Bynane v. The Bank of New York Mellon, As Trustee for CWMBS, Inc. Asset-Backed Certificates Series 2006-24 et al
MEMORANDUM AND ORDER GRANTED 5 MOTION to Dismiss Plaintiff's Complaint and their Memorandum of Law in Support of their Motion to Dismiss, 9 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM. It is furtherORDERED that any and all restrainin g orders entered while the case was pending in Texas state court are VACATED. It is furtherORDERED that any motions relating to Guzmans counterclaim against Plaintiff, and any motions for an award of attorneys fees, must be filed by January 22, 2016.(Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
THE BANK OF NEW YORK
MELLON, Trustee, et al.,
December 15, 2015
David J. Bradley, Clerk
CIVIL ACTION NO. H-15-2901
MEMORANDUM AND ORDER
This case is before the Court on the Motion to Dismiss [Doc. # 5] filed by
Defendants Bank of New York Mellon (“BONY”), Bank of America, N.A. (“BOA”),
and Mortgage Electronic Registration Systems, Inc. (“MERS”) (collectively, the
“Bank Defendants”), to which Plaintiff Michael Bynane filed a Response in
Opposition [Doc. # 10], and the Bank Defendants filed a Reply [Doc. # 15]. Also
pending is the Motion to Dismiss [Doc. # 9] filed by Defendant David Guzman, to
which Plaintiff filed a Response in Opposition [Doc. # 17], and Guzman filed a Reply
[Doc. # 20].
The Court has reviewed the full record in this case, as well as the record in
Plaintiff’s prior lawsuit, Bynane v. Bank of New York Mellon, et al., Civil Action No.
H-15-1249. Based on this review and the application of binding and persuasive legal
authorities, the Court grants the Motions to Dismiss and dismisses Plaintiff’s claims
against Defendants with prejudice. Guzman’s counterclaim against Plaintiff remains
Plaintiff Michael Bynane owned a condominium in Houston, Texas (the
“Property”). On November 2, 2006, Plaintiff executed a Texas Home Equity Note
(the “Note”) in the principal amount of $135,000.00. See Note, Exh. A to Bank
Defendants’ Motion to Dismiss. The Lender was Countrywide Home Loans, Inc. and,
in the Note, Plaintiff promised to pay the principal amount, plus interest. See id., ¶ 1.
In the Note, Plaintiff represented that he understood “that the Lender may transfer this
Note.” See id. Plaintiff agreed to pay “principal and interest by making payment
every month” in the amount of $1,172.27. See id., ¶ 3. Plaintiff agreed in the Note
that if he failed to pay the full monthly payment on the date it was due, he would be
in default. See id., ¶ 6. Plaintiff agreed that the terms of the Note could not be
“contradicted by evidence or prior, contemporaneous, or subsequent oral agreements
of the parties.” Id., ¶ 12.
The Note was secured by a Texas Home Equity Security Instrument (the “Deed
of Trust”). In the Deed of Trust, Countrywide Home Loans, Inc. is the “Lender” and
CTC Real Estate Servicing is the Trustee. See Deed of Trust, Exh. A to Original
Petition (“Complaint”), p. 1. Defendant MERS is “acting solely as a nominee for
Lender and Lender’s successors and assigns.” Id. at 2. The beneficiary under the
Deed of Trust is MERS “and the successors and assigns of MERS.” Id. In the Deed
of Trust, signed by Plaintiff and Kathryn Bynane, Plaintiff agreed to “pay when due
the principal of, and interest on, the debt evidenced by the Note and any late charges
due under the Note.” See id. at 3. The Deed of Trust provided that if Plaintiff failed
to perform as agreed, the Lender and the Trustee were authorized to foreclose on the
Property and sell it at foreclosure. See id. at 10-11. The Deed of Trust was filed in
the Harris County Real Property Records on November 16, 2006.
On January 20, 2012, MERS assigned all beneficial interest in the Deed of
Trust to BONY. See Assignment of Deed of Trust (“Assignment”), Exh. B to
Complaint. The Notary Public certified under penalty of perjury that Dominique
Johnson personally appeared, provided satisfactory evidence that she was the person
signing the Assignment, and acknowledged that she executed the Assignment in her
authorized capacity. See id. The Assignment was filed in the Harris County Real
Property Records on January 31, 2012.
