Powe et al v. Deutsche bank National Trust Company

Filing 24

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE for 11 Motion to Dismiss, filed by Deutsche Bank National Trust Company, 21 Report and Recommendation. Having received the report of the United States Magis trate Judge, having considered Plaintiffs' timely filed objection (Dkt. #22), Defendant's response (Dkt. #23), and having conducted a de novo review, the Court is of the opinion that the findings and conclusions of the Magistrate Judge are correct and adopts the Magistrate Judge's report (Dkt. #21) as the findings and conclusions of the Court. It is, therefore, ORDERED that Defendant's Motion to Dismiss (Dkt. #11) is GRANTED, and Plaintiffs, claims are DISMISSED with prejudice. Signed by Judge Amos L. Mazzant, III on 7/29/2016. (kls, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
WAYNE A. POWE, REGINA Y. POWE
v.
DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE FOR
RESIDENTIAL ASSET SECURITIZATION
TRUST SERIES 2004-A7 MORTGAGE
PASS-THROUGH CERTIFICATES 2004-G

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Civil Action No. 4:15-CV-661
(Judge Mazzant/Judge Nowak)

MEMORANDUM ADOPTING REPORT AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action,
this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636.
On June 15, 2016, the report of the Magistrate Judge (Dkt. #21) was entered containing proposed
findings of fact and recommendations that Defendant Deutsche Bank National Trust Company’s
(“Defendant”) Motion to Dismiss (Dkt. #11) be granted. Having received the report of the
Magistrate Judge (Dkt. #21), having considered Plaintiffs Wayne A. Powe and Regina Y Powe’s
(“Plaintiffs”) timely filed objections (Dkt. #22), Defendant’s response to Plaintiffs’ objections
(Dkt. #23), and having conducted a de novo review, the Court is of the opinion that the findings
and conclusions of the Magistrate Judge are correct.
BACKGROUND
Plaintiffs originally commenced this action on July 31, 2015, in the 401st District Court,
Collin County, Texas, Cause No. 401-03028-2015 (“State Court Action”) against Defendant
(Dkt. #1 at 1).1

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The claims in Plaintiffs’ Petition relate to the servicing and foreclosure

Prior to initiation of the current lawsuit in Texas state court, Defendant filed a Rule 736 Proceeding for foreclosure
on the Property (“Rule 736 Proceeding”) (Dkt. #10-4 at 1). In Re: Order for Foreclosure Concerning 291 Oakwood

proceedings of Plaintiffs’ loan secured by the residence, located at 291 Oakwood Trail, Fairview,
Texas 75069 (“Property”). Id. at 1-2. On August 28, 2015, the case was removed to the Eastern
District of Texas (Dkt. #1). Thereafter, Plaintiffs filed an Amended Complaint alleging claims
for: (1) Violations of the Pooling and Servicing Agreement (“PSA”); (2) Truth In Lending Act
(“TILA”) violations; (3) Quiet Title; (4) Unjust Enrichment; (5) Declaratory Judgment
(requesting that the lien on the Property be declared invalid); and (6) Procedural Deficiencies in
the Rule 736 Proceeding (Dkt. #9). On November 20, 2015, Defendant filed a Motion to
Dismiss under 12(b)(6) (Dkt. #11) requesting that each of Plaintiffs’ claims be dismissed.
On February 5, 2016, Plaintiffs filed a Response (Dkt. #15). The Magistrate Judge entered a
report and recommendation on June 15, 2016, recommending Defendant’s Motion to Dismiss be
granted (Dkt. #21 at 17). On June 29, 2016, Plaintiffs timely filed objections to the Magistrate
Judge’s report (Dkt. #22). On July 11, 2016, Defendant filed a response to Plaintiffs’ objections
(Dkt. #23).
PLAINTIFFS’ OBJECTIONS
Under the law, a party who files timely written objections to a magistrate judge's report
and recommendation is entitled to a de novo determination of those findings or recommendations
to which the party specifically objects. 28 U.S.C. § 636(b)(1)(c); Fed. R. Civ. P. 72(b)(2)-(3).
Plaintiffs assert two objections herein: (1) the Magistrate Judge incorrectly found Plaintiffs
cannot challenge the purported assignment from IndyMac Bank, F.S.B. to OneWest Bank,
F.S.B.; and (2) the Magistrate Judge incorrectly found limitations barred Plaintiffs’ claims
(Dkt. #22).
Trail Fairview, TX 75069 Under Tex.R.Civ.Proc. 736 Petitioner: Deutsche Bank National Trust Company as
Trustee for Residential Asset Securitization Trust Series 2004-A7 Mortgage Pass-Through Certificates Series
2004-G Respondent(s) vs. Wayne A Powe and Regina Y Powe, No. 401-02037-2015 (401st Dist. Ct., Collin County,
Tex. August 12, 2015). The Rule 736 Proceeding was later dismissed without prejudice by Defendant’s Notice of
Non-Suit. (Dkt. #20, Ex. 1). Id.

