Walton v. Secretary of Veterans Affairs et al

Filing 16

ORDER granting Bank Defendants' 3 Motion to Dismiss Plaintiff's Quiet Title Complaint. Plaintiff is DIRECTED, within fourteen (14) days of this Order, to file an amended complaint consistent with this opinion. In accordance with the foreg oing, Movant CitiMortgage, Inc.'s 10 Motion to Dismiss and Defendant Secretary of Veterans Affair's 14 Motion to Dismiss are DENIED as moot. Following Plaintiff's filing of an amended complaint, Defendants may reassert their arguments and file renewed motions to dismiss as appropriate. If Plaintiff does not file an amended complaint within fourteen (14) days of this Order, the Clerk shall close this case. Signed by Judge Richard W. Story on 2/27/2014. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
MARILYN A. WALTON,
Plaintiff,
v.
SECRETARY OF VETERANS
AFFAIRS, BANK OF AMERICA,
N.A., as successor by merger to
BAC HOME LOANS
SERVICING, LP, and
DEUTSCHE BANK NATIONAL
TRUST COMPANY f/k/a
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
Defendants.

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CIVIL ACTION NO.
1:13-CV-918-RWS

ORDER
This case is before the Court on: (1) Defendant Bank of America,
N.A. and Deutsche Bank National Trust Company’s (collectively “Bank
Defendants”) Motion to Dismiss [3], (2) Movant CitiMortgage, Inc.’s Motion to
Dismiss [10]; and (3) Defendant Secretary of Veterans Affairs’s Motion to
Dismiss [14]. After reviewing the record, the Court enters the following Order.
Background
Plaintiff Walton brings this action to quiet title on her property, located at

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4605 Wonder Valley Trail, Decatur, Georgia 30034 (the “Property”). (Compl.,
Dkt [1-1].) It appears, based on the few facts presented to this Court, that on
September 25, 1998, Plaintiff executed a promissory note in the amount of
$90,187.50 and security deed in favor of the Secretary of Veterans Affairs to
secure a mortgage on the Property. [1-1, Ex. B and E]. The security deed was
then assigned to Bankers Trust Company of California, N.A. (“Bankers Trust”)
on February 25, 1999. [1-1, Ex. G].
Plaintiff Walton filed this action in Dekalb County Superior Court on
February 15, 2013. Although it is difficult to decipher, Plaintiff’s claim for
quiet title appears grounded on the theories that the assignment of her security
deed and the securitization of her note discharged her debt. Asserting diversity
jurisdiction, Bank Defendants then removed the action to this Court on March
22, 2013, and Bank Defendants filed their Motion to Dismiss [3] on March 29,
2013. On April 17, 2013, Plaintiff filed a Response to Bank Defendants’
Motion to Dismiss, asserting new allegations, including violations of the Truth
in Lending Act (“TILA”), conspiracy, and estoppel/waiver. [4 at 9-11]. Bank
Defendants filed a Reply on May 6, 2013, arguing that Plaintiff’s amended

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claims were not properly before the court and that all Plaintiff’s claims should
be dismissed under Rule 12(b)(6). [6 at 2-3].
On June 19, 2013, CitiMortgage, Inc. filed a Rule 12(b)(6) motion to
dismiss, arguing that Plaintiff’s claim should be dismissed as to CitiMortgage
because Plaintiff makes no allegations against CitiMortgage, nor names
CitiMortgage as a defendant. [10]

Finally, the Secretary of Veterans Affairs

filed a motion to dismiss pursuant to Rules 12(b)(1), (5) and (6) and (h)(3) on
August 22, 2013. [14].
Discussion
I.

Motions to Dismiss
A.

Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” While this pleading standard does not require “detailed factual
allegations,” mere 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
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)) (stating
“[n]or does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of
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‘further factual enhancement’”). In order to withstand a motion to dismiss, “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’ ” Id. (quoting Twombly, 550 U.S. at
570). A complaint is plausible on its face when the plaintiff pleads factual
content necessary for the court to draw the reasonable inference that the
defendant is liable for the conduct alleged. Id.
When considering a Federal Rule of Civil Procedure 12(b)(6) motion to
dismiss, “all well-pleaded facts are accepted as true, and the reasonable
inferences therefrom are construed in the light most favorable to the plaintiff.”
FindWhat Investor Group v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir.
2011) (quoting Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th
Cir. 1999)). However, the court does not “accept as true a legal conclusion
couched as a factual allegation.” Twombly, 550 U.S. at 555. “Threadbare
recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S. at 678.
Finally, 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.” Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th
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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 Fed. App’x 635, 637 (11th Cir. 2010).
B.

Analysis
1.