Plaintiff failed to make the August 1, 2013 payment under the Note, and has
been in default since that date. On June 19, 2013, BONY gave Plaintiff Notice of
Default. When Plaintiff failed to cure the default, BONY accelerated the Note on
January 30, 2014.
Foreclosure And Sale of the Property
Pursuant to Texas Rule of Civil Procedure 736, BONY applied for a judicial
order to proceed with foreclosure and sale.1 Plaintiff, after receiving proper notice of
the Rule 736 proceeding, failed to file any opposition to the request and failed to
appear for the hearing. By Order entered June 23, 2014, the state court granted
BONY’s application and allowed the foreclosure to proceed. See Order to Proceed
With Notice of Foreclosure Sale and Foreclosure (“June 23 Order”), Exh. C to
Complaint, pp. 5-6. Plaintiff did not seek reconsideration, file a notice of appeal, or
otherwise challenge the state court’s June 23 Order.
BONY properly noticed the foreclosure sale for March 3, 2015, more than eight
months after the state court issued its June 23 Order. Defendant Guzman purchased
the Property at foreclosure for $281,000.00. See Substitute Trustee’s Deed dated
March 15, 2015, Exh. C to Complaint. To date, Plaintiff has retained possession of
the Property without making any payments either to Defendant Guzman or into the
Rule 736 provides the procedure for obtaining an expedited order allowing the
foreclosure and sale in connection with a home equity loan lien. TEX. R. CIV. P.
First Lawsuit Against Bank Defendants and Guzman
On April 6, 2015, Plaintiff filed his Original Petition and Application for ExParte Temporary Restraining Order and Temporary Injunction in Texas state court.
See Original Petition, Doc. # 1-1 in Bynane v. Bank of New York Mellon, et al., Civil
Action No. H-15-1249 (“Bynane I”). In Bynane I, Plaintiff named BONY, BOA,
MERS, and Guzman as Defendants. Plaintiff sought to have the foreclosure sale set
aside “due to a void assignment of Deed of Trust,” and asserted quiet title and breach
of contract claims. See id. The case was removed to federal court on May 11, 2015,
and the Bank Defendants moved to dismiss on May 18, 2015. On May 21, 2015,
Plaintiff filed a First Amended Complaint and Application for Preliminary Injunction
[Doc. # 6 in Bynane I], adding claims for promissory estoppel, fraud, and violations
of the Texas Debt Collection Act (“TDCA”).
On June 8, 2015, the Bank Defendants moved to dismiss the First Amended
Complaint in Bynane I. The Bank Defendants argued that Plaintiff did not have
standing to challenge the assignment from MERS to BONY, and that Plaintiff failed
to state a claim upon which relief could be granted as to any of the asserted claims.
See Bank Defendants’ Motion to Dismiss [Doc. # 11 in Bynane I]. The Bank
Defendants argued specifically that Plaintiff could not adequately assert a promissory
estoppel claim absent “a promise to sign an already existing written agreement that
would itself satisfy the requirements of the statute of frauds.” See id. at 13 (citations
omitted). Bank Defendants argued that the fraud claim failed to satisfy the pleading
requirements of Rule 9(b) of the Federal Rules of Civil Procedure. See id. at 14-15.
Bank Defendants also challenged the TDCA claims, asserted under Sections
392.304(a)(8), (14), and (19), as inadequately pled. See id. at 15-17.
Meanwhile, on May 22, 2015, Plaintiff filed a Motion to Remand in which he
asserted that Defendant Guzman was a citizen of Texas and, therefore, non-diverse.
See Motion to Remand [Doc. # 8 in Bynane I], p. 3. The Bank Defendants filed a
Response asserting, with supporting evidence, that Guzman is a citizen of Indiana.
