Husk v. Deutsche Bank National Trust Company et al
Filing
24
MEMORANDUM OPINION AND ORDER granting 12 MOTION for Summary Judgment based on Statute of Limitations, granting 18 MOTION to Dismiss 8 Amended Complaint, denying 21 Request for Leave to Amend. (Signed by Judge Sim Lake) Parties notified. (aboyd)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DON L. HUSK,
§
5
Plaintiff,
§
§
5
v.
§
DEUTSCHE BANK NATIONAL TRUST
§
COMPANY; HOMEWARD RESIDENTIAL, 5
INC. f/k/a American Home
§
Mortgage Servicing, Inc.; and
§
AMERICAN MORTGAGE GROUP, L.L.C., §
5
Defendants.
5
CIVIL ACTION NO
MEMORANDUM OPINION AND ORDER
Plaintiff Don L. Husk originally brought this suit against
Defendants Deutsche Bank National Trust Company
("Deutsche"),
Homeward Residential, Inc. f/k/a American Home Mortgage Servicing,
Inc.
("HRI"),
and
American
Mortgage
Group,
L.L.C.
("AMG")
(collectively, "Defendants") in the 9th Judicial District Court of
Montgomery County, Texas, where it was filed under Cause Number 1203-02363-CV.
Deutsche and HRI removed the action to this court.'
Pending before the court are AMG's Motion for Summary Judgment
(Docket Entry No. 12) and Deutsche Bank and HRI's
Judgment on the Pleadings and Brief in Support
Motion for
(Docket Entry
No. 18) . Also pending before the court is Huskrs request for leave
'AMG consented to removal the same day. Defendant American
Mortgage Group L.L.C.'s Consent to Removal, Docket Entry No. 4.
to amend (contained in Plaintiff's Response to Deutsche and HRI's
Motion for Judgment on the Pleadings, Docket Entry No. 21).
After
careful consideration of the motions and relevant law the court is
persuaded that AMG1s Motion for Summary Judgment and Deutsche Bank
and HRI1s Motion for Judgment on the Pleadings should be granted,
and that Husk's request for leave to amend should be denied.
I.
Backaround
In August of 2006 Husk obtained financing to purchase a home
by executing a promissory note and deed of trust.'
Husk alleges
that AMG acted as his mortgage broker in connection with the loan.3
The promissory note, dated August 29, 2006, stated that Husk was
obligated to pay interest at a yearly rate of 10.300%, subject to
changes based on an interest rate indexm4 AMG also provided Husk
with a United States Department of Housing and Urban Development
Settlement Statement ("the HUD") that "disclosed the fees that
[Husk] would be charged in connection with the loan."5
The HUD
included fees that Husk would pay to AMG, as well as a "Yield
'~irst Amended Petition, Docket Entry No. 8, ¶ ¶ 12-13; see
Adjustable Rate Note, Ex. A to First Amended Petition, Docket Entry
No. 8-1; Deed of Trust, Ex. B to First Amended Petition, Docket
Entry No. 8-2. Husk alleges that Deutsche eventually acquired the
note and deed of trust.
First Amended Petition, Docket Entry
No. 8, ¶ 14.
3~irst
Amended Petition, Docket Entry No. 8,
¶
15.
4~djustable
Rate Note, Ex. A to First Amended Petition, Docket
Entry No. 8-1, ¶ ¶ 2, 4.
5~irst
Amended Petition, Docket Entry No. 8,
¶
16.
Spread Premium" ("YSP") that the original lender would pay to A M G . ~
The following language was included above Husk's
signature on the
HUD :
I have carefully reviewed the HUD-1 Settlement Statement
and to the best of my knowledge and belief, it is a true
and accurate statement of all receipts and disbursements
I
made on my account or by me in this transaction.
further certify that I have received a copy of the HUD-1
Settlement Statement.
