HAYES, JR. v. BANK OF AMERICA,N.A. et al
Filing
37
MEMORANDUM OPINION granting 26 First MOTION for Summary Judgment , denying 19 MOTION for Summary Judgment, denying 30 MOTION to Dismiss on Emegency Basis (Signed by Magistrate Judge Nancy K. Johnson) Parties notified.(sbutler, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DARROL HAYES, JR.,
Plaintiff,
v.
BANK OF AMERICA, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., and CORNERSTONE
MORTGAGE COMPANY,
Defendants.
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Civil Action No. H-12-377
MEMORANDUM OPINION
Pending before the court1 are Plaintiff’s Motion for Summary
Judgment (Doc. 19), Defendants’ Motion for Summary Judgment (Doc.
26), and Plaintiff’s Emergency Motion to Dismiss (Doc. 30).
court
has
considered
the
motions,
Defendants’
responses
The
to
Plaintiff’s motions, all other relevant filings, and the applicable
law. For the reasons set forth below, the court DENIES Plaintiff’s
motions and GRANTS Defendants’ motion.
I.
Case Background
Plaintiff, proceeding pro se, this filed case in state court
on
October
31,
2011,
to
avoid
foreclosure
on
his
house.2
Defendants removed the action to this court on February 9, 2012.3
1
The parties consented to proceed before the undersigned magistrate
judge for all proceedings, including trial and final judgment, pursuant to 28
U.S.C. § 636(c) and Federal Rule of Civil Procedure (“Rule”) 73. See Doc. 9.
2
See Doc. 1-3, Ex. 2 to Notice of Removal, Pl.’s Original Pet.; Doc.
12, Pl.’s Am. Compl.
3
See Doc. 1, Notice of Removal.
A.
Factual History
The dispute concerns the real estate commonly known as “1107
Imperial Lake Drive” in Harris County, Texas.4
On December 22,
2009, Plaintiff purchased the property from D.R. Horton-Texas, LTD,
as reflected in a General Warranty Deed with Vendor’s Lien.5
A
“vendor’s lien together with the superior title” to the property
was
created
in
favor
of
Cornerstone
Mortgage
Company
(“Cornerstone”), which financed $129,609 of the purchase price.6
Plaintiff executed a promissory note (“Note”) in favor of
Cornerstone for the amount of the loan.7
Pursuant to the terms of
the Note, Plaintiff was required to make monthly mortgage payments
in the amount of $756.36 beginning on February 1, 2010.8
The Note
was subsequently endorsed twice, first by Cornerstone to Defendant
Bank of America, N.A., (“BANA”) and then by Defendant BANA in
blank.9
Defendant BANA is the “current owner, holder, and servicer
of the Note” and possesses the original Note.10
4
See Doc. 1-3, Ex. 2 to Notice of Removal, Pl.’s Original Pet.; Doc.
12, Pl.’s Am. Compl.
5
See Doc. 26-1, Ex. A to Defs.’ Mot. for Summ. J., General Warranty
Deed with Vendor’s Lien.
6
See id. p. 1.
7
See Doc. 26-3, Ex. B-1 to Defs.’ Mot. for Summ. J., Note.
8
Id. p. 1.
9
Id. p. 3.
10
Doc. 26-2, Ex. B to Defs.’ Mot. for Summ. J., Aff. of Natalia A.
Canaveral (“Canaveral”), ¶ 4.
2
Plaintiff also executed a deed of trust (“Deed”), which
conveyed the property to a trustee for the benefit of Defendant
Mortgage Electronic Registration Systems (“MERS”) as nominee for
Cornerstone.11
MERS assigned the Deed to Defendant BANA.12
The
General Warranty Deed with Vendor’s Lien, the Deed, and the
Assignment of Deed of Trust were recorded in the real property
records for Harris County, Texas.13
Plaintiff failed to make the payment due on May 1, 2010, or
any payment thereafter.14
The substitute trustee conducted a
foreclosure sale in March 2013.15
Defendant BANA bought the
property for $167,292.16
B.
Procedural History
In his original petition, Plaintiff alleged a variety of
illegal acts in the loan and foreclosure processes.17
alleged
that
he
“discovered
certain
bogus
Plaintiff
Instruments
which
purported to divest Plaintiff of all interest in the subject
11
See Doc. 26-5, Ex. C to Defs.’ Mot. for Summ. J., Deed.
12
See Doc. 26-6, Ex. D to Defs.’ Mot. for Summ. J., Assignment of Deed.
13
See Doc. 26-1, Ex. A to Defs.’ Mot. for Summ. J., General Warranty
Deed with Vendor’s Lien; Doc. 26-5, Ex. C to Defs.’ Mot. for Summ. J., Deed; Doc.
26-6, Ex. D to Defs.’ Mot. for Summ. J., Assignment of Deed.
14
Doc. 26-2, Ex. B to Defs.’ Mot. for Summ. J., Aff. of Canaveral, ¶
5 (citing Doc. 26-4, Ex. B-2 to Defs.’ Mot. for Summ. J., Payment History).
15
See Doc. 26-7, Ex. E to Defs.’ Mot. for Summ. J., Substitute Tr.’s
16
Id.