See Response [Doc. # 13 in Bynane I], p. 2. On June 17, 2015, Defendant Guzman
filed a pro se Motion to Dismiss, listing his address in Lawrenceburg, Indiana. See
Guzman Motion to Dismiss [Doc. # 15 in Bynane I], p. 4. By Order [Doc. # 16 in
Bynane I] entered June 17, 2015, Hon. Kenneth Hoyt denied Plaintiff’s Motion to
Remand, finding that it lacked merit. On June 19, 2015, Plaintiff filed a Motion to
Reconsider the denial of his Motion to Remand, continuing to argue that Guzman is
a citizen of Texas. See Motion to Reconsider [Doc. # 18 in Bynane I]. Plaintiff
asserted specifically that Guzman had a Texas drivers license and was employed in
Texas. See id. at 4-9. By Order [Doc. # 29 in Bynane I] entered August 6, 2015,
Judge Hoyt denied Plaintiff’s Motion to Reconsider, finding that the motion lacked
merit and should be denied it its entirety. One hour and 35 minutes later, Plaintiff
voluntarily dismissed the Bynane I lawsuit. See Notice of Voluntary Dismissal
Without Prejudice [Doc. # 30 in Bynane I].
On August 11, 2015, three business days after Judge Hoyt denied remand the
second time in Bynane I and Plaintiff dismissed that lawsuit, Plaintiff – represented
by the same counsel as in Bynane I – refiled this lawsuit in Texas state court. See
Complaint [Doc. # 1-1]. Plaintiff again sued BONY, BOA, MERS, and Guzman, and
again asserted a claim to set aside the foreclosure sale “due to a void assignment of
Deed of Trust,” a quiet title claim, and claims for breach of contract, promissory
estoppel, fraud, and violations of the TDCA. Guzman filed a Counterclaim, asserting
that Plaintiff’s lawsuit was frivolous and seeking to recover actual damages, attorney’s
fees and costs, expenses, and interest. See Counterclaim [Doc. # 1-1], at ECF pages
78 of 88, 80 of 88. Plaintiff has failed to respond to Guzman’s Counterclaim.
The Bank Defendants removed the second lawsuit to federal court and filed the
pending Motion to Dismiss. Plaintiff again filed a Motion to Remand [Doc. # 6].
Plaintiff again argued that Guzman is a citizen of Texas, an argument twice rejected
by Judge Hoyt in Bynane I. The Bank Defendants and Guzman, who now is
represented by counsel, filed responses in opposition to the Motion to Remand.
Guzman attached an affidavit stating under oath that he is registered to vote in
Indiana, has held an Indiana drivers license since at least August 2012, has business
dealings in Indiana, owns a home in Indiana, belongs to a social club in Indiana, and
that he considers Indiana his home where he “always intend[s] to return and stay.”
See Guzman Affidavit, Exh. 1 to Guzman Opposition to Motion to Remand [Doc. #
13]. Plaintiff filed a Reply, persisting in the argument that the “evidence before the
court is now overwhelmingly in favor of remanding the case because Guzman is
clearly is [sic] a citizen of Texas.” See Reply [Doc. # 16], p. 2. By Memorandum and
Order [Doc. # 19] entered December 1, 2015, the Court found without reservation that
Guzman is a citizen of Indiana and denied the Motion to Remand.
Defendants’ Motions to Dismiss have been fully briefed. Guzman originally
argued that the state court order issued in the Rule 736 proceeding was res judicata
and barred this lawsuit. Guzman has now abandoned that argument and, therefore, the
Bank Defendants and Guzman present the same arguments in favor of dismissal of
Plaintiff’s claims in this lawsuit pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure. The Motions to Dismiss are now ripe for decision.
STANDARD FOR MOTIONS 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
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.
Claim to Set Aside Foreclosure Sale
Plaintiff alleges that the foreclosure sale should be set aside because the
Assignment from MERS to BONY was forged. See Complaint, ¶ 11. Plaintiff alleges
that the signatures of Dominique Johnson on two unrelated assignments from MERS
to two assignees other than BONY are different from each other.2 See id., ¶ 12.
The Court has reviewed the signatures on which Plaintiff bases his forgery allegation
and finds that the signature on the assignment to Bank of America, N.A. of a
mortgage to Tory and Theresa Roberts (Exh. E to Complaint) appears to be very
similar to the signature on the Assignment in this case. The Court does not, however,
make any finding on this issue and does not base its decision on this apparent
Plaintiff alleges that Johnson’s signature on the Assignment was not authorized by
MERS and, indeed, was not authorized by Johnson. See id., ¶ 13.