I hereby authorize the Settlement Agent to make
expenditures and disbursements as shown above and approve
same for payment .7
Husk signed the HUD on August 30, 2006.8 Husk now alleges that the
YSP was a "kickback" paid by the original lender to AMG "in
exchange for
[AMG] misleading
[Husk] into accepting a higher
interest rate than was actually a ~ a i l a b l e . " ~
Husk filed his First Amended Petition on August 8, 2012,
asserting state-law claims against AMG for common-law fraud, fraud
by nondisclosure, statutory fraud, negligent misrepresentation, and
breach of fiduciary duty.''
Husk alleges in these claims that he
he HUD, Ex. C to First Amended Petition, Docket Entry No. 83, p. 2, lines 801-812.
'~irstAmended Petition, Docket Entry No. 8,
¶¶
17-19.
' I .¶ ¶ 21-44. Husk also asserts "Breach of Agent-Principal
'd
~elationship/Suitfor an Accounting" as an "alternative to breach
of fiduciary duty."
Td. ¶ 44.
Because an agent-principal
relationship creates a fiduciary duty regardless of the context in
which it arises, see Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d
193, 200 (Tex. 2002), the court considers the breach of fiduciary
(continued.. . )
has suffered monetary injuries to the extent that he accepted terms
and an interest rate that were
available.''
federal
Real
less favorable than the best
Husk also asserts a claim against AMG under the
Estate
Settlement
Procedure
Act
("RESPA"),
12
U.S.C. 5 2607, which prohibits the receipt of "kickbacks" for
referring a borrower to a lender in connection with a mortgage
loan.''
Husk reasons that AMGrs actions are imputed to the original
lender; that Deutsche purchased the note and deed of trust from the
original lender; and therefore that Deutsche is liable for any
actions imputed to the original lender that arise out of the
mortgage documents.13
On
August
17,
2012,
AMG
filed
its
Motion
for
Summary
Judgment.14 AMG argues that each of Husk's claims is barred by the
applicable statute of limitations.15 In response, Husk argues that
under the "discovery rule," and alternatively under the doctrine of
"fraudulent concealment," the limitations period has not yet run.16
lo(
. . .continued)
duty claim to include
relationship claim.
any
breach
of
the
" ~ i r s t Amended Petition, Docket Entry No. 8,
37, 40.
agent-principal
¶¶
23, 29, 34,
1 4 ~ ~ ~ r sfor Summary Judgment, Docket Entry No. 12.
Motion
15&
¶ 2.02; see also AMGrs Reply to Plaintiff's Response to
Motion for Summary Judgment ("AMGrs Reply"), Docket Entry No. 20.
l6plaintiff's Response to Defendant AMGrs Motion for Summary
Judgment ("Response to AMG"), Docket Entry No. 19, ¶ ¶ 17, 25.
Deutsche and HRI filed their Motion
for Judgment on the
Pleadings on September 4, 2012.17 Deutsche and HRI argue that all
claims should be dismissed because Husk does not assert any causes
of action against HRI and because Deutsche cannot be liable for the
alleged misdeeds of the original lender.18 Husk filed a response
on September 25, 2012, arguing that Deutsche and HRI, as Deutsche's
agent, are liable for the actions of the original lender because
Deutsche is not a holder in due course.lg Included in the response
is Husk's request for leave to amend.20
11.
A.
AMG's Motion for Summary J u d m e n t
Standard of Review
Rule 56 of the Federal Rules of Civil Procedure mandates
summary judgment "if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law."
Fed. R. Civ. P. 56 (a).
A party
moving for summary judgment "bears the burden of identifying those
portions of the record it believes demonstrate the absence of a
genuine issue of material fact."
Lincoln Gen. Ins. Co. v. Revna,
17~eutsche
and HRI's Motion for Judgment on the Pleadings and
Brief in Support, Docket Entry No. 18.
lg~laintiff's
Response to Defendants' Motion for Judgment on
the Pleadings ("Response to Deutsche and HRI"), Docket Entry
No. 21, ¶ ¶ 10-12.
401 F.3d 347, 349 (5th Cir. 2005).
Once the movant has carried
this burden, the nonmovant must show that specific facts exist over
which there is a genuine issue for trial.