17
Doc. 1-3, Pl.’s Original Compl.
Deed.
3
property by way of Silent Fraud.”18
Although his petition contained convoluted statements of law
and no factual details, the court broadly reads the petition to
have alleged violations of the Real Estate Settlement Procedures
Act19
(“RESPA”),
Regulation
X,20
the
Uniform
Commercial
Code21
(“UCC”), and the “REMIC LAW”22 as well as claims of quiet title,
fraudulent
concealment,
breach
of
contract,23
and
forgery.24
Plaintiff’s original petition sought fee simple title to the
property, a declaration that Defendants’ interests were “invalid
and forever [e]xtinguished, and a return of the property “to its
rightful owner[] and double its value of . . . $129,609.00 for
defending the fraudulent action and void Ab initio, void from the
beginning.”25 Plaintiff attached copies of several documents, among
them the General Warranty Deed with Vendor’s Lien, the Note, and
18
Doc. 1-3, Pl.’s Original Compl. p. 2.
19
12 U.S.C. §§ 2601-2617.
20
24 C.F.R. §§ 3500.1-3500.23.
21
Plaintiff cited the section allegedly violated as “UCC & 201(39).”
22
A REMIC is real estate mortgage investment conduit under the Internal
Revenue Code. See 26 U.S.C. § 860D.
23
The court understands Plaintiff’s allegation that Defendants were “in
violation of the Servicer Performance Agreement due to its poor bookkeeping of
accounts” to state a breach of contract claim. See Doc. 1-3, Pl.’s Original
Compl. p. 4.
24
Id. pp. 1-6.
25
Id. p. 6.
4
two pages of the Deed.26
Defendants
removed
the
case
based
on
federal
jurisdiction and filed an answer in February 2012.27
question
Plaintiff
filed an amended complaint within the time allowed under the
scheduling order but without seeking leave of court.28
As the court can best discern from the amended complaint,29
Plaintiff’s claims emanate from alleged fraud and/or irregularity
in the loan documents, Defendants’ alleged failure to respond to
Plaintiff’s request for validation of the loan, Defendants’ alleged
failure to record documents properly, Defendants’ alleged failure
to provide Plaintiff with “the alleged contract for review,”
Defendants’ alleged poor bookkeeping, and Defendants’ alleged
failure to report to consumer reporting agencies the date of
delinquency.30
Plaintiff’s Amended Complaint specifically listed
six causes of action (in his words): 1) breach of contract; 2)
violation of contract also validation; 3) violation of the servicer
26
See id., Exs. A & B to Pl.’s Original Compl., Loan Documents.
27
See Doc. 1, Notice of Removal; Doc. 3, Answer.
28
See Doc. 8, Scheduling Order; Doc. 12, Am. Compl. According to the
record before the court, Plaintiff did not request the court’s leave to amend or
secure Defendants’ written consent to amendment as required by Rule 15(a)(2).
However, Defendants have not objected to the amendment. The court, therefore,
deems Plaintiff’s Amended Complaint to be the live pleading in this action.
29
Many of the statements of law in Plaintiff’s complaint are
incomprehensible. For example, Plaintiff claimed Defendants violated the UCC
by failing to validate the alleged debt, stating that “[t]his created a Disparage
Contract which for him was lawful but not legal.” Doc. 12, Pl.’s Am. Compl. p.
4. Plaintiff also cited the Notice of Confidentiality Rights on the deed of
trust as “a violation of fraudulent concealment.” Id. p. 3.
30
See Doc. 12, Pl.’s Am. Compl.
5
performance agreement; 4) violation under the UCC; 5) failure of
validation is a REMIC violation; and 6) unjust enrichment.31
Plaintiff repeated his requests that the court find that he is the
title
holder
of
the
property,
that
Defendants’
interests
be
declared invalid, and that the property be returned to its rightful
owner.32
In the amended complaint he requested monetary damages in
the amount of $226,708.33
Plaintiff attached only the General
Warranty Deed with Vendor’s Lien to his amended complaint.34
Plaintiff filed a motion for summary judgment in February
2013, and Defendants filed their response after a brief extension.35
Defendants sought and received leave to file a motion for summary
judgment out of time.36
The motion docket date was July 17, 2013,
and Plaintiff did not respond to the motion.37
31
Id. pp. 3-6. The court notes that Plaintiff also mentioned the Truth
in Lending Act (“TILA”), 15 U.S.C. §§ 1601-1667f, under the heading of unjust
enrichment. See id. p. 6. This allegation, in its entirety, read: “That all
Defendants have violated TILA.
That validation have not been responded to
because the account was not valid.” Id. The court finds no factual allegations
in the amended complaint to support a TILA claim.
32
See id. pp. 8-9.
33
Id. p. 9.
34
See Doc. 12, Ex. A to Pl.’s Am. Compl., General Warranty Deed with
Vendor’s Lien.
35
See Doc. 19, Pl.’s Mot. for Summ. J.; Doc. 22, Defs.’ Resp. to Pl.’s
Mot. for Summ. J. (“Resp.”).
