Kim v. CTX Mortgage Company LLC et al

Filing 49

MEMORANDUM OPINION AND ORDER: The court ORDERS that the motion 14 of defendants Buckley Madole, Muirhead, and Eldard to dismiss be, and is hereby, granted, and that all claims and causes of action asserted by plaintiff against such defendants be, and are hereby, dismissed. The court determines that there is no just reason for delay in, and hereby directs, entry of final judgment as to such dismissals. (Ordered by Judge John McBryde on 6/28/2017) (edm)

IN THE UNITED STATES DISTRICT
NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
CHIN KIM,

§

vs.
CTX MORTGAGE COMPANY, LLC,
ET AL.,
Defendants.

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§
§
§
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CLERK, ld ..,.,,_;""'-''-'• COURT

By~~~~~-------­
Deputy

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Plaintiff,

JUN 2 8 20l7

NO. 4:17-CV-144-A

MEMORANDUM OPINION
and
ORDER
Came on for consideration the motion of defendants Buckley
Madole,

P. C.

("Buckley Madole"), Craig M1,Iirhead, as substitute

trustee ("Muirhead"), and Roger Eldard, as agent of Buckley
Madole

("Eldard"), to dismiss for failure to state a claim upon

which relief can be granted. Plaintiff, Chin Kim, has responded
and the above-referenced defendants have filed a reply. Having
reviewed the motion, the response, the reply, plaintiff's amended
complaint, and applicable legal authorities, the court concludes
that the motion should be granted.
I.

Plaintiff's Claims Against Defendants
Plaintiff's amended complaint asserts the following claims
against Buckley Madole:
Act;

(1) violation of the Federal Fair Housing

(2) violation of the Fourteenth Amendment;

the Civil Right& Act of 1866;

(3) violation of

(4) fraud/negligent

misrepresentation;

(5)

conversion; and (6) violation of the Fair

Debt Collection Practices Act

("FDCPA").

Plaintiff's amended complaint asserts the following claims
against Muirhead:

(1) wrongful foreclosure; and (2) conversion.

In addition to damages, plaintiff seeks declaratory relief,
requesting the court to "declare that

[plaintiff's]

rights

pursuant to the deed of trust, as well as federal and state law,
have been violated by defendants .

• Doc. 1 8 at '

208.

II.
Grounds of the Motion to Dismiss
Buckley Madole, Muirhead, and Eldard contend that
plaintiff's amended complaint fails to state a claim upon which
relief can be granted because (1) plaintiff's allegations are
incomplete, conclusory, and lack sufficient factual
underpinnings; and (2)

certain of plaintiff's claims are barred

by limitations.
III.

Applicable Pleading Principles
Rule 8(a) (2) of the Federal Rules of Civil Procedure
provides,

in a general way,

the applicable standard of pleading.

It requires that a complaint contain "a short and plain statement
of the claim showing that the pleader is entitled to relief,"

'The "Doc. "references are to the number of the item on the docket in this action.
2

Fed. R. Civ. P. 8(a) (2),

•in order to give the defendant fair

notice of what the claim is and the grounds upon which it rests,"
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007)

(internal

quotation marks and ellipsis omitted) . Although a complaint need
not contain detailed factual allegations, the "showing•
contemplated by Rule 8 requires the plaintiff to do more than
simply allege legal conclusions or recite the elements of a cause
of action. Twombly, 550 U.S. at 555 & n.3. Thus, while a court
must accept all of the factual allegations in the complaint as
true, it need not credit bare legal conclusions that are
unsupported by any factual underpinnings. See Ashcroft v. Iqbal,
556 U.S. 662, 679

(2009)

("While legal conclusions can provide

the framework of a complaint, they must be supported by factual
allegations.").
Moreover, to survive a motion to dismiss for failure to
state a claim upon which relief can be granted, the facts pleaded
must allow the court to infer that the plaintiff's right to
relief is plausible. Iqbal, 556 U.S. at 678. To allege a
plausible right to relief, the facts pleaded must suggest
liability; allegations that are merely consistent with unlawful
conduct are insufficient. Id. In other words, where the facts
pleaded do no more than permit the court to infer the possibility
of misconduct, the complaint has not shown that the pleader is

3

entitled to relief. Id. at 679. "Determining whether a complaint
states a plausible claim for relief . .