Revna, 401 F.3d at 349.
The nonmovant may not rest upon mere allegations in the pleadings
to make such a showing.
Revna, 401 F.3d at 350.
To create a
genuine fact issue, more than some "metaphysical doubt as to the
material facts" is required. Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986).
The parties may support the existence or nonexistence of a
genuine fact issue by either (1) citing to particular parts of the
record, including depositions, documents, electronically stored
information, affidavits or declarations, admissions, and interrogatory answers, or
(2) showing that the materials cited do not
establish the absence or presence of a genuine dispute or that an
adverse party cannot produce admissible evidence to support the
fact. Fed. R. Civ. P. 56 (c)(1)(A) (B).
In reviewing this evidence
"the court must draw all reasonable inferences in favor of the
nonmoving party, and it may not make credibility determinations or
weigh the evidence."
Reeves v. Sanderson Plumbinq Prods., Inc.,
120 S. Ct. 2097, 2110 (2000).
A claim barred by the applicable
statute of limitations may be properly disposed of by summary
judgment.
B.
Sheets v. Burman, 322 F.2d 277, 278 (5th Cir. 1963).
Statutes of Limitations and Tolling
The statutes of limitations for Husk's state law claims are
governed
by
Texas
law.
Kansa
-6-
Reinsurance
Co.,
Ltd.
v.
Conqressional Morts. Corp. of Texas, 20 F.3d 1362, 1369 (5th Cir.
1994).
The following statutes of limitations apply to ~usk's
four years for each fraud claim, TEX. CIV. PRAC.&
causes of action:
REM. CODE 5 16.004 (a)(4); two years for the negligent misrepre-
sentation claim,
id. 5 16.003(a); and four years for the breach of
fiduciary duty
claim, id.
§
16.003 (a)(5).
Under
the
Texas
"discovery rule," however, a statute of limitations does not run
from the date of the defendant's wrongful act or omission, but from
the date that the injury was or should have been discovered by the
plaintiff.
The
rule
Weaver v. Witt, 561 S.W.2d 792, 793-94 (Tex. 1977) .
applies
only
"if
the
injury
undiscoverable and objectively verifiable."
is
both
inherently
K3C Inc. v. Bank of
America, N.A., 204 F. App'x 455, 462 (5th Cir. 2006) (citing HECI
Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998)).
An
injury is "inherently undiscoverable" if, by its nature, it is
unlikely to be discovered within the limitations period despite the
exercise of reasonable diligence by the plaintiff. Waqner
&
Brown,
Ltd. v. Horwood, 58 S.W.3d 732, 734-35 (Tex. 2001).
Similarly, the Texas doctrine of "fraudulent concealment"
tolls the limitations period "'until the fraud is discovered or
could have been discovered with reasonable diligence.'"
Hunton v.
Guardian ~ i f e
Ins. Co. of Am., 243 F. Supp. 2d 686, 699 (S.D. Tex.
2002) (quoting Velsicol Chem. Corp. v. Winoqrad, 956 S.W.2d 529,
531
e ex.
1997)). The doctrine "estops" a defendant who concealed
the perpetration of fraud from relying on a statute of limitations
defense.
Hunton, 243 F. Supp. 2d at 699.
RESPA claims brought under 12 U.S.C.
§
2607 carry a one-year
12 U.S.C. 5 2614.
statute of limitations.
Federal law also
recognizes a "fraudulent concealment" doctrine.
A plaintiff may
invoke the doctrine by proving (1) that the defendant "concealed
the conduct complained of" and (2) that the plaintiff "failed,
despite the exercise of due diligence on his part, to discover the
facts that form the basis of his claim."
Texas v. Allan Constr.
C . 851 F.2d 1526, 1528 (5th Cir. 1988) (internal quotation marks
o,
omitted).
To satisfy the first element, the defendant must have
engaged in "affirmative acts of concealment."
