Graves v. Deutsche Bank National Trust Company

Filing 39

MEMORANDUM OPINION AND ORDER granting 30 Motion for Summary Judgment filed by Deutsche Bank National Trust Company (Ordered by Judge Mary Lou Robinson on 5/27/2011) (djs)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
AMARILLO DIVISION

JAMES E. GRAVES,
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Plaintiff,

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V.

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DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee for Carrington
Mortgage Loan Trust, Series 2005-NCI
Asset Backed Pass-Through Certificates,

NO. 2:10-CV-00183-J

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Defendant.

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MEMORANDUM OPINION AND ORDER
Before the Court is Defendant's Motionfor Summary Judgment. Plaintiff has responded,
and Defendant has replied. The Motion is therefore ripe for decision.

Plaintiff James Graves entered into a consumer contract for the refinance of his primary
residence in Claude, Texas. He alleges that Defendant Deutsche Bank National Trust Company

induced him to enter into a predatory loan agreement, committed numerous acts of fraud in
furtherance

of a criminal conspiracy, failed to make proper notices, and charged false fees,

among other things. Graves seeks damages in the amount of $966,000.20, as well as a judgment
granting him title to the property.
Deutsche Bank moves

for summary judgment, asserting that it is entitled to summary

judgment because a Texas state court previously granted it permission to foreclose and each of
Graves' claims is baned by the respective statute of limitations.

Graves responds that Deutsche Bank did not have standing to foreclose. He alleges that
he discharged the loan on May 26,2009

with a lawful bonded promissory note in the amount of

$3,000,000.00. He asserts that Carrington Mortgage Services, LLC stole that note.
Graves further alleges

in his

Response that the transfer

of the note from Carrington

Mortgage Services, LLC to Deutsche Bank was done without notiffing him, in violation of the
Truth in Lending Act.

Additionally in his Response, Graves makes allegations under the Racketeer Influenced
and Comrpt Organizations Act (RICO).

STANDARI)

A motion for summary judgment should be granted if the movant shows that there is no
genuine issue as to any material fact. Fnp. R. CIv, P. 56(a).

A party who moves for summary judgment has the burden of identifying the parts of the
pleadings and discovery on file that, together with any affidavits, show the absence of a genuine
issue of material

fact. See Celotex Corp. v. Catrett, 477 U.S. 3I7, 325 (1986). The nonmovant

must set forth specific facts that show a genuine issue for trial. Anderson v. Liberty Lobby, Inc.,
477 U.5.242,256 (1986). In determining whether a genuine issue of material fact exists, courts
must resolve all ambiguities of fact in favor of the non-movingparty. Id.

DISCUSSION
New Century Mortgage Corporation and James Graves reached an agreement for a loan

in the amount of $100,000. On October 25, 2004, Graves executed a Texas Home Equity Note
and a Texas Home Equity Security Instrument.
Sometime in 2008, Graves defaulted on the loan.

At closing, Graves was given $75,198.97.

New Century Mortgage assigned the Note and Deed to Deutsche Bank on October

15,

2009. Deutsche Bank subsequently filed a foreclosure proceeding in the district court of
Armstrong County, Texas. On January 22, 2010, the state court granted Deutsche Bank
permission

to proceed with the foreclosure. Deutsche Bank purchased the property at the

foreclosure sale on August 3,2010.

Validity of the Lien
Graves brings an action seeking

to invalidate the foreclosure. The district court of

Armstrong County, Texas authorized Deutsche Bank to proceed with the foreclosure. Pursuant
to the Rooker-Feldman doctrine, this Court lacks jurisdiction to entertain any question regarding
the validity of the lien or Deutsche Bank's right to foreclose. See, e.g., Pease v. First Nat. Bank,
335 Fed.Appx. 412,415 (unpublished) (5th

Cir 2009) ("to the extent [plaintiff] is challenging the

merits of the foreclosure, we will not entertain a collateral attack on the final judgment of a state

court"); Flores v. Citizens State Bank of Roma, Tex., 132 F.3d 1457, 1997 WL 803150
(unpublished) (5th Cir. 1997) ("Federal courts lack jurisdiction to engage in appellate review of
state-court determinations. . . .") (citations omitted).

TILA
The purpose of TILA is to provide meaningful disclosure of credit terms. 15 U.S.C.

$

1601. Failure to provide the appropriate disclosures under TILA gives rise to a private right of

action. 15 U.S.C. $ 16a0(a). The statute of limitations under TILA is one year from
violation. 15 U.S.C. $ l6a0(e).
Truclcs,

the

See also, Lqwson v. Conyers Chrysler, Plymouth, and Dodge

Inc., 600 F.2d 465 (5th Cir. 1979). The violation generally occurs when the transaction

is consummated, i.e., when a contractual relationship is created between the parties.

