Morlock, L.L.C., a Texas Limited Liability Company v. JPMorgan Chase Bank, N.A.

Filing 17

MEMORANDUM OPINION AND ORDER denying 12 First MOTION to Remand, denying 15 Motion for Leave to Amend Complaint, granting 13 MOTION to Dismiss . (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

MORLOCK, L.L.C., a Texas
Limited Liability Company,
Plaintiff,
v.
JPMORGAN CHASE BANK, N.A.,
Defendant.

§
§
§
§
§
§
§
§
§
§

CIVIL ACTION NO. H-13-0734

MEMORANDUM OPINION AND ORDER

Defendant JPMorgan Chase Bank N.A.

("Chase")

removed this

action from the 127th Judicial District Court of Harris County,
Texas,

where it was filed under Cause No.

2013-12805.

Pending

before the court are plaintiff Morlock, L.L.C.'s ("Morlock") Motion
to Remand (Docket Entry No. 12), Chase's Rule 12(b) (6) Motion to
Dismiss ("Motion to Dismiss")

(Docket Entry No. 13), and Morlock's

Motion for Leave to Amend Complaint (Docket Entry No. 15 at p. 8).
For the reasons explained below, Morlock's Motion to Remand and
Motion for Leave to Amend Complaint will be denied and Chase's
Motion to Dismiss will be granted.
I.

Factual and Procedural Background

On February 1,

2008, Alejandro Mendoza and Iris N.

Mendoza

executed and delivered a Deed of Trust on their property to secure

capstone Mortgage, L.P. on a $144,200 promissory note. 1
Mortgage,

L. P.

assigned

the

Deed of

Trust

Capstone

"together with

the

certain note(s) described therein" to Chase the same day.2
Morlock purchased the Mendoza's property, "a certain tract of
land located in Harris County, Texas .

. which is known as 2819

Trinity

("the

Glen,

trustee's

sale

Houston,
conducted

Texas
by

77047"
the

Brunswick

Property"),
Meadows

at

a

Homeowners

Association and received a Trustees Deed dated October 10, 2011. 3
Chase posted the Property for a substitute trustee's sale under the
Deed of Trust scheduled for March 5, 2013. 4
Morlock filed its Original Petition in the District Court of
Harris County, Texas, 127th Judicial District, on March 4, 2013. 5
Morlock's Original Petition alleged that the Deed of Trust had been
"executed

and

delivered

to

secure

Mortgage

Electronic

Registration Systems, Inc." and that it "was allegedly assigned to

lDeed of Trust, Exhibit A to Motion to Dismiss, Docket Entry
No. 13, pp. 1-2, 15-16.
2Assignment of Deed of Trust, Exhibit B to Motion to Dismiss,
Docket Entry No. 13.
3Plaintiff's First Amended Complaint,
pp . 1- 2 ~ ~ 3 - 4 .

Docket Entry No.

II,

4Plaintiffs' Original Petition, and Application for Temporary
Restraining Order ("Original Petition"), Exhibit B to Defendant's
Notice of Removal, Docket Entry No. I, p. 2 ~ 7; Defendant's Answer
to Original Petition and Application for Temporary Restraining
Order ("Defendant's Answer"), Docket Entry No.6, p. 2 ~ 7.
50 r iginal

Petition, Exhibit
Removal, Docket Entry No.1.
-2 -

------'-"

B

to

Defendant's

Notice

of

Defendant
("MERS")

Chaser]

by

Morlock

."6

Mortgage

Electronic

alleged

that

Registration

"[tlhe

Deed

of

Systems

Trust

and

assignment, although appearing valid on its face, is invalid and of
no force or effect because, on information and belief, MERS was not
the holder of the original note that was secured by the Deed of
Trust. 117

Accordingly, Morlock argued, "the assignment by MERS was

not valid and Defendant Chase is not and was not the owner and
holder of the Note and,

therefore, has no right or authority to

post the Property for a Trustee's Sale." B
Morlock sought "a judgment which determines whether Defendant
Chase has any interest in the Property," attorneys'

fees,

and a

"Temporary Restraining Order which would immediately enj oin and
restrain

Defendant

Property or
including

to

disturb

taking

possession.

119

Chase

any

from

taking

Morlock's

action

to

any

action

possession
obtain

or

of

to

sell

the

enforce

the

Property,
a

writ

of

Morlock asserted that "unless enjoined, Defendant

Chase will sell the Property and take possession of the Property"
and

that

"[il f

the

Property

is

sold,

Morlock's

Property will be unnecessarily clouded."lo

6Id. at 2 ~ 6.
7Id.

~

9.

BId.
9Id. at 3 ~~ 11-15.
laId.

~

14.
-3-

title

to

the

Morlock alleged that

~[t]he

~[u]nless

Property is worth approximately $130,OOOH and that

[Chase is] enjoined as requested, Morlock will suffer irreparable
harm and inj ury . 11
H

The State District Court issued a Temporary

Restraining Order on March 4, 2013. 12
On March 15, 2013, Chase removed this action to federal court
on the basis of diversity jurisdiction. 13

On April 25, 2013, Chase

filed its Answer asserting that Morlock's Original Petition
to

state

claims

upon

which

Morlock's

claims

~are

precluded and barred by

frauds.

relief

can

be

granted H
the

~fails

and

that

statute

of

H14

On June 13, 2013, Chase filed its Motion to Dismiss on the
Pleadings. 15

Chase attached the Deed of Trust and Assignment of

Deed of Trust to its motion. 16
conference was held,

On June 14,

2013,

a

scheduling

and an order was entered requiring amended

pleadings to be filed by July 19, 2013. 17

~~

11Id.

14-15.

12Temporary Restraining Order, Exhibit
Notice of Removal, Docket Entry NO.1.

A-4

to

Defendant's

13Defendant's Notice of Removal, Docket Entry No.1.
14Defendant's Answer, Docket Entry No.6, p. 3
15Chase's Motion to Dismiss on the Pleadings
Motion H ) , Docket Entry No.8.

~~

18-19.

(~Chase's

12(c)

16Deed of Trust, Exhibit A to Chase's 12(c) Motion, Docket
Entry No.8; Assignment of Deed of Trust, Exhibi t B to Chase's
12(c) Motion, Docket Entry No.8.
17Docket Control Order, Docket Entry No. 10.
-4-

-------------_

....... .

On July 19, 2013, Morlock filed its First Amended Complaint. 18
In it Morlock alleges that the Mendozas "executed and delivered a
Deed of Trust to secure Capstone Mortgage, L.P., which created a
lien on the Property" and that "[t]he Deed of Trust was allegedly
assigned to Defendant Chase not by Capstone Mortgage, L.P., but by
[MERS] ." 19

Morlock

argues

that

" [t] he

assignment,

although

appearing valid on its face, is invalid and of no force or effect
because,

on information and belief,

the

person who signed the

assignment on behalf of MERS was not employed by MERS and that
person had no authority to endorse the Note
assignment. ,,20

[or]

Accordingly, Morlock argues that Chase "was not the

owner and holder of the Note and Deed of Trust
hard]

to execute the

[and]

therefore[]

no right or authority to post the Property for a Trustee's

Sale. ,,21
Morlock also asserts that it "has attempted to contact the
person or the entity who is the owner of the Note and Deed of Trust
to either pay the Note or at a minimum to enter into discussions
regarding a payoff of the Note" and that Chase "has refused to
provide any proof

.

