Duncan v. Pinnacle Financial Corporation et al
Filing
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MEMORANDUM AND ORDER granting 11 MOTION for Judgment on the Pleadings. Case is DISMISSED WITHOUT PREJUDICE. (Signed by Judge Gregg Costa) Parties notified.(arrivera, )
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
JOHN DUNCAN,
Plaintiff,
VS.
PINNACLE FINANCIAL
CORPORATION, et al,
Defendants.
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§ CIVIL ACTION NO. 3:12-CV-335
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MEMORANDUM AND ORDER
Plaintiff John Duncan brings this home foreclosure suit seeking declaratory
and injunctive relief against five Defendants—his original mortgage lender
Pinnacle Financial Corporation, the current mortgage holder Deutsche Bank
National Trust Association, his loan servicer GMAC Mortgage, LLC, and Thomas
Black and Gregory Graham, two individuals who had formerly been trustees on the
deed of trust—to prevent Defendants from foreclosing on his home.
Defendants Deutsche Bank and GMAC Mortgage, LLC have moved for
judgment on the pleadings.
Docket Entry No. 11.
Although Duncan was
originally represented by counsel, his counsel withdrew after Defendants removed
the case to this Court, and Duncan now proceeds pro se. Although the Court gave
Duncan two chances and additional time to either retain new counsel or submit a
pro se response, Duncan did not respond to the motion.
1
The Court, having
considered Duncan’s petition, Defendants’ motion, and the underlying law, now
GRANTS the motion for judgment on the pleadings and dismisses Duncan’s
claims against all Defendants.
I.
BACKGROUND
Duncan’s state court petition, which he never amended in federal court,1
alleges very few facts. Duncan purchased the property at issue in this case, a home
located in Angleton (the “Property”), in May 2006 with the assistance of two
mortgage loans from Pinnacle Financial Corporation. The first loan, which had
priority, was for $88,000, while the second was for $22,000. The first loan was
assigned to Defendant Deutsche Bank in November 2011. 2 In July 2012, Duncan
received notice that he had defaulted and the loan had been accelerated. Docket
Entry No. 1-2 at 17 ¶ 12. The Property was sold to Deutsche Bank at a foreclosure
sale in early October 2012. 3 See Docket Entry No. 11-1 at 45–49 (deed of trust
conveying property to Deutsche Bank).
1
The Court’s practice, which it explained to Duncan at the scheduling conference, is to set a
deadline in the scheduling order by which the parties may file amended pleadings without
seeking leave.
2
Of course, the Court must take all well-pleaded facts in Duncan’s petition as true, and Duncan
alleges that Deutsche Bank was not the mortgagee. See Docket Entry No. 1-2 at 16 ¶ 5.
However, he filed a copy of the assignment to Deutsche Bank as an attachment to his petition.
See Docket Entry No. 1-2 at 86. The Court thus considers the assignment at the Rule 12 stage.
3
Although Duncan alleges that a proper foreclosure did not occur, the Court takes judicial notice
of the land records showing that the sale occurred. See Welcome to Brazoria County Clerk
Online Services, Brazoria County Clerk, http://www.brazoriacountyclerk.net/recorder/web/ (last
visited May 10, 2013); Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) (“[I]t is
clearly proper in deciding a [Rule 12] motion to take judicial notice of matters of public record.”
(citation omitted)).
2
Duncan’s allegations fall into two general categories. First, Duncan alleges
that he “is not in default under the terms of the Notes as alleged,” although he
seems to claim both that he did not default and that he did default, just not to the
extent claimed by Defendants. Docket Entry No. 1-2 at 17 ¶ 15. Second, he
argues that the foreclosure is void because Defendants failed to follow the
foreclosure procedures prescribed by Texas law. See id. at 17 ¶ 13 (alleging that
“the substitute trustees as agents for Pinnacle, Deutsche and/or GMAC and [sic] all
were involved in the preparation of current and former fraudulent foreclosure
notices, including the Notice of Default, Substitution of Trustees and Notice of
Trustee’s Sale, Assignment of Note and Deed, and improper assignment, notice
and recordation of same”).
