Rivers, Sr. v. Bank of America, N.A. et al

Filing 12

MEMORANDUM OPINION AND ORDER granting 5 Motion to Dismiss. Accordingly, Plaintiff Cornell Rivers, Sr.'s claims against Defendant Bank of America NA are DISMISSED without prejudice. Normally, courts will afford a plaintiff the opportunit y to overcome pleading deficiencies, unless it appears certain that such repleading would be futile. In light of Rivers's pro se status, and because this Order is the Court's first review of Rivers's allegations, the Court concludes that he should be given the opportunity to replead his claims so as to address the issues noted above. If Rivers is able to replead and overcome the grounds for dismissal described, he should do so by no later than thirty (30) days from the date of this Order. Failure to file an amended pleading will result in a dismissal with prejudice of Rivers's claims against Defendant Bank of America NA. (Ordered by Judge Jane J Boyle on 8/6/2015) (axm)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
CORNELL RIVERS, SR.,
Plaintiff,
v.
BANK OF AMERICA, N.A. and
MACKIE, WOLF, ZIENTZ & MANN,
P.C.,
Defendants.

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CIVIL ACTION NO. 3:15-CV-0704-B

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Bank of America, N.A.=s Motion to Dismiss (doc. 5), filed
on March 10, 2015. For the reasons set forth below, the Motion is GRANTED.
I.
BACKGROUND1
A.

Factual Background
This case arises out of a dispute regarding the foreclosure of Plaintiff=s property. According

to Plaintiff Cornell Rivers, Sr. (ARivers@), he executed a note in the amount of $261,548.00 (the
ANote@) on December 22, 2008 for the purchase of property located at 1118 Fieldstone Drive,
Cedar Hill, Texas (the AProperty@). Doc. 1-1, Ex. B-1, Petition for Temporary Restraining Order
and Application for Temporary Injunction (AOrig. Pet.@) 1–2; Ex. A to Orig. Pet., Note. The Note,
1

The Court draws its factual account from the allegations contained in Plaintiff Cornell Rivers,
Sr.=s Petition for Temporary Restraining Order and Application for Temporary Injunction (doc. 1-1), as
well as from the attachments and documents incorporated therein by reference. Wolcott v. Sebelius, 635 F.3d
757, 763 (5th Cir. 2011).

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secured by the Property, was made payable to Realty Mortgage Company (ARealty@). Id. At this
time, Rivers also executed a deed of trust (the ADeed of Trust@) granting Realty a security interest
in the Property. Orig. Pet. 2; Ex. B to Orig. Pet., Deed of Trust. The Deed of Trust further listed
Mortgage Electronic Registration Systems, Inc. (AMERS@) as the beneficiary and nominee for
Realty. Id. Pursuant to the Note and Deed of Trust, Rivers was required to make payments on the
loan obligations and pay any applicable charges and fees. Id.
On November 2, 2011, MERS assigned and transferred its interest in the Deed of Trust to
Defendant Bank of America, N.A. (ABANA@). Orig. Pet. 2; Ex. C to Orig. Pet., Assignment of
Deed of Trust. Rivers asserts that this assignment was invalid because MERS, the assignor, was
only the nominee for Realty and allegedly lacked the authority to convey any interest in the Note.
Orig. Pet. 2. Rivers further maintains that the assignment is the product of fraud and is therefore
void. Id. at 3.
Although Rivers does not detail the circumstances leading up to the foreclosure of his
home, he indicates that BANA conducted a foreclosure sale of the Property on December 4, 2012.
Id. at 2. He alleges that on February 17, 2015—over two years after the foreclosure—the Dallas
County Constable’s Office placed a 24-hour notice of eviction on the Property. Id. at 3.
To challenge the Property’s foreclosure, Rivers filed this action in state court on February
17, 2015 against Defendants BANA and the law firm Mackie, Wolf, Zientz & Mann, P.C.2 See
2

Rivers does not specify what causes of action he asserts against Defendant Mackie, Wolf, Zientz &
Mann, P.C. Throughout his pleadings, Rivers refers to “Defendants,” which presumably encompasses both
BANA and Mackie, Wolf, Zientz & Mann, P.C. However, the sole allegation that specifically pertains to
Mackie, Wolf, Zientz & Mann, P.C. is the following: “Defendant[] Mackie, Wolf, Zientz & Mann, P.C.
helped perpetuate the use of the fraudulent Assignment of Deed of Trust on behalf of its client, thereby
committing fraudulent conduct that is not protected by immunity.” Orig. Pet. 3.

