Caranchini v. Bank of America National Association et al

Filing 173

ORDER granting Defendant Kozeny's motion to dismiss. (Filed as Doc. 46 in consolidated Case No. 11-0464). Signed on 5/18/12 by District Judge Greg Kays. (Francis, Alexandra)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
GWENDOLYN G. CARANCHINI
Plaintiff,
v.
BANK OF AMERICA, N.A., et al.
Defendants.

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Case No. 4:10-CV-00672-DGK
(consolidated with 4:11-cv-0464)

ORDER GRANTING MOTION TO DISMISS
This case concerns the mortgage on Plaintiff’s home. Plaintiff brought this lawsuit when
state foreclosure proceedings were being threatened. Plaintiff, who is representing herself,
alleges that after receiving a mortgage through Aegis Lending Corporation, the note was sold to
a succession of different entities, none of whom properly recorded their interest or
communicated with her. Plaintiff asserts that as a result, she is the sole lawful owner of the
property securing the mortgage.
This lawsuit is substantially similar to another lawsuit Plaintiff has filed, Caranchini v.
Kozeny & McCubbin, LLL, et al., 4:11-0464, in which she also named as a defendant the law
firm that is trustee on the deed of trust. The second case has been consolidated into this one.
Now before the Court is Defendant Kozeny & McCubbin, LLC’s (“Kozeny”) Motion to
Dismiss Plaintiff’s Petition (Doc. 46) for failure to state a claim upon which relief can be
granted. With respect to Count I, the quite title action, the Court finds Kozeny has no present
stake in the property and that there is no real, present claim for relief against Kozeny. With
respect to Count III, the claim for breach of fiduciary duty, the Court holds that at the time the
second amended petition was filed, no foreclosure sale had occurred or was pending, thus

Kozeny did not owe any duty to Plaintiff. Consequently, Count III also fails to state a claim.
The motion is GRANTED.
Background
On February 29, 2010 Plaintiff filed her first lawsuit in the Circuit Court of Jackson
County, Missouri against Defendants Bank of America, N.A. (“BOA”); BAC Home Loans
Servicing, LP (“BAC”); Aegis Lending Corporation; Wilshire Credit Corporation; Mortgage
Electronic Registration Systems, Inc. (“MERS”); Citibank, in its capacity as a trustee for two
mortgage trusts; Countrywide Lending; Todd Hamby, the initial trustee on the deed of trust;
Merrill Lynch; and John and Mary Does 1-1000. Defendants BOA and BAC removed the case
to federal court pursuant to the Court’s diversity jurisdiction.
On September 10, 2010 Plaintiff filed a second lawsuit in the Circuit Court of Jackson
County, Missouri naming Kozeny & McCubbin, LLC (“Kozeny”), the successor trustee on the
deed of trust for her home, as the sole defendant. On October 4, 2010, Plaintiff amended the
Petition to add claims against the other Defendants named in the first lawsuit. Plaintiff also
added claims against MERSCORP, Inc., the sole owner of MERS.

That lawsuit was also

removed to federal court, and on January 5, 2012, the Court granted Plaintiff’s motion to
consolidate these lawsuits.
The consolidated lawsuit contains two counts relevant to the pending motion. Count I,
brought against Kozeny and other the other Defendants, seeks to quiet title to Plaintiff’s property
free and clear of the deed of trust. It also seeks a declaration that Defendants have no interest in
the property. Count III alleges breach of fiduciary duty against Kozeny as the successor trustee
of the deed of trust.

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Standard
A complaint “must contain . . . a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a). To avoid dismissal, a complaint must include
“enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “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, 129 S. Ct. 1937, 1949 (2009). “While a
complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Benton v. Merrill Lynch & Co., Inc., 524 F.3d 866, 870 (8th Cir. 2008). In
reviewing a motion to dismiss, the court assumes the facts alleged in the complaint are true and
draws all reasonable inferences from those facts in the plaintiff’s favor. Monson v. Drug
Enforcement Admin., 589 F.3d 952, 961 (8th Cir. 2009).
Discussion
A.