36
See Doc. 27, Mot. for Extension of Time; Doc. 28, Order Dated Aug.
9, 2013.
37
To date, Plaintiff still has not responded to Defendants’ motion.
Although the Local Rules for the Southern District of Texas state that failure
to respond to a motion will be taken as a representation of no opposition, the
court must consider the merits of dispositive motions regardless of whether a
response was filed. See L.R. 7.4 Watson v. United States, 285 F. App’x 140, 143
6
On August 14, 2013, Plaintiff filed a notice of appearance of
counsel.38
The following day, Plaintiff filed an emergency motion
to dismiss without prejudice, explaining that Plaintiff had filed
the lawsuit “on the advice of an unlicensed individual from
Michigan
holding
himself
out
as
a
paralegal,”
who
promised
Plaintiff the recovery of large sums of money for a fee.39
In the
motion, Plaintiff’s counsel acknowledged that Plaintiff’s pleadings
were “incoherent and unintelligible to read and understand” and
stated that counsel advised Plaintiff “to dismiss this action to
protect his future rights, should it be determined that there are
claims that can be substantiated from real evidence rather than an
abundance of conclusory statements.”40
Defendants opposed Plaintiff’s motion to dismiss, and the
court set a hearing on the matter.41
On August 23, 2013, Plaintiff
filed a petition for relief under Chapter 13 of the Bankruptcy
Code.42
Five days later, which happened to be the day before the
(5th Cir. 2008)(citing Johnson v. Pettiford, 442 F.3d 917, 918 (5th Cir. 2006),
and Johnson v. Louisiana, 757 F.2d 698, 708-09 (5th Cir. 1985)(stating that the
Fifth Circuit has rejected granting dispositive motions based solely on the
failure to comply with Rule 7.4).
38
See Doc. 29, Notice of Appearance.
39
Doc. 30, Pl.’s Emergency Mot. to Dismiss p. 1.
40
Id. pp. 1, 2.
41
See Doc. 32, Defs.’ Resp. to Pl.’s Emergency Mot. to Dismiss; Doc.
33, Notice of Setting.
42
Doc. 36, Defs.’ Brief Addressing the Effect of Pl.’s Bankr. Pet. on
this Litig.
7
scheduled hearing, Plaintiff filed a Notice of Suggestion of
Bankruptcy.43
At the hearing, the parties discussed the effect on
this action of Plaintiff’s filing for bankruptcy protection.44
The
court allowed Defendants one week to brief the issue and Plaintiff
two weeks to respond.45
Defendants timely filed a brief.46
Plaintiff failed to respond to Defendants’ brief or to the court’s
telephonic inquiries regarding his intention to file a brief.
The court begins its analysis with the preliminary matters of
the effect of Plaintiff’s bankruptcy petition and Plaintiff’s
motion to dismiss.
II.
Bankruptcy Protection
Pursuant to the Bankruptcy Code, a voluntary petition filed
with the bankruptcy court operates as a stay of a variety of
actions against the debtor. 11 U.S.C. § 362(a). However, the stay
does not apply to lawsuits initiated by the debtor that would inure
to the benefit of the estate.
Carley Capital Grp. v. Firemen’s
Fund Ins. Co., 889 F.2d 1126, 1127 (D.C. Cir. 1989); see also 11
U.S.C. § 362(a) (listing actions against the debtor or property of
the estate as those to which the automatic stay applies); In re
Versoy, 306 F. App’x 65, 68-69 (5th Cir. 2009)(unpublished)(stating
43
See Doc. 34, Notice of Suggestion of Bankr.
44
See Oral Tr. of Hr’g on Aug. 29, 2013.
45
See Doc. 35, Min. Entry Dated Aug. 29, 2013.
46
See Doc. 36, Brief.
8
that 11 U.S.C. § 362 has no effect on claims initially brought by
the debtor); In re U.S. Abatement Corp., 39 F.3d 563, 568 (5th Cir.
1994)(stating that the automatic stay applies only to actions
against the debtor).
When a debtor files for bankruptcy protection while a claim he
initiated is pending, the claim becomes a part of the bankruptcy
estate.
See 11 U.S.C. §§ 541(a)(1), 1306; In re SI Restructuring
Inc., 714 F.3d 860, 864 (5th Cir. 2013)(defining “estate” in context
of a Chapter 11 petition).
A Chapter 13 debtor remains in
possession of all property of the estate and has standing to bring
claims in his own name on behalf of the bankruptcy estate.
See 11
U.S.C. § 1306(b)(stating that the debtor retains possession of all
property of the estate); Love v. Tyson Foods, Inc., 677 F.3d 258,
269 n.6 (5th Cir. 2012)(Haynes, J., dissenting)(noting that “[e]very
circuit to have considered the question has held that the ‘rights
and powers’ that the Chapter 13 debtor enjoys under [11 U.S.C.] §
1303 include the power to sue on claims that are property of the
estate on behalf of the estate”); Smith v. Rockett, 522 F.3d 1080,
1081 (10th Cir. 2008)(collecting circuit court decisions that held
Chapter 13 debtors have standing to bring claims in their own names
for the benefit of the bankruptcy estates); Stangel v. Fetterly &
Gordon, P.A., No. Civ. A. 3:00CV1509-L, 2001 WL 671466, at *6 (N.D.