. that it is the owner of the Note and/or

Deed of Trust or whether it is the proper party to be paid." 22

18Plaintiff's First Amended Complaint, Docket Entry No. 11.
19Id. at 2
2°Id.

~

5.

6.

~

~

7.

21Id.
22Id.

-5-

Morlock asserts that it "is concerned that if it pays Chase,

it

could be subject to double exposure for the payment of the Note if
Chase is not entitled to payout 23 and

"seeks a

II

judgment which

determines whether Defendant Chase is the owner and holder of the
Note and/or Deed of Trust and whether Chase has any interest in the
Property. 1124
On July 19,

2013

Morlock filed

I

its Motion to

Remand. 25

Morlock argues that this action should be remanded to state court
because

Morlock

"has

not

plead [ed]

an

amount

of

damages

and

accordingly it is defendant's burden to establish an amount in
excess of $75,000 as the amount in controversy. 1126

Morlock asserts

that Chase "relies solely on the value of the Property" but that
\\ [a] ccording to [Morlock]' s Complaint, ownership of the Property is
not in dispute and therefore, the amount in controversy is not in
excess of $75,000."27
On July 30,
reviewing

the

Chase filed its Motion to Dismiss. 28

2013,

nature

of

the

proceeding,

Chase

"Mortgagors Alejandro Mendoza and Iris N. Mendoza .

23Id. a t 3
24Id.

~~

fT 1 .
1 8

11-12.

25Motion to Remand, Docket Entry No. 12.
26Id. a t

3

5

fT 1 .
1

28Motion to Dismiss

I

Docket Entry No. 13.
-6-

states

In
that

. executed a

Deed of Trust with lender Capstone Mortgage, and with [MERS] as the
beneficiary under the Deed of Trust
lender) . ,,29

Chase

attached

(solely as nominee for the

copies

of

the

Deed

of

Trust

and

Assignment of Deed of Trust to its Motion. 30
Chase alleges that Morlock's argument against the validity of
the

assignment

"appears

to

stem

from

the

theory

that

the

'bifurcation' of the note and Deed of Trust renders the Deed of
Trust

invalid"

and

that

"[h] ere,

the

Deed

of

Trust

expressly

provides that MERS holds the Deed of Trust for the benefit of the
original noteholder and its successors and assigns. ,,31

Chase argues

that the "bifurcation theory" has been rejected by Texas courts and
that Morlock has therefore failed to state a claim in its First
Amended Petition. 32

Chase also argues that because Morlock was not

a party to the assignment it does not have standing to challenge
the assignment, that Morlock has failed to state a plausible quiettitle claim, and that Morlock has failed to plead facts to support
its action for declaratory judgment. 33

29Id. at 2.
30Deed of Trust, Exhibit A to Motion to Dismiss, Docket Entry
No. 13 i Assignment of Deed of Trust, Exhibit B to Motion to
Dismiss, Docket Entry No. 13.
31Motion to Dismiss, Docket Entry No. 13, pp. 4 and 5.
32Id.

33Id. at 5-6.
-7-

On August

8,

2013,

Motion to Remand. 34

Chase

filed

its Response

to Morlock's

Chase argues that because Morlock "seeks a

determination [of] whether \ [Chase] is the owner of the Note and/or
Deed

of

Trust

and

whether

[Chase]

has

an

interest

in

the

Property,'l1 the amount in controversy should be measured by the
value of the Property.35

Chase notes that Morlock had previously

contended in its Original Petition that the property was worth
approximately $130,000 36 and attached a printed report

from the

Harris County Appraisal District's website showing the appraised
value of the property at $132,425. 37
On August 20,

2013,

Motion to Dismiss. 38

Morlock filed its Response to Chase's

Morlock argues that it "only seeks to have a

determination that Chase is the proper party which holds the lien

ll

and that it "is concerned that if it pays Chase it may be exposed
to double payment of the same debt. 1139

Morlock acknowledges that

"[a]t the time Morlock purchased the Property, it was subject to a

34Defendant's

Response

to

Motion

to

Remand,

Docket

Entry

No. 14.
35Id. at 2-3

~~

6-7.

37Harris County Appraisal District Real Property Account
Information, Exhibit A to Defendant's Response to Motion to Remand,
Docket Entry No. 14.
38Plaintiff's Response to Defendant's Rule 12 Motion, Docket
Entry No. 15.
39Id. a t 3

fT
11

10

•

-8-

Deed of Trust lien, dated February 1, 2008, which secured a Note
executed by Alej andro Mendoza and

Iris Mendoza

and payable

to

capstone Mortgage, L.P." and asserts that "[t]he Deed of Trust was
purportedly assigned to Chase by one or more assignments signed by
[MERS] . "40

Morlock argues that "[a] s the owner of the Property,

[it] has the right to determine the validity of liens against its
own property. ,,41
Morlock also argues that its "action to determine the right [s]
of the parties and to strike any interest

[Chase] may have in the

Property certainly states a cause of action to remove a cloud on
ti tle. ,,42

Morlock asserts that i t " is not at tacking the existence

of the lien.

It is only seeking a determination of whether Chase

is the 1 ien holder to whom payment is owed." 43
Morlock's Response to Chase's Motion to Dismiss also contains
a Motion for Leave to Amend Complaint. 44

No copy of the proposed

amended complaint was attached.
On September 6,

2013,

Chase

Response to its Motion to Dismiss. 45

filed

its Reply to Morlock's

Chase argues in its reply that

40Id. ~~ 13-14.
41Id. at 6 ~ 29.
42Id. at 8 ~ 40.
43Id. at 6 ~ 31.
44Id. at 8-9 ~~ 41-44.
45Defendant's Reply to Plaintiff's Response to Rule 12 (b) (6)
Motion, and Response to Motion for Leave to Amend Complaint, Docket
Entry No. 16.
-9-

Morlock's "vague[] challenge[ to] the recorded Assignment" is not
sufficient to state a claim because Morlock does not have standing
to challenge the assignment under Texas law. 46
II.

Morlock's Motion to Remand

In its Motion to Remand,
plead [ed]

Morlock asserts that it

"has not

an amount of damages and accordingly it is defendant's

burden to establish an amount in excess of $75,000 as the amount in
controversy. ,,47
Removal,
that

Morlock

also

notes

that

"[i] n

its

Notice

of

[Chase] relies solely on the value of the Property," but

"[a] ccording

to

[Morlock's]

Complaint,

ownership

of

the

Property is not in dispute and therefore, the amount in controversy
is not in excess of $75,000.,,48

It is unclear whether Morlock

intends to reference its Original Petition or its First Amended
Complaint.
subject

However, because "federal courts base decisions about

matter

jurisdiction

after

removal

on

the

plaintiff's

complaint as it existed at the time that the defendant filed the
removal petition," only Morlock's Original Petition is relevant to
a determination of the propriety of removal.
Airlines.

Co.,

891

F.2d

540,

546

(5th

Cir.

Kidd v.
1990);

Southwest
see

also

Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 264 (5th
Cir.

1995)

(" [A]

complaint amended post-removal cannot divest a

46Id. at 2.
47Motion to Remand, Docket Entry No. 12, p. 3
4Bld.