Count I fails to state a claim upon which relief can be granted.
Defendant Kozeny argues that Count I, the quiet title claim, fails to state a claim with

respect to it because as a trustee of the deed of trust, it has no interest in the property and will not
have any interest until the lender, or the lender’s successors, invokes the power of sale in the
deed of trust. Kozeny contends that because the lender’s successors and assigns have all been
joined in this action, its presence is unnecessary. If the Court grants Plaintiff the relief she seeks
and cancels the deed of trust, it could never have any interest in the property, thus Kozeny’s
presence in this lawsuit does not afford Plaintiff any relief.

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The Court notes that under Missouri law a deed of trust simply creates a lien in favor of
the mortgagee; it does not vest title in the trustee. Libby v. Uptegrove, 988 S.W.2d 131, 132
(Mo. App. 1999). The trustee of a deed of trust has no interest in the property; the grantor
remains the owner of the land until entry for breach of the condition of the deed of trust. State ex
rel. State Hwy. Comm. v. Thelnor, Inc., 485 S.W.2d 443, 445 (Mo. App. 1972). In a lawsuit
affecting title to a mortgaged property a trustee is not an indispensable party. Casper v. Lee, 245
S.W.2d 132, 138-39 (Mo. banc 1952).
In the present case, the trustee has no ownership interest in Plaintiff’s property and, as the
deed of trust makes clear, has no independent right to sell or dispose of the property. The trustee
can act under the deed of trust only if the lender, or the lender’s successors or assigns, invokes
the power of sale. The lender’s successors and assigns have all been joined in this action, so if
the Court grants Plaintiff the relief she seeks and cancels the deed of trust, the trustee would have
no further rights in the property. Thus Kozeny is neither a necessary or indispensable party to
this litigation. There is also no suggestion here that Kozeny has some other stake in the
litigation, nor is there any other real, present claim for relief against Kozeny. Consequently,
Count I is dismissed against Kozeny.
B.

Count III fails to state a claim upon which relief can be granted.
Count III alleges that Kozeny breached its fiduciary duty to the Plaintiff by not reviewing

and clearing what Plaintiff alleges is a “cloud” on the title of the property securing the mortgage.
Second Am. Pet. (doc. 1-4) at pp. 51-52. Kozeny argues that because the deed of trust does not
contain any provision directing it to investigate the property’s title, or clear title if it becomes
clouded, it owed no duty to Plaintiff which it could have breached.

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Under Missouri law, “[a] trustee in a deed of trust acts in a fiduciary capacity and he must
act with complete integrity, fairness, and impartiality toward both the debtor and the creditor.”
Spires v. Edgar, 513 S.W.2d 372, 378 (Mo. 1974). “The duties and powers of a trustee are fixed
by the terms of the contract, namely, the deed of trust.” Id. Where the deed of trust does not
contain a provision directing the trustee to investigate a property’s title, there is no requirement
that the trustee initiate one.
In the present case, Paragraph 22 of the deed of trust (doc. 1-5) defines Kozeny’s duties.
These duties are limited to giving notice of any foreclosure sale, selling the property at a public
auction to the highest bidder, conveying the property by trustees’ deed, and applying the sale
proceeds. It does not include an affirmative duty to investigate the property’s title or remove any
clouds that a third-party places upon it. Consequently, Count III does not state a claim for relief
against Kozeny, and it is dismissed against Kozeny.
C.

Dismissal is without prejudice.
Finally, Kozeny argues that dismissal should be with prejudice because there was no

reasonable basis in fact or law for it to be included in this lawsuit. Given the facts as the Court
understands them, the Court is skeptical that Plaintiff could possibly have any viable claims
against Kozeny. In the event she does, however, the Court does not want to foreclose Plaintiff
from bringing them by dismissing these claims with prejudice. Additionally, the Court notes that
dismissal with prejudice is not necessary to prevent Plaintiff from subsequently bringing
meritless claims against Kozeny, because if Plaintiff chooses to re-file this lawsuit against
Kozeny, the Court has the power to order Plaintiff to pay all or part of the costs of the previous
action, or to order her to post a bond to cover costs in the new action. Accordingly, this portion
of the motion is denied.

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Conclusion
For the foregoing reasons, Defendant Kozeny’s Motion to Dismiss Plaintiff’s Petition
(Doc. 46) is GRANTED. This lawsuit is dismissed without prejudice against Kozeny.
IT IS SO ORDERED.
Date: May 18, 2012

/s/ Greg Kays
GREG KAYS, JUDGE
UNITED STATES DISTRICT COURT

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