I . at 1531.
d
A defendant asserting the statute of limitation defense bears
the burden of proof on that defense.
Crescent Towins
&
Salvaqe Co.
v. M/V Anax, 40 F.3d 741, 744 (5th Cir. 1994) (federal law); KPMG
Peat Marwick v. Harrison Cntv. Hsq. Fin. Corp., 988 S.W.2d 746, 748
(Tex. 1999)
(Texas law).
At
the
summary judgment stage the
plaintiff bears the burden to provide specific facts to support the
applicability
concealment"
of
the
doctrine.
"discovery
McGreqor
rule"
v.
La.
or
the
State
"fraudulent
Univ.
Bd.
of
Supervisors, 3 F.3d 850, 865 (5th Cir. 1993) (federal law); Weaver,
561 S.W.2d at 794 n.2 (Texas law).
C.
Analysis
AMG's
Motion for Summary Judgment is based on statute of
limitations defenses.
AMG contends that the statutory period for
-8-
each claim began to run, at the latest, on August 30, 2006, when
Husk was provided with and signed the HUD.'l
that Husk's
AMG further argues
allegations "relate solely to information that was
readily available" when the loan was executed in 2006."
AMG
therefore reasons that Husk's alleged injuries were not "inherently
undiscoverable."23
Husk contends, however, that the statute of limitations only
began to run on February 28, 2012, when his attorney performed an
in-depth review of the documents relating to his home.24 Invoking
the "discovery rule," Husk argues that his injury was "inherently
undiscoverable" because he only had the opportunity to discover
AMG1s "deceitful conduct" after learning in 2012 that AMG had
"received a kickback in the form of a YSP from the Original Lender
in exchange for misleading Plaintiff into accepting a higher
interest
rate
than
what
he
qualified
for."25
Husk
relies
alternatively on the "fraudulent concealment" doctrine to show that
the statutes of limitations do not bar his claims.26
¶
'~AMG'S Motion for Summary Judgment, Docket Entry No. 12,
3.02.
2 4 ~ i r s Amended Petition, Docket Entry No. 8,
t
to AMG, Docket Entry No. 19, ¶ 17.
25~esponse AMG, Docket Entry No. 19,
to
¶
20.
¶
52; Response
The court concludes that AMG has satisfied its burden to show
that the statute of limitations bars Husk's claims.
In Texas the
general rule is that a cause of action accrues and the statute of
limitations begins to run when "a wrongful act causes some legal
injury
. . .
occurred."
even if all the resulting damages have not yet
Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex. 1997).
A cause of action brought under RESPA, 12 U.S.C.
accrue when the alleged "kickback" is paid.
§
2607, begins to
Snow v. First Am.
Title Ins. Co., 332 F.3d 356, 359 (5th Cir. 2003).
The summary judgment record reveals that Husk signed the
promissory note
(containing the applicable
interest
rate) on
August 29, 2006,27 and the HUD (containing the fees and YSP) on
August 30, 2012.
Accordingly, the state-law causes of action
would have begun to accrue at the latest on August 30, 2006, after
Husk had signed the documents obligating him to the specified terms
and interest rate.
If AMG committed fraud (four-year statute of
limitations) or negligent misrepresentation (two-year statute of
limitations) or breached its fiduciary duty to Husk
(four-year
statute of limitations), the legal injury giving rise to those
claims would have been caused when the promissory note and HUD were
executed.
The cause of action under RESPA would have begun to
27~djustable
Rate Note, Ex. A to First Amended Petition, Docket
Entry No. 8-1.
28~he
HUD, Ex. C to First Amended Petition, Docket Entry
NO. 8-3.
accrue on August 30, 2006, when Husk approved the payment of the
YSP from the original lender to AMG.29
Husk's
claims are therefore barred unless the applicable
statutes of limitations were tolled.
To prevail Husk must offer
specific facts to show that the "discovery rule" or the "fraudulent
concealment" doctrine applies.
not carried this burden.
The court concludes that Husk has
Specifically, the injury that forms the
basis of each of Huskfs state-law claims is not
undiscoverable."