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Orig. Pet. Rivers alleges that BANA lacked the authority to pursue the foreclosure, as it relied on
an invalid assignment and was not the holder of the Note. Id. at 2–7. Accordingly, Rivers asserts
claims for violation of the Truth in Lending Act and breach of contract. Id. at 10–13. As a remedy,
Rivers seeks a judgment declaring that the assignment and foreclosure sale are void, that BANA
has no rights to the Property, and that the Note and Deed of Trust are no longer a lien against the
Property. Id. at 15.
B.

Procedural Background
BANA removed the case to this Court on March 3, 2015. See doc. 1, Notice of Removal.

On March 10, 2015, BANA filed the present Motion to Dismiss (doc. 5) seeking dismissal of all
claims brought by Rivers. Rivers, at this time appearing pro se, submitted his Response (doc. 7)3
on March 24, 2015, to which BANA replied (doc. 10) on April 7, 2015. As such, the Motion is
now ripe for the Court=s review.
II.
LEGAL STANDARD
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain Aa
short and plain statement of the claim showing that the pleader is entitled to relief.@ Fed. R. Civ. P.
8(a)(2). Rule 12(b)(6) authorizes the court to dismiss a plaintiff=s complaint for Afailure to state a
claim upon which relief can be granted.@ Fed. R. Civ. P. 12(b)(6). In considering a Rule 12(b)(6)
motion to dismiss, A[t]he court accepts all well-pleaded facts as true, viewing them in the light most

3

Regrettably, Rivers’s Response does not address the issues raised in BANA’s Motion to Dismiss
and contains no substantive arguments for the Court’s review. Following BANA’s Reply, Rivers filed a
Sur-reply (doc. 11), which largely reiterates the statements made in the Response.

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favorable to the plaintiff.@ In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007)
(quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)).
The court will Anot look beyond the face of the pleadings to determine whether relief should be
granted based on the alleged facts.@ Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert.
denied, 530 U.S. 1229 (2000). To survive a motion to dismiss, a plaintiff must plead Aenough facts
to state a claim to relief that is plausible on its face.@ Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). AThreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.@ Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). AA 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.@ Id. AThe plausibility standard is
not akin to a >probability requirement,= but it asks for more than a sheer possibility that a defendant
has acted unlawfully.@ Id. When well-pleaded facts fail to achieve this plausibility standard, Athe
complaint has alleged—but it has not shown—that the pleader is entitled to relief.@ Id. at 679
(internal quotation marks and alterations omitted).
III.
ANALYSIS
BANA seeks the dismissal of all the claims Rivers asserts in his Original Petition. It thus
argues that the following theories and causes of action fail as a matter of law or lack sufficient
factual support: (1) claim that the assignment is invalid; (2) split-the-note or show-me-the-note
theory; (3) claim under the Truth in Lending Act; (4) breach of contract claim; and (5) request for
declaratory judgment. Doc. 6, Br. in Support of Mot. to Dismiss (ADef.=s Br.@). The Court addresses
the parties= arguments as to these claims, in turn, below.
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A.

Validity of Assignment
Rivers first asserts that the November 2, 2011 assignment of the Deed of Trust, which

