Bailey v. Deutsche Bank Trust Company Americas, et al

Filing 14

ORDER AND OPINION GRANTING DEFENDANTS' MOTION TO DISMISS, 7 . Signed on 3/11/15 by District Judge Ortrie D. Smith. (Matthes, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
JOE L. BAILEY,

)
)
Plaintiff,
)
)
vs.
)
)
DEUTSCHE BANK TRUST COMPANY )
AMERICAS and WELLS FARGO
)
BANK, N.A.,
)
)
Defendants.
)

Case No. 15-0014-CV-W-ODS

ORDER AND OPINION GRANTING DEFENDANTS’ MOTION TO DISMISS
Pending is Defendants’ Motion to Dismiss for Failure to State a Claim. The Court
has reviewed the parties’ arguments and the Record, and now grants the motion.

I. BACKGROUND

In reviewing a Motion to Dismiss filed pursuant to Rule 12(b)(6), the Court is
limited to considering the Complaint’s factual allegations and any materials attached to
or necessarily embraced by the Complaint. E.g., Mattes v. ABC Plastics, Inc., 323 F.3d
695, 697 n.4 (8th Cir. 2003). The Court may also consider matters of public record.
E.g., Miller v. Redwood Toxicology Laboratory, Inc., 688 F.3d 928, 931 (8th Cir. 2012).
Those allegations and materials demonstrate that in 2006 Plaintiff executed a $200,000
promissory note (“the Note”) in favor of Wachovia Mortgage Corporation (“Wachovia”);
the Note was secured by a Deed of Trust on a piece of real property (“the Property”).
The Deed of Trust named Robert Meckfessel as Trustee and Mortgage Electronic
Registration Systems, Inc. (“MERS”) as the beneficiary. In April 2009 MERS assigned
the beneficial interest in the Deed of Trust to Wachovia. Sometime before June 2011
Wells Fargo Bank, N.A. (“Wells Fargo”) became the successor by merger to Wachovia,
and in June 2011 Wells Fargo assigned the Deed of Trust to Deutsche Bank in its
capacity as Trustee for a trust of mortgages securitizing mortgage-backed investments

(“Deutsche Bank”). In August 2013, Deutsche Bank appointed the Substitute Transfer
Corporation (“STC”) as Successor Trustee, and in September 2013 STC instituted a
foreclosure sale as permitted by the Deed of Trust. A Successor Trustee’s Deed was
issued to Deutsche Bank. All of these transactions are reflected in documents recorded
with the Jackson County Recorder of Deeds. The Note – which is the focal point of
Plaintiff’s suit and thus may be examined for purposes of resolving Defendants’ motion
– reflects that it was endorsed by Wachovia to Residential Funding Company, LLC, and
then by Residential Funding Company, LLC to Deutsche Bank as trustee. Thus,
Deutsche Bank (as trustee) owns the Note.
The heart of Plaintiff’s Complaint1 is his allegation that the trust containing the
assets securitizing the mortgage-backed investments (and for which Deutsche Bank
was the trustee) lacked the authority to buy the Note. More specifically, he alleges the
Pooling and Servicing Agreement (“PSA”) governing the trust specified that any loans it
purchased had to be purchased by February 27, 2007. Complaint, ¶¶ 15, 17-20. He
theorizes that the purchase of his Note was ineffective because it did not occur before
February 27, 2007, so the subsequent foreclosure was void. Plaintiff further alleges the
transactions subsequent to his were not properly recorded or were made without his
approval. Complaint, ¶¶ 23, 25, 37.
The Complaint sets forth five counts, which are not numbered consecutively.
Some of the counts are comprised of multiple causes of action or requests for relief.
Specifically:


Count I seeks an order declaring all filings after the Note was created are a
nullity, that the Deed of Trust is a nullity, and quieting title in Plaintiff in fee simple
with no encumbrances or liens.



Count II (the first one) seeks declarations that (1) neither Defendant is a holder in
due course, (2) Plaintiff does not owe any debts to Defendants, and (3) the Deed
of Trust is void.

1

Plaintiff instituted this suit in state court when he filed his Petition on October 16,
2014, but the Court will utilize the nomenclature used in federal court. It should also be
noted that while Plaintiff’s counsel was permitted to withdraw on February 3, 2015, and
Plaintiff is now proceeding pro se, he was not pro se when the case was filed.
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

Count II (the second one) asserts claims for wrongful foreclosure, wrongful
eviction, conversion of instrument and unjust enrichment.



Count IV (the first one) asserts claims for breach of fiduciary duty and unjust
enrichment.



Count IV (the second one) asserts a claim under the Missouri Merchandising
Practices Act.

II. DISCUSSION

The liberal pleading standard created by the Federal Rules of Civil Procedure
requires Aa short and plain statement of the claim showing that the pleader is entitled to
relief.@ Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Fed. R. Civ. P.
8(a)(2)). ASpecific facts are not necessary; the statement need only >give the defendant
fair notice of what the . . . claim is and the grounds upon which it rests.=@ Id. (citing Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In ruling on a motion to dismiss,
the Court Amust accept as true all of the complaint=s factual allegations and view them in
the light most favorable to the Plaintiff[ ].@ Stodghill v. Wellston School Dist., 512 F.3d
472, 476 (8th Cir. 2008).
To survive 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. 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. The plausibility standard is
not akin to a probability requirement, but it asks for more than a sheer
possibility that a defendant has acted unlawfully. Where a complaint
pleads facts that are merely consistent with a defendant's liability, it stops
short of the line between possibility and plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In keeping with these principles a court considering a motion to dismiss
can choose to begin by identifying pleadings that, because they are no
more than conclusions, are not entitled to the assumption of truth. While
legal conclusions can provide the framework of a complaint, they must be
supported by factual allegations. When there are well-pleaded factual