The
unfavorable terms were
allegedly
excessive
discoverable through
"inherently
interest
rate
and
"the exercise of
reasonable diligence" when Husk signed the promissory note and the
HUD.
Horwood, 58 S.W.3d at 734-35.
nothing
that
would
toll
the
Husk's attorney "discovered"
statutes
of
limitations.
The
"discovery rule" therefore does not apply.
The court further concludes that AMG is not "estopped" from
asserting the statute of limitations defense under the Texas
"fraudulent concealment" doctrine because Husk has provided no
evidence to show that AMG concealed the perpetration of any fraud.
See Hunton, 243 F. Supp. 2d at 699. For similar reasons, the court
concludes that the federal "fraudulent concealment" doctrine does
not apply to toll the RESPA claim.
See Allan, 851 F.2d at 1528
(defendant must have engaged in "affirmative acts of concealment"
" ~ u s k does not argue that the alleged "kickback" was paid at
any later date.
to toll the statute of limitations). AMG is therefore entitled to
summary judgment as a matter of law.
111.
A.
Motion for Judcrment on the Pleadinqs
-
Standard of Review
A motion brought pursuant Federal Rule of Civil Procedure
12(c) should be granted if there is no issue of material fact and
if the pleadings show that the moving party is entitled to judgment
as a matter of law.
Greenbers v. General Mills Fun Group, Inc.,
478 F.2d 254, 256 (5th Cir. 1973).
A motion for judgment on the
pleadings is subject to the same standard as a motion to dismiss
for failure to state a claim.
See
In re Great Lakes Dredse
&
Dock
Co. LLC, 624 F.3d 201, 209 (5th Cir. 2010); Guidrv v. American
Public Life Insurance Co., 512 F.3d 177, 180 (5th Cir. 2007).
The
court must accept the factual allegations of the complaint as true,
view them in a light most favorable to the plaintiffs, and draw all
reasonable
inferences
in
the plaintiffsr
favor.
Ramminq
v.
United States, 281 F.3d 158, 161 (5th Cir. 2001), cert. denied sub
nom Cloud v.
United
States,
122 S. Ct.
2665
(2002).
When
considering a Rule 12(b) (6) motion to dismiss courts are generally
able to look only to "the complaint, any documents attached to the
complaint, and any documents attached to the motion to dismiss that
are central to the claim and referenced by the complaint."
Lone
Star Fund V (U.S.), L.P. v. Barclavs Bank PLC, 594 F.3d 383, 387
(5th Cir. 2010) .
B.
Analysis
1.
HRI
In their Motion for Judgment on the Pleadings Deutsche and HRI
argue that HRI should be dismissed because Husk does not assert a
single cause of action against HRI.30 In response to this issue,
Husk argues only that "Deutsche, and by extension their agent
Defendant HRIrs liability to Plaintiffs arises due to their lack of
holder in due course status."31
The court is not persuaded by
Husk's agency argument. Husk does not refer to HRI in the "Facts,"
"Causes of Action," or "Theories of Liability" section of the First
Amended Petition.
allegation
In fact, Husk fails to plead a single factual
regarding
HRIfs liability.
The
court
therefore
concludes that HRI is entitled to judgment as a matter of law and
that all claims against HRI should be dismissed.32
2.
Deutsche
Husk asserts causes of action against Deutsche under the
theory that AMGrs actions are imputed to the original lender and
that Deutsche is liable for any actions imputed to the original
lender.33 The only alleged connection between the original lender
30~eutsche
and HRIrs Motion for Judgment on the Pleadings,
Docket Entry No. 18, p. 3.
31~esponse Deutsche and HRI, Docket Entry No. 21,
to
¶
10.
" ~ v e n if the court were to accept Husk's agency argument
regarding HRI, the court would still dismiss any action against HRI
because all causes of action against Deutsche will be dismissed.