See

Bittinger v. Wells Fargo Bank NA,744 F.Supp .2d 619 (S.D.Tex. 2010); Williams v. Countrywide

Home Loons, Inc., 504 F.Supp,2d 176 (S.D.Tex. 2007). Non-disclosure is not a continuing

violation. Moor v. Travelers Ins. Co.,784F.2d 632,633 (5th Cir. 1936).
The contractual relationship at issue here was consummated on October 25,2004. The
statute of limitations has thus run for any claim under

TILA regarding non-disclosure

at the time

the loan was consummated.
The Fifth Circuit has held that a plaintiff may not rely on the doctrine of equitable tolling

to extend the statute of limitations under TILA. Moor v. Travelers Ins. Co.,784 F.2d at 633434
(citations omitted). See also, Val-Com Acquisitions Trust v. U.S. Bank Nat. Ass'n as Trustee

for

Citigroup Mortg. Loan Trust Inc. Asset-Backed Pass-Through Certifications Series 2005-H83,
2010

WL 5140059 (N.D.Tex. 2010). Graves' claims under TILA

are thus barred by the statute

of limitations.r

'

Graves asserts an additional claim under TILA in his Response to the Motion for Summary
Judgment, specifically the failure to notifu him of the transfer of the loan. When a claim is raised for
the first time in response to a motion for summary judgment, the Court will construe that claim as a
motion to amend the complaint. See Cash v. Jefferson Assocs., lnc.,978F.2d217,218 (5th Cir.
1992); Stover v. Hattiesburg Pub. Sch. Dist., 549 F.3d 985, 989 n.2 (5th Cir. 2008); Debowalev. (J.5.
Inc., 62 F.3d 395, 395 (5th Cir. 1995). The motion should be granted unless it would be futile. An
amendment is deemed futile if "the amended complaint would fail to state a claim upon which relief
could be granted." Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, S73 (5th Cir. 2000) (citation

omitted).
15 U.S.C. $ 16a1(g) states: "not later than 30 days afterthe date on which a mortgage loan is
sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or
assignee of the debt shall notify the borrower in writing of such transfer . . ."
Damages are limited to the sum of actual damages and twice the amount of any finance
charge. A plaintiff must allege sufficient damages in order to state a claim under this section. See
Beall v. Quality Loan Service Corp.,20ll WL 1044148 (S.D.Cal. 20ll) ("Plaintiff has not alleged
any actual damages or finance charges related to [Defendant's] failure to provide the notice of
assignment required under $ 1641(g)(l).").
Graves has not alleged damages arising from the failure to noti$' him of the transfer. Any
amendment to Graves' cause of action under TILA would therefore be futile and the implied motion
to amend is hereby DENIED.

HOEPA
The Home Ownership Equity Protection Act (HOEPA) was passed as an amendment to

TILA to heighten disclosure requirements. Smith v. Nat. City Mortg., 2010 WL

3338537

(W.D.Tex. 2010). Claims under HOEPA are subject to TILA's statute of limitations. Id. at *8;
Lechner v. Citimortgage, Inc., 2009 WL2356142 (N.D.Tex .2009).

Graves' claims under HOEPA are therefore also barred bv the one-vear statute of

limitations. l5 U.S.C. $ 1640.
RESPA
RESPA was enacted to ensure that real estate consumers are provided with sufficient and
accurate information about the settlement process. Snow v. First American Title Ins. Co., 332

F.3d 356 (5th Cir. 2003). RESPA claims have either a one-year or a three-year statute of
limitations, depending on which provisions of RESPA are claimed to have been violated.

12

U.S.C. S 2614. The one-year limitations period applies to claims alleging kickbacks and
uneamed fees, as well as claims regarding title insurance. Misczak v. Chase Home Finance,

LLC,2011 WL 145263 at *3 (N.D.Tex. 2011).
Generally, RESPA violations occur at the date of closing, thereby triggering the statute
limitations

. Snow , 332 F .3d at 36I .

of

The loan was closed in 2004. Any RESPA claim stemming

from the loan consummation is barred by either the three-year or the one-year statute of
limitations.

It

has not been shown that equitable

tolling applies to claims under RESPA. Vanderbilt

Mortg. and Finance, Inc. v. Flores,735 F.Supp.2d679 (S.D.Tex.20l0); 9now,332F.3d356,

361 n. 7 (5th Cir.) ("we therefore express no opinion on

whether 5 2614 is subject to

equitable tolling.").

Regardless, Graves has

not provided sufficient factual allegations to support its

application here and his RESPA claims are therefore barred by limitations.
Deceptive Practices Act

The statute of limitations for a claim under the Texas Deceptive Trade Practices Act
(DTPA) is two years. Tex. Bus. & Comm. Code $ 17.565. The cause of action accrues when the
consumer discovers or should have discovered the deceptive practice.

in2004. Graves' claims

Id.

The loan was closed

are thus barred bv limitations.

Fraud & Breach of Fiduciary Duty
The statute of limitations for a fraud action is four years. Tex. Civ. Prac. & Rem. Code.