Plaintiff lacks standing to challenge the Assignment. The “law is settled in
Texas that an obligor cannot defend against an assignee’s efforts to enforce the
obligation on a ground that merely renders the assignment voidable at the election of
the assignor,” but the obligor may defend “on any ground which renders the
assignment void.” Reinagel v. Deutsche Bank Nat’l Trust Co., 735 F.3d 220, 225 (5th
Cir. 2013). Plaintiff’s allegations that Johnson did not personally sign the Assignment
and/or lacked authority to sign on behalf of MERS, if proven, would render the
Assignment voidable rather than void.3 See id.; Epstein v. U.S. Bank Nat’l Ass’n, 540
F. App’x 354, 357-58 (5th Cir. Sept. 25, 2013); Rodriguez v. Bank of Am., N.A., 2013
WL 1773670, *6 (W.D. Tex. Apr. 25, 2013), aff’d, 577 F. App’x 381, 382 (5th Cir.
2014) (adopting district court’s analysis); Morlock, L.L.C. v. Bank of New York, 448
S.W.3d 514, 517 (Tex. App. – Houston [1st Dist.] 2014, review denied). “Even if
[Ms. Johnson] worked as part of a ‘document mill’ and had different signature
variations, as long as MERS was aware of this and did not object to it, the
The Court notes that the Assignment in this case, attached as Exhibit B to Plaintiff’s
Complaint, bears a Notary Public certification that Ms. Johnson presented satisfactory
evidence of her identity and acknowledged that she executed the Assignment in her
authorized capacity. The Court does not, however, make any finding on this issue and
does not base its decision on the Notary Public’s certification.
assignment – though perhaps fraudulent – would not rise to the level of a forgery and
thus would be voidable, not void.” Rodriguez, 2013 WL 1773670 at *6 (emphasis
added). MERS is a party to this case and has not objected that Johnson lacked
authority to execute the Assignment on its behalf. As a result, Plaintiff has failed to
allege a factual basis to support his ability to challenge the facially valid Assignment.
See, e.g., Reed v. Bank of Am., N.A., 2015 WL 7736642, *2 (S.D. Tex. Nov. 30,
2015)4 (Miller, J.); Jolem, LLC v. Select Portfolio Servicing, Inc., 2015 WL 3823642,
*5 (S.D. Tex. June 18, 2015) (Miller, J.). Plaintiff’s conclusory allegations against
Johnson’s signature and authority to execute the Assignment are inadequate to allow
the court to draw a reasonable inference that the signature on the Assignment is forged
such that the Assignment would be void rather than voidable at MERS’s option. See
In his Response to the Bank Defendants’ Motion to Dismiss, Plaintiff argues
that the Assignment is void “due to MERS’ involvement because MERS was not the
‘nominee’ for any party that had an interest in either the note or Deed of Trust at the
time of the Assignment.”5 See Response [Doc. # 10], p. 9. Plaintiff argues that
The plaintiff in the Reed case and Plaintiff Bynane in this case are represented by the
same law firm who made the same “forgery” allegations in both cases.
In the Complaint, the alleged forgery is the only basis on which Plaintiff alleges the
Assignment is void.
because MERS held the Note only as a nominee, and because the Assignment does not
identify for whom MERS was a nominee, “Plaintiff has validly pleaded that the
Assignment in this case is void ab initio for lack of the essential elements of a
contract, that is two identifiable real parties in interest.” See id. at 11. Plaintiff’s
argument is without merit, factually and legally. MERS, in addition to being the
Lender’s nominee under the Deed of Trust, is the beneficiary of the Deed of Trust.
See Deed of Trust, Exh. A to Complaint, p. 2. As the beneficiary of the Deed of Trust,
MERS had the right to foreclose on the Deed of Trust and had the right to assign the
Deed of Trust to another entity. See Wiley v. Deutsche Bank Nat’l Trust Co., 539 F.
App’x 533, 536 (5th Cir. Sept. 6, 2013).
Plaintiff has failed to allege a factual or legal basis for his request to have the
foreclosure sale to Guzman set aside. As a result, Defendants are entitled to dismissal
of this first cause of action.
Quiet Title Claim
Plaintiff seeks quiet title to the Property, arguing that BONY’s purported
standing to foreclose and sell the Property to Guzman was based on a void
Assignment from MERS. For the reasons stated above, Plaintiff has failed to allege
a valid legal or factual basis for his attempt to challenge the facially valid Assignment.