~

6.
-10-

~

5.

federal court of jurisdiction"

(citing Pullman Co. v. Jenkins, 59

S. Ct. 347, 348-49 (1939))).
A.

Applicable Law

"Under 28 U.S.C.

1441(a) any state court civil action over

§

which the federal courts would have original jurisdiction may be
removed from state to federal court."

Gasch v. Hartford Accident

Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007).

&

Federal courts have

original jurisdiction over "all civil actions where the matter in
controversy exceeds the
interest and costs,
States."

28 U.S.C.

sum or value of

and is between
§

$75,000,

exclusive of

citizens of different

1332 (a) (1).

Removal jurisdiction depends on the plaintiff's state court
pleadings at the time of removal.
Cavallini, 44 F.3d at 264.

Pullman Co., 59 S. Ct. at 349;

"When the plaintiff's complaint does

not allege a specific amount of damages,

the removing defendant

must prove by a preponderance of the evidence that the amount in
controversy exceeds

[the jurisdictional amount]."

Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993).
has two ways to meet its burden.

proper

if

'it

is

facially

The removing defendant

Garcia v. Koch Oil Co. of Texas

Inc., 351 F. 3d 636, 639 (5th Cir. 2003).
be

De Aguilar v.

"First, jurisdiction will

apparent'

from

complaint that their 'claims are likely above

the

plaintiffs'

[$75,000].'"

Id.

(quoting Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir.
1995)).

However,

"[i]f the value of the claims is not apparent,
-11-

then the defendants 'may support federal jurisdiction by setting
forth

the

[either]

facts

in

the

removal

petition

[or]

by

affidavit -- that support a finding of the requisite amount."
(quoting AlIeni

63

established l

a

by

F. 3d at

Once

1335)

preponderance

that

I

"[t] he

federal

Id.

defendant

has

jurisdiction

is

'[i]t must appear to a legal certainty that the

warranted [I]

claim is really for less than the jurisdictional amount to justify
dismissal.
Cir. 1995)
S. Ct. 586
B.

De Aguilar v. Boeing CO'

III

I

47 F.3d 1404

1412

1

(quoting St. Paul Mercury Indem. Co. v. Red Cab CO'
1

(5th
I

58

590 (1938)).

Analysis

In

its

Original

injunctive relief. 49

Petition l

Morlock

seeks

declaratory

and

"In actions seeking declaratory or injunctive

relief l it is well established that the amount in controversy is
measured by the value of the object of the litigation."
Washington State Apple Adver. Commln l 97 S. Ct. 2434
"To put it another way

I

the amount in controversy

declaratory or injunctive relief

l

I

1

2443 (1977).

in an action for

is the value of the right to be

protected or the extent of the injury to be prevented.
v.

Leininger l

705 F.2d 7271

729

Hunt v.

(5th Cir.

1983)

II

Leininger

AccordinglYI

whether the amount in controversy in this case exceeds $75 / 000
depends upon the "value of the right to be protected or the extent

490riginal Peti tion l Exhibit B to Defendantls
Removal Docket Entry No. 11 pp. 3-4 ~~ 11-16.
I

-12-

Notice

of

of the injury to be prevented
Original Petition.
1.

ll

by the relief requested in Morlock's

Id.

The rights to be protected in this case are Morlock's
rights as owner of the Property.

It is facially apparent from Morlock's Original Petition that
the rights to be protected in this case are Morlock's property
rights

as

owner

of

the

exclusive possession.

Property,

particularly

its

right

of

Morlock asserts that it is the owner of the

Property, having purchased it at "a Trustees Sale Conducted by the
Brunswick Meadows Homeowners Association,
Restraining

Order

which would

II

and seeks "a Temporary

immediately

enj oin

and

restrain

Defendant Chase from taking any action to sell the Property or to
disturb Morlock's possession of the Property, including taking any
action to obtain or enforce a writ of possession. 1I50
from

Morlock's

perspective,

the

rights

Morlock's rights as owner of the Property.

to

be

Therefore,

protected

are

See, e.g., Martinez v.

BAC Home Loans Servicing, LP, 777 F. Supp. 2d 1039, 1049 (W.D. Tex.
2010)

("At least one of the bundle of property rights that

[the

plaintiff] is seeking to enforce or protect through this litigation
is his right to peacefully possess and enjoy his home.

From

[the plaintiff's] perspective, then, it is the whole title and its
'bundle of rights' at issue."

(quoting Mapp v. Deutsche Bank Nat.

Trust Co., No. 3:08-CV-695-WKW, 2009 WL 3664118, at *3

50Id. at 1-3

~~

4-5, 11, 13.
-13-

(M.D. Ala.

Oct.

28,

2009)));

see also Burr v.

JPMorgan Chase Bank,

N.A.,

No. 4:11-CV-03519, 2012 WL 1016121, at *2 (S.D. Tex. Mar. 23, 2012)
("The amount in controversy is measured from the perspective of the
(citing Garcia, 351 F.3d at 640 n.4)).

plaintiff."

Accordingly, whether the amount in controversy exceeds $75,000
will depend upon the value of Morlock's rights as owner of the
Property.

As

owner

of

the

Property,

Morlock

exclusive possession of the entire property.
Co. v. Smith,
dism'd w.o. j . )
possession

of

860 S.W.2d 157,

159

is

entitled

to

See Mobil Pipe Line

(Tex. App.-EI Paso 1993, writ

(DAn owner of land has title and is entitled to
the

premises.").

The

Texas

Supreme

Court

has

characterized "the right to exclude all others from use of the
property" as Done of the 'most essential sticks in the bundle of
rights that are commonly characterized as property. '"
Patterson, 370 S.W.3d 70S, 709 (Tex. 2012)

Severance v.

(quoting Dolan v. City

of Tigard, 114 S. Ct. 2309, 2316, 2320 (1994)); see also Evanston
Ins. Co. v. Legacy of Life, Inc., 370 S.W.3d 377, 383 (Tex. 2012)
(identifying Dthe right to exclusive possession"

as one of the

Dcore rights in the bundle of property rights") .
Morlock's ownership interest in the Property,

including its

right of exclusive possession, is most accurately reflected by the
Property's fair market value, as that is the amount that Morlock
could expect to receive if it sold its ownership interest on the
open market.

See Martinez, 777 F. Supp. 2d at 1051 (holding that

when a "plaintiff seeks both a preliminary and permanent injunction
-14-

to prevent the defendant from foreclosing on his home

. the

fair market value of his home is the proper measure of the amount
in controversy"); .M.9J;m, 2009 WL 3664118, at *3 ("Ownership, title
and possession, thus, are not only the objects of this lawsuit, but
similarly represent the value of the rights sought to be protected
by an injunction enjoining the foreclosure.

In monetary terms,

these benefits, objects and rights are best measured by the value
of the home itself.
Dictionary 1549

II

(internal citations omitted)); Black's Law

(7th ed.

1999)

(defining "fair market value" as

" [t] he price that a seller is willing to accept and a buyer is
willing

to

pay

on

the

open

market

and

in

an

arm's-length

transaction; the point at which supply and demand intersect").