Tex. June 12, 2001)(quoting legislative history indicating a debtor
has standing to pursue prepetition claims).
9
The
present
lawsuit
was
brought
by
Plaintiff
Defendants, and Defendants seek no affirmative relief.
automatic stay is not applicable to this case.
against
Thus, the
Furthermore,
Plaintiff has standing to pursue claims in his own name for the
benefit of the bankruptcy estate. Nothing stands in the way of the
court ruling on the pending dispositive motions.
III.
Both
parties
Summary Judgment Motions
moved
for
summary
judgment.
Rather
than
addressing each party’s motion separately, the court contemplates
the viability of each of Plaintiff’s allegations within the context
of the arguments raised by both parties.
A.
Summary Judgment Standard
Summary judgment is warranted when the evidence reveals that
no genuine dispute exists regarding any material fact and the
moving party is entitled to judgment as a matter of law.
Fed. R.
Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
Brown v. City of Houston, Tex., 337 F.3d 539, 540-41 (5th Cir.
2003).
A material fact is a fact that is identified by applicable
substantive law as critical to the outcome of the suit.
Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Ameristar Jet
Charter, Inc. v. Signal Composites, Inc., 271 F.3d 624, 626 (5th
Cir. 2001).
To be genuine, the dispute regarding a material fact
must be supported by evidence such that a reasonable jury could
resolve the issue in favor of either party.
10
Anderson, 477 U.S. at
250; TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th
Cir. 2002).
The movant must inform the court of the basis for the summary
judgment motion and must point to relevant excerpts from pleadings,
depositions, answers to interrogatories, admissions, or affidavits
that demonstrate the absence of genuine factual issues.
Celotex
Corp., 477 U.S. at 323; Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th
Cir. 1992).
If the moving party can show that the facts are not in
dispute, the party opposing summary judgment must go beyond the
pleadings and proffer evidence demonstrating that genuine issues of
material fact do exist that must be resolved at trial. See Celotex
Corp., 477 U.S. at 324.
When considering the evidence, "[d]oubts are to be resolved in
favor of the nonmoving party, and any reasonable inferences are to
be drawn in favor of that party."
Evans v. City of Houston, 246
F.3d 344, 348 (5th Cir. 2001); see also Boston Old Colony Ins. Co.
v. Tiner Assocs. Inc., 288 F.3d 222, 227 (5th Cir. 2002). The court
should not “weigh evidence, assess credibility, or determine the
most reasonable inference to be drawn from the evidence.”
Honore
v. Douglas, 833 F.2d 565, 567 (5th Cir. 1987).
Even when a nonmovant fails to respond to a motion for summary
judgment, the movant still bears the burden of proving that no
issue of material fact exists. Celotex, 477 U.S. at 323. However,
the court will only resolve factual controversies in favor of the
11
nonmoving party when a controversy actually exists; in other words,
no controversy exists when factual allegations are not challenged
by the nonmoving party.
Little, 37 F.3d at 1075 (relying on Lujan
v. National Wildlife Federation, 497 U.S. 871, 888 (1990)).
Therefore, assumptions or inferences that the nonmoving party could
or would prove the necessary facts will not be made.
B.
Id.
Analysis
Plaintiff’s motion argues that Defendants lack privity because
Plaintiff never entered a contract with them and that they cannot
prove chain of title, the existence of a valid lien, or ownership
of the note.47 Plaintiff’s motion for summary judgment is subheaded
as Plaintiff’s affidavit.48
Although it is not in affidavit form,
it is signed and dated and, to the extent it contains competent
testimony, is accepted by the court as a declaration. However, the
vast majority of the declaration consists of legal conclusions and
other information not within Plaintiff’s personal knowledge.
His brief in support of his motion states, in its entirety:
Introduction
This Motion involves a cause of action filed by the
Darrol Hayes against Bank of America et al (Defendant(s)
for request of Quiet Title plus interest and costs
incurred since the filing of this Complaint.
Argument
47
See Doc. 19, Pl.’s Mot. for Summ. J.
48
See id.
12
This is a Quiet Title Case which Defendant(s) has
failed or refused to validate the alleged Account in
violation of 15 U.S.C $ 1692 f (1) and Defendant also
Defendant(s) counsel has failed to respond to the request
for the original we ink contract if any, none as of
02/11/2013.
As a result of the foregoing, Plaintiff is entitled
to Summary Judgment on all Counts of its Complaint based
on Federal Rule 56(c) and entry of Judgment in its favor,
to include legal fees, costs, and such other relief this
Court deems appropriate.
Conclusion
For the reasons set forth above, this Court should
grant Plaintiff’s Motion for Summary Judgment in favor of
the Plaintiff.49
Attached to the brief is the only evidence, in addition to
Plaintiff’s declaration, that Plaintiff submitted with his motion
for summary judgment.50
Plaintiff’s declaration refers to two
certified mail receipts, copies of which are attached to his brief,
that indicate Defendants each received something in the mail in
early November 2011.51
In his declaration, he claims that they are
proof that he sent a request for validation to Defendants.52
only
other
piece
of
summary
judgment
evidence
submitted
The
by
Plaintiff is a court document that Plaintiff filed in January 2012
in state court, requesting that the court consider Defendants’
failure to respond to his petition as a representation of no
49
Doc. 20, Pl.’s Brief in Support of Mot. for Summ. J.