Therefore, the claim for quiet title, which is based on the allegation that the
Assignment was void, similarly fails and is dismissed.6
Breach of Contract
Plaintiff alleges that BONY breached the Deed of Trust by foreclosing on the
Property without legal authority to do so because the Assignment to BONY was void.
Under Texas law, the elements of a breach of contract claim are: (1) the existence of
a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach
of the contract by the defendant; and (4) damages sustained by the plaintiff as a result
of the breach. See Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009).
A plaintiff cannot prevail on a claim for breach of contract when the plaintiff has not
performed his own duties under the contract. Id.; see also Golden v. Wells Fargo
Bank, N.A., 557 F. App’x 323, 327-28 (5th Cir. 2014); Hernandez v. Gulf Group
Lloyds, 875 S.W.2d 691, 692 (Tex. 1994) (holding that when one party materially
Additionally, under Texas law, a necessary prerequisite to the recovery of quiet title
“is tender of whatever amount is owed on the note.” Jemison v. CitiMortgage, Inc.,
2014 WL 2739351, *6 (S.D. Tex. June 17, 2014) (Rosenthal, J.) (citations omitted).
It is undisputed that Plaintiff has not tendered the amount he owes under the Note.
He states in the Complaint that he “offers to tender whatever the court determines to
be equitable to one or several defendants, jointly, as a pre-requisite to setting aside the
foreclosure sale as pleaded for.” Complaint, p. 14. He does not, however, allege that
he has the financial ability to tender, prior to any final judgment, all amounts owed
under the Note.
breaches a contract, the other party is discharged or excused from any obligation to
In this case, Plaintiff has not alleged, and cannot allege, that he performed his
obligations under the Deed of Trust. Plaintiff, as the Borrower, was obligated to “pay
when due the principal of, and interest on, the debt evidenced by the Note and any late
charges due under the Note.” See Deed of Trust, p. 3. There is no allegation that
Plaintiff complied with this obligation and, indeed, it is undisputed that he did not.
Plaintiff has not paid any part of the principal and interest, or any late charges, since
August 1, 2013, and the loan has been in default since that date. See June 23 Order,
Exh. C to Complaint. Having failed to allege performance of his obligations under the
Deed of Trust, Plaintiff has failed to allege an essential element of his breach of
contract claim. See Jemison v. CitiMortgage, Inc., 2014 WL 2739351, *9 (S.D. Tex.
June 17, 2014) (Rosenthal, J.). Defendants are entitled to dismissal of this claim.
Additionally, as is discussed above, Plaintiff has failed to allege a factual basis
to permit him to challenge the Assignment to BONY of MERS’ rights under the Deed
of Trust. On this basis also, Defendants are entitled to dismissal of the breach of
Promissory Estoppel Claim
Plaintiff alleges that BOA, acting as an agent for BONY, “promised that no
non-judicial or judicial foreclosure would occur until the loan modification process
was completed and Plaintiff was given an answer that his application was either
granted or denied.” Complaint, ¶ 30. Plaintiff alleges further that BOA promised to
sign a written modification document already in existence at the time of the promise
if the modification was approved. See id., ¶ 31.
Under Texas law, “a loan agreement in which the amount involved in the loan
agreement exceeds $50,000 in value is not enforceable unless the agreement is in
writing and signed by the party to be bound or by that party’s authorized
representative.” TEX. BUS. & COMM. CODE § 26.02(b); Martins v. BAC Home Loans
Servicing, L.P., 722 F.3d 249, 256 (5th Cir. 2013). A “loan agreement” includes any
agreement or promise in which a financial institution delays repayment of or agrees
to delay repayment of money, or to otherwise make a financial accommodation. TEX.
BUS. & COMM. CODE § 26.02(a)(2). As a result, a loan modification agreement is
subject to the statute of frauds. See Miller v. Citimortgage, Inc., 970 F. Supp. 2d 568,
581 (N.D. Tex. 2013). There is no allegation that Plaintiff and any Defendant entered
into a written loan modification contract.
Promissory estoppel is a “narrow exception to the statute of frauds.” See
Matthews v. JPMorgan Chase Bank, N.A., 2015 WL 892954, *2 (S.D. Tex. Mar. 1,
2015) (Rosenthal, J.) (citations omitted). “For promissory estoppel to create an
exception to the statute of frauds, there must have been a promise to sign a written
agreement that had been prepared and that would satisfy the requirement of the statute
of frauds.” Id. (quoting 1001 McKinney Ltd. v. Credit Suisse First Boston Mortg.
