Burke v. Regions Bank et al

Filing 17

ORDER granting 11 Motion for Summary Judgment. Signed by Judge Samuel H. Mays, Jr on 01/15/2013.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

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SEAN BURKE,
Plaintiff,
v.
REGIONS BANK D/B/A REGIONS
MORTGAGE, and FEDERAL NATIONAL
MORTGAGE ASSOCIATION,
Defendants.

No. 11-2633

ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Plaintiff Sean Burke (“Burke”) brings suit against Regions
Bank (“Regions”) and Federal National Mortgage Association
(“FNMA”), (collectively, “Defendants”) to restrict and prohibit
foreclosure, to order accounting on loans, and for monetary
damages, legal, and equitable relief.

(Complaint, ECF No. 1-2.)

Burke initially filed his Complaint in the Chancery Court of
Shelby County on May 2, 2011.

Defendants timely removed the

action to this Court on July 28, 2011.
No. 1.)

(Notice of Removal, ECF

On April 18, 2012 Defendants filed a Motion for Summary

Judgment.

(ECF No. 11.)

On October 25, 2012, the Court issued

an Order to Show Cause why Defendants’ Motion for Summary
Judgment should not be granted.
responded.

(ECF No. 14.)

Burke has not

For the following reasons, Defendants’ Motion for Summary
Judgment is GRANTED.
I.

Background

On November 10, 1998, Audrea Y. Tillman (“Tillman”) executed a
Note in favor of Regions’ predecessor by merger, Union Planters
Bank (“Union Planters”), for the property in question, 4069
Sandburg Street, Memphis, Tennessee, 38128.

(Def.’s Statement

of Undisputed Facts at ¶ 1, ECF No. 11-2.)

Tillman secured the

Note with a Deed of Trust conveying the property to trustees
Emmett James House and Bill R. McLaughlin (the “Trustees”).
(Id. at ¶ 2.)
The Note and Deed of Trust require Tillman to pay the full
amount of each monthly payment on time or to be in default and
be subject to immediate acceleration of all outstanding
principal and interest on the Note.

(Id. at ¶ 5, 7.)

Both

instruments include due on sale clauses that allow the lender to
immediately accelerate the entire amount of the loan if Tillman
sells or conveys the property without the lender’s prior written
approval.

(Id. at ¶ 6, 11.)

If the due on sale clause is

invoked and the borrower does not pay all money due on the Note,
the lender is entitled to foreclose on the property.

(Id. at ¶

6.)
Burke is not a party to the Note or the Deed of Trust.
at ¶ 4.)

On November 3, 2009, Tillman conveyed her right,
2

(Id.

title, and interest in the property to Burke by quitclaim deed.
(Id. at ¶ 12.)
Regions.

(Id.)

Tillman did not obtain prior permission from
Tillman continued to make the required monthly

payments on the Note until May 28, 2010.

(Id. at ¶ 13-14.)

On

September 16, 2010, Regions sent Tillman a written notice of her
default and its right to foreclose as permitted by the Deed of
Trust.

(Id. at ¶ 9, 15.)

Beginning on February 21, 2011,

Regions published notice of the foreclosure sale for three
consecutive weeks in The Daily News, a newspaper of record in
Memphis, Tennessee.

(Id. at ¶ 19.)

The property was purchased

by Regions, the highest bidder, at the advertised foreclosure
sale on March 14, 2011.
II.

(Id. at ¶ 20-21.)

Jurisdiction

Jurisdiction in this Court is proper under 28 U.S.C § 1332.
The parties are completely diverse and the amount in
controversy, exclusive of interests and costs, exceeds $75,000.
III. Standard of Review
Under Federal Rule of Civil Procedure 56, on motion of a
party, the court “shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).

The moving party can meet this burden by

pointing out to the court that the non-moving party, having had
sufficient opportunity for discovery, has no evidence to support
3

an essential element of his case.
Asbury

v.

Teodosio,

412

F.

See Fed. R. Civ. P. 56(c)(1);

Appx.

786,

791

(6th

Cir.

2011)

(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).
When confronted with a properly supported motion for summary
judgment, the non-moving party must set forth specific facts
showing that there is a genuine dispute for trial.
Civ.

P.

56(c).

A

genuine

dispute

for

trial

See Fed. R.

exists

if

the

evidence is such that a reasonable jury could return a verdict
for the non-moving party.

See Wasek v. Arrow Energy Servs., 682

F.3d

2012)

463,

467

(6th

Cir.

(quoting

Lobby, Inc., 477 U.S. 242, 248 (1986)).

Anderson

v.

Liberty

The non-moving party

must “‘do more than simply show that there is some metaphysical
doubt as to the material facts.’”
Auto.

Ins.

Co.,

680

F.3d

725,

Phelps v. State Farm Mut.

735

(6th

Cir.

2012)

(quoting

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586

(1986)).

A

party

may

not

oppose

a

properly

supported

summary judgment motion by mere reliance on the pleadings.

See

Beckett v. Ford, 384 Fed. Appx. 435, 443 (6th Cir. 2010) (citing
Celotex Corp., 477 U.S. at 324).