50
See id.
51
See Doc. 19, Pl.’s Mot. for Summ. J. p. 2; Doc. 20, Ex. A to Pl.’s
Brief in Support of Mot. for Summ. J., Certified Mail Receipts.
52
See Doc. 19, Pl.’s Mot. for Summ. J. p. 2.
13
opposition.53
Defendants’ summary judgment motion presents nearly identical
arguments to their response to Plaintiff’s motion.
They contend
that Plaintiff’s Amended Complaint fails to state the elements for
any alleged cause of action and that Plaintiff failed to produce
any summary judgment evidence in support of those elements.
Rather, they contend, the evidence shows that a valid contract
exists between Plaintiff and Defendant BANA under which Plaintiff
failed
to
perform,
allowing
Defendant
BANA
to
exercise
its
contractual power of sale.
The few factual allegations in the amended complaint do not
match up well with the causes of action identified by Plaintiff.
Although Plaintiff claims that he did not enter into a contract
with Defendants,54 three of the counts listed in the amended
complaint are labeled in such a way as to assert breaches of
contract.
Counts 1, 2, and 3 all loosely refer to contract
breaches.
Even though those counts reference other violations in
addition to contract breaches, the court addresses all allegations
made therein under the “Breach of Contract” subheading in this
opinion.
Plaintiff’s UCC claim seems to relate to the negotiation
of the note, which Plaintiff alleged was fraudulent and/or recorded
improperly.
The court addresses that cause of action and then
53
See Doc. 20, Ex. B to Pl.’s Brief in Support of Mot. for Summ. J.,
Notice of Violation of Court Rule 3.3.2.
54
See Doc. 19, Pl.’s Mot. for Summ. J. p. 1.
14
turns to Plaintiff’s last two claims of REMIC violation and unjust
enrichment.
The
court
concludes
with
quiet
title,
a
claim
mentioned several times in Plaintiff’s filings but not specifically
listed as a cause of action in Plaintiff’s Amended Complaint.55
1.
Breach of Contract
A breach of contract claim requires proof that: 1) a valid
contract exists; 2) plaintiff fully performed his obligations; 3)
defendant breached the contract; and 4) plaintiff was damaged as a
result of the breach.
Hovorka v. Cmty. Health Sys., Inc., 262
S.W.3d 503, 508-09 (Tex. App.--El Paso 2008, no pet.).
“Under
Texas law, if one party to a contract breaches, there is no
obligation for the non-breaching party to continue performance.”
United States ex rel. Wallace v. Flintco Inc., 143 F.3d 955, 968
(5th Cir. 1998); see also Thomas v. EMC Mortg. Corp., 499 F. App’x
337, 341 (5th Cir. 2012)(unpublished)(finding that homeowners who
failed to make timely payments could not maintain a breach of
contract claim against the lenders).
The court understands Plaintiff’s Amended Complaint to make
the following allegations under the category of breach of contract:
improper bookkeeping; failure to respond to Plaintiff’s request for
validation;
failure
to
provide
55
Plaintiff
with
documents
he
The court does not address unclean hands, which was mentioned in
Plaintiff’s motion for summary judgment. See Doc. 19, Pl.’s Mot. for Summ. J.
p. 2 (“That no name of a real party in interest has came forward and the answer
to the Interrogatory has not resolved that request which is proof of unclean
hands.”)
The court could not locate any allegation of unclean hands in
Plaintiff’s Amended Complaint. See Doc. 12, Pl.’s Am. Compl.
15
requested; failure to report the date on which the account first
became delinquent; and failure to record the lien “at the register
of deeds office.”
did
Plaintiff
In neither his amended complaint nor his motion
identify
any
valid
contract56
imposing
these
obligations on Defendants, state that he fully performed his
obligations, or explain how he was damaged by the alleged breaches.
Even if he had provided sufficient factual allegations, he could no
longer rely on them at the summary judgment stage.
Defendants produced an authenticated copy of the loan history
statement for Plaintiff’s loan.57
A bank employee explained that
the statement indicated that Plaintiff had not made the payment due
in May 2010 or any that came due thereafter.58
The court has
reviewed the statement and finds no apparent bookkeeping errors.
Absent
any
evidence
to
support
the
allegation
of
improper
bookkeeping, Plaintiff cannot succeed on that contract claim.
In
addition
to
the
loan
history
statement,
submitted copies of the Note and the Deed.59
Defendants
The evidence shows
56
Plaintiff alleged violations of a servicer performance agreement in
his amended complaint but never entered a copy of that contract into the record.
Doc. 12, Pl.’s Am. Compl. p. 4. By the name, it does not appear to refer to any
contract in evidence. Without evidence, Plaintiff’s claim cannot survive summary
judgment.
