult for the
Court to identify which causes of action Plaintiff is seeking to assert. (See generally
Compl., Dkt. [1-1].) Defendant reads the Complaint, as does the Court, as asserting
the following claims: (1) wrongful foreclosure based on an allegedly invalid
assignment, (2) fraud, (3) improper securitization, (4) doctrine of unclean hands, and
(5) punitive damages. (See generally Defs.’ Mem., Dkt. [3-1] (identifying foregoing
as causes of action asserted in Complaint).)
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Surreply (Dkt. [12]) in opposition to Defendants’ Motion to Dismiss, which
motions are also before the Court.
Discussion
I.

Plaintiff’s Motion to Remand [10]
As stated in the Background section, supra, Plaintiff filed a Motion to

Remand this case, alleging that (1) Defendants have not shown diversity
jurisdiction under 28 U.S.C. § 1332, (2) that there is no federal question
jurisdiction under 28 U.S.C. § 1331, and (3) that subject matter jurisdiction is
only proper in the state courts of Georgia. (Mot. to Remand, Dkt. [10] ¶¶ 2-5.)
Defendants contend that federal jurisdiction is proper pursuant to 28 U.S.C.
§ 1332. (Defs.’ Resp. in Opp’n to Mot. to Remand, Dkt. [11] at 5-9.)
The Court agrees with Defendants that there is federal subject matter
jurisdiction pursuant to 28 U.S.C. § 1332 such that removal to this Court was
proper. A defendant may remove from state court to federal court any civil
action “of which the district courts of the United States have original
jurisdiction.” 28 U.S.C. § 1441(a). On a motion to remand, the proponent of
federal jurisdiction has the burden of establishing original jurisdiction for the
removal. Miedema v. Maytag Corp., 450 F.3d 1322, 1330 (11th Cir. 2006).
Removal is allowed “where original jurisdiction exists at the time of removal.”
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Moore v. N. Am. Sports, Inc., 623 F.3d 1325, 1329 (11th Cir. 2010) (internal
quotes and citation omitted). “[Federal] courts . . . have original jurisdiction of
all civil actions where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between citizens of different
States.” 28 U.S.C. § 1332(a).
With regard to the amount in controversy, the Court finds that there is
more than $75,000 in controversy in this case. Under Georgia law, where a
party seeks to bar the right to foreclose, the value of the property determines the
amount in controversy for purposes of diversity jurisdiction. See Roper v.
Saxon Mort. Servs., Inc., 1:09-CV-312-RWS, 2009 WL 1259193, at *6 (N.D.
Ga. May 5, 2009) (“As Plaintiff seeks injunctive relief barring the foreclosure
on the property at issue, the value of the property determines the financial value
at stake.”). Moreover, courts often look to the value of the loan as evidenced by
the security deed to determine the amount in controversy in a foreclosure case.
See, e.g., Reynolds v. JPMorgan Chase Bank N.A., No. 5:11-CV-311 (MTT),
2011 WL 5835925, at *2 (M.D. Ga. Nov. 21, 2011) (“[T]he security deed meets
the amount-in-controversy requirement.”). Borrowers’ Security Deed
demonstrates that the value of the Loan was $348,555.00. Plaintiff does not
allege any specific facts or put forward any evidence to show that the amount in
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controversy requirement is not satisfied. Accordingly, in light of the foregoing
authority, the Court finds that the amount in controversy requirement is
satisfied.
The Court also finds complete diversity of citizenship between the
parties. Pursuant to 28 U.S.C. § 1332(a), diversity of citizenship exists where
the parties are citizens of different states. Plaintiff is the trustee of the Trust
located at 220 Highland Lake Court, College Park, Georgia 30349. (Compl.,
Dkt. [1-1] at 3.) Plaintiff does not dispute that he is a resident of Georgia. It is
proper to “look . . . to the citizenship of the plaintiff trustee[ ] . . . to discern
diversity of citizenship . . . for purposes of jurisdiction.” Lee v. Navarro Sav.
Ass’n, 597 F.2d 421, 425 (5th Cir. 1979).5 Therefore, Plaintiff is a resident of
the state of Georgia for purposes of diversity of citizenship.
Defendant U.S. Bank is a national bank with its main office in the state of
Minnesota. “All national banking associations shall . . . be deemed citizens of
the States in which they are respectively located.” 28 U.S.C. § 1348. “[A]

