Wilmington et al v. Bay Area Utilities, LLC et al
Filing
21
MEMORANDUM OPINION AND ORDER granting 16 MOTION to Dismiss and Brief in Support, denying as moot 18 MOTION to Quash Discovery AND MOTION to Stay of Discovery. Defendant Nationstar Mortgage, LLC is dismissed with prejudice. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
December 02, 2015
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DEVON WILMINGTON,
Plaintiff,
v.
BAY AREA UTILITIES, LLC,
NATIONSTAR MORTGAGE, LLC, and
LEB KEMP, SUBSTITUTE TRUSTEE,
Defendants.
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§
David J. Bradley, Clerk
CIVIL ACTION NO. H-15-3031
MEMORANDUM OPINION AND ORDER
Devon Wilmington ("Plaintiff" or "Wilmington") has sued Bay
Area Utilities, LLC
("Bay Area Utilities"), Nationstar Mortgage,
LLC
and Leb Kemp,
("Nations tar") ,
Substitute Trustee,
reciting
various causes of action relating to the foreclosure sale of her
home in July of 2014. 1
Pending before the court
is defendant
Nationstar Mortgage, LLC's Motion to Dismiss and Brief in Support
("Motion to Dismiss")
(Docket Entry No. 16), to which Wilmington
has filed an opposition (Docket Entry No. 19) . 2
1
See First Amended Original Petition for Plaintiff's Petition
to Remove Cloud and Quiet Title ("Amended Petition"), Exhibit B-4
to Defendant Nationstar Mortgage, LLC's Notice of Removal ("Notice
of Removal"), Docket Entry No. 1-2, pp. 27-35.
2
See Devon Wilmington's Opposition to Nationstar Mortgage
LLC' s Motion to Dismiss and Brief in Support ("Opposition to Motion
to Dismiss").
I.
Factual and Procedural Background
Wilmington executed a Deed of Trust granting a lien on her
property on February 19,
loan. 3
Mortgage
2009,
in exchange for a purchase money
The Deed of Trust was
later assigned to Nationstar by
Electronic
Registration
Systems,
Inc. 4
Wilmington
defaulted, and Nationstar noticed a foreclosure sale. 5
The sale
was held on July 1, 2014, and Nationstar purchased the property. 6
Wilmington
filed
a
"Motion
for
Judicial
Review
of
Documentation or Instrument Purporting to Create a Lien or Claim"
See Deed of Trust, Exhibit F to Motion to Dismiss, Docket
Entry No. 16-6; See also Special Warranty Deed with Vendor's Lien
dated February 18, 2009, Exhibit A to Amended Petition, Exhibit B-4
to Notice of Removal, Docket Entry No. 1-2, p. 37.
Nationstar
attached seven exhibits to its Motion to Dismiss.
Exhibits A
through E are prior court filings.
Nationstar requests the court
take judicial notice of these matters of public record. The court
will do so, as they may be considered in a motion to dismiss
without converting it to a motion for summary judgment. See Norris
v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) ("[I]t is
clearly proper in deciding a 12 (b) (6) motion to take judicial
notice of matters of public record."); Cinel v. Connick, 15 F.3d
133 8, 1343 n. 6 (5th Cir. 1994) (" [C] onsideration of the consent
judgment [in deciding this 12(b) (6) motion] does not convert this
motion into one for summary judgment")).
The other exhibits are
the Deed of Trust (Exhibit F to Motion to Dismiss, Docket Entry No.
16-6) and the Corporate Assignment of Deed of Trust (Exhibit G to
Motion to Dismiss, Docket Entry No. 16-7), both recorded in the
Official Public Records of Harris County, Texas, and properly the
subject of consideration here. See also Fed. R. Evid. 201.
3
4
See Corporate Assignment of Deed of
Motion to Dismiss, Docket Entry No. 16-7.
Trust,
Exhibit
G
to
5
See Notice of Trustee's Sale, Exhibit D to Amended Petition,
Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 52.
6
See Substitute Trustee's Deed, Exhibit C to Amended Petition,
id. at 46.
-2-
that was dismissed for want of prosecution. 7
Subsequently,
Area
from
Utilities
(which
acquired
the
obtained a judgment for eviction. 9
property
Bay
Nationstar 8 )
Wilmington filed for Chapter 13
bankruptcy before her appeal from the judgment of eviction went to
trial. 10
The
bankruptcy
judge
granted
Bay
Area
Utilities's
subsequent Motion for Relief from Stay on June 30, 2015, allowing
Bay Area Utilities to continue with the eviction proceeding. 11
Wilmington,
Plaintiff's
pro
Petition
se,
to
initiated
Remove
this
Cloud
and
case
when
Quiet
she
Title
filed
in
the
District Court for the 133rd Judicial District of Harris County,
Texas on August 14, 2015, against Bay Area Utilities. 12
She amended
her petition on August 31, 2015, and added Nationstar Mortgage, LLC
7
See Exhibit A to Motion to Dismiss, Docket Entry No. 16-1;
Final Order, Exhibit B to Motion to Dismiss, Docket Entry No. 16-2.