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allegations, a court should assume their veracity and then determine
whether they plausibly give rise to an entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). A claim is facially plausible if it allows the
reasonable inference that the defendant is liable for the conduct alleged. E.g., Horras v.
American Capital Strategies, Ltd., 729 F.3d 798, 801 (8th Cir. 2013).
Plaintiffs’ claims all stem from a single premise: that assignment of the Note to
Deutsche Bank was void because it occurred after the PSA permitted the trust to obtain
new assets. Therefore, Deutsche Bank could not have the ability to collect funds or
enforce the Deed of Trust. Plaintiff’s argument is simply incorrect. “A judicial
consensus has developed holding that a borrower lacks standing to (1) challenge the
validity of a mortgage securitization or (2) request a judicial determination that a loan
assignment is invalid due to noncompliance with a pooling and servicing agreement.”
Schwend v. U.S. Bank, N.A., 2013 WL 686592, at *3 (E.D. Mo. 2013) (quotation
omitted).2 The rationale employed by these courts is that the borrower on the
underlying loan is not a party to the PSA so the borrower lacks standing to complain
that the PSA was not followed. Moreover, any such violation of the PSA – assuming
one occurred – would not change the fact that the trust owns the note and has the right
to enforce the deed of trust. The parties to the PSA could conceivably pursue a claim
that the trust should not have purchased the asset, but it would not change the fact that
the trust actually did so.
Plaintiff responds to these argument generally by contending he can assert his
claims if he can prove that the assignments were fraudulent. Not only does he lack any
legal support for his contention, but he does not allege or describe the purported fraud.
All Plaintiff does is reiterate his views regarding the legality of the transfers and appends
2

Other courts comprising this judicial consensus include (but by no means are
limited to): Rajamin v. Deutsche Bank Nat’l Trust Co., 757 F.3d 79, 86-87 (2d Cir.
2014); Reinagel v. Deutsche Bank Nat’l Trust Co., 735 F.3d 220, 228 (5th Cir. 2013);
Wright v. Deutsche Bank Nat’l Trust Co., No. 12-5120-CV-SW-GAF, slip op. at 8 (W.D.
Mo. Sept. 23, 2013); Karnatcheva v. JPMorgan Chase Bank, N.A., 871 F. Supp. 2d 834,
842 (D. Minn.); aff’d, 704 F.3d 545 (8th Cir.); cert. denied, 134 S. Ct. 72 (2013); Metcalf
v. Deutsche Bank Nat. Trust Co., 2012 WL 2399369, at *4 (N.D. Tex. 2012); In Re
Walker, 466 B.R. 271, 284–85 nn. 28–29 (Bankr. E.D. Pa. 2012); Deerinck v. Heritage
Plaza Mortg. Inc., 2012 WL 1085520, at *5 & n.10 (E.D. Cal. 2012); Edwards v. Ocwen
Loan Servicing, LLC, 2012 WL 844396, at *5 (E.D. Tex. 2012).
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the adjective “fraudulent.” This does not provide his claims with any legal footing.
Plaintiff also recites the names of a series of court decisions (few of which involve
Missouri law) but has not explained the legal principles that purportedly apply to his
claims. The Court’s independent review of Plaintiff’s authorities also fails to reveal any
basis for concluding his claims are legally viable.3 One of the few Missouri authorities
Plaintiff cites – and the one he seems to rely on the most – stands for the proposition
that the actions of a loan servicer are “in connection with” the sale of merchandise such
that a loan servicer’s actions might give rise to a cause of action under the Missouri
Merchandising Practices Act. However, the servicer’s actions in that case – the alleged
failure to apply fire insurance proceeds to the loan balance and subsequent foreclosure
based on the mortgagor’s resulting delinquency – are a far cry from the actions alleged
in this case. Conway v. CitiMortgage, Inc., 438 S.W.2d 410 (Mo. 2014) (en banc).
Plaintiff’s response to the motion to dismiss does not rely on his allegations
regarding his lack of consent to the transactions following the original mortgage – which
is just as well as there was no legal requirement that Plaintiff tender approval to make
any of the transfers valid. Finally, to whatever extent Plaintiff relies on a theory that the
Note and Deed of Trust were split, this theory depends on the previously-discussed
argument regarding the validity of Deutsche Bank’s acquisition of the Note; for the
reasons previously discussed, such an argument fails as a matter of law.

3

For instance, Plaintiff cites to In re Mortgage Electronic Registration Systems,
Inc., 754 F.3d 772 (9th Cir. 2014), a decision by the Ninth Circuit reviewing the dismissal
by a district court of suits challenging MERS’s operations. The district court was the
transferee court ruling in a multitude of cases transferred by the Judicial Panel on
Multidistrict Litigation. The Ninth Circuit reversed the dismissal of claims predicated on
Arizona’s false documents statute and affirmed the dismissal of claims for (1) wrongful
disclosure, aiding and abetting wrongful foreclosure, and aiding and abetting predatory
lending, all predicated on Arizona, California, and Nevada law, and (2) violation of
Nevada’s statute governing non-judicial forfeitures. Plaintiff does not explain how any
portion of the Ninth Circuit’s ruling helps him with his claims under Missouri law.
Similarly, Slorp v. Lerner, Sampson, and Rothfuss, 587 Fed. Appx. 249 (6th Cir. 2014),
upheld the dismissal of the plaintiff’s state law claims, all of which were predicated on
Ohio law.
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III. CONCLUSON

The Motion to Dismiss (Doc. # 7) is granted.

IT IS SO ORDERED.

DATE: March 11, 2015

/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

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