5

“[D]ecisions of the United States Court of Appeals for the Fifth Circuit (the
‘former Fifth’ or the ‘old Fifth’), as that court existed on September 30, 1981, handed
down by that court prior to the close of business on that date, shall be binding as
precedent in the Eleventh Circuit, for this court, the district courts, and the bankruptcy
courts in the circuit.” Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir.
1981).
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national bank, for § 1348 purposes, is a citizen of the State in which its main
office, as set forth in its articles of association, is located.” Wachovia Bank v.
Schmidt, 546 U.S. 303, 303 (2006). A national bank is “not deemed a citizen of
every State in which it conducts business or is otherwise amenable to personal
jurisdiction.” Id. at 318. Defendant U.S. Bank’s main office, as set forth in its
articles of association, is located in the state of Minnesota. Therefore,
Defendant U.S. Bank is a citizen of the state of Minnesota for purposes of
diversity of citizenship.
Defendant MERS is a corporation organized under the laws of the state
of Delaware with a principal place of business in the state of Virginia. “[A]
corporation’s citizenship derives, for diversity jurisdiction purposes, from its
State of incorporation and principal place of business.” Id. (citing 28 U.S.C.
§ 1332(c)(1)). Accordingly, Defendant MERS is a citizen of both the state of
Delaware and the state of Virginia. Because Plaintiff is a resident of the state of
Georgia, Defendant U.S. Bank is a citizen of the state of Minnesota, and
Defendant MERS is a citizen of the state of Delaware and Virginia, complete
diversity of citizenship exists between Plaintiff and Defendants.
Finding that the amount in controversy in this case is greater than
$75,000 and complete diversity of citizenship exists between the parties, the
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Court finds that it has original jurisdiction pursuant to 28 U.S.C. § 1332(a).
Therefore, Defendants’ removal to this Court was proper.
Plaintiff also argues that this Court lacks jurisdiction because Defendants
“do not ask this court a Federal question.” (Mot. to Remand, Dkt. [10] ¶ 5.)
This is immaterial. As stated immediately above, this Court has jurisdiction
based on diversity of citizenship, pursuant to 28 U.S.C. § 1332. Removal was
proper on that basis.
Finally, Plaintiff’s argument that subject matter jurisdiction is only
proper in the superior courts of Georgia (Mot. to Remand, Dkt. [10] ¶¶ 2-3) is
without merit. While the superior courts of Georgia may have subject matter
jurisdiction over Plaintiff’s claims, this Court has concurrent jurisdiction over
Plaintiff’s claims based on diversity jurisdiction. Therefore, Plaintiff’s
argument that Georgia courts have exclusive jurisdiction fails. Accordingly,
removal was proper, and Plaintiff’s Motion to Remand [10] is DENIED.
II.

Plaintiff’s Motion for Leave to File a Surreply [12]
Plaintiff moves the Court for leave to file a surreply in opposition to

Defendants’ Motion to Dismiss. “Neither the Federal Rules of Civil Procedure
nor this Court’s Local Rules authorize the filing of surreplies.” Fedrick v.
Mercedes-Benz USA, LLC, 366 F. Supp. 2d 1190, 1197 (N.D. Ga. 2005) (citing
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Byrom v. Delta Family Care-Disability & Survivorship Plan, 343 F. Supp. 2d
1163, 1188 (N.D. Ga. 2004)). “To allow such surreplies as a regular practice
would put the court in the position of refereeing an endless volley of briefs.”
Garrison v. N.E. Ga. Med. Ctr., Inc., 66 F. Supp. 2d 1336, 1340 (N.D. Ga.
1999). Rather, surreplies typically will be permitted only in unusual
circumstances, such as where a movant raises new arguments or facts in a reply
brief, or where a party wishes to inform the Court of a new decision or rule
implicating the motion under review. Cf., e.g., Fedrick, 366 F. Supp. 2d at
1197 (stating “valid reason for . . . additional briefing exists . . . where the
movant raises new arguments in its reply brief”). In this case, Defendants’
reply brief directly addresses arguments raised by Plaintiff in its opposition to
Defendants’ motion to dismiss. Accordingly, a surreply is not warranted and
Plaintiff’s Motion for Leave to File a Surreply [12] is DENIED.
III.