Based on these allegations, Duncan requests
declaratory and injunctive relief, as well as an accounting to show how much he
owes Defendants. Duncan brings no claims for damages.
Duncan filed suit in Brazoria County district court to halt the foreclosure in
late October 2012, several weeks after the sale occurred.
Defendants timely
removed the case to this Court in November 2012. Duncan’s counsel then moved
to withdraw, and the Court granted her motion. On January 16, 2013, the Court
held a telephone scheduling conference in the case, at which Duncan appeared pro
se. At that conference, Duncan indicated his desire to retain new counsel, and
Defendants informed him that they would soon file a Rule 12 motion.
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Accordingly, the Court explained to Duncan that he would have 21 days from the
date Defendants filed their motion to respond. The Court also told Duncan that he
would have to file a pro se response if he could not retain new counsel.
Defendants filed their motion on January 24, 2013.
Duncan failed to
respond by the February 14 deadline. Given Duncan’s pro se status, the Court
scheduled a second conference for March 21.
Although the Court originally
ordered Duncan to attend the conference in person, Duncan ultimately attended by
telephone after seeking special dispensation to attend remotely due to an illness.
At the March 21 conference, the Court set a firm deadline of April 15 for Duncan
to respond to Defendants’ motion. The Court again informed Duncan that he
would have to file his response pro se if he was unable to retain counsel. Duncan
never filed his response, and Defendants’ motion for judgment on the pleadings is
ripe for review.
II.
STANDARD OF REVIEW
“The standard for deciding a Rule 12(c) motion is the same as a Rule
12(b)(6) motion to dismiss.” Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 180
(5th Cir. 2007) (citation omitted). Federal Rule of Civil Procedure 12(b)(6) allows
dismissal if a plaintiff fails to state a claim upon which relief may be granted. Fed.
R. Civ. P. 12(b)(6). In evaluating a Rule 12(b)(6) motion, the “court accepts ‘all
well-pleaded facts as true, viewing them in the light most favorable to the
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plaintiff.’” Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464,
467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.
1999)). The court does not look beyond the face of the pleadings to determine
whether the plaintiff has stated a claim. Spivey v. Robertson, 197 F.3d 772, 774
(5th Cir. 1999). To survive a motion to dismiss, a claim for relief must be
“plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
III.
DISCUSSION
The Court first notes that Duncan’s request for injunctive relief is moot
because the Property has already been sold at foreclosure, and thus an injunction
preventing foreclosure would serve no purpose. See Pollett v. Aurora Loan Servs.,
455 F. App’x 413, 414 (5th Cir. 2011) (per curiam) (“[T]he appeal of Pollett’s
motion for a restraining order/preliminary injunction is moot because Aurora has
already foreclosed on his home.” (citations omitted)).
Duncan’s requests for declaratory relief must also be dismissed, though for
different reasons. Duncan first requests declarations that he did not breach the
terms of the notes or deed of trust and—somewhat conversely—that the arrears
amount is in dispute. See Docket Entry No. 1-2 at 17 ¶ 16(a), 19 ¶ 1. The
Declaratory Judgment Act allows this Court to “declare the rights and other legal
relations of any interested party,” 28 U.S.C. § 2201(a), but it can only do so where
there is an actual controversy, that is, “a dispute that is ‘definite and concrete,
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touching the legal relations of parties having adverse legal interests.’” Val-Com
Acquisitions Trust v. Chase Home Fin., LLC, 428 F. App’x 364, 365 (5th Cir.
2011) (per curiam) (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
127 (2007)). Moreover, in addition to these background requirements of Article
III, the Declaratory Judgment Act itself gives this Court “unique and substantial
discretion” to decide whether to issue declaratory relief. Sherwin-Williams v.
Holmes County, 343 F.3d 383, 389 (5th Cir. 2003).
As Duncan orally admitted during the scheduling conferences, he is in
arrears on his mortgage payments. Given that Duncan admitted his default, the
Court sees no basis for allowing him to proceed with his clearly unsupported claim
for a declaration that he never breached the terms of the notes or deeds of trust, and
it will exercise its discretion to dismiss this claim.