.

[is) a context-specific

task that requires the reviewing court to draw on its judicial
experience and common sense." Id.
Further, when a successful affirmative defense such as
limitations is apparent on the face of the pleadings, dismissal
is appropriate on that ground. Kansa Reinsurance Co. v. Cong.
Mortg. Corp. Of Texas, 20 F. 3d 1362, 1366 (5th Cir. 1994).
IV.
Analysis
A.

The Claims Against Buckley Madole
1.

Federal Fair Housing Act Claim

Plaintiff alleges that he was discriminated against based on
his race as an Asian American. He claims that, as a member of a
protected class under the Fair Housing Act, the "conduct" of
Buckley Madole "threatened and interfered with [plaintiff) living
in or attempting to live in a neighborhood of his choice" and
"depriv[ed) plaintiff of a right to housing." Doc. 8 a t , 131-32.
Plaintiff alleges that such conduct was "either intentional or
had a discriminatory effect." Id. at

~

130.

Plaintiff wholly fails to state a claim under the Fair
Housing Act. The allegations in plaintiff's amended complaint are
nothing more than conclusory assertions; the amended complaint

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contains no factual allegations to support the alleged
discrimination and is therefore insufficient to give Buckley
Madole notice of plaintiff's claim against it.
In any event, plaintiff's claim is barred by limitations.
The Fair Housing Act provides for a two-year limitations period,
which accrues after the occurrence or the termination of an
alleged discriminatory housing practice. 42 U.S.C.

§

3613 (a) (1) (A). Here, the foreclosure occurred on April 1, 2014
more than two years before plaintiff initiated this action.
Accordingly, plaintiff's Fair Housing Act claim is barred by
limitations.
2.

Fourteenth Amendment Claim

Plaintiff asserts that Buckley Madole violated the
Fourteenth Amendment when it allegedly discriminated against
plaintiff. Claims under the Fourteenth Amendment require state
action. See Shelley v. Kraemer, 334 U.S. 1, 13

(1948). Plaintiff

has not identified any state action applicable to his Fourteenth
Amendment claim. Such claim must be dismissed.
3.

Civil Rights Act of 1866 Claim

Plaintiff invokes 42 U.S.C.

§§

1981 & 1982 to allege that

Buckley Madole discriminated against plaintiff based on his race
as an Asian American. Plaintiff merely states that certain
defendants racially discriminated against him and deprived

5

plaintiff of his right to homestead by foreclosing on his
property. Similar to his Fair Housing Act claim, plaintiff's
claim fails because it recites bare legal conclusions that are
unsupported by any factual underpinnings. Accordingly,
plaintiff's claim should be dismissed for failure to state a
claim upon which relief can be granted.
4.

Fraud/Negligent Misrepresentation

Plaintiff's fraud claim is governed by the pleading standard
under Rule 9(b) of the Federal Rules of Civil Procedure. See Lone
Star Fund V (U.S.), LP v. Barclays Bank PLC, 594 F.3d 383, 387
n.3

(5th Cir. 2010). Rule 9(b) of the Federal Rules of Civil

Procedure requires "a plaintiff pleading fraud to specify the
statements contended to be fraudulent, identify the speaker,
state when and where the statements were made, and explain why
the statements were fraudulent." Herrmann Holdings Ltd. v. Lucent
Techs. Inc., 302 F.3d 552, 564-65 (5th Cir. 2002)

(internal

quotation marks and citations omitted) . To satisfy this
requirement, plaintiffs must allege "the particulars of time,
place, and contents of the false representations, as well as the
identity of the person making the misrepresentation and what that
person obtained thereby." Tuchman v. DCS Commc'ns Corp., 14 F.3d
1061, 1068

(5th Cir. 1994)

(internal quotation marks omitted).