3 3 ~ i r s Amended Petition, Docket Entry No. 8,
t
¶¶
47-48.
and Deutsche is the transfer of the promissory note and the deed of
trust.34 Husk does not allege that Deutsche was involved in the
loan origination process or in the execution of the promissory note
or the deed of trust.
Deutsche and HRI argue in their Motion for
Judgment on the Pleadings that Deutsche cannot be held liable for
the alleged wrongdoing of the original lender and should therefore
be dismissed.35 Husk contends that as a consequence of Deutsche's
lack of holder in due course status, Deutsche is liable "for any
actions undertaken by the original lender arising from the mortgage
documents."36
The court is persuaded that all claims against Deutsche should
be
dismissed.
Deutsche and HRI point
out
that neither the
promissory note nor the deed of trust contains any provision in
which Deutsche agrees to be liable for the misconduct of the
original lender. Moreover, Husk has not cited -- and the court has
not found -- a single case holding that under Texas or federal law
a transferee of a promissory note is vicariously liable for the
transferor's actions taken in the context of the loan origination.
Deutsche and HRI urge the court to follow Belanser v. BAC Home
Loans Servicinq, L.P., 839 F. Supp. 2d 873, 876-77
(W.D. Tex.
2011), a case from the Western District of Texas in which the court
35~eutsche
and HRI' s Motion for Judgment on the Pleadings,
Docket Entry No. 18, p. 4.
36~esponse Deutsche and HRI, Docket Entry No. 21,
to
¶
10.
held that under Texas law a transferee could not be held liable for
the transferor's negligence in approving a loan without securing
accurate financial information.
In Belanser the court relied on
the fact that the transferee had not been
origination of the home loan.
involved with the
I . at 877.
d
Belanser applies with equal force to Husk's
negligence, fraud, and breach of fiduciary duty.
actions for
The determining
factor is not that the transferor engaged in a certain type of
misconduct -- whether it be fraud or negligence -- but that the
transferee had no role in the loan origination and no contact with
the borrower when the alleged wrongdoing was committed.
The court
also concludes that because Deutsche had no involvement in the
alleged "kickback" (the payment of the YSP), Deutsche cannot be
held liable under RESPA.
Holder in due course status, or lack
thereof, is irrelevant here. Accordingly, the court concludes that
Deutsche cannot be held liable for the original lender's conduct
before Deutsche had any involvement with the loan.
Deutsche is
therefore entitled to judgment as a matter of law.
3.
Request for Leave to Amend
Husk includes a request for leave to amend in his response to
Deutsche and HRIfs Motion for Judgment on the Pleadings.
A party
may generally amend its pleading once as a matter of course within:
"(A) 21 days after serving it, or (B) if the pleading is one to
which a responsive pleading is required, 21 days after service of
-15-
a responsive pleading or 21 days after service of a motion under
Rule 12(b), (e), or (f), whichever is earlier."
Fed. R. Civ. P.
15(a) (1). In all other cases a party may only amend its pleadings
with the written consent of the opposing party or with the court's
leave.
Fed. R. Civ. P. 15 (a) (2).
The court should freely give
leave to amend when justice so requires.
applies here.
I . Rule 15(a) (2)
d
Because Husk has neither shown how an amended
complaint would be successful nor attached a proposed amended
complaint, the court concludes that Husk's request for leave to
amend should be denied.
IV.
Conclusion and Order
The court concludes that all claims against AMG are timebarred.
Accordingly, AMG's Motion for Summary Judgment (Docket
Entry No.
12) is GRANTED.
The court further concludes that
Deutsche and HRI are entitled to judgment as a matter of law on all
claims.
Therefore, Deutsche and HRI's Motion for Judgment on the
Pleadings (Docket Entry No. 18) is GRANTED.
Husk' s request for
leave to amend (contained in Plaintiff's Response to Deutsche and
HRI's Motion for Judgment on the Pleadings, Docket Entry No. 21) is
DENIED.
a
SIGNED at Houston, Texas, on this the 12th day of March, 2013.
SIM LAKE
UNITED STATES DISTRICT JUDGE
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