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Plaintiffs’ objections, as stated, effect and/or impact only two of the findings and
conclusions of the Magistrate Judge (see Dkts. #21-22).

The Magistrate Judge’s report

specifically recommended that:
(1) Plaintiffs’ claims for violations of the PSA and TILA be dismissed because
Plaintiffs have not objected to dismissal of these claims (Dkt. #15 at 8-9, 11;
Dkt. #21 at 5-6);
(2) Plaintiffs’ claims based on the invalidity of the chain of assignments,
including specifically the invalidity of the IndyMac Bank/OneWest
Assignment and the OneWest/Defendant Assignment, be dismissed for lack of
standing to challenge the Assignments on grounds that merely render the
Assignments voidable (Dkt. #21 at 6-11);
(3) Plaintiffs’ claim for unjust enrichment/restitution be dismissed because it is
barred by the statute of limitations (Dkt. #21 at 11-12);
(4) Plaintiffs’ claims based on the Rule 736 Proceeding be dismissed as moot
(Dkt. #21 at 13-14);
(5) Plaintiffs’ claim for quiet title be dismissed because Plaintiffs fail to state a
claim under Federal Rule of Civil Procedure 12(b)(6) (Dkt. #21 at 14-15);
(6) Plaintiffs’ claim for unjust enrichment/restitution be dismissed for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6)
(Dkt. #21 at 15-16).
Plaintiffs do not object to the findings of the Magistrate Judge: (i) that Plaintiffs’ claims for
violations of the PSA and TILA; (ii) Plaintiffs’ claims based on the Rule 736 Proceeding; and
(iii) Plaintiffs’ claim for quiet title, should be dismissed (see Dkt. #22). Nor do Plaintiffs object
to the Magistrate Judge’s finding that Plaintiffs’ claim for unjust enrichment/restitution should be
dismissed under Rule 12(b)(6). Id.
As such, the Court holds that these findings and conclusions of the Magistrate Judge are
correct and will be adopted as the findings and conclusions of the Court. Accordingly, Plaintiffs’
claims: (i) for violations of the PSA and TILA; (ii) based on the Rule 736 Proceeding;

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(iii) for quiet title; and (iv) for unjust enrichment/restitution are dismissed. The Court now
addresses each of Plaintiffs’ objections in turn.
Objection 1:

Plaintiffs’ Claim Based on the Purported Assignment of the Note from
IndyMac Bank, F.S.B. to OneWest Bank, F.S.B., which was a Void and
Invalid Assignment.

Plaintiffs’ first objection contends that the Magistrate Judge improperly found that
Plaintiffs’ claims based on the IndyMac Bank/OneWest Assignment should be dismissed
because Plaintiffs lack standing to assert such claims (Dkt. #22 at 1-3). Specifically, Plaintiffs
assert that: (1) the Magistrate Judge improperly relied on the bulk asset transfer by the FDIC,
rather than the individual assignment at issue, to reach this result; and (2) the Magistrate Judge
misstated the holding and/or effect of the reversal of Burke cited in support of Plaintiffs’
arguments. Id.
The Magistrate Judge, in reliance on binding Fifth Circuit precedent Reinagel v. Deutsche
Bank National Trust Company., 735 F.3d 220, 224–28 (5th Cir. 2013), found that Plaintiffs, as
non-signatories, lacked standing to challenge the IndyMac Bank/OneWest Assignment because
Plaintiffs’ challenges to the assignment merely rendered it voidable, not void (Dkt. #21 at 6-11).
In Reinagel, the Fifth Circuit found that a non-signatory to a contract (including an assignment
such as here) may only challenge the contract on grounds that render the contract void; the
non-signatory lacks standing to assert any grounds which merely renders it voidable, such as lack
of

authority

of

an

individual

to

sign

the

contract

on

behalf

of

a

company.