Capital, 192 S.W.3d 20, 29 (Tex. App.-- Houston [14th Dist.] 2005, pet. denied)); see
also Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233, 239 (5th Cir. 2014). For
an existing written contract to satisfy the requirements of the statute of frauds, “there
must be a written memorandum which is complete within itself in every material
detail and which contains all of the essential elements of the agreement so that the
contract can be ascertained from the writings without resorting to oral testimony.”
Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978); Scott v. Bank of Am., N.A.,
597 F. App’x 223, 225 (5th Cir. Dec. 30, 2014). In a contract to loan money, the
material terms include, inter alia, the amount to be loaned, the maturity date, the
interest rate, and the repayment terms. See Hern Family Ltd. P’ship. v. Compass
Bank, 863 F. Supp. 2d 613, 624 (S.D. Tex. Mar. 26, 2012) (Ellison, J.) (citing T.O.
Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)).
In this case, Plaintiff alleges that a BOA employee promised “to sign a written
modification document already in existence at the time of the promise if the
modification was approved.” See Complaint, ¶ 31. Plaintiff does not allege, however,
that the “written modification document already in existence” was one that would
contain all the material terms of the loan modification such that it would satisfy the
requirements of the statute of frauds. This omission is fatal to Plaintiff’s promissory
estoppel claim. For example, a promise to sign an existing written form document that
contained blank lines to be filled in once the terms of a loan modification were agreed
upon would not satisfy the requirements of the statute of frauds. Plaintiff has failed
to allege an essential element of his promissory estoppel claim and, as a result, the
claim is dismissed.
To state an actionable claim for fraud, a plaintiff must allege with specificity
that (1) 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
plaintiff acted in reliance on the representation; and (6) thereby suffered injury. See
Harris Cnty. v. MERSCORP Inc., 791 F.3d 545, 558 (5th Cir. 2015) (citing Italian
Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex.
2011)). When alleging fraud, a party must plead the circumstances constituting fraud
with particularity. See FED. R. CIV. P. 9(b). To satisfy the pleading requirements of
Rule 9(b), a plaintiff asserting a fraud claim must “specify the statements contended
to be fraudulent, identify the speaker, state when and where the statements were made,
and explain why the statements were fraudulent.” Dorsey v. Portfolio Equities, Inc.,
540 F.3d 333, 339 (5th Cir. 2008);
Plaintiff alleges that BOA, as BONY’s agent, fraudulently represented that
“there would be no non-judicial or judicial foreclosure sale until the loan modification
process was completed and Plaintiff was given an answer that his application was
either granted or denied.” See Complaint, ¶ 36. Plaintiff alleges that BOA and/or
BONY never intended to perform this promise. See id., ¶ 38. Plaintiff does not allege
who made the alleged misrepresentations and, more importantly, when they were
made. Plaintiff fails also to provide any factual allegations to support the conclusory
assertion that “BONY never intended to perform the promise” to delay foreclosure.
As a result, Plaintiff has failed to satisfy the Rule 9(b) requirement that fraud claims
be alleged with adequate particularity. See, e.g., Kiper v. BAC Home Loans Servicing,
LP, 884 F. Supp. 2d 561, 573 (S.D. Tex. 2012); James v. Wells Fargo Bank, N.A.,
2014 WL 2123060, *5 (S.D. Tex. May 21, 2014) (Lake, J.). Defendants’ Motions to
Dismiss the fraud claim are granted.