In Texas, negligent misrepresentation requires that

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(1) the representation is made by a defendant in the
course of his business, or in a transaction in which he
has a pecuniary interest; (2) the defendant supplies
"false information" for the guidance of others in their
business; (3) the defendant did not exercise reasonable
care or competence in obtaining or communicating the
information; and {4) the plaintiff suffers pecuniary
loss by justifiably relying on the representation.
Federal Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442
(Tex. 1991).
Here, plaintiff has failed to state a claim for fraud or
negligent misrepresentation. Plaintiff alleges that Buckley
Madole "took shortcuts by having so-called robo-signers complete
affidavits and other essential foreclosure documents -

such as

assignments of mortgages - without personal knowledge of the
documents' veracity and without verifying the.ir contents." Doc. 8
at , 155. Plaintiff fails, however, to identify any fraudulent
statement or false information upon which plaintiff relied that
would satisfy the pleading standard under Rule 9{b) or support a
claim for negligent misrepresentation. Plaintiff's
fraud/negligent misrepresentation claims should be dismissed.
5.

Conversion Claim

Plaintiff's conversion claim against Buckley Madole rests
solely on the allegation that Buckley Madole "fail[ed) to
disburse to [plaintiff) his portion of the proceeds from the
foreclosure sale." Id. at ,

178. Under Texas law, claims for

conversion of personal property are bound by a two-year statute
7

of limitations. Tex. Civ. Prac. & Rem. Code§ 16.003(a). The
foreclosure sale occurred on April 1, 2014. Plaintiff's
conversion claim against Buckley Madole is barred by limitations.
6.

FDCPA Claim

Plaintiff claims that Buckley Madole failed to provide
plaintiff with validation of debt within five business days of
contacting him, Doc. 8 at , 190, and misrepresented the
character, amount, or legal status of plaintiff's debt in
violation of the FDCPA, id. at , 191.
An action under the FDCPA must be brought within one year
from the date on which the violation occurs. 15 U.S.C. § 1692k.
Here, plaintiff complains of alleged debt collection that
occurred during the foreclosure of plaintiff's property on April
1, 2014. Plaintiff's claim against Buckley Madole under the FDCPA
is time-barred.
B.

The Claims Against Muirhead
1.

Wrongful Foreclosure Claim

Under the section titled "Count 1 Wrongful Foreclosure,"
plaintiff's amended complaint alleges that Muirhead, as
substitute trustee,

"breached his fiduciary duty as special agent

to mortgagor by failing to obtain the highest possible price for
the foreclosure property, and failed to act with impartiality and
fairness.• Doc. 8 at , 70. Plaintiff further contends that

8

Muirhead failed to properly advertise and conduct the foreclosure
sale. Id. "If the sale had been properly advertised and
conducted," plaintiff claimed,

"a bidder probably would have been

present to pay the fair market value of the property.• Id. at

~

76.
To state a claim for wrongful foreclosure, plaintiff must
allege

(1) a defect in the foreclosure sale proceedings;

(2) a

grossly inadequate selling price; and (3) a causal connection
between the defect and the grossly inadequate selling price.
Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex.
App.-Corpus Christi 2008, no pet.) A "grossly inadequate price
would have to be so little as 'to shock a correct mind.'" Martins
v. BAC Home Loans Servicing, L.P., 722 F.3d 249

(5th Cir. 2013).

Courts have found that a sales price more than fifty percent of
property value is not grossly inadequate as a matter of law.
James v. Wells Fargo Bank, N.A., No. 5:12-CV-042-C, 2012 WL
12878197, at *2
444

(N.D. Tex. July 18, 2012), aff'd, 533 F. App'x

(5th Cir. 2013)

781, 788

(citing Terra XXI, Ltd. v. Harmon, 279 S.W.3d

(Tex. App.-Amarillo 2007, pet. denied)); see Water

Dynamics, Ltd. v. HSBC Bank USA, Nat'l Ass'n, 509 F. App'x 367,
369 (5th Cir. 2013)

(per curiam); Reeves v. Wells Fargo Bank, NA,

No. EP-14-CV-00187-DCG, 2015 WL 11598711 (W.D. Tex. Sept. 4,
2015).