Reinagel, 735 F.3d at 224–28; see also Casterline v. OneWest Bank, F.S.B., No. CAC–12–150,
2012 WL 5465982, at *3-5 (S.D. Tex. Oct. 10, 2012) (finding that plaintiffs lacked standing to
challenge an assignment from IndyMac Bank to Deutsche National Trust Company

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because plaintiffs challenged the assignment only on grounds that rendered the assignment
voidable, not void).
Here, Plaintiffs challenge the validity of the assignment of the deed of trust from
IndyMac Bank to OneWest on September 10, 2009, which was executed by Erica A.
Johnson-Seck, attorney-in-fact for IndyMac Bank and its successors and/or assigns (Dkt. #9 at 6,
13-15; Dkt. #15 at 4-8, Ex. C). Plaintiffs argue that because IndyMac Bank was defunct and/or
had been shut down at the time the IndyMac Bank/OneWest Assignment was executed, it was
void. Id. Plaintiffs’ sole authority for this proposition was Burke, wherein the Court found an
assignment void because it was signed by a purportedly “dead” party (Dkt. #15 at 4-8).
See Deutsche Bank Nat'l Trust Co. v. Burke, 92 F. Supp. 3d 601, 602 (S.D. Tex. 2015), vacated
and remanded sub nom. DEUTSCHE BANK NATIONAL TRUST COMPANY, as Tr. of the
Residential Asset Securitization Trust 2007-A8, Mortgage Pass-Through Certificates, Series
2007-H under the Pooling & Servicing Agreement dated June 1, 2007, Plaintiff - Appellant v.
JOANNA BURKE; JOHN BURKE, Defendants - Appellees, No. 15-20201, 2016 WL 3209223
(5th Cir. June 9, 2016) (“Fifth Circuit Opinion”). The Burke Court reasoned, in part, that
IndyMac Bank had been closed by the Office of Thrift Supervision and did not exist on the date
the assignment was executed or its effective date. Id. The Magistrate Judge correctly noted that
Burke has been vacated and reversed in full by the Fifth Circuit (Dkt. #21 at 10-11). See Fifth
Circuit Opinion, 2016 WL 3209223, at *3. While the Fifth Circuit Opinion did not specifically
address the argument Plaintiffs assert herein, that fact is irrelevant as the underlying opinion was
entirely vacated and has no precedential value (Dkt. #21 at 10-11). Fifth Circuit Opinion,
2016 WL 3209223, at *3; see Asgeirsson v. Abbott, 696 F.3d 454, 459 (5th Cir. 2012) (stating
that the Fifth Circuit has consistently held that a vacated decision has no precedential value).

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Moreover, Plaintiffs’ objection focusing on the alleged inapplicability of the bulk asset
sale to OneWest through the receivership — omits and ignores the discussion in the report and
recommendation that the IndyMac Bank/OneWest Assignment, at issue here, includes the
language “successors and assigns” (Dkt. #22 at 1-3). Plaintiffs have clearly admitted in their
underlying pleadings, and now again in their objections, that the IndyMac Bank/OneWest
Assignment was executed by “IndyMac Bank, F.S.B. and its successors and/or assigns” and
further that the FDIC, a successor in interest and “live” entity, had authority, as receiver, to
transfer the assets of IndyMac Bank (Dkt. #15 at 4-7; see also Dkt. #9 at 3-6, 11-12, 14;
Dkt. #22 at 1-2). In Casterline, considered by the Magistrate Judge, the assignment at issue
similarly stated, “IndyMac, its successors and assigns” and the court found such language
necessarily included the FDIC and OneWest Bank, the successors and/or assigns of IndyMac
Bank. Casterline, 2012 WL 5465982, at *3-5. Casterline reasoned that even if IndyMac Bank
was defunct on the date of assignment, an individual authorized to sign the assignment on behalf
of a successor or assign of IndyMac Bank could properly execute an assignment.2 Id. Thus,
Plaintiffs’ focus on the reference to a bulk asset sale (alleging no such asset sale applies here),
ignores that Casterline also found that IndyMac Bank was in receivership and an attorney-in-fact
for a successor in interest and/or assignee of IndyMac Bank (such as the FDIC or IndyMac
Federal, F.S.B.) could still validly execute an assignment (see Dkt. #15, Ex. C).
Casterline, 2012 WL 5465982, at *3-5. Such is the case here; the IndyMac Bank/OneWest
Assignment includes the language “IndyMac Bank, F.S.B. and its successors and/or assigns”
(Dkt. #15, Ex. C). Similarly, it was signed by an attorney-in-fact acting for “IndyMac Bank,
F.S.B. and its successors and/or assigns.” Id. Accordingly, Plaintiffs’ challenge, while couched
2

The court in Casterline was also not persuaded that IndyMac Bank was “dead” or defunct on the date of the
assignment, noting that the public records reflected IndyMac Bank was in receivership and/or conservatorship at that
time. Id.