It

is undisputed that the fair market value of the Property exceeds
$75,000. 51

Indeed, Morlock asserts in its Original Petition that

" [t] he Property is worth approximately $130,000.00." 52 Accordingly,
"the value of the right to be protected" by Morlock's action for
declaratory

and

injunctive

relief,

and

thus

the

controversy, exceeds $75,000 and removal was proper.

amount

in

Leininger,

705 F.2d at 729.

51Id. at 3 ~ 14; Harris County Appraisal District Real Property
Account Information, Exhibit A to Defendant's Response to Motion to
Remand, Docket Entry No. 14.
520riginal Pet i t ion, Exhibit
Removal, Docket Entry No. I, p. 3

~

-15-

B to
14.

Defendant's

Notice

of

2.

The injury to be prevented by Morlock's requested relief
is the clouding and potential loss of its title to the
Property.

It is facially apparent from Morlock's Original Petition that
the injury to be prevented by Morlock's requested relief is the
clouding and potential loss of Morlock's title and the loss of its
right to possess the Property.

According to its Original Petition,

Morlock "fears that, unless enjoined, Defendant Chase will sell the
Property and take possession of the Property. 1153
asserts that "[i]f the Property is sold,

Morlock also

Morlock's title to the

Property will be unnecessarily clouded" and that "if the Property
is sold, a third party may claim to be the owner of the Property,
thereby causing a
Morlock's Original

further cloud to the
Petition declares

enjoined as requested,
inj ury .

II

title.

that

1154

"[u] nless

Furthermore,
[Chase is]

Morlock will suffer irreparable harm and

55

"[T]he

'value of the extent of the injury to be prevented'

[is] the amount the plaintiffs stood to lose if their requests for
injunctions were denied."
No. H-10-3482,

Govea v.

2010 WL 5140064,

at *3

(quoting Leininger, 705 F.2d at 729)

JPMorgan Chase Bank,

N. A. ,

(S.D. Tex. Dec. 10, 2010)
Morlock's Original Petition

argues that had its request for an injunction been denied, Morlock

53Id.
54Id.
55Id.

~

15.
-16-

would have "suffer red] irreparable harm and injury" because "if the
Property is sold, a third party may claim to be the owner of the
Property, thereby causing a further cloud to the title. 1156

Because

the scheduled Deed of Trust sale could have clouded Morlock's title
or, potentially, divested Morlock of title completely, "a right to
property [was] called into question in its entirety" and thus "the
value

of

the

property

Nationstar Mortg.
2009)

LLC v.

(quoting Waller v.

547-48

(5th

controls

Cir.

Knox,

the

amount

controversy.

351 F. App'x 844,

Professional Ins.

1961)) i

in

see

also

Corp.,

Waller,

296

848

II

(5th Cir.

296 F.2d 545,
F.2d

at

547

("[C]ourts look to the value of the property involved rather than
the damages that might be suffered, to determine the jurisdictional
amount in suits for injunctions
cloud from the title of realty."

. and in suits to remove a
(internal citations omitted)).

Since it is facially apparent from Morlock's Original Petition
that

"[t]he Property is worth approximately $130,000.00,"57 the

extent of the injury to be prevented exceeds the jurisdictional
amount and removal was proper.
words,

Garcia, 351 F.3d at 639.

In other

looking to the value of the right to be protected or the

extent of the injury to be prevented it is clear that the "object
of the litigation" is the Property itself, and thus the amount In
controversy is measured by the value of the Property.

56Id.

~~

57Id.

~

14-15.
14.
-17-

Hunt,

97

S. Ct. at 2443; Leininger, 705 F.2d at 729; Govea, 2010 WL 5140064,
at *4.

Accordingly, Morlock's Motion to Remand will be denied.
III.

Chase's Motion to Dismiss

Chase argues that to the extent that Morlock's claims "stem
from the theory that the

'bifurcation'

of the note and Deed of

Trust renders the Deed of Trust invalid," it has failed to state a
claim as a

matter of law because

rejected this theory."5a

"Texas Courts have routinely

Chase further argues that Morlock lacks

standing to challenge the assignment of the Deed of Trust,

has

failed to advance a plausible quiet-title claim, and that Morlock's
claim for

declaratory

judgment,

apparently based loosely on a

theory of wrongful foreclosure, fails as a matter of law. 59
A.

Applicable Law

A motion

to

dismiss

Procedure 12(b) (6)

pursuant

to

Federal

Rule

of

Civil

for failure to state a claim for which relief

may be granted tests the formal sufficiency of the pleadings and is
"appropriate when a defendant attacks the complaint because it
fails

to

state

a

legally

cognizable

claim."

Ramming

v.

United States, 281 F.3d 158, 161 (5th Cir. 2001), cert. denied sub
nom Cloud v. United States, 122 S. Ct. 2665 (2002).

The court must

accept the factual allegations of the complaint as true, view them

58Motion to Dismiss, Docket Entry No. 13, p. 4.
59Id.

at 5-6.
-18-

in a light most favorable to the plaintiff, and draw all reasonable
inferences in the plaintiff's favor.

Id.

When a federal court reviews the sufficiency of a
complaint, before the reception of any evidence either by
affidavit or admissions, its task is necessarily a
limited one. The issue is not whether a plaintiff will
ultimately prevail but whether the claimant is entitled
to offer evidence to support the claims.
Swierkiewicz v. Sorema N.A., 122 S. Ct. 992,

997

Scheuer v.

(1974)).

Rhodes,

94

S.

Ct.

1683,

1686

(2002)

(quoting
To

avoid

dismissal a plaintiff must allege "enough facts to state a claim to
Bell Atlantic Corp.

relief that is plausible on its face."
Twombly, 127 S. Ct. 1955, 1974 (2007).

v.

Plausibility requires "more

than an unadorned, the-defendant-unlawfully-harmed-me accusation."
Ashcroft v.

Iqbal,

129 S.

Ct.

1937,

1949

(2009).

"A claim has

facial plausibility when the plaintiff pleads factual content that
allows

the

court

to

draw

the

reasonable

inference

that

defendant is liable for the misconduct alleged."
complaint

pleads

facts

defendant's

liability,

possibil i ty

and

(quoting Twombly,
omitted) .

relief."

it

are

127 S.

regarding

a

merely

stops

plausibility of

" [D] ismissal

allegation

that

short

entitlement

Ct.

at 1966)

is

proper

required

if

"Where a

consistent

of

the
to

the

with

line

a

between

reI ief . "

Id.

(internal quotation marks
the

element

complaint
necessary

lacks
to

an

obtain

Torch Liquidating Trust ex reI. Bridge Assocs. L.L.C. v.

Stockstill, 561 F.3d 377, 384 (5th Cir. 2009).

-19-

When considering a motion to dismiss courts are "limited 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.
L.P.

v.

Barclays Bank PLC/

594

Lone Star Fund V (U.S.),

1I

F.3d 383/387

(5th Cir.

2010)

(citing Collins v. Morgan Stanley Dean Witter/ 224 F.3d 496/ 498-99
(5th Cir. 2000)).
a 12 (b) (6)
record.
2007)

In addition/ "it is clearly proper in deciding

motion to take judicial notice of matters of public
Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir.

II

(citing Cinel v. Connick/ 15 F.3d 1338/ 1343 n.6

(5th Cir.

1994)).