$

16.004. A cause of action "is generally considered to accrue either when the fraud is discovered
or when the facts giving rise to the fraud claim are discovered or might reasonably be discovered

rule.' " Kansa Reinsurance Co., Ltd.

through reasonable diligence

- the so-called 'discovery

Congressional Mortg. Corp.

of Tex.,20 F.3d 1362 (5th Cir. 1994) (citing Texas authority).

Because Graves' claims

v.

of fraud accrued upon consummation of the loan in 2004, they are

barred by limitations.

The statute of limitations for a breach of fiduciary duty is four years. Tex. Civ. Prac. &
Rem. Code. $ 16.004. "[B]reach of fiduciary duty cases are treated like fraud cases in terms

of

deferral of the cause of action; the issue is when the plaintiff knew or should have known, with
the exercise of reasonable diligence, of his or her

injury."

Slusser v. Union Bankers Ins. Co.,72

S.W.3d 713 (Tex.App.-Eastland 2002) (citation omitted).

This cause of action is therefore also barred bv limitations.

Implied Covenant of Good Faith and Fair Dealing
The duty of good faith and fair dealing only exists in Texas where express language in a
contract creates the duty or where a special relationship of trust exists between the parties. "The

relationship of a mortgagor and mortgagee ordinarily does not involve a duty of good faith."

Federal Deposit Ins. Corp. v. Coleman, 795 S.W.2d 706 (Tex. 1990). See also, Lovell

v.

Western Nat. Life Ins. Co.,754 S.W.2d 298 (Tex.App.-Amarillo 1988).
Because there was no duty created. Graves cannot maintain a cause

of action under this

theory.

Additional State Law Claims
The statute of limitations for a theft (conversion) action is two years. Tex. Civ. Prac. &
Rem. Code. $ 16.003. The statute of limitations for a negligence action is two years. Tex. Civ.
Prac.

& Rem. Code. $ 16.003. The statute of limitations for intentional infliction of emotional

distress is two years. Tex. Civ. Prac. & Rem. Code $ 16.003; Patrick v. McGowan, I04 S.W.3d

219 (Tex.App.-Texarkana 2003). For every action for which there is no express statute of
limitations, the limitations period is four years. Tex. Civ. Prac. & Rem. Code. $ 16.051.

A
legal

cause

injury.

of action generally accrues when the wrongful act is completed and causes

Slusser

v. LInion Bankers Ins. Co., 72 S.W.3d 713 (Tex.App.-Eastland

a

2002);

Delhomme v. Caremark Rx 1nc.,232 F.R.D. 573 (N.D.Tex. 2005) (citing Texas authority).

Any cause of action for conversion based on improper fees accrued at the

loan

consummation in 2004 and is therefore barred by limitations. Any cause of action for negligence
based on the loan transaction accrued when the loan transaction was consummated, and is barred

by limitations. Any cause of action for intentional infliction of emotional distress arising from

the loan consummation is barred by limitations. Any additional state law claim arising from the
loan consummation is also barred by limitations.

RICO

In his response to the Motion for

Summary Judgment, Graves makes numerous

allegations of violations of the Racketeer Influenced and Comrpt Orgarizations Act (RICO).
These allegations do not include any specific facts about Deutsche Bank but instead seem to

malign the mortgage industry as a whole.
When a claim is raised for the first time in response to a motion to dismiss or motion for
summary judgment, the court should construe that claim as a motion to amend the complaint. See

Cashv, Jffirson Assocs., lnc.,978F.2d2I7,218 (5th Cir.l992); Stover v. Hattiesburg Pub.
Sch. Dist., 549 F.3d 985, 989 n.2 (5th Cir.2008); Debowalev.

tls.

Inc., 62 F.3d 395, 395 (5th

Cir.1995).
Whether plaintiff should be granted leave to amend his complaint is governed by Fed. R.

Civ. Pro. 15(a)(2). The court should grant leave to amend when justice so requires. 1d. An
amendment is deemed futile

if "the amended complaint would fail to state a claim

upon which

relief could be granted." Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 873 (5th Cir.2000)
(citation omitted).
To survive a Rule l2(bx6) 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." Cox v. Hilco
Receivables, L.L.C., --- F.Supp.2d ---,2010

WL 4781304 at *2 Q.{.D.Tex. 2010). The pleading

must be "factually suggestive" beyond mere conclusory allegations. Ollie v. Plano Independent

School Dist., 564 F.Supp.2d 658, 660 (E.D.Tex. 2008) (citing Twombly, 550 U.S. at 555).

Graves has not asserted any specific factual allegations pertaining to Deutsche Bank that would
entitle him to relief.
Graves' motion to amend his complaint is DENIED.

CONCLUSION
Summary judgment is hereby GRANTED to Deutsche Bank on all of Graves' causes of
action.

It

iS SO

ORDERED.
Signed this

the

M

O^rof May,

21ll.

DISTRICT JUDGE

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