Texas Debt Collection Act Claim
Plaintiff alleges that BOA and BONY violated the TDCA, specifically sections
392.304(a)(8), (14), and (19). See Complaint, ¶ 44. The TDCA prohibits a debt
collector from “misrepresenting the character, extent, or amount of a consumer debt,
or misrepresenting the consumer debt’s status in a judicial or governmental
proceeding” (paragraph 8); “representing falsely the status or nature of the services
rendered by the debt collector or the debt collector's business” (paragraph 14); or
“using any other false representation or deceptive means to collect a debt or obtain
information concerning a consumer” (paragraph 19). Plaintiff alleges specifically that
Defendants BOA and BONY promised “they would not foreclose until a
determination was made on Plaintiff’s submitted loan applications” but “proceeded
to foreclose before ever responding to Plaintiff’s submitted loan modification
applications.” Complaint, ¶ 45. Plaintiff alleges also that BOA and BONY “informed
Plaintiff that the terms of his loan could be modified to cure the default and avoid
foreclosure if Plaintiff qualified for available options[;] informed Plaintiff that he did
not need to make payments on the loan because delinquent payments would be
subsumed into the modified loan when the modification was approved[; and] promised
not to foreclose until a decision was made on Plaintiff’s submitted modification
application(s).” Id., ¶ 46. Plaintiff alleges that this conduct violated sections
392.304(a)(14) and 392.304(a)(19).
Plaintiff makes no factual allegations regarding section
392.304(a)(8) of the TDCA. The allegations regarding paragraphs 14 and 19 do not
state a claim under paragraph 8 because statements regarding loan modification plans
are not representations of the charcter, extent, or amount of the debt. See Miller v.
BAC Home Loans Servicing, L.P., 726 F.3d 717, 723 (5th Cir. 2013); Chavez v. Wells
Fargo Bank, N.A., 578 F. App’x 345, 348 (5th Cir. 2014); Martinez v. Wells Fargo
Bank, N.A., 2015 WL 4041674, *5 (W.D. Tex. June 30, 2015). The TDCA claim
based on section 392.304(a)(8) is dismissed.
Paragraph 19. “Communications in connection with the renegotiation of a loan
do not concern the collection of a debt but, instead, relate to its modification and thus
they do not state a claim under Section 392.304(a)(19).” Thompson v. Bank of Am.,
N.A., 783 F.3d 1022, 1026 (5th Cir. 2015). As a result, the TDCA claim based on
paragraph 19 is dismissed.
Paragraph 14. In support of the TDCA claim under section 392.304(a)(14),
Plaintiff relies on the Fifth Circuit’s decision in Miller v. BAC Home Loans Servicing,
L.P., 726 F.3d 717 (5th Cir. 2013). In that case, the plaintiffs alleged, inter alia, that
BAC’s foreclosure specialist informed them that she “had obtained approval to
postpone the [June 1] foreclosure sale.” Id. at 724. The Fifth Circuit held that this
adequately alleged a claim under section 372.304(a)(14) for misrepresenting the status
or nature of the services rendered by the debt collector. Id. In Miller, the date for the
foreclosure sale had been set and the plaintiffs alleged that the defendant
misrepresented that the established sale date had been postponed. Id. In this case,
there is no allegation regarding when the alleged misrepresentations were made.
Additionally, there is no allegation that BOA told Plaintiff that an established
foreclosure sale date had been set and/or postponed. There is no allegation that the
alleged misrepresentations were made after entry of the June 23 Order allowing
foreclosure to proceed. The June 23 Order was entered more than 8 months before the
foreclosure sale and constituted clear notice that BOA and BONY had not granted
Plaintiff’s request for a loan modification. During that time, Plaintiff had the right to
seek reconsideration, appeal, or otherwise challenge the June 23 Order, but he chose
not to do so. Plaintiff also had ample opportunity to explore, and take advantage of,
various options to avoid the foreclosure sale that the state court had ordered could
proceed. Again, he chose not to do so.
Plaintiff’s allegations are inadequately similar to those in Miller to state a claim
under the TDCA section 392.304(a)(14). Absent factual allegations that BOA falsely
represented the status or nature of their services, the section 392.304(a)(14) claim is
Conclusion as to TDCA Claim. Plaintiff has failed to allege facts which state
a claim for relief under any cited section of the TDCA. Defendants’ Motions to
Dismiss the TDCA claim is granted.
REQUEST FOR LEAVE TO REPLEAD
Rule 15(a) provides that leave to amend pleadings “shall be freely given when
justice so requires.” FED. R. CIV. P. 15(a); United States ex rel. Marcy v. Rowan
Companies, Inc., 520 F.3d 384, 392 (5th Cir. 2008). The Fifth Circuit has concluded
that Rule 15(a) “evinces a bias in favor of granting leave to amend.” Carroll v. Fort
James Corp., 470 F.3d 1171, 1175 (5th Cir. 2006) (citation omitted). However, leave
to amend is by no means automatic, and the decision to grant or deny leave to amend
“is entrusted to the sound discretion of the district court.” Pervasive Software Inc. v.