purported to assign the interest in the Deed of Trust to BANA, was invalid and therefore did not
grant BANA the authority to foreclose on the Property. Orig. Pet. 2–3. Specifically, Rivers
contends that the assignor, MERS, Awas only the >Nominee= for the Lender [Realty]@ and, as such,
had no authority to execute the assignment. Id. at 2. Rivers further argues that the assignment was
fraudulent and that it is thus void. Id. at 3.
BANA maintains that Rivers has no standing to challenge the assignment, and that any
such challenge would only make the assignment voidable at the election of the original lender.
Def.=s Br. 3. The Court agrees. Indeed, the Fifth Circuit has held that Afacially valid assignments
cannot be challenged for want of authority except by the defrauded assignor.@ Reinagel v. Deutsche
Bank Nat’l Trust Co., 735 F.3d 220, 228 (5th Cir. 2013). The present case involves a facially valid
assignment of the Deed of Trust from MERS to BANA, and MERS, the assignor, has not
challenged the assignment. While Rivers maintains that the individual executing the assignment,
Tina LeRaybaud, Assistant Secretary of MERS, Ais not listed as a Trustee of the Deed of Trust,@
such an assertion does not render the assignment facially invalid. See Orig. Pet. 3; Assignment of
Deed of Trust. Rivers further notes his suspicion as to the notary public block, which is located on
the page after the assignment. Id. This, however, similarly fails to challenge the facial validity of the
assignment, as the notary page contains the necessary information and signatures. See Assignment
of Deed of Trust. Accordingly, Rivers lacks standing to challenge MERS=s assignment of the Deed
of Trust to BANA. See Reinagel, 735 F.3d at 226–28.
Moreover, BANA indicates that MERS is the nominee for the original lender, Realty—a
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fact Rivers does not contest—and that its status as nominee does not preclude it from executing
the assignment. Def.=s Br. 3–4; Orig. Pet. 2. The Court agrees and concludes that any challenge to
the assignment based on MERS=s status as a Anominee@ cannot survive BANA=s motion to dismiss.
See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 252, 255 (5th Cir. 2013) (noting that
MERS, as nominee for the original lender under a deed of trust, has the authority to foreclose or
grant the authority to foreclose).
Lastly, to the extent Rivers relies on Texas Local Government Code § 192.007(a) to
challenge the assignment, such a challenge fails. See Orig. Pet. 12 (discussing Texas Local
Government Code ' 192.007(a) without explaining its applicability or relevance). This section
provides: ATo release, transfer, assign, or take another action relating to an instrument that is filed,
registered, or recorded in the office of the county clerk, a person must file, register, or record
another instrument relating to the action in the same manner as the original instrument was
required to be filed, registered, or recorded.@ Tex. Loc. Gov=t Code § 192.007(a). As BANA
correctly indicates, however, this provision does not impose an obligation on the parties to the
assignment. Def.=s Br. 4. In fact, as the Fifth Circuit explained in Reinagel, Texas Local
Government Code § 192.007(a) is an Aobscure provision [that] has never been cited in a state
court decision and is best read as a procedural directive to county clerks, not as a prerequisite to the
validity of assignments.@ Reinagel, 735 F.3d at 228 n.27; see also Hudson v. JP Morgan Chase Bank,
N.A., 541 F. App=x 380, 384 (5th Cir. 2013).
In sum, Rivers=s allegations fail to challenge the assignment of the Deed of Trust and
cannot support his claim that BANA lacked the authority to foreclose on the Property. BANA=s
Motion to Dismiss as to this issue is therefore GRANTED.
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B.

Split-the-Note or Show-Me-the-Note Theory
Rivers next contends that BANA was not entitled to foreclose on the Property because it

was not the holder of a properly negotiated note. Orig. Pet. 3–6. Specifically, Rivers implies that
the assignment split the Note from the Deed of Trust, leaving BANA with no debt on which it
could foreclose. Id. BANA moves to dismiss these allegations to the extent they are an attempt to
assert a show-me-the-note or split-the-note theory as a defense to the foreclosure on the Property.
Def.=s Br. 4.
The Fifth Circuit has repeatedly rejected the Ashow-me-the-note@ theory, which posits that
Aonly the holder of the original wet-ink signature note has the lawful power to initiate a
non-judicial foreclosure.@ Martins, 722 F.3d at 253 (quoting Wells v. BAC Home Loans Servicing,
L.P., No. W-10-CA-00350, 2011 WL 2163987, at *2 (W.D. Tex. Apr. 26, 2011)). This theory has
been held to be without merit because, under Texas law, Apromissory notes and deeds of trust are
distinct obligations that afford lenders distinct remedies upon default, the note against the
borrower and the lien against the real property.@ Jones v. Deutsche Bank Nat’l Trust Co., No.
3:12-CV-3929-L, 2013 WL 3455716, at *8 (N.D. Tex. July 9, 2013) (internal quotations omitted).
If a lender wishes to secure a personal judgment against a borrower, it will usually be required to
produce the original note in order to show it is a holder, but if it seeks to foreclose, it need not do so
because Aforeclosure is an independent action against the collateral that enforces the deed of trust,
not the underlying note.@ Id. (citations omitted); Martins, 722 F.3d at 254 (AThe original, signed
note need not be produced in order to foreclose.@).
The Texas Property Code permits mortgagees and mortgage servicers to Aconduct a
nonjudicial foreclosure sale >under a power of sale conferred by a deed of trust or other contract
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lien.=@ Asonibe v. Flagstar Bank, FSB, No. 3:12-CV-2113-M-BH, 2013 WL 1828842, at *6 (N.D.
Tex. Apr. 5, 2013) report and recommendation adopted by No. 3:12-CV-2113-M-BH, 2013 WL
1831747 (N.D. Tex. Apr. 30, 2013) (citing Tex. Prop. Code § 51.002). A Amortgagee@ includes
Athe grantee, beneficiary, owner, or holder of a security instrument@ or Aif the security interest has
been assigned of record, the last person to whom the security interest has been assigned of record.@
Tex. Prop. Code § 51.001(4)(A), (C). As a result, courts have repeatedly held that a mortgagee
does not need to produce proof of the original note before conducting a nonjudicial foreclosure
sale. Asonibe, 2013 WL 1828842, at *6.
Because the Deed of Trust in the present case named MERS as the beneficiary and
nominee of Realty, and because MERS subsequently assigned the Deed of Trust to BANA, this
assignment transferred all of the rights contained in the Deed of Trust, including the right to
foreclose on the Property. See Jones, 2013 WL 3455716, at *8; Asonibe, 2013 WL 1828842, at *6;
see also Deed of Trust; Assignment of Deed of Trust. BANA could thus foreclose on the Property
without having to produce the original Note. Therefore, any request to declare the foreclosure
invalid based on BANA=s failure to produce the Note must fail. Accordingly, BANA=s Motion to
Dismiss is GRANTED as to this matter.
C.