57
See Doc. 26-2, Ex. B to Defs.’ Mot. for Summ. J., Aff. of Natalia
Canaveral ¶ 5; Doc. 26-4, Ex. B-2 to Defs.’ Mot. for Summ. J., Loan History
Statement.
58
See Doc. 26-2, Ex. B to Defs.’ Mot. for Summ. J., Aff. of Natalia
Canaveral ¶ 5.
59
See Doc. 26-3, Ex. B-1 to Defs.’ Mot. for Summ. J., Note; Doc. 26-5,
Ex. C to Defs.’ Mot. for Summ. J., Deed.
16
that Plaintiff failed to make timely payments and that nonpayment
was a breach of his obligations under the Note and the Deed.
Plaintiff’s breach, which preceded his requests for validation and
documentation and the reporting of the delinquency date, relieved
Defendants of the duty to continue performing under the Note and
the Deed.
See United States ex rel. Wallace, 143 F.3d at 968.
Therefore, Plaintiff cannot maintain breach of contract claims
based on those allegations, even assuming they were contractual
duties. See Thomas, 499 F. App’x at 341.
Plaintiff’s final contract claim, concerning the recording of
the deed, is contested by Defendants.
In fact, the Deed bears the
stamp of the Harris County District Clerk, indicating that it was
recorded in December 2009.60
To the extent that Plaintiff contends
that the Deed should have been recorded at some other location (he
refers to “the register of deeds office”), Plaintiff has failed to
show that any contract in evidence imposed such an obligation on
Defendants.
Plaintiff cannot succeed on any breach of contract
claim.
Plaintiff mentioned several other claims under the contract
subheadings: fraudulent concealment; and violations of the Fair
60
See Doc. 26-5, Ex. C to Defs.’ Mot. for Summ. J., Deed p. 1.
17
Credit Reporting Act61 (“FCRA”), RESPA, and Regulation X.62
The
court addresses those in the order listed here.
The elements of common law fraud are: “(1) that a material
representation was made; (2) the representation was false; (3) when
the representation was made, the speaker knew it was false or made
it recklessly without any knowledge of the truth and as a positive
assertion; (4) the speaker made the representation with the intent
that the other party should act upon it; (5) the party acted in
reliance on the representation; and (6) the party thereby suffered
injury.” In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex.
2001).
When a party has a duty to disclose information and fails
to do so, the concealment of that information may constitute fraud.
Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001).
Plaintiff
did
not
allege
facts
in
his
amended
petition
identifying what Defendants failed to disclose to Plaintiff.
The
court’s best guess is that the allegation related to the alleged
failure to provide Plaintiff with documents upon request.
Even if
true, the failure to provide documents would not support a fraud
cause of action because it is neither a representation nor the
omission of a representation.
Moreover, Plaintiff failed to
produce any evidence whatsoever to support the allegation that he
61
See 15 U.S.C. §§ 1681-1681x.
62
Plaintiff also alleged
Conveyance and Instrument-Certified
The law to which Plaintiff referred
was unable to locate it in Texas or
a violation of “Section 600.2109-Recorded
Copies.” Doc. 12, Pl.’s Am. Compl. p. 3.
is not readily identifiable, and the court
federal statutes or federal regulations.
18
requested documents, that Defendants had a duty to provide them to
Plaintiff, or that Defendants failed to provide them.
As the
evidence reveals nothing even remotely suggesting Defendants’
fraudulent concealment, the claim fails.
Under the FCRA, furnishers of information have a duty to
provide accurate information regarding the delinquency of accounts.
See 15 U.S.C. § 1681s-2(a)(5). “A person who furnishes information
to a consumer reporting agency regarding a delinquent account being
placed for collection . . . shall . . . notify the [consumer
reporting] agency of the date of delinquency on the account . . .
.”
Id.
In the amended complaint, Plaintiff’s only reference to the
FCRA stated: “That Unlawful practice of re-aging, a collection
company must report the original date (actual month and year) the
account first became delinquent.
ticking.
This is when the clock begins
This is a violation of Section 623(a)(5) of the FCRA and
NCO was required to pay a $1,5000.000.00 fine.”63 Plaintiff did not
assert that Defendants engaged in the practice of re-aging or even
that Defendants did not properly report the delinquency of his
mortgage loan.64
Plaintiff failed to properly plead a FCRA claim
and, further, failed to provide any summary judgment evidence to
63
Doc. 12, Pl.’s Am. Compl. p. 4.
64
The allegation not only did not mention Defendants, but, according
to Defendants, it referenced a fine imposed on NCO Financial in a separate,
The
unrelated proceeding.
See Doc. 26, Defs.’ Mot. for Summ. J. p. 13.
reference has nothing to do with the facts underlying this case.
19
support the claim.
Defendants are entitled to summary judgment on
this claim.
Under RESPA, a loan servicer has a duty to respond to borrower
inquiries.
See 12 U.S.C. § 2605(e).
Upon receipt of a written
request that includes the name and identifies the account of the
borrower and a sufficiently detailed statement explaining the
reason for a belief that the account is in error or detailing the
information sought by the borrower, the servicer must acknowledge,
within
twenty
2605(e)(1).
days,
receipt
of
that
request.