Instead, the non-moving party

“must adduce concrete evidence on which a reasonable juror could
return a verdict in his favor.”

Stalbosky v. Belew, 205 F.3d

890, 895 (6th Cir. 2000) (citations omitted); see Fed. R. Civ.
P. 56(c)(1).
record

for

The court does not have the duty to search the
such

evidence.

See
4

Fed.

R.

Civ.

P.

56(c)(3);

InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir.
1989).

The non-moving party has the duty to point out specific

evidence in the record that would be sufficient to justify a
jury decision in his favor.

See Fed. R. Civ. P. 56(c)(1);

InterRoyal Corp., 889 F.2d at 111.
Although summary judgment must be used carefully, it “is an
integral

part

designed

to

determination

of

the

secure
of

every

procedural shortcut.”

Federal
the

Rules

just,

action[,]

as

a

whole,

speedy,
rather

and
than

which

are

inexpensive
a

disfavored

FDIC v. Jeff Miller Stables, 573 F.3d

289, 294 (6th Cir. 2009) (internal quotation marks and citations
omitted).
The local rules of this district set out specific
requirements that must be met by the non-moving party.

The

party opposing summary judgment must respond to each fact set
forth by the moving party by agreeing that it is undisputed,
agreeing that it is undisputed for purposes of ruling on the
summary judgment motion only, or by demonstrating that the fact
is disputed.

W.D. Tenn. L.R. 56.1 (b).

The non-moving party

must make specific citations to the record to support each
contention that a particular fact is in dispute.

Id.

The non-

moving party’s failure to respond as required to the moving
party’s statement of material facts “shall indicate that the
asserted facts are not disputed for purposes of summary
5

judgment.”

W.D. Tenn. L.R. 56.1(d).

Plaintiff has failed to

respond in any manner to Defendants’ Motion for Summary
Judgment.

Therefore, Defendants’ statements of material fact

are accepted as true for purposes of ruling on their motion.
IV.

Analysis

Burke claims that he is entitled to compensatory and
injunctive relief for violation of his rights under the
Tennessee common law of contracts, the Tennessee Consumer
Protection Act, Tenn. Code Ann. §§ 47-18-101, et seq. (“TCPA”),
and the Due Process Clause of the Fourteenth Amendment.
Defendants are entitled to summary judgment on all claims in
Burke’s Complaint because he lacks standing to bring any claims
on the contract or under the TCPA and because there was no state
action upon which a Due Process claim could be based.
A. FNMA
Burke does not allege any “specific act of wrongdoing”
against FNMA, and claims only that it is “the beneficiar[y] of
the misconduct of defendant Regions.”

(Compl. ¶ 2.)

Burke has

not alleged any facts that can support a claim of liability
against FNMA under any of the legal theories he proposes.

There

is no genuine dispute of material fact as to FNMA’s liability,
and it is entitled to judgment as a matter of law.

Defendants’

Motion for Summary Judgment in favor of FNMA is GRANTED.
B. The Note and Deed of Trust
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An individual may not sue to enforce rights existing under a
contract unless he is a party to the contract or an intended
third-party beneficiary.

See Owner-Operator Indep. Drivers

Ass’n v. Concord EFS, 59 S.W.3d 63, 68 (Tenn. 2001).

A party to

a contract is an original party or an individual or entity in
privity with an original party.

It is undisputed for purposes

of deciding this Motion that Burke is not a party to the Note or
the Deed of Trust entered into by the original borrower,
Tillman, and the original lender, Union Planters.
Undisputed Facts ¶ 4.)

(Defs.’

It is also undisputed that Burke did not

assume the rights and obligations under Tillman’s contracts, but
merely received Tillman’s interest in the property by quitclaim
deed.

(Quitclaim Deed, ECF No. 1-2.)

Burke did not step into

the shoes of Tillman in her contractual relationship with the
Defendants.

See Johnson v. Johnson, 187 B.R. 598, 601 (E.D.

Tenn. 1994) (stating that a quitclaim deed is a conveyance and
the effect is only to convey whatever interest the grantor has
in the property).

Therefore, Burke is not in privity of

contract with Regions and cannot challenge the formation of the
contract or assert any rights under the contract as a party.
In Tennessee, strangers to a contract may seek to enforce
its terms if they are intended third-party beneficiaries of the
contract identified by the contracting parties at the time the
original agreement was made.

Concord EFS, 59 S.W.3d, at 68. A
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merely incidental third-party beneficiary of a contract has no
right to enforce its terms.

Id.

To maintain an action as an

intended beneficiary, a third party must show “‘(1) a valid
contract made upon sufficient consideration between the
principal parties and (2) the clear intent to have the contract
operate for the benefit of a third party.’”

Id. (quoting First

Tennessee Bank Nat’l Ass’n v. Thoroughbred Motor Cars, Inc., 923
S.W.2d 928, 930 (Tenn. Ct. App. 1996) (internal citations
omitted)).