Bank Defendants’ Motion to Dismiss Quiet Title Complaint

Plaintiff’s claim for quiet title appears grounded on the theories that
assignment of her security deed and securitization of her note discharged her
debt [1-1, ¶¶ 16-30]. Bank Defendants argue that Plaintiff’s complaint should
be dismissed because: (1) Plaintiff lacks standing to challenge the assignment of
her security deed and furthermore, assignment of the security deed did not
discharge Plaintiff’s debt; and (2) Georgia courts reject Plaintiff’s allegation
that securitization of a loan somehow discharges the underlying debt. The
Court addresses each argument below.
First, Plaintiff argues that she is entitled to quiet title because the
assignment of her Security Deed “divested Defendant Secretary of Veterans
Affairs, of any interest” in her property, and that DeutscheBank (f/k/a Bankers
Trust Company of California), as assignee of the security deed, has “absolutely

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no authority to demand payment from the Plaintiff as if it were the Note
Holder.” (Compl., Dkt [1-1] ¶¶ 23, 29.)
Bank Defendants argue that mere assignment of a security deed does not
discharge Plaintiff’s loan obligations, and the Security Deed was properly
assigned, along with the right to collect Plaintiff’s loan payments. [3 at 8-9]. As
Bank Defendants argue, “[s]ecurity deeds and other mortgage loans are
transferrable by way of assignment in Georgia.” Woodberry v. Bank of
America, N.A., 2012 WL 113658, at *2 (N.D.Ga., Jan. 12, 2012) (citing
O.C.G.A. § 44-14-64). Plaintiff does not identify any language in her security
deed prohibiting assignment by the Secretary of Veterans Affairs, and
furthermore, the Security Deed expressly grants rights to the Secretary of
Veterans Affairs and “his successors and assigns.” [1-1, Ex. B]
By virtue of the assignment, Defendant Secretary of Veterans Affairs
transferred the “right, title and interest” under the Security Deed to Bankers
Trust (n/k/a Deutschbank).1 Under Georgia law, the security deed assignee
“may exercise any power therein contained.” O.C.G.A. § 23-2-114. Therefore,

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The assignment expressly included “the property therein described, the
indebtedness and the note(s) thereby secured.” Id.
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Plaintiff’s claim that she is entitled to quiet title because the assignment
discharged her loan obligations fails as a matter of law.
Bank Defendants further argue that Plaintiff lacks standing to challenge
the validity of the assignment. [3 at 11]. The Court agrees. A person who is not
a party to a contract or an intended third-party beneficiary of a contract lacks
standing to challenge or enforce the contract. See O.C.G.A. § 9-2-20(a) (stating
that “an action on a contract . . . shall be brought in the name of the party in
whom the legal interest in the contract is vested, and against the party who
made it in person or by agent”); Joseph v. Fed. Home Loan Mortg. Corp., No.
1:12-CV-1022-RWS, 2012 WL 5429639, at *2 (N.D. Ga. Nov. 6, 2012)
(finding plaintiff could not support claim for wrongful foreclosure by
challenging assignment of the security deed because she was not a party to the
contract and lacked standing to challenge validity of the assignment). Here,
Plaintiff may not challenge the assignment’s validity because she was not a
party to the assignment or an intended third-party beneficiary.
Plaintiff further alleges that she was relieved of her obligation to repay
the loan because her loan was securitized. [1-1 at ¶ 25]. Specifically, Plaintiff
alleges that “[t]he obligation reflected by the note allegedly secured by the
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Secretary of Veterans Affairs has been satisfied in whole or part because the
investors who furnished the funding for the loan have been paid to the degree
that extinguishment of the debts has occurred with the results that there exist no
obligations.” Id. Bank Defendants argue that Plaintiff’s bare allegation of
securitization, without more, fails to state a claim for relief. [3 at 11-12].
Accepting as true Plaintiff’s allegation regarding securitization, Plaintiff
was not relieved of her loan obligations by virtue of the securitization of her
Note. Montoya v. Branch Banking & Trust Co., 2012 WL 826993, at *6
(N.D.Ga., Mar. 9, 2012) (rejecting plaintiff’s argument that securitization of
loan relieved plaintiff of her obligation to repay the loan and finding allegation
regarding securitization failed to state a claim for relief). The Court thus finds
that Plaintiff’s allegation regarding securitization fails to state a claim for relief.
Bank Defendants argue that “[t]o the extent Plaintiff also alleges that the
securitization rendered the Security Deed unenforceable because it created a
split between the Note and Security Deed (Compl. at ¶¶ 23, 25), this ‘splitting’
claim has been soundly rejected.” [3 at 12]. The Court agrees. As Bank
Defendants argue, Plaintiff’s “split-the note” claim has been rejected by this
Court and the Georgia Supreme Court. See Montoya v. Branch Banking &
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Trust Co., 2012 WL 826993, at *5 (N.D.Ga., Mar. 9, 2012) (finding “any and
all claims arising out of the Note and Security Deed being ‘split’ fail as a matter
of law”); see also You v. JP Morgan Chase Bank, N.A., 743 S.E.2d 428, 433
(Ga. 2013)(finding that the “holder of a deed to secure debt is authorized to
exercise the power of sale in accordance with terms of the deed even if it does
not also hold the note or otherwise have any beneficial interest in the debt
obligation underlying the deed”).
As discussed above, mere assignment of the security deed and
securitization of her note are not grounds for relief. Because Plaintiff’s
complaint for quiet title does not contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face, it cannot withstand
Bank Defendant’s Motion to Dismiss. Accordingly, Bank Defendant’s Motion
to Dismiss is GRANTED, and Plaintiff’s Complaint for Quiet Title is
DISMISSED.
2. New Allegations Raised in Response to Motions to Dismiss
In Responses to Motions to Dismiss, Plaintiff argues that this Court
should not dismiss her complaint because Defendants are guilty of conduct
including violating the Truth in Lending Act, Fair Credit Debt Act, Real Estate
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Settlement Procedure Act, and Fair Debt Collections Practice Act, conspiracy,
estoppel/waiver, and wrongful foreclosure. (See, e.g., [4 at 9-12; 11 at 3; 13 at
10-11]) Bank Defendants argue that these new claims are not properly before
this Court because a party may not amend her complaint by introducing
additional facts and evidence in opposition to a motion to dismiss.2 [6 at 7].
The Court agrees that the proper procedure to add claims is to file an
amended complaint. Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209, 1222 (11th
Cir. 1999) (“Where a request for leave to file an amended complaint simply is
imbedded within an opposition memorandum, the issue has not been raised
properly”). See also Thomason v. Nachtrieb, 888 F.2d 1202, 1205 (7th Cir.
1989) (“It is a basic principle that the complaint may not be amended by the
briefs in opposition to a motion to dismiss”).
The Court notes, with concern, that Plaintiff has attached a purported
payment in the amount of $77,288.98, and her responses allege that this
payment was accepted by Defendants to discharge the associated debt. [1-1 at
52 of 55; 4 , Ex. G]. It is unclear if Plaintiff’s new claims are premised on this