When a party presents "matters outside the pleadingsll with

a

12 (b) (6)

Rule

motion

to

dismiss /

the

court

has

"complete

discretion ll to either accept or exclude the evidence for purposes
of the motion to dismiss.

Isquith ex rel. Isquith v. Middle South

Utilities, Inc./ 847 F.2d 186/ 194 n.3

(5th Cir. 1988).

However/

"[i]f . . . matters outside the pleadings are presented to and not
excluded by the

court /

the motion must

summary judgment under Rule 56
reasonable
pertinent

opportunity

to

to the motion.

II

11

be

treated as one

for

and "all parties must be given a

present
Fed.

R.

all
Civ.

the
P.

material
12 (d) .

that

is

Chase has

attached to its Motion to Dismiss copies of documents it contends
are the Deed of Trust 60 and Assignment of Deed of Trust. 61

Because

60Deed of Trust, Exhibit A to Motion to Dismiss/ Docket Entry
No. 13.
61Assignment of Deed of Trust/ Exhibit B to Motion to Dismiss/
Docket Entry No. 13.
-20-

these documents are referenced in Morlock's First Amended Complaint
and central to Morlock's claims, the court concludes that they can
be considered without converting the motion to dismiss to a motion
for summary judgment.

B.

Analysis

Morlock filed its First Amended Complaint on July 19, 2013,
seeking "a judgment which determines whether Defendant Chase is the
owner and holder of the Note and/or Deed of Trust and whether Chase
has any interest in the property.,,62
concerned that if it pays Chase,

Morlock asserts that it "is

it could be subject to double

exposure for the payment of the Note if Chase is not entitled to
payout. ,,63

Morlock admits "that there is a lien on the Property and

only seeks a Judicial Determination as to whether Chase has a right
to receive payment." 64

"Morlock is not seeking a determination that

its interest is superior to the Deed of Trust but only to determine
whether Chase is the holder of the Note which is secured by the
Deed of Trust. ,,65
Morlock's argument that Chase may not be entitled to enforce
the

Deed

of

Trust

relies

solely

on

its

assertion

that

the

Assignment of Deed of Trust "is invalid and of no force or effect

62Plaintiff's First Amended Complaint,
p. 3 ~ 11.

63Id.

~

8.

-21-

Docket Entry No.

11,

because,

on information and belief,

the person who signed the

assignment on behalf of MERS was not employed by MERS and that
person had no authority to endorse the Note and no authority to
execute

the

assignment. "66

Assignment of Deed of Trust. 67

MERS

is

never

mentioned

in

the

The parties, however, have made the

role of MERS a central feature of this litigation.
1.

The parties have made conflicting representations about
the role of MERS in securing and assigning the Deed of
Trust.

In its Original

Petition Morlock asserted that

"Alej andro

Mendoza and Iris N. Mendoza executed and delivered a Deed of Trust
to secure Mortgage Electronic Registration Systems, Inc.
nominee for Capstone Mortgage, L.P.') ."68

('MERS as

Morlock further asserted

that the Deed of Trust "was allegedly assigned to Defendant Chase
by [MERS]. "69

In its Answer "Chase admit [ted] that a Deed of Trust

was filed and recorded in Harris County,

Texas,

and that it was

assigned to Chase," but denied that it secured MERS or was assigned
by MERS. 70

66Id. at 2

~

6.

67Assignment of Deed of Trust, Exhibit B to Motion to Dismiss,
Docket Entry No. 13.
680riginal Petition, Exhibit B to
Removal, Docket Entry No. I, p. 2 ~ 6.

Defendant's

7°Defendant's Answer, Docket Entry No.6, p. 2
-22-

~

Notice

6.

of

Chase's 12(c) Motion stated that the Mendozas "executed a Deed
of Trust with lender Capstone Mortgage,
beneficiary under the Deed of Trust
lender)

.1171

Chase

attached to

its

and with

[MERS]

as the

(solely as nominee for the
12

(c)

Motion

"[a]

true and

correct copy of the Deed of Trust recorded in the Official Public
Record of Real Property of Harris County,

Texas. 1172

Chase also

asserted that "[t] he Deed of Trust was subsequently assigned to
Chase ll and attached "the Assignment recorded in the Official Public

Record of Real Property of Harris County, Texas. 1173

MERS is never

mentioned in either of the attached documents. 74
Apparently realizing that the Deed of Trust did not secure
MERS, as alleged in its Original Petition, Morlock alleges in its
First Amended Complaint that "Alej andro Mendoza and Iris N. Mendoza
executed and delivered a Deed of Trust to secure Capstone Mortgage,
L.p.1I75

However, Morlock also alleges that" [t]he Deed of Trust was

71Chase's 12(c) Motion, Docket Entry No.8, p. 2.
72Id.; Deed of Trust, Exhibit A to Chase's 12(c) Motion, Docket
Entry No.8.
73Chase's 12 (c) Motion, Docket Entry No.8, pp. 2-3; Assignment
of Deed of Trust, Exhibit B to Chase's 12(c) Motion, Docket Entry
No.8.
74Deed of Trust, Exhibit A to Chase's 12(c) Motion, Docket
Entry No.8; Assignment of Deed of Trust, Exhibit B to Chase's
12(c} Motion, Docket Entry No.8.
75Plaintiff's First Amended Complaint,
p. 2 ~ 5.

-23-

Docket Entry No.

11,

allegedly assigned to Defendant Chase not by Capstone Mortgage,
L.P., but by [MERS]

II 76

In its Motion to Dismiss,

Chase asserts that the Mendozas

uexecuted a Deed of Trust with lender Capstone Mortgage, and with
[MERS]
nominee

as

the

for

Trust. 78

beneficiary under the Deed of

the

Chase

subsequently

lender)
also

assigned

1177

and attaches a

asserts
to

that

Chase" 79

U[t]he

and

Trust

copy of
Deed

attaches

(solely as
the Deed of

of
a

Trust

copy

of

was
the

Assignment of Deed of Trust.so
In its Response to Chase's Motion to Dismiss, Morlock asserts
that the Deed of Trust usecured a Note executed by Alejandro and
Iris Mendoza and payable to Capstone Mortgage, L.P." and that it
U
was purportedly assigned to Chase by one or more assignments
signed by [MERS]. 1181

A review of the Deed of Trust and Assignment

of Deed of Trust, attached to Chase's Motion to Dismiss,

reveals

that neither party has an accurate grasp of the underlying facts
regarding the Deed of Trust and its assignment.

76Id.
77Motion to Dismiss, Docket Entry No. 13, p. 2.
7SDeed of Trust, Exhibit A to Motion to Dismiss, Docket Entry
No. 13.
79Motion to Dismiss, Docket Entry No. 13, p. 3.
SOAssignment of Deed of Trust, Exhibit B to Motion to Dismiss,
Docket Entry No. 13.
81Plaintiff's Response to Defendant's Rule 12 Motion, Docket
Entry No. 15, p. 3 ~~ 13-14.
-24-

2.

MERS is never mentioned in either the Deed of Trust or
Assignment of Deed of Trust.

The

Deed

of

Trust

identifies

Mortgage, LpH and states that the
this

Security

~Thomas

F.

Instrument.

Vet ters.