The “primary consideration in evaluating third-party

beneficiary claims is the intent of the contracting parties,
which must be established by clear and direct evidence,”

it

must appear “‘that the contract was made and entered into
directly and primarily for the benefit of such third person.’”
TIG Ins. Co. v. Titan Underwriting Managers, LLC, No. M20070177-COA-R3-CV, 2008 Tenn. App. LEXIS 777, at *8 (Tenn. Ct. App.
Nov. 7, 2008).

The Tennessee Supreme Court has elaborated that

a third party is an intended third-party beneficiary if:
(1)
(2)

(3)

The parties to the contract have not otherwise agreed;
Recognition of a right to performance in the
beneficiary is appropriate to effectuate the intention
of the parties; and
The terms of the contract or the circumstances
surrounding performance indicate that either:
(a) the performance of the promise will satisfy an
obligation or discharge a duty owed by the
promise to the beneficiary; or
(b) the promisee intends to give the beneficiary the
benefit of the promised performance.

Concord EFS, 59 S.W.2d, at 70.
8

The Note and Deed of Trust establish on their faces that
Burke was not an intended third-party beneficiary of the
agreement between the original contracting parties.

Not only is

there no mention of Burke and no benefit assigned to him under
the terms of either document, but both the Note and the Deed of
Trust explicitly include due on sale clauses that prohibit
Tillman from transferring all or part of her interest in the
property without the express permission of the lender.

It is

clear from the face of the documents that neither Burke nor any
other third party was intended to benefit.

There is no genuine

dispute of material fact about Burke’s status in this
contractual relationship.

Burke has no standing to bring a

claim, and Defendants are entitled to judgment as a matter of
law on all contract-based claims raised by the Complaint.
C. Tennessee Consumer Protection Act
Burke’s Complaint also alleges that Regions violated several
requirements of the TCPA.

Burke alleges that “[t]he loan

agreement as advertised, as implemented, and as executed
violates the [TCPA]” and that “Defendant’s conduct has violated
the [TCPA] and it is guilty of false and misleading practices.”
(Compl. ¶¶ 4,6, ECF No. 1-2.)

Burke is not a consumer as

defined by the TCPA with respect to Regions and cannot bring an
action against it under the TCPA.

It is undisputed that Burke

is not a party to the loan agreement of November 10, 1998, as
9

memorialized in the Note and the Deed of Trust.
Undisputed Facts, ¶¶ 1, 4.)

(Defs.’

It is undisputed that whatever

interest Burke acquired in the property was acquired from
Tillman by quitclaim deed on November 3, 2009, and not from
Regions or its predecessor Union Planters.

(Id. ¶ 12.)

It is

undisputed for purposes of deciding this Motion for Summary
Judgment that from November 3, 2009, until May 28, 2010,
Tillman, and not Burke, continued to make the monthly payments
on the loan despite the conveyance to Burke by quitclaim deed.
(Id. ¶¶ 13-14.)

It is clear that Burke never “[sought] or

acquire[d] by purchase, rent, lease, assignment, award by
chance, or other disposition, any goods, services, or property,
tangible or intangible, real, personal or mixed” from Regions or
Union Planters.

Tenn. Code Ann. § 47-18-103(2) (defining

“consumer” for purposes of the act); see also Burke v. Litton
Loan Servicing, No. 2:10-cv-2553, slip op. at 12-13 (W.D. Tenn.
Mar. 30, 2012).

There is no genuine dispute of material fact

about Burke’s standing under the TCPA.

Regions is entitled to

judgment as a matter of law on all of Burke’s claims under the
TCPA.
D. Due Process
Burke also appears to allege that Regions’ foreclosure of
the property constituted a violation of his rights under the Due
Process Clause of the Fourteenth Amendment.
10

(See Compl. ¶¶ 3,

4.)1

A violation of the Fourteenth Amendment requires state

action and cannot result from purely private action.

See, e.g.,

Paige v. Coyner, 614 F.3d 273, 278 (6th Cir. 2010) (“the
Fourteenth Amendment prohibits only states (as opposed to
private entities) from depriving individuals of due process.”).
A non-judicial foreclosure is a contractually-determined action
that does not implicate state action.

See King v. Emery, 836

F.2d 1348, 1348 (6th Cir. 1988) (interpreting Tennessee law).
Statutory recognition of a non-judicial foreclosure procedure is
insufficient to convert enforcement of a private contract remedy
into state action.

Id. (“This recognition of private

nonjudicial foreclosures falls short of the compulsion required
to establish state action.”).

To the extent Burke seeks to

bring a due process claim under the Tennessee Constitution, the
analysis is the same.

See State v. James, 315 S.W.3d 440, 448

n.4 (Tenn. 2010) (the law of the land clause of Article I § 8 of
the Tennessee Constitution is interpreted identically to the due
process clause of the Fourteenth Amendment of the United States
Constitution).

Regions is entitled to judgment as a matter of

law on all of Burke’s claims alleging a violation of his due
process rights.
V.

Conclusion

1

Burke’s Complaint contains two paragraphs labeled “4” and no paragraph
labeled “5.” This citation refers to the second paragraph 4.

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For the foregoing reasons, Defendants’ Motion for Summary
Judgment is GRANTED.

So ordered this 15th day of January, 2013.

s/ Samuel H. Mays, Jr.__ ___
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE

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