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or framed in terms of a defunct or dead entity, is merely a challenge to the authority of the signor
of the IndyMac Bank/OneWest Assignment who executed it at that time. See Casterline,
2012 WL 5465982, at *3-5. A challenge to the authority of the signor, such as Plaintiffs’
challenge here, is clearly recognized under Reinagel as a ground a non-signatory has no standing
to assert, because the ground merely renders the Assignment voidable, not void.
735 F.3d at 224–28. Plaintiffs, as non-signatories, therefore lack standing to challenge the
IndyMac Bank/OneWest Assignment on such ground, and any claims relying thereupon,
including but not limited to Plaintiffs’ claims for declaratory judgment, must be dismissed.
Plaintiffs’ first objection is overruled.
Objection 2:

Limitations

Plaintiffs also object to the finding by the Magistrate Judge that Plaintiffs’ unjust
enrichment/restitution claim is barred by limitations (Dkt. #21 at 11-12; Dkt. #22 at 3). Notably,
Plaintiffs do not object to the Magistrate Judge’s finding that Plaintiffs failed to state a
claim for unjust enrichment/restitution under Federal Rule of Civil Procedure 12(b)(6)
(see Dkt. #21 at 11-12; Dkt. #22 at 3). Again, the Magistrate Judge found that Plaintiffs’ unjust
enrichment/restitution claim failed to state a claim upon which relief can be granted because the
Parties had a contract (Dkt. #21 at 11-12). Plaintiffs have not objected to such finding; therefore,
even if the unjust enrichment/restitution claim was not barred by limitations, such claim must
still be dismissed (Dkts. #21-22). Accordingly, no matter the result or disposition of Plaintiffs’
objections regarding limitations, Plaintiffs’ unjust enrichment/restitution claim is properly
dismissed.
Nevertheless, the Court reviews the objection.

Plaintiffs do not dispute

that Plaintiffs’ unjust enrichment/restitution claim is subject to Texas’s two year

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statute of limitations (Dkts. #21-22).

Elledge v. Friberg-Cooper Water Supply Corp.,

240 S.W.3d 869, 869 (Tex. 2007); TEX. CIV. PRAC. & REM. CODE §§ 16.003, 16.051.
Rather, Plaintiffs assert that the latest date of injury for the unjust enrichment/restitution claim
was July 2015, bringing such claim within the limitations period (Dkt. #22 at 3-4). Plaintiffs
specifically assert in their objections that the date of injury for Plaintiffs’ claim was July 2015,
when the Rule 736 Proceeding was filed in Texas state court; and that the Magistrate Judge erred
in citing or relying on January 7, 2011. Id.
Plaintiffs allege, by way of their unjust enrichment/restitution claim, that because
Defendant was allegedly not the legal owner of the note/deed of trust, Plaintiffs are entitled to
repayment of any and all payments made to Defendant (who as a non-owner would not be
entitled to such payments) since June 2004 under the note/deed of trust (Dkt. #9 at 16). Plaintiffs
argue limitations for this claim should be measured from July 2015 (Dkt. #22 at 3-4). As a
general proposition, a cause of action accrues when a wrongful act causes a legal injury, even if
the fact of injury is not discovered until later, and even if all resulting damages have not yet
occurred. See Trinity River Auth. v. URS Consultants, Inc., 889 S.W.2d 259, 262 (Tex. 1994);
see also Sw. Energy Prod. Co. v. Berry-Helfand, No. 13-0986, 2016 WL 3212999, at *15
(Tex. June 10, 2016).

Different claims asserted in the same lawsuit may have different

injury and accrual dates for purposes of the statute of limitations.