Truth in Lending Act
Next, Rivers brings a claim under the Truth in Lending Act (ATILA@), 15 U.S.C. § 1601 et

seq., alleging that BANA failed to notify him that the Deed of Trust was assigned to BANA within
thirty days of the assignment, as required by 15 U.S.C. § 1641(g).4 Orig. Pet. 10. Section 1641(g)

4

Rivers=s Original Petition also references Section 1641(f) of TILA, which Amerely describes how a
mortgage service[r] is treated for purposes of § 1641 and does not impose any obligations on [d]efendants,@

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of TILA provides that Anot later than 30 days after the 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@ and provide the borrower with certain
disclosures. 15 U.S.C. § 1641(g). BANA moves to dismiss this claim, noting that it is barred by
TILA=s one-year statute of limitations and that, even if it were not time-barred, it would fail to
state a claim under 15 U.S.C. § 1641(g) because Rivers does not allege that BANA was transferred
the rights under the Deed of Trust. Def.=s Br. 5.
Indeed, TILA claims under Section 1641(g) Aare subject to a one year statute of limitations
which runs from the end of the 30 days period after the date of an assignment.@ Benitez v. America’s
Wholesale Lender, No. H-14-953, 2014 WL 3388650, at *2 (S.D. Tex. July 9, 2014); see also 15
U.S.C. § 1641(e). Although Rivers objects to the validity of the assignment, he recognizes that this
purported assignment occurred on November 2, 2011. Orig. Pet. 2. Thus, BANA had thirty days
from this date to provide the required notice to Rivers, and the statute of limitations on a claim
based on any failure to provide such notice expired one year thereafter, or on December 2, 2012.
Regrettably, Rivers did not file the present TILA claim until February 17, 2015—over two years
after the deadline to file such a claim. See Orig. Pet.
Perhaps in anticipation of BANA=s argument on this issue, Rivers alleges that the one-year
statute of limitations on his TILA claim should be equitably tolled because the relevant
Ainformation has been concealed and/or undiscoverable.@ Id. at 10. However, the copy of the
assignment provided by Rivers himself indicates that it was Afiled and recorded@ in the AOfficial
and thus, Acannot form the basis of a claim for relief.@ Barrett v. Bank of Am., N.A., No. 3:14-CV-3389-B,
2015 WL 668488, at *5 n.5 (N.D. Tex. Feb. 17, 2015) (citing 15 U.S.C. § 1641(f)).

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Public Records@ of Dallas County, Texas by the County Clerk on November 8, 2011. Assignment
of Deed of Trust. Because this assignment has been part of the public record since November 2011,
Rivers=s insistence that the information relevant to his TILA claim was Aconcealed@ or
Aundiscoverable@ is unavailing. Accordingly, Rivers=s TILA claim is time-barred, and BANA=s
Motion to Dismiss this claim is GRANTED.5
D.