To the extent that Duncan requests a declaration regarding the extent to
which he is in arrears, the Court determines that this issue is not ripe. While a
court declaration could theoretically affect Duncan’s personal liability for the
remaining amounts owed, such a dispute is hypothetical. Defendants have not
asserted in this case any claims against Duncan based on his outstanding liability,
and there is no indication that they plan to do so in a collections suit. If the issue
of Duncan’s personal liability should arise in some future case, Duncan may
litigate it at that time.
This speculative dispute does not give rise to a ripe
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controversy in this case. Cf. Nino v. JPMorgan Chase N.A., No. SA-11-CV-0564
FB (NN), 2011 WL 5040454, at *2 (W.D. Tex. Oct. 24, 2011) (noting, where a
lender had not yet initiated foreclosure, that “[a]nticipation does not rise to the
level of ripeness” because “[b]elieving a lender may foreclose does not create a
substantial controversy of sufficient immediacy and reality between parties having
adverse legal interests”). Similarly, Duncan’s demand for an accounting, to the
extent it is not moot now that Defendants have provided a statement showing his
payment history on the first loan, see Docket Entry No. 11-1 at 51–62, is not ripe
because it only relates to Duncan’s potential personal liability.
Duncan also requests a declaration that Defendants had no right to foreclose
because they failed to follow a number of foreclosure procedures required by
Texas law. See Docket Entry No. 1-2 at 19 ¶ 1. Even assuming that this request is
not moot given that Defendants have already foreclosed, Duncan has failed to
plead any facts to support this claim. Indeed, the only allegation Duncan makes on
this regard is the conclusory description of the foreclosure notices as “fraudulent,”
his stated belief that Defendant GMAC was not “the real party in interest,” and an
unexplained allegation that “[p]rior to the alleged foreclosure sale, GMAC
represented to Duncan that GMAC had already foreclosed.” Id. at 17 ¶¶ 13, 15;
id. at 18 ¶ 19. These cursory allegations are clearly insufficient to satisfy the
federal pleading standards, and thus Duncan’s final request for declaratory relief
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must be dismissed.4
Additionally, the Court notes that dismissal is also appropriate on Duncan’s
claims against the remaining three Defendants, who did not move for dismissal.
District courts are authorized to enter orders of dismissal sua sponte under
appropriate circumstances. See First Gibraltar Bank, FSB v. Smith, 62 F.3d 133,
135 (5th Cir. 1995) (citation omitted); 5B CHARLES ALAN WRIGHT & ARTHUR R.
MILLER, FEDERAL PRACTICE
AND
PROCEDURE § 1357 (3d ed. 2004) (“Even if a
party does not make a formal motion under Rule 12(b)(6), the district judge on his
or her own initiative may note the inadequacy of the complaint and dismiss it for
failure to state a claim as long as the procedure employed is fair to the parties.”).
Given that Duncan makes no additional allegations specific to these Defendants,
other than a conclusory statement that the individual Defendants “committed fraud
as the Trustee for Pinnacle,” the Court finds that dismissal of Duncan’s claims
against them is appropriate. Docket Entry No. 1-2 at 15 ¶¶ 3–4.
IV.
CONCLUSION
For the foregoing reasons, Duncan’s claims must be dismissed.
Accordingly, Defendants’ motion for judgment on the pleadings (Docket Entry No.
4
The Court notes that Duncan’s pleading is not entitled to the more liberal pro se pleading
standard because counsel represented him when it was filed and presumably drafted it.
However, even if Duncan was entitled to have his petition “broadly construed” as a pro se filing,
Ross v. Fifth Third Bank, No. H-11-1087, 2011 WL 3299814, at *1 (S.D. Tex. Aug. 1, 2011)
(citation omitted), the Court holds that his allegations would still be insufficient to state a claim.
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11) is GRANTED. Duncan’s claim for a declaratory judgment that Defendants
had no right to foreclose because they failed to give proper notice is DISMISSED
WITH PREJUDICE. All of Duncan’s other claims, which were dismissed either
for justiciability reasons or in this Court’s discretion under the Declaratory
Judgment Act, are DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.
SIGNED this 13th day of May, 2013.
______________________________
Gregg Costa
United States District Judge
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