Lexware GmbH & Co., 688 F.3d 214, 232 (5th Cir. 2012). In deciding whether to
grant leave to file an amended pleading, the district court “should consider factors
such as undue delay, bad faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously allowed, undue prejudice to the
opposing party, and futility of amendment.” In re Am. Intern. Refinery, Inc., 676 F.3d
455, 466 (5th Cir. 2012) (quoting In re Southmark, 88 F.3d 311, 315 (5th Cir. 1996)).
In this case, Plaintiff filed his first Original Petition in Bynane I. Defendants
filed a motion to dismiss, asserting the various deficiencies they believed existed in
the Original Petition. After reviewing the motion to dismiss, Plaintiff filed a First
Amended Complaint in Bynane I. The First Amended Complaint was filed after
removal to federal court, and the Court expects Plaintiff’s counsel to have followed
the federal pleading requirements. Again, Defendants filed motions to dismiss
alerting Plaintiff’s counsel to the deficiencies – as perceived by Defendants – in the
First Amended Complaint filed in Bynane I. After reviewing the motions to dismiss
the First Amended Complaint, and after Plaintiff’s request for remand of Bynane I was
denied for a second time, Plaintiff voluntarily dismissed that case and, represented by
the same lawyers, immediately refiled the lawsuit in state court. It is that second suit
that is now pending here.
Plaintiff’s dismissing Bynane I and refiling this lawsuit created undue delay and
suggests a dilatory motive on his part. The Complaint currently before this Court is
effectively Plaintiff’s third opportunity to allege a factual and legal basis for his
claims, demonstrating a repeated failure to cure deficiencies pointed out by
Defendants. The Court notes again that Plaintiff has been represented by the same law
firm throughout the proceedings in Bynane I and in this case. As to the request to set
aside the foreclosure sale because the Assignment by MERS to BONY was allegedly
void, the quiet title claim, the breach of contract claim, and the TDCA claims relating
to sections 392.304(a)(8) and (a)(19), any attempt to revive those claims by
amendment would be futile.
Lastly but importantly, the undue prejudice to Defendants, particularly
Defendant Guzman, resulting from further delay in this case is extreme. In reliance
on the June 23, 2014 Order to Proceed With Notice of Foreclosure Sale and
Foreclosure, Guzman purchased the Property for $281,000.00 on March 3, 2015.
Since that date, Plaintiff has retained possession of the Property without making rental
payments, Homeowners Association or other condominium fee payments, or property
tax payments. Plaintiff does not allege any valid legal or factual basis to deny
Guzman possession of the Property, and further delay is unwarranted.
Based on a careful consideration of the unusual circumstances of this case, the
Court exercises its discretion to deny leave to amend. Plaintiff’s claims in this lawsuit
are dismissed with prejudice.
CONCLUSION AND ORDER
Plaintiff does not have standing to challenge the assignment of the Deed of
Trust from MERS to BONY, which negates the basis for his action to set aside the
foreclosure sale, quiet title, and breach of contract claims. Plaintiff has failed to allege
a factual basis for the promissory estoppel, fraud, and TDCA claims despite ample
notice of pleading deficiencies.
The Complaint in this case is effectively Plaintiff’s third attempt to state valid
claims for relief. One of the attempts was the First Amended Complaint filed in
Bynane I, filed after the Bank Defendants filed a Motion to Dismiss and filed under
federal pleading standards. As a result, the Court dismisses Plaintiff’s claims in this
suit without leave to replead. It is therefore
ORDERED that Defendants’ Motions to Dismiss [Docs. # 5 and # 9] are
Plaintiff’s claims against Defendants are DISMISSED WITH
PREJUDICE. It is further
ORDERED that any and all restraining orders entered while the case was
pending in Texas state court are VACATED. It is further
ORDERED that any motions relating to Guzman’s counterclaim against
Plaintiff, and any motions for an award of attorneys’ fees, must be filed by
January 22, 2016.
SIGNED at Houston, Texas, this 15th day of December, 2015.
NAN Y F. ATLAS
STATES DISTRICT JUDGE
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