Breach of Contract
Rivers also asserts a breach of contract claim against BANA. The elements of a claim for

breach of contract under Texas law are: (1) the existence of a valid contract; (2) the plaintiff=s
performance or tendered performance; (3) the defendant=s breach of the contract; and (4)
damages to the plaintiff resulting from the breach. Lewis v. Bank of Am., NA, 343 F.3d 540, 545
(5th Cir. 2003) (citing Palmer v. Espey Hous. & Assocs., 84 S.W.3d 345, 353 (Tex. App.—Corpus
Christi 2002, pet. denied)). In addition, the plaintiff must identify the specific contract provision
that has been breached. Williams v. Wells Fargo Bank, N.A., 560 F. App=x 233, 238 (5th Cir. 2014).
Although Rivers asserts that the Deed of Trust was a valid contract between him and
Realty, he does not specify how this contract was breached or which of its provisions is at issue.
Instead, Rivers merely states, in a general manner, that Aviolations of Federal law and laws of local
jurisdiction[s] constitute a failure to strictly adhere to the terms of the Deed of Trust.@ Orig. Pet.
12. It therefore appears that the breach of contract claim is based on the remaining allegations
Rivers asserts throughout his pleadings. BANA moves to dismiss this claim, arguing that it is
conclusory, lacks factual support, and does not satisfy the requisite elements. Def.=s Br. 6–7.
5

Because the Court concludes that Rivers=s claim under TILA is barred by the applicable statute of
limitations, it need not address BANA=s remaining arguments in favor of the claim=s dismissal.

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Having considered the relevant arguments and authorities, the Court concludes that
Rivers has failed to plead sufficient facts from which the Court can reasonably infer that BANA
breached the Deed of Trust. Rivers=s unsupported, conclusory statements neither identify the
contract provision that was allegedly breached nor the manner in which BANA engaged in such a
breach. Moreover, because the breach of contract claim appears to be derivative of Rivers=s claims
that the assignment to BANA was void, that BANA lacked the authority to foreclose, and that it
violated certain TILA provisions, and because the Court already determined that these three
theories do not present viable claims for relief, the breach of contract claim must likewise fail.
Accordingly, BANA=s Motion to Dismiss the breach of contract claim is GRANTED.
E.

Declaratory Judgment
In addition to the claims set forth above, Rivers requests a judgment declaring that the

assignment of the Deed of Trust and foreclosure sale of the Property are void, that BANA has no
rights to the Property, and that the Note and Deed of Trust are no longer a lien against the
Property. Orig. Pet. 15. Rivers thus asks the Court to enter a declaratory judgment establishing the
Arights, obligations and interest of the parties with regard to the subject property.@ Id. at 14. In
moving to dismiss this request, BANA correctly observes that the Court has addressed the issues
underlying the request for declaratory judgment and has determined that they do not state viable
claims for relief. Def.=s Br. 7.
As this Court has previously held, a request for a declaratory judgment Ais remedial in
nature and dependent upon the assertion of viable causes of action.@ Thompson v. Bank of Am.,
N.A., 13 F. Supp. 3d 636, 660 (N.D. Tex. 2014). Because the Court grants BANA=s motion to
dismiss as to Rivers=s remaining claims (concluding that they either fail as a matter of law or lack
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the requisite factual support), there are no other claims to which Rivers=s request for declaratory
judgment can attach. Accordingly, the Court GRANTS BANA=s Motion to Dismiss as to this
issue.
IV.
CONCLUSION
For the reasons stated above, Defendant Bank of America, N.A.=s Motion to Dismiss (doc.
5) is GRANTED. Accordingly, Plaintiff Cornell Rivers, Sr.=s claims against Defendant Bank of
America, N.A. are DISMISSED without prejudice.
Normally, courts will afford a plaintiff the opportunity to overcome pleading deficiencies,
unless it appears certain that such repleading would be futile. See Hitt v. City of Pasadena, 561 F.2d
606, 608 (5th Cir. 1977) (A[A] court ordinarily should not dismiss the complaint except after
affording every opportunity for the plaintiff to state a claim upon which relief can be granted.@). In
light of Rivers’s pro se status, and because this Order is the Court=s first review of Rivers=s
allegations, the Court concludes that he should be given the opportunity to replead his claims so as
to address the issues noted above.
If Rivers is able to replead and overcome the grounds for dismissal described above, he
should do so by no later than thirty (30) days from the date of this Order. Failure to file an
amended pleading will result in a dismissal with prejudice of Rivers=s claims against Defendant Bank
of America, N.A.

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SO ORDERED.
SIGNED: August 6, 2015.

_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE

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