12
U.S.C.
§
Within sixty days of receipt of the request, the
servicer must provide the borrower with a written response that
includes the information requested or an explanation of why that
information is unavailable, as well as contact information for an
individual who can assist the borrower.
12 U.S.C. § 2605(e)(2).
A claim of failure to respond to a qualified written request
requires proof of actual damages from the statutory violation. See
12 U.S.C. § 2605(f).
Regulation X is the common name for the
regulations implementing RESPA. Moreno v. Summit Mortg. Corp., 364
F.3d 574, 576 (5th Cir. 2004).
Plaintiff averred in his declaration that he sent requests for
validation to Defendants and that the copies of two certified mail
receipts correspond to those requests.
Viewing the evidence
favorably to Plaintiff, as the court must, the court finds that
Plaintiff has adduced some evidence that he submitted written
20
requests to Defendants that they validate his loan.
broadly,
Plaintiff’s
indicating
that
declaration
Defendants
can
failed
to
be
understood
provide
the
Read very
as
also
requested
information.65
However, that is not sufficient evidence to meet his burden in
response
to
Defendants’
motion,
much
less
to
establish
his
affirmative summary judgment burden of showing that no genuine
issue of fact exists and Plaintiff is entitled to judgment as a
matter of law against Defendants for violating RESPA.
Plaintiff
produced no evidence that his qualified written response met the
RESPA requirements or that he suffered any damages as a result of
any RESPA violation.
As Plaintiff failed to carry his burden,
summary judgment must be granted in favor of Defendants on the
RESPA claim.
2.
Violation of the UCC
Article 3 of the UCC covers negotiable instruments; Article 4
covers bank deposits and collections; Article 8 covers investment
securities; and Article 9 covers secured transactions.
Tex. Bus.
& Comm. Code § 3.102; Tex. Bus. & Comm. Code § 4.101; Tex. Bus. &
Comm. Code § 8.102; Tex. Bus. & Comm. Code § 9.101.
The Texas
Business and Commerce Code explains that the provisions related to
65
See Doc. 19, Pl.’s Mot. for Summ. J. p. 2. (stating “[t]hat no name
of a real party in interest has came forward and the answer to the Interrogatory
has not resolved that request which is proof of unclean hands” and “[t]hat
finally [NO PROMISE TO LEND] has been presented to the Court as proof of any
valid loan with the Plaintiff and again a Notice was given of this violation to
the Court Rule 3.3.2 as of 1/20/2012”).
21
secured transactions do not apply to “the creation or transfer of
an interest in or lien on real property.”
Tex. Bus. & Comm. Code
§ 9.109(d)(11).
In the amended complaint, Plaintiff cited generally to Article
3.
He also cited to Section 208 of Article 4,66 which pertains to
presentment warranties, and Section 321 of Article 8,67 which was
deleted in 1995.
The court can discern no statement of a legal
claim within Plaintiff’s pleading related to any of those three UCC
articles, and Plaintiff failed to produce any evidence of a
violation. Plaintiff also cited to several sections of Article 9.
As Article 9 does not apply to real property liens, Plaintiff
cannot maintain any action pursuant to the provisions therein.
Within his discussion of the UCC in his amended complaint,
Plaintiff cited a provision of the Fair Debt Collection Practices
Act68 (“FDCPA”) that deals with the validation of a debt.
In his
summary judgment brief he claims a violation of another section of
the FDCPA that concerns unfair collection practices.
The FDCPA was designed “to eliminate abusive debt collection
practices by debt collectors, to insure that those debt collectors
who refrain from using abusive debt collection practices are not
competitively disadvantaged, and to promote consistent State action
66
Tex. Bus. & Comm. Code § 4.208.
67
Tex. Bus. & Comm. Code § 8.321.
68
See 15 U.S.C. §§ 1692-1692o.
22
to protect consumers against debt collection abuses.”
15 U.S.C. §
1692(e); see also McKenzie v. E.A. Uffman & Assocs., Inc., 119 F.3d
358, 360 (5th Cir. 1997).
The protections of the statute extend to
debts “arising out of . . . transaction[s] in which the money,
property, insurance, or services which are the subject of the
transaction[s] are primarily for personal, family, or household
purposes.”
15 U.S.C. § 1692a(5).
Upon initial contact with a debtor or within five days of
initial contact, a debt collector must provide the amount of a
debt, the name of the creditor to whom the debt is owed, a notice
that the debt will be assumed to be valid unless the debtor timely
disputes the debt, a statement that the debt collector will verify
the debt upon timely written request and mail a copy of the
verification to the debtor, and a statement that the debt collector
will provide name and address of the original creditor upon written
request.
15 U.S.C. § 1692g(a).
When a debtor timely sends a
written notification to the debt collector disputing the debt or
requesting contact information for the original creditor, the debt
collector must cease collection until it sends the debtor the
requested information.
See 15 U.S.C. § 1692g(b).