Defendants’ Motion to Dismiss [3]
Plaintiff’s Complaint appears to assert the following claims: (1) wrongful

foreclosure based on improper assignment, (2) fraud, (3) improper
securitization, (4) doctrine of unclean hands, and (5) punitive damages.
Defendants move to dismiss on several grounds, arguing (1) that Plaintiff’s
claims are barred by the doctrines of collateral estoppel and res judicata, (2) that
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Plaintiff lacks standing to sue, and (3) that Plaintiff has failed to state a claim
upon which relief may be granted, pursuant to Rule 12(b)(6). (See generally
Defs.’ Mem., Dkt. [3-1].) As explained below, the Court finds the Motion to
Dismiss due to be GRANTED pursuant to Rule 12(b)(6). Accordingly, the
Court sets out the legal standard governing a Rule 12(b)(6) motion to dismiss
before considering the claims raised in the Complaint.
A.

Legal Standard

When considering a motion to dismiss under Rule 12(b)(6), a federal
court is to accept as true “all facts set forth in the plaintiff’s complaint.”
Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000) (citation
omitted). The court must also draw all reasonable inferences in the light most
favorable to the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56
(internal citations omitted); Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273
n.1 (11th Cir. 1999). However, “[a] pleading that offers ‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action will
not do.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (quoting Twombly, 550 U.S. at
555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Id.

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The United States Supreme Court has dispensed with the rule that a
complaint may only be dismissed under Rule 12(b)(6) when “‘it appears beyond
doubt that the plaintiff can prove no set of facts in support of his claim which
would entitle him to relief.’” Twombly, 127 U.S. at 561 (quoting Conley v.
Gibson, 355 U.S. 41, 45-46 (1957)). The Supreme Court has replaced that rule
with the “plausibility standard,” which requires factual allegations to “raise the
right to relief above the speculative level.” Id. at 556. The plausibility standard
“does not[, however,] impose a probability requirement at the pleading stage; it
simply calls for enough facts to raise a reasonable expectation that discovery
will reveal evidence [supporting the claim].” Id.
However, because Plaintiff is acting pro se, his “pleadings are held to a
less stringent standard than pleadings drafted by attorneys and will, therefore,
be liberally construed.” Tennenbaum v. United States, 148 F.3d 1262, 1263
(11th Cir. 1998). “This leniency, however, does not require or allow courts to
rewrite an otherwise deficient pleading in order to sustain an action.” Thomas
v. Pentagon Fed. Credit Union, 393 F. App’x 635, 637 (11th Cir. 2010).
B.

Analysis

As a threshold matter, the Court notes that Plaintiff does not respond to
Defendants’ Motion to Dismiss with respect to Plaintiff’s claims for fraud,
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doctrine of unclean hands, and punitive damages. Therefore, the Motion to
Dismiss is deemed unopposed with respect to these claims. See LR 7.1B,
NDGa (“Failure to file a response shall indicate there is no opposition to the
motion.”). Accordingly, for the reasons stated in their Memorandum of Law in
Support of Motion to Dismiss, Defendants’ Motion to Dismiss [3] is
GRANTED with respect to Plaintiff’s claims for fraud, doctrine of unclean
hands, and punitive damages. Utilizing the legal framework discussed in
Part III.A., supra, the Court considers the remaining claims raised in the
Complaint.
1.