H

H

~Lender

The

82

the

as

~LenderH

~Capstone

is the beneficiary under

~TrusteeH

is

identified

as

MERS is never mentioned in the Deed of

83

Trust, nor is there any language to indicate that anyone other than
Capstone

Mortgage,

L.P.

is

the

beneficiary.84

There

indication that MERS or any other entity is acting as
the lender.

H

is

no

~nominee

for

85

Similarly, MERS is never mentioned in the Assignment of Deed
of

Trust. 86

Instead,

the

assignor

Mortgage, LpH and the assignee as

is

identified as

~JPMorgan

~Capstone

Chase Bank, N .A. H87

The

signature on the Assignment of Deed of Trust is that of Alberto
Rios, as Capstone Mortgage, L.P.'s
~personally

known

to

[the

~duly

notary]

to

authorized officer[]H and
be

the

individual

that

82Deed of Trust, Exhibit A to Motion to Dismiss, Docket Entry
No. 13, pp. 1-2.
83Id. at 2.
84Id. at 1-2.
B5Cf. Original Petition, Exhibit B to Defendant's Notice of
Removal, Docket Entry No.1, p. 2 ~ 6; Chase's 12(c) Motion, Docket
Entry No.8, p. 2; Motion to Dismiss, Docket Entry No. 13, p. 2.
86Assignment of Deed of Trust, Exhibit B to Motion to Dismiss,
Docket Entry No. 13.

-25-

executed the [Assignment]. 1188
was]

of

Capstone

Alberto Rios "acknowledged that [he

Mortgage,

Lp.

and

that

[he]

executed

the

[Assignment] and affixed its seal as its duly authorized officer[]
and that

such execution was done as the free

Capstone Mortgage, Lp.
Furthermore,
states

that

it

II

act and deed of

89

the Assignment of Deed of Trust specifically
assigns

"the

described

deed

of

trust

and any

modifications, bearing the date of February 1, 2008, together with
the certain note(s) described therein with all interest, all liens,
and any rights due or to become due thereto to:
Bank, N. A .
Trust

are

II

Both the Deed of Trust and Assignment of Deed of

90

attached

Morlock's claims,
Complaint.

to

the

Motion

record,

to

Dismiss,

are

central

to

and are referenced in Morlock's First Amended

They are therefore properly considered in deciding

Chase's Motion to Dismiss.
Collins,

JPMorgan Chase

224 F.3d at 498-99.

Lone Star Fund,

594

F.3d at

387;

They are also "matters of public

having been filed in Public Records of Harris County,

Texas," and therefore "may properly be considered in connection
with a Rule 12(b) (6) Motion to Dismiss."
of

America,

N.A.

("Morlock

v.

BOA") ,

WL 1640895, at *2 (S.D. Tex. May 8, 2012)
at 454) .

S8Id. at 1-2.
89Id. at 2.
9OId. at

l.

-26-

Morlock, L.L.C. v. Bank
No.

H-12-0364,

2012

(citing Norris, 500 F.3d

3.

Morlock's action for declaratory relief fails because
Morlock has not advanced a plausible cause of action
under any other substantive law.

"When a declaratory judgment action is filed in state court
and is subsequently removed to federal court,

it is converted to

one brought under the federal Declaratory Judgment Act."
Bank of America Home Loan Servicing LP, No.
WL

568755,

at

*8

(S.D.

Tex.

Feb.

21,

Bell v.

4:11-CV-02085,

2012).

The

2012

federal

Declaratory Judgment Act does not create a substantive cause of
action but, instead, is merely a procedural vehicle that allows a
party to obtain an early adj udication of an actual controversy
arising under other substantive law.
Hartford,

Conn.

v.

Haworth,

57 S.

See Aetna Life Ins. Co. of

Ct.

461,

463

(1937)

i

Lowe v.

Ingalls Shipbuilding, 723 F.2d 1173, 1178 (5th Cir. 1984).
While it is clear that Morlock seeks a declaratory judgment as
to whether Chase "is the owner and holder of the Note and/or Deed
of Trust,

"91

attempts

it is unclear what substantive cause of action Morlock

to

assert

acknowledges

"that

in

its

there

First
is

a

Amended
lien

on

Complaint.
the

Morlock

Property"

and

specifically states that it "is not seeking a determination that
its interest is superior to the Deed of Trust."92
forecloses any plausible quiet-title claim.
Metlife Home Loans, L.L.C.

9lPlaintiff's First Amended Complaint,
d .

~~

See Morlock, L. L. C. v.

("Morlock v. Metlife"), No. 13-20132,

p. 3 ~ 1I.
92 I

This admission

9 -1 0 .

-27-

Docket Entry No.

11,

2013 WL 4844713, at *2 (5th Cir. Sept. 12, 2013)

(uBecause Morlock

does not challenge the Deed of Trust's validity or otherwise assert
title superior to that of Chase or MERS, Morlock fails to advance
a plausible quite-title claim.
Morgan Chase Bank,

N.A.

11

(quoting Morlock,

(UMorlock v. JPMC"),

WL 2422778, at *2 (5th Cir. June 4, 2013))).

No.

L.L.C. v. JP

12-20623,

2013

Yet, in its Response

to Chase's Motion to Dismiss, Morlock asserts that its uaction to
determine the right[s]

of the parties and to strike any interest

Defendant may have in the Property certainly states a cause of
action to remove a cloud on title." 93
(a)

Morlock fails to assert a plausible quiet-title
action in its First Amended Complaint.

U[T] he goal of a suit to quiet title is to clear title to
property from clouds or encumbrances."
305 (Tex. 2011)

In re Puig, 351 S.W.3d 301,

(citing Thomson v. Locke, 1 S.W. 112, 115 (1886)).

"In a Texas quiet title action,

\ [t]he plaintiff must prove, as a

matter of

right of ownership and that

law,

that he has

adverse claim is a
Morlock,
No.

a

cloud on title that equity will

the

remove.'

11

L.L.C. v. Bank of New York Mellon Trust Company, N.A.,

12-20832,

2013

WL 3971517,

at

*1

(5th Cir.

Aug.

5,

2013)

(quoting Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388
(Tex. App.-Houston [1st Dist.] 2012, pet. denied)).

UA plaintiff

in a suit to quiet title must prove and recover on the strength of

93Plaintiff's Response to Defendant's Rule 12 Motion, Docket
Entry No. 15, p. 8 ~ 40.
-28-

his own title
v. Hancock

not the weakness of his adversary/s title. 1I

l

S.W.3d 322

45

l

1

327 (Tex. App.-Corpus Christi 2001

In its First Amended Complaint

pet.) .

Fricks

I

1

no

Morlock neither contests

the Deed of Trust/s validity nor suggests that its own interest is
superior to the Deed of Trust. 94
2422778

at

1

"Instead

*2.

l

it

See Morlock v.
challenges

JPMC

the validity of

assignment of the Deed of Trust from MERS to Chase. 95

MERS is never mentioned in either the Deed of

l

Trust or Assignment of Deed of Trust.

The Assignment of Deed of

Trust clearly identifies the assignor as "Capstone Mortgage
Morlock does
support

not

its assertion that

Lp.1I

"[t] he Deed of Trust was allegedly
I

L.P.