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Bank Defendants also argue that these new claims fail as a matter of law.
Thecourt will defer such a ruling until such time, if any, that Plaintiff files an amended
complaint and defendants have had an opportunity to respond to all potential claims.
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alleged satisfaction of debt. If so, Defendants should be afforded an
opportunity to understand and respond to allegations and claims made against
them. Cf. Beckwith v. Bellsouth Telcoms., Inc., 146 Fed. Appx. 368, 371 (11th
Cir. 2005) (“The failure to identify claims with sufficient clarity to enable the
defendant to frame a responsive pleading constitutes a ‘shotgun pleading’....
[B]ecause ‘shotgun’ pleadings present an unfair burden on a defendant, the
plaintiff should be required to provide a more definite statement of his
complaint”) (citations omitted).
Accordingly, Plaintiff is DIRECTED within fourteen (14) days of this
Order to file an amended complaint in which she sets forth her particular factual
allegations and claims for relief. Cf. Figueroa v. JP Morgan, No. 1:09-CV-1874
(N.D. Ga. Feb. 16, 2010)(directing plaintiff to replead her amended complaint,
which constituted a “shotgun pleading”). Plaintiff is hereby instructed that
while she will be afforded the liberal construction for pleadings permitted pro
se parties, this Court cannot rewrite an otherwise deficient complaint. Plaintiff
must satisfy the Federal Rules of Civil Procedure, particularly Rules 8(a) and
12(b)(6) and provide enough facts pertaining to her particular complaint to
show this Court that she is entitled to the relief she requests and permit
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Defendants an opportunity to understand and respond to allegations made
against them.
Conclusion
Based on the foregoing, Bank Defendants’ Motion to Dismiss Plaintiff’s
Quiet Title Complaint is hereby GRANTED [3]. Plaintiff is DIRECTED,
within fourteen (14) days of this Order, to file an amended complaint consistent
with this opinion. In accordance with the foregoing, Movant CitiMortgage,
Inc.’s Motion to Dismiss [10] and Defendant Secretary of Veterans Affairs’s
Motion to Dismiss [14] are DENIED as moot. Following Plaintiff’s filing of
an amended complaint, Defendants may reassert their arguments and file
renewed motions to dismiss as appropriate. If Plaintiff does not file an
amended complaint within fourteen (14) days of this Order, the Clerk shall
close this case.
SO ORDERED, this 27th day of February, 2014.

________________________________
RICHARD W. STORY
United States District Judge

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