Wrongful Foreclosure Based on Improper Assignment

Plaintiff’s claim for wrongful foreclosure appears to be entirely premised
on the alleged invalidity of the Assignment. (Compl., Dkt. [1-1] at 14-17 of
32.) Defendants argue that this claim fails as a matter of law because Plaintiff
has failed to allege the essential elements of a claim for wrongful foreclosure.
(Defs.’ Mem., Dkt. [3-1] at 11-12.) Defendants further argue that this claim is
due to be dismissed because “Plaintiff lacks standing to challenge the
Assignment.” (Id. at 12.) The Court agrees with Defendants.
To state a claim for wrongful foreclosure, a claimant must allege the
following elements: “a legal duty owed to it by the foreclosing party, a breach
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of that duty, a causal connection between the breach of that duty and the injury
it sustained, and damages.” Gregorakos v. Wells Fargo Nat’l Ass’n, 647 S.E.2d
289, 292 (Ga. Ct. App. 2007) (internal quotes and citation omitted). Plaintiff
has failed to allege these essential elements, and thus his claim is due to be
dismissed as a matter of law. Moreover, as a stranger to the Assignment,
Plaintiff lacks standing to challenge it. See, e.g., Breus v. McGriff, 413 S.E.2d
538, 239 (Ga. Ct. App. 1991) (“[S]trangers to the assignment contract . . . have
no standing to challenge its validity.”). Accordingly, Plaintiff’s claim for
wrongful foreclosure based on the alleged invalidity of the Assignment fails.
For these reasons, Plaintiff’s claim for wrongful foreclosure is DISMISSED.
2.

Improper Securitization

Plaintiff also asserts a claim for relief based on the allegation that the
Security Deed was improperly securitized. (Compl., Dkt. [1-1] at 22 of 32.)
Specifically, Plaintiff alleges that the securitization was a “violation[] of [the]
Real Estate Mortgage Investment Conduit ‘REMIC’ pursuant to I.R.C. §860AG [sic].” (Id. at 12.) Defendants argue that “Plaintiff fails to allege any facts to
support a [securitization] claim . . . [and such claims] have been squarely
rejected by this Court.” (Defs.’ Mem., Dkt. [3-1] at 19.)

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The Court agrees with Defendants and finds that Plaintiff’s Complaint
pleads insufficient facts to state a plausible claim for relief based on the
securitization of the Security Deed. Moreover, “the Court is unaware of any
legal authority—and Plaintiff points to none—that supports the proposition that
the securitization of a debt relieves the debtor of her obligation to repay.”
Montoya v. Branch Banking & Trust Co., No. 1:11-CV-01869-RWS, 2012 WL
826993, at *6 (N.D. Ga. Mar. 9, 2012). As the Court stated in Searcy v. EMC
Mortgage Corporation, “[w]hile it may well be that Plaintiff’s mortgage was
pooled with other loans into a securitized trust that then issued bonds to
investors, that fact would not have any effect on Plaintiff’s rights and obligation
with respect to the mortgage loan, and it certainly would not absolve Plaintiff
from having to make loan payments or somehow shield Plaintiff’s property
from foreclosure.” No. 1:10-CV-0965-WBH, slip op. at 2 (N.D. Ga. Sept. 30,
2010). The Court thus finds that Plaintiff’s claim for improper securitization
fails as a matter of law, and, accordingly, it is DISMISSED. Because Plaintiff
has failed to state any plausible claim for relief against Defendants, their
Motion to Dismiss [3] is due to be GRANTED.

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Conclusion
In accordance with the foregoing, Defendants’ Motion to Dismiss [3] is
GRANTED. Plaintiff’s Motion to Remand [10] and Motion for Leave to File a
Surreply [12] are DENIED. The Clerk is directed to enter judgment in favor of
Defendants and to close the case.
SO ORDERED, this 15th day of March, 2013.

_______________________________
RICHARD W. STORY
UNITED STATES DISTRICT JUDGE

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