I

but by

The Deed of Trust and Assignment of Deed of Trust were

.1196

attached to Chase s

12 (c)

Amended

and

I

Complaint 97
I

Dismiss. 98

Motion
again

filed before Morlock s
l

l

attached

to

Chase/s

First

Motion

to

Morlock amended its Complaint to identify the secured

94Plaintiff s First Amended Complaint
p. 3 ~~ 9-10.
I

95rd. at 2
96rd.

I

cite or attach any relevant documentation to

assigned to Defendant Chase not by Capstone Mortgage
[MERS]

the

Id.

II

As noted above

2013 WL

I

~

~~

I

Docket Entry No.

111

5-6.

5.

97Deed of Trust
Exhibi t A to Chase s 12(c) Motion Docket
Entry No.8; Assignment of Deed of Trust
Exhibit B to Chase/s
12(c) Motion Docket Entry No.8.
I

I

l

I

l

98Deed of Trust Exhibit A to Motion to Dismiss Docket Entry
No. 13; Assignment of Deed of Trust
Exhibit B to Motion to
Dismiss Docket Entry No. 13.
I

l

I

l

-29-

party as Capstone Mortgage, L.P., rather than MERS.99

Nonetheless,

Morlock continues to assert that MERS assigned the Deed of Trust to
Chase.

In light of the unequivocal language in the Assignment of

Deed of Trust identifying the assignor as Capstone Mortgage, L.P.,
Morlock's assertions regarding MERS are baseless and without merit.
Furthermore,
Chase

or MERS

Morlock's

has

argument

authority

to

"merely questions

enforce

the

Deed of

whether
Trust.

II

"Because Morlock does not challenge the Deed of Trust's validity or
otherwise assert title superior to that of Chase or MERS, Morlock
fails

to advance a

plausible quiet-title claim.

Id.

II

(citing

Fricks, 45 S.W.3d at 327).
(b)

Morlock fails to allege a plausible action for
wrongful foreclosure.

Morlock fares

no better to the extent

that

its claim for

declaratory judgment is based on a theory of wrongful foreclosure.
"Under a theory of wrongful foreclosure,

Morlock can make Chase

prove

Morlock v.

it

has

WL 2422778,
S.W.3d 79,

standing

at *2
84

to

foreclose.

II

JPMC,

(citing Martin v. New Century Mortg. Co.,

(Tex.

App.-Houston

[1st Dist.]

2012,

2013
377

no pet.)).

Chase has presented evidence of standing through a facially valid
assignment, which was signed by Alberto Rios as Capstone Mortgage,
L. P. ' s "duly authorized officer []

11100

and "recorded in the Official

99Plaintiff's First Amended Complaint,

Docket Entry No.

11,

p. 2 ~ 5.

lOOAssignment of Deed of Trust, Exhibit B to Motion to Dismiss,
Docket Entry No. 13.
-30-

Public Record of Real Property of Harris County, Texas." 101

See id.

Because "[r]eal Property records often contain transfers taking
place many years in the past[,] . . . Texas 'view[s] with suspicion
and distrust attempts to discredit certificates of acknowledgment, '
under which the transfer is presumptively valid and contradicting
evidence 'must be clear, cogent, and convincing beyond reasonable
controversy. '"

rd.

(quoting Ruiz v.

Stewart Mineral Corp.,

202

S.W.3d 242, 248 (Tex. App.-Tyler 2006, pet. denied)).
Morlock fails to plead any facts remotely approaching this
standard.

Morlock asserts that although the Assignment of Deed of

Trust appears valid on its face, it "is invalid and of no force or
effect because, on information and belief, the person who signed
the assignment on behalf of MERS was not employed by MERS and that
person had no authority to endorse the Note and no authority to
execute the assignment.

11102

Morlock is correct that the person who

signed the Assignment of Deed of Trust was not employed by MERS -he was the "duly authorized officer []

II

of Capstone Mortgage, L. P .103

He did not sign the assignment on behalf of MERS, but on behalf of
Capstone Mortgage, L.P., whom Morlock admits was properly secured
by the Deed of Trust. 104

Morlock presents no facts impugning the

lOlMotion to Dismiss, Docket Entry No. 13, p. 3.
l02Plaintiff's First Amended Complaint, Docket Entry No.

11,

p. 2 ~ 6.

l03Assignment of Deed of Trust, Exhibit B to Motion to Dismiss,
Docket Entry No. 13.
l04Plaintiff's First Amended Complaint, Docket Entry No.
p. 2 ~ 5.

-31-

11,

agreement between Capstone Mortgage, L.P. and Chase apart from the
bare assertion that the "person who signed the assignment . . . had
no authority to endorse the Note and no authority to execute the
assignment.,,105

See Morlock v. JPMC, 2013 WL 2422778, at *2.

"This

'naked assertion[] devoid of further factual enhancement' fails to
state a plausible claim for relief."

rd. (citing Iqbal, 129 S. Ct.

at 1949).
In seeking "to determine whether Chase is the holder of the
Note which is

secured by the Deed of Trust,"

it

appears

that

Morlock is attempting to argue that bifurcation of the Note and
Deed of Trust renders the Deed of Trust invalid. 106

Not only is

this "split-the-note" theory without merit, the Assignment of Deed
of Trust establishes that there was no bifurcation of the Note and
Deed of Trust in this case.
The

"split-the-note"

theory posits that

"the

'transfer of

[the] deed of trust . . . "splits" the note from the deed of trust,
thus rendering both null. ,,,
No.

12-51039,

Wiley v. Deutsche Bank Nat. Trust Co.,

2013 WL 4779686,

at *1

(5th Cir.

Sept.

6,

2013)

(quoting Martins v. BAC Home Loans Servicing. L.P., 722 F.3d 249,
254

(5th Cir. 2013))

"In order to foreclose, the theory goes, a

party must hold both the note and the deed of trust."
Martins, 722 F.3d at 254).

However,

Id.

(quoting

"Texas courts have explained

on multiple occasions that a note and a deed of trust constitute

105Id.
106Id. at 3 ~ 10 i Motion to Dismiss, Docket Entry No. 13, p. 4.
-32-

separate actions.

1I

Id. at *2.

"It is so well settled as not to be

controverted that the right to recover a personal judgment for a
debt secured by a lien on land and the right to have a foreclosure
of lien are severable, and a plaintiff may elect to seek a personal
judgment without foreclosing the lien, and even without a waiver of
the lien.1I

Martins,

722 F.3d at 255

(quoting Carter v. Gray, 81

S.W.2d 647, 648 (Tex. Comm'n App. 1935)).
"The

duality

of

the

lien

and

the

note

means

that

the

beneficiary of the lien can be different from the holder of the

note.

1I

"'The party to foreclose

Wiley, 2013 WL 4779686, at *2.

need not possess the note itself.'

So long as it is a beneficiary

named in the deed of trust or an assign,

that party may exercise

its authority even if it does not hold the note itself.
(internal citations omitted)

/I

Id.

(quoting Martins, 722 F.3d at 255).

Thus, "the split the note theory is . . . inapplicable under Texas
law where the foreclosing party is a
has been properly assigned./I
255)
at

Id.

[mortgagee] and the mortgage

(quoting Martins,

(internal quotation marks omitted)
255

("A

deed

of

trust

'gives

i

722 F.3d at

see also Martins, 722 F.3d

the

lender

as

well

as

the

beneficiary the right to invoke the power of sale,' even though it
would not be possible for both to hold the note. 1I

(quoting Robeson

v. Mortgage Elec. Registration Sys./ Inc., No. 02-10-00227-CV, 2012
WL 42965, at *6 (Tex. App.-Fort Worth Jan. 5, 2012, pet. denied))).
In this case the Assignment of Deed of Trust specifically
states

that

it

assigns

"the

described
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deed

of

trust

and any

modifications, bearing the date of February I, 2008, together with
the certain note(s) described therein with all interest, all liens,
and any rights due or to become due thereto to:
Bank, N. A.

11107

JPMorgan Chase

Thus, there was no bifurcation of the note and Deed

of Trust in this case.

See, e.g., Reinagel v. Deutsche Bank Nat'l

Trust Co., 722 F.3d 700, 705-09 (5th Cir. 2013).
In Reinagel the plaintiff-homeowners sought declaratory and
injunctive relief on the basis that the assignee of their mortgage
lacked standing to foreclose.

Id. at 703-05.

The Fifth Circuit

analyzed the effect of two mortgage assignments challenged by the
plaintiff-homeowners,

noting that "the first instrument assigned

only the deed of trust, whereas the second instrument assigned both
the deed of trust and 'the certain note(s) described therein. '"
Id. at 705.

The court ultimately held that the second assignment

was valid against the plaintiffs and "reaffirm [ed] that under Texas
law,

facially valid assignments cannot be challenged for want of

authority except by the defrauded assignor."
Here,

the

Assignment

instrument in Reinagel,

of

Deed

of

Id. at 707-09.

Trust,

like

the

second

assigns both the Deed of Trust and "the

certain note(s) described therein with all interest, all liens, and
any rights due or to become due thereto. 11108
Al though Morlock would have standing to

See id.

"defend

at 703.

\ on any ground

l07Assignment of Deed of Trust, Exhibit B to Motion to Dismiss
Docket Entry No. 13, p. 1.

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t

which renders the assignment void,'"

its challenge based on the

signer's alleged lack of authority would render the assignment,
"like any other unauthorized contract,
voidable at

[]

not void,

but merely

the election of the defrauded principal."

Id.

at

705-06 (quoting Tri-Cities Const., Inc. v. Am. Nat. Ins. Co., 523
s.w.2d

426,

430

Thus,

writ) ) .

accepted as

(Tex.
the

true,

challenge the .

Civ.

signer's
does

not

App.-Houston
"alleged
furnish

assignment."

[1st

lack of

[Morlock]

Dist.]

1975,

authority,
with a

no

even

basis

to

rd. at 707.

Morlock asserts that it is "concerned that if it pays Chase,
it could be subject to double exposure for the payment of the Note
if Chase is not entitled to payout. "109
Inc.,

523 S. W. 2d at 430

See Tri-Cities Const.,

(" [T] he only interest or right which an

obligor of a claim has in the instrument of assignment is to insure
himself that he will not have to pay the same claim twice.").
However,

"[b]ecause Morlock is not a borrower under the purchase-

money mortgage secured by the Deed of Trust, it does not stand to
incur any liability under the note as a result of the foreclosure.
Morlock v. JPMC, 2013 WL 2422778, at *2 n.4.

"Tellingly,

II

[Morlock]

has not even joined MERS or [Capstone Mortgage, L.P.] as a party in
this case; any judgment in this case would thus not be binding upon
them."

Id.

l09Plaintiff's First Amended Complaint, Docket Entry No.
p. 3 ~ 8.

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II,

(c)

Without a plausible cause of action under other
substantive law, Morlock's claim for declaratory
relief must fail as a matter of law.

Morlock conspicuously fails to clearly assert a substantive
cause of action in its First Amended Complaint, although its claim
for declaratory judgment appears to be based loosely on a theory of
wrongful

foreclosure.

In it's Response to Chase's Motion to

Dismiss,

Morlock asserts

110

that

it

is

seeking

"to determine

the

validity of liens against its own property" and "to remove a cloud
on title," suggesting that it intends to assert a quiet-title claim
against

Chase. 111

For

the

reasons

explained

above,

the

court

concludes that Morlock has failed to allege any facts that would
support either claim.
and

continuing

Accordingly,

controversy

between

there is not "'a substantial
two

adverse

parties'"

and

"[t]herefore, any request that Morlock is making for declaratory
judgment must fail."

See Morlock, L.L.C. v. JP Morgan Chase Bank,

N.A.,

No.

2012 WL 3187918,

2012)

(quoting Bauer v. Texas, 341 F.3d 352, 358 (5th Cir. 2003)).
IV.

H-12-1448,

at *7

(S.D.

Tex. Aug.

2,

Morlock's Motion for Leave to Amend Complaint

Morlock's Motion for Leave to Amend Complaint is included with
its Response to Chase's Motion to Dismiss. 112

l1°rd. at 2-3

~~

Morlock has already

6-11.

111Plaintiff's Response to Defendant's Rule 12 Motion, Docket
Entry No. 15, pp. 6, 8 ~~ 29, 40.
112rd. at 8-9

~~

41-44.
-36-

amended

its

complaint

once

and has

neither

shown how another

amendment would state a claim nor attached a copy of its proposed
amended complaint.

The court concludes that another amendment

"cannot overcome the contents of the Deed of Trust [ or] the assignment of the Deed of Trust" and any amendment would therefore be
futile.
v.

Morlock v. BOA, 2012 WL 1640895, at *2; see also Morlock

Metlife,

2013 WL 4844713,

at *2

(holding that

"the district

court did not abuse its discretion in denying leave to amend the
complaint, as any amendment would have been futile"); Morlock v.
JPMC,

2013 WL 2422778, at *2 n.5

("Morlock fails to present any

evidence or arguments to suggest that a second amended complaint
would not have been futile."); Stripling v. Jordan Prod. Co., LLC,
234 F.3d 863, 872-73

(5th Cir. 2000)

("It is within the district

court's discretion to deny a motion to amend if it is futile.");
Morlock, LLC v. JPMorgan Chase Bank, N.A., No. 4:12-CV-03648, 2013
WL 5231498, at *5 (S.D. Tex. Sept. 13, 2013)

("[G]iven the contents

of the public records relative to the Property at issue in this
case, . . . Morlock cannot cure the defect in its pleadings with an
amendment.

In addition, given the rejection, by numerous courts,

of the exact type of claims asserted by Morlock in this case, both
before and after amendment, there is no reasonable likelihood that
Morlock

could,

re 1 i e f . ") .

through

Therefore,

amendment,
Morlock's

Complaint will be denied.

-37-

state
Motion

a

viable

for

Leave

claim
to

for

Amend

V.

Conclusions and Order

For the reasons explained above, Morlock's Motion to Remand
(Docket Entry No.
(Docket Entry No.

12)

and Motion for Leave to Amend Complaint

15 at p.

8)

are DENIED,

Chase's Rule 12(b) (6)

Motion to Dismiss (Docket Entry No. 13) is GRANTED, and this action
will be dismissed with prejudice.
SIGNED at Houston, Texas, on this 25th day of October, 2013.

SIM LAKE
UNITED STATES DISTRICT JUDGE

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