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Here, plaintiff alleges that the foreclosed property was
sold for $76,000.00 and had a fair market value of $140,000.00.
Taking plaintiff's factual allegations as true, the property was
sold for roughly fifty-four percent of its alleged value. Thus,
plaintiff has not and cannot show that the selling price was
grossly inadequate.
2.

Conversion Claim

Like his conversion claim against Buckley Madole, plaintiff
alleges that Muirhead converted plaintiff's property by "failing
to disburse to [plaintiff] his portion of the proceeds from the
foreclosure sale." The foreclosure sale occurred on April 1,
2014. Plaintiff's claim is barred by the applicable two-year
statute of limitations. Tex. Civ. Prac. & Rem. Code§ 16.003(a).
C.

The Lack of Claims Against Eldard
Eldard is mentioned several times throughout plaintiff's

amended complaint, but nowhere in the amended complaint does
plaintiff assert a claim against Eldard. To the extent that the
amended complaint could be construed to assert claims against
Eldard, such claims are dismissed for failure to state a claim
upon which relief can be granted.
D.

Declaratory Judgment
Federal courts have sound discretion whether to decide a

declaratory judgment claim. Rowan Cos., Inc. v. Griffin, 876 F.2d

10

26, 28

(5th Cir 1989)

(citing Mission Ins. Co. v. Puritan

Fashionscorp., 706F.2d599, 601 (5thCir. 1983)). "A
declaratory judgment, like other forms of equitable relief,
should be granted only as a matter of judicial discretion,
exercised in the public interest." Pub. Affairs Assocs., Inc. v.
Rickover, 369

u.s.

111, 112

(1962)

(quoting Eccles v. Peoples

Bank , 3 3 3 U . S . 4 2 6 , 4 3 1 ( 19 4 8 ) ) .
For the reasons articulated above, none of plaintiff's
claims survive the motion to dismiss of Buckley Madole, Muirhead,
or Eldard. Therefore, the court is also dismissing plaintiff's
claim for declaratory judgment as to such defendants.
E.

The Court is Not Authorizing Plaintiff to File Yet Another
Amended Complaint
Plaintiff initiated this action on February 13, 2017 by

filing an original complaint. After warning plaintiff that such
complaint failed to allege sufficient facts to establish the
court's subject matter jurisdiction, the court ordered plaintiff
to file an amended complaint. Plaintiff filed his amended
complaint on March 8, 2017. Nothing in such amended complaint
suggests that there are facts that plaintiff could plead in yet
another amended complaint that would cure the pleading
deficiencies as to his claims against Buckley Madole, Muirhead,
and Eldard. If plaintiff were to put in another amended complaint
allegations of fact that would be inconsistent with the dates or
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sale figures alleged in his first amended complaint, he would be
at risk of the imposition of sanctions under Rule 11 of the
Federal Rules of Civil Procedure. In other words, the record
suggests that plaintiff cannot honestly plead facts by another
amended complaint that would bring his time-barred claims within
the applicable limitations period or cure the pleading
deficiencies as to any of his other claims against Buckley
Madole, Muirhead, or Eldard. Thus, permitting plaintiff to file
yet another amended complaint would be futile.

v.
Order
Therefore,
The court ORDERS that the motion of defendants Buckley
Madole, Muirhead, and Eldard to dismiss be, and is hereby,
granted, and that all claims and causes of action asserted by
plaintiff against such defendants be, and are hereby, dismissed.
The court determines that there is no just reason for delay
in, and hereby directs, entry of final judgment as to such
dismissals.
/

SIGNED June 28, 2017.

ict Judge

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