Among the tactics that the FDCPA prohibits debt collectors
from using in connection with the collection of any debt are:
1)
the collection of any amount that is not expressly authorized by
the debt agreement; 2) the solicitation by a debt collector of a
23
postdated
check;
concealment
of
3)
true
charging
a
purpose
person
of
for
communications
communication;
4)
taking
by
or
threatening to take nonjudicial action to dispossess debtor of
property in the absence of a legal right and present intention or
if property is exempt; and 5) communicating with a debtor by post
card.
15 U.S.C. § 1692f.
Although Plaintiff submitted some evidence that he requested
loan validation from Defendants, that alone is insufficient to
establish a claim under 15 U.S.C. § 1692g.
The alleged facts are
simply too sparse to determine whether that section was triggered.
The evidence does not establish that Defendants failed to timely
provide Plaintiff with the required information.
No evidence
suggests that Defendants engaged in any prohibited debt collection
tactic.69
3.
Plaintiff cannot pursue an FDCPA claim.
REMIC Violation
Under the Internal Revenue Code, the general rule is that
REMICs are not taxed as corporations, partnerships, or trusts, but,
rather, the income from REMICs is generally taxed to the holders of
those interests.
26 U.S.C. § 860A.
In his live pleading, Plaintiff asserted that Defendants
violated “the REMIC LAW.”
Plaintiff discussed the provisions of
69
The court does not address whether Defendants qualify as debt
collectors under the FDCPA.
24
the Internal Revenue Code that address the treatment of REMICs.70
The record contains no evidence to support this claim.
More
importantly, Plaintiff has not shown that he has standing to bring
a private right of action for an income tax violation or that the
court has jurisdiction in the first instance over such a claim.
Plaintiff cannot maintain a claim for a REMIC violation.
4.
Unjust Enrichment
Under Texas law, unjust enrichment is not considered an
independent cause of action; rather, it is a theory of recovery
that allows for restitution “when a party receiving property or
benefits would be unjustly enriched if it were permitted to retain
the property or benefits at the expense of another.”
Heldenfels
Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 43 (Tex.
1992); see also Excess Underwriters at Lloyd’s, London v. Frank’s
Casing Crew & Rental Tools, Inc., 246 S.W.3d 42, 62 n.24 (Tex.
2008)(quoting Heldenfels Bros., Inc., 832 S.W.2d at 41, as stating
that restitution is a recognized remedy for unjust enrichment
“[w]hen one person has obtained a benefit from another by fraud,
duress, or the taking of an undue advantage”).
Unjust enrichment
is an equitable doctrine that applies only in the absence of an
actual contract.
Mowbray v. Avery, 76 S.W.3d 663, 679 (Tex.
70
Plaintiff also mentioned fraudulent concealment, the violation of a
servicer performance agreement, and poor bookkeeping. See Doc. 12, Pl.’s Am.
Compl. p. 5. The court addressed these issues in an earlier section of this
opinion and finds no connection between the allegations and the Internal Revenue
Code.
25
App.–Corpus Christi 2002, pet. struck); see also Frank’s Casing
Crew & Rental Tools, Inc., 246 S.W.3d at 51 (discussing the Supreme
Court of Texas’ reluctance to allow rewriting of a contract based
on an equitable unjust-enrichment theory).
In
his
amended
complaint,
Plaintiff
again
mentioned
Defendants’ alleged failure to validate the loan and concluded that
“Defendants received and unjust enrichment and made Plaintiff the
injured party.”71
Plaintiff did not plead facts pointing to, much
less submit any evidence of, property or benefits that Defendants
received at Plaintiff’s expense.
Here, the evidence shows that the parties entered a contract
that covered payment arrangements, rendering equitable relief
improper.
Therefore, Plaintiff cannot recover under the doctrine
of unjust enrichment.
5.
Quiet Title
A suit to quiet title is an equitable remedy to clarify
ownership by removing clouds on the title (competing claims to
ownership). See Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 618
(Tex. 2007). A plaintiff must prove and recover on the strength of
his own title.
Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App.--
Corpus Christi 2001, no pet.).
Defendants produced evidence of a valid encumbrance to the
property in the form of a copy of the Deed and an authenticated
71
Doc. 12, Pl.’s Am. Compl. p.6.
26
copy of the Note.
ownership.
See
1983)(finding
sufficient
This is sufficient evidence to establish
Zarges
that
as
a
an
v.
Bevan,
652
authenticated
matter
of
law
S.W.2d
photocopy
to
prove
368,
of
369
a
note
ownership
controverting evidence); Nguyen v. Citibank N.A.,
(Tex.
was
absent
S.W. 3d
,
2013 WL 3192884, at *2 (Tex. App.–-Houston [14th Dist.] 2013, no
pet. h.).
Plaintiff failed to adduce any controverting evidence.
Plaintiff’s quiet title claim fails as a matter of law.
IV.
Conclusion
Based on the foregoing, the court GRANTS Defendants’ motion
for summary judgment and DENIES Plaintiff’s motion for summary
judgment.
Because
Defendants’
summary
judgment
motion
is
meritorious and warrants dismissal of Plaintiff’s entire lawsuit
with prejudice, Plaintiff’s motion to dismiss without prejudice is
DENIED.
SIGNED in Houston, Texas, this 23rd day of September, 2013.
27
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