8
See Warranty Deed dated July 31, 2014, Exhibit B to Amended
Petition, Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2,
pp. 41-45.
9
See Motion of Bay Area Utilities, LLC's for Relief From the
Stay, Exhibit C to Motion to Dismiss, Docket Entry No. 16-3, p. 6
~ 17; see also Memorandum Opinion in Case. No. 15-31207-H3-13,
Exhibit E to Motion to Dismiss, Docket Entry No. 16-5, pp. 2-3.
10
See Motion of Bay Area Utilities, LLC's for Relief From the
Stay, Exhibit C to Motion to Dismiss, Docket Entry No. 16-3, p. 6
~ 18; see also Voluntary Petition for Bankruptcy, Exhibit D to
Motion to Dismiss, Docket Entry No. 16-4.
11
See Memorandum Opinion in Case. No. 15-31207-H3-13, Exhibit
E to Motion to Dismiss, Docket Entry No. 16-5.
12
See Exhibit B-2 to Notice of Removal, Docket Entry No. 1-2,
pp. 6-13.
-3-
and Leb Kemp, Substitute Trustee, as defendants. 13
a Notice of Removal,
October 14, 2015. 14
Nationstar filed
and the case was removed to this court on
Defendant Leb Kemp's Rule 12(b) (6) Motion to
Dismiss (Docket Entry No. 3) was granted on November 9, 2015. 15
On
that day, Nationstar filed its Motion to Dismiss (Docket Entry No.
16), which is now before the court.
II.
Under
Rule
8
of
Standard of Review
the
Federal
Rules
of
Civil
Procedure
a
pleading must contain "a short and plain statement of the claim
showing that the pleader is entitled to relief."
8 (a) (2).
Fed. R. Civ. P.
A Rule 12 (b) (6) motion 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 in a light most favorable to the plaintiff, and
draw all reasonable inferences in the plaintiff's favor.
Id.
To defeat a motion to dismiss pursuant to Rule 12(b) (6),
a
plaintiff must plead "enough facts to state a claim to relief that
13
See Amended Petition, Exhibit
Docket Entry No. 1-2, pp. 27-36.
14
B-4
to Notice
of
Removal,
See Notice of Removal, Docket Entry No. 1.
15
0rder Granting Defendant Leb Kemp's Rule 12(b) (6) Motion to
Dismiss, Docket Entry No. 15.
-4-
is plausible on its face."
Ct. 1955, 1974
(2007).
s.
Bell Atlantic Corp. v. Twombly, 127
"A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the
reasonable
inference
(citing Twombly,
than a
unlawfully."
a
complaint
defendant's
defendant
is
liable
Iqbal,
129 S.
Ct.
pleads
1937,
a
defendant
has
(quoting Twombly, 127 S. Ct. at 1965).
facts
liability,
the
1949
'probability requirement,' but it asks
sheer possibility that
Id.
for
"The plausibility
127 S. Ct. at 1965).
standard is not akin to a
for more
the
Ashcroft v.
misconduct alleged."
(2009)
that
that
it
are
'stops
'merely consistent
short
of
the
line
acted
"Where
with'
between
possibility and plausibility of "entitlement to relief."'"
(quoting Twombly, 127 S. Ct. at 1966).
to dismiss,
a
Id.
When considering a motion
district 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."
Lone Star Fund V (U.S.), L.P. v. Barclays Bank
PLC, 594 F.3d 383, 387 (5th Cir. 2010).
proper in deciding a 12(b) (6)
matters of public record."
However,
"it is clearly
motion to take judicial notice of
Norris, 500 F.3d at 461 n.9.
III.
Analysis
Wilmington's Amended Petition contains a number of claims.
It
seeks declaratory judgment that "a certain document and claim made
-5-
by the defendant" is invalid. 16
It asks the court to remove the
cloud and quiet title to the property. 17
It argues that defendants
have made •false claims" 18 and slandered Wilmington's title to the
property. 19
It
lists
causes
of
action
for
fraud,
intentional
infliction of emotional distress, rescission, and violations of the
Truth
in Lending Act
Procedures Act
( "TILA")
and
the
Real
Estate
Settlement
("RESPA") based "upon the facts and circumstances
surrounding Plaintiff's original loan transaction and subsequent
securitization". 20 Wilmington attached the following to her Amended
Petition:
(1)
Special
February 19, 2009; 21
(2)
Warranty
Deed With Vendor's
Warranty Deed dated July 31,
Lien
dated
2014; 22
(3)
Substitute Trustee's Deed dated July 15, 2014; 23 and (4) Notice of
Trustee's Sale dated May 21, 2014. 24
484 F.3d 776,
780
(5th Cir.
2007)
See Ferrer v. Chevron Corp.,
("A written document that is
attached to a complaint as an exhibit is considered part of the
16
See Amended Petition, