Valdez v. SunTrust Mortgage, Inc. et al

Filing 9

MEMORANDUM AND ORDER. ORDERED that Defendants Motion to Dismiss (Doc. # 6 ) is GRANTED. It is further ORDERED that Plaintiffs claims are DISMISSED WITHOUT PREJUDICE. Plaintiff is granted leave to file an Amended Complaint on or before January 27, 2 014. If Plaintiff fails to amend her pleading by that date, the Court will dismiss this case with prejudice. It is further ORDERED that Plaintiff and counsel may not plead a claim for which Plaintiff has no good faith factual and legal basis. See FED. R.CIV. P. 11(b); 28 U.S.C. § 1927. Amended Pleadings due by 1/27/2014. (Signed by Judge Nancy F. Atlas) Parties notified.(gkelner, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
LUCIA T. VALDEZ,
Plaintiff,
v.
SUNTRUST MORTGAGE, INC.,
et al.,
Defendants.

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CIVIL ACTION NO. H-13-3439

MEMORANDUM AND ORDER
This foreclosure case is before the Court on the Motion to Dismiss [Doc. # 6]
filed by Defendants SunTrust Mortgage, Inc. (“SunTrust”), Federal Home Loan
Mortgage Corporation (“Freddie Mac”), and Mortgage Electronic Registration
Systems, Inc. (“MERS”). Plaintiff Lucia T. Valdez filed a Response [Doc. # 7], and
Defendants filed a Reply [Doc. # 8]. Having reviewed the full record and applicable
legal authorities, the Court grants the Motion to Dismiss.
I.

BACKGROUND
In 2008, Plaintiff executed a Promissory Note (“Note”) in connection with the

purchase of real property in Houston, Texas. The Note is secured by a Deed of Trust,
identifying Plaintiff as the Borrower, SunTrust as the Lender, and MERS as “a
nominee for Lender and Lender’s successors and assigns” and as “the beneficiary
under this Security Instrument.” See Deed of Trust, Exh. B to Plaintiff’s Response.

Michael C. Barrett was named as the Trustee, and the Deed of Trust was recorded in
Harris County.
In 2011, MERS, as the original nominee for SunTrust, its successors and
assigns, and as beneficiary, assigned the Deed of Trust to SunTrust. See Corporate
Assignment of Deed of Trust, Exh. C to Plaintiff’s Response. The Assignment was
recorded in Harris County.
Plaintiff defaulted on the Note and SunTrust posted the Property for
foreclosure. Foreclosure proceeded in February 2013, and Freddie Mac purchased the
property at that time. See Substitute Trustee’s Deed dated February 14, 2013, Exh.
M to Plaintiff’s Response.
On October 30, 2013, Plaintiff filed this lawsuit in the 215th Judicial District
Court of Harris County, Texas. Plaintiff asserted a claim for declaratory judgment,
a wrongful foreclosure claim based on the assertion that SunTrust lacked standing to
foreclose, and a claim to quiet title. On November 20, 2013, Defendants filed a timely
Notice of Removal. Defendants then filed their Motion to Dismiss, which has been
fully briefed and is ripe for decision.
II.

STANDARD FOR MOTION TO DISMISS
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil

Procedure is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d

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770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d
141, 147 (5th Cir. 2009)). The complaint must be liberally construed in favor of the
plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563
F.3d at 147. The complaint must, however, contain sufficient factual allegations, as
opposed to legal conclusions, to state a claim for relief that is “plausible on its face.”
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d
614, 617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court
should presume they are true, even if doubtful, and then determine whether they
plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679.
In considering a motion to dismiss, a court must ordinarily limit itself to the
contents of the pleadings and attachments thereto. Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498 (5th Cir. 2000) (citing FED. R. CIV. P. 12(b)(6)).
Documents that are submitted in connection with a motion to dismiss may be
considered if they are referred to in the complaint and are central to her claim. Id.
(quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir.
1993)); see also Kane Enters. v. MacGregor (USA), Inc., 322 F.3d 371, 374 (5th Cir.
2003). These are documents presumably whose authenticity no party questions. See
Walch v. Adjutant General’s Dep’t of Tex., 533 F.3d 289, 294 (5th Cir. 2008) (on a
Rule 12(b)(6) motion, documents attached to the briefing may be considered by the

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Court if the documents are sufficiently referenced in the complaint and no party
questions their authenticity).
III.

ANALYSIS
A.

Declaratory Judgment Claim

Plaintiff seeks a declaratory judgment that SunTrust had no authority to
foreclose on the Deed of Trust and that Plaintiff is entitled to exclusive possession of
the property. The documents attached to Plaintiff’s Response, however, demonstrate
that SunTrust was the assignee of the Deed of Trust and had authority to foreclose.
Plaintiff’s documents show that MERS was the original beneficiary under the
Deed of Trust. As the original beneficiary under the Deed of Trust, MERS is an
original mortgagee. See Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 342 (5th Cir.
2013). As the beneficiary of the Deed of Trust, MERS had the right to foreclose and
sell the Property upon default. See id. (citing TEX. PROP. CODE § 51.0001(4)(A)).
Under the Deed of Trust, MERS has the authority to assign its rights. See Deed of
Trust, Exh. B to Plaintiff’s Response; See also Wilson v. Bank of New York Mellon,
2013 WL 5273328, *6 (N.D. Tex. Sept. 18, 2013) (citing TEX. PROP. CODE
§ 51.0001(4)(A)).
MERS had the right, pursuant to the Deed of Trust, to assign its rights
thereunder. See id., ¶ 20. MERS exercised that right in 2011, assigning the Deed of

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Trust to SunTrust.1 See Corporate Assignment of Deed of Trust, Exh. C to Response.
After the assignment from MERS, SunTrust became the new mortgagee and acquired
all of MERS’s rights under the Deed of Trust. See Wilson, 2013 WL 2573328 at *6.
As a result, SunTrust had the right to foreclose under the Deed of Trust, and Plaintiff’s
declaratory judgment claim is dismissed.
B.

Wrongful Foreclosure Claim

“The three elements of a wrongful foreclosure are (1) a defect in the foreclosure
sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection
between the two.” Martins v. BAC Home Loans Servicing, 722 F.3d 249, 256 (5th
Cir. 2013). Plaintiff has failed to allege a grossly inadequate selling price. Indeed,
Plaintiff alleges and her evidence submitted with her Response show that Plaintiff
paid $278,350.00 for the property. See Original Petition [Doc. # 1-1], ¶ 23; General
Warranty Deed, Exh. A to Response. At foreclosure, the property was sold to Freddie
Mac for $266,900.00. See Original Petition, ¶ 11; Substitute Trustee’s Deed, Exh. M

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Plaintiff challenges the validity of the assignment, asserting that the individual who
signed the assignment on behalf of MERS was an employee of SunTrust, and that her
signature on the assignment in this case appears was “robo-signed.” See Original
Petition [Doc. # 1-1], ¶¶ 33-36. Even if these allegations were true, the assignment
would be merely voidable, not void. See Reinagel v. Deutsche Bank Nat’l Trust Co.,
722 F.3d 700, 706–07 (5th Cir. 2013); Nobles v. Marcus, 533 S.W.2d 923, 926 (Tex.
1976) (holding that a contract executed by a person falsely claiming to be a corporate
officer is voidable by the defrauded corporation). Because the alleged deficiencies
in the assignment would render it voidable, Plaintiff has no standing to challenge
MERS's assignment. See Reinagel, 722 F.3d at 706-07.
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to Response.

Plaintiff has failed to plead (or demonstrate in the face of

incontrovertable evidence) that the price paid at foreclosure was grossly inadequate.
Plaintiff’s wrongful foreclosure claim is legally insufficient.
C.

Quiet Title Claim

To recover on a claim to quiet title, Plaintiff must prove that she has superior
title to the property over Defendants. Rogers v. Ricane Enters., 884 S.W.2d 763, 768
(Tex. 1994). The suit “relies on the invalidity of the defendant’s claim to the
property” and “exists to enable the holder of the feeblest equity to remove from his
way to legal title any unlawful hindrance having the appearance of better right.”
Gordon v. West Houston Trees, Ltd., 2011 WL 1598790, *7 (Tex. App. – Houston
[1st Dist.] 2011) (internal quotation marks and citations omitted) (emphasis added).
For the reasons set forth above, Plaintiff’s evidence shows that SunTrust was the
assignee of the Deed of Trust. As the assignee of the Deed of Trust, SunTrust had the
authority to foreclose on the property. Plaintiff has, therefore, failed to state a viable
quiet title claim.
IV.

CONCLUSION AND ORDER
For the foregoing reasons, it is hereby
ORDERED that Defendants’ Motion to Dismiss [Doc. # 6] is GRANTED. It

is further

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ORDERED

that

Plaintiff’s

claims

are

DISMISSED

WITHOUT

PREJUDICE. Plaintiff is granted leave to file an Amended Complaint on or before
January 27, 2014. If Plaintiff fails to amend her pleading by that date, the Court will
dismiss this case with prejudice. It is further
ORDERED that Plaintiff and counsel may not plead a claim for which Plaintiff
has no good faith factual and legal basis. See FED. R. CIV. P. 11(b); 28 U.S.C. § 1927.
SIGNED at Houston, Texas, this

10th

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day of January, 2014.