See e.g. Smith

Int'l, Inc. v. Egle Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007) (finding breach of contract,
negligent misrepresentation, and indemnification had different accrual/injury dates for purposes
of limitations).
Again, Plaintiffs’ unjust enrichment/restitution claim seeks recoupment in the form of
monetary damages for alleged payments made by Plaintiffs to Defendant when Defendant was

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not the lawful owner of the note and/or deed of trust on the Property (Dkt. #9 at 16). Plaintiffs
have not alleged anywhere in the Amended Complaint or otherwise, the dates on which they
made payments (the alleged “injury” for purposes of the unjust enrichment/restitution claim) or
the dates on which any payments were accepted by Defendant (see generally Dkt. #9). And the
Magistrate Judge noted the latest date referenced in the Amended Complaint in connection with
any wrongdoing by Defendant is January 7, 2011 (Dkt. #21 at 6-11; see generally Dkt. #9). Id.
Notwithstanding, Plaintiffs attempt to argue that “Defendant’s wrongdoing occurred when it
filed the state court action” in July 2015.
A party cannot circumvent the statute of limitations merely by referencing a later injury
date applicable to a completely different claim, where such date has no discernable connection
with the claim at issue. See Smith Int'l, Inc., 490 F.3d at 387 (finding accrual date for breach of
contract and negligent misrepresentation, which accrued when breach occurred, was different
than the accrual date for the indemnification claim, which accrued when plaintiff became liable
to pay a judgment, even though all claims arose from the same underlying contract and
relationship between the parties); see also Mitchell v. Crescent River Port Pilots Ass'n,
515 F. Supp. 2d 666, 677 (E.D. La. 2007), aff'd, 265 F. App'x 363 (5th Cir. 2008) (finding claims
based on alleged discrimination in the yearly state appointee selection process for multiple years
were independent, discrete injuries and claims, with some, but not all claims limitations barred).
To find otherwise would render limitations a nullity.
Plaintiffs’ Amended Complaint alleges numerous claims (Dkt. #9). The only claim
Plaintiffs assert based on the filing of the Rule 736 Proceeding is the declaratory judgment action
seeking to declare the Rule 736 Order void.

Id. at 11-13.

Plaintiffs’ claim for unjust

enrichment/restitution based on payments made by Plaintiffs to Defendant is independent of that

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claim (Dkt. #9 at 15-16). See Mitchell, 515 F. Supp. 2d at 677 (finding claims based on alleged
discrimination related to the selection process for a state appointment were discrete and
independent injuries, with some, but not all claims barred by the statute of limitations);
Edwards v. Galveston-Texas City Pilots, 203 F. Supp. 2d 759, 767 (S.D. Tex. 2002) (explaining
plaintiff alleged two discrete injuries, one in 1999 that was limitations barred and one in 2000
that was not); see also Smith Int'l, Inc., 490 F.3d at 387-88 (finding accrual date for party’s
breach of contract and negligent representation claims was different than accrual date for the
indemnification claims). Plaintiffs’ filing of this lawsuit stayed the Rule 736 Order; that Order
has been vacated and the Rule 736 Proceeding non-suited (Dkt. #20). Tex. R. Civ. P. 736.11.
Any claims based on the filing of the Rule 736 Proceeding are therefore moot, and the last
identifiable allegation of wrongdoing in Plaintiffs’ Amended Complaint remains the recording of
the OneWest/Defendant Assignment in January 2011 (Dkt. #9 at 17). Medcalf v. Ocwen Loan
Servicing LLC, No. A-14-CA-096-SS, 2014 WL 2722325, at *3 (W.D. Tex. June 16, 2014)
(stating that claims brought under rule 736 proceeding for foreclosure were moot because Rule
736.11 obligates the state court to vacate the order of foreclosure when a lawsuit challenging the
foreclosure is filed). Plaintiffs thus have not pleaded an injury for which they seek unjust
enrichment/restitution within the relevant two-year time period, and Plaintiffs’ unjust
enrichment/restitution claim is thus limitations barred.
TEX. CIV. PRAC. & REM. CODE § 16.003.

Elledge, 240 S.W.3d at 869;
Accordingly, Plaintiffs’ unjust

enrichment/restitution claim is barred by limitations, and Plaintiffs’ second objection is
overruled.

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CONCLUSION
Having received the report of the United States Magistrate Judge, having considered
Plaintiffs’ timely filed objection (Dkt. #22), Defendant’s response (Dkt. #23), and having
conducted a de novo review, the Court is of the opinion that the findings and conclusions of the
Magistrate Judge are correct and adopts the Magistrate Judge’s report (Dkt. #21) as the findings

. and conclusions of the Court.
It is, therefore, ORDERED that Defendant’s Motion to Dismiss (Dkt. #11) is
GRANTED, and Plaintiffs claims are DISMISSED with prejudice.
IT IS SO ORDERED.

SIGNED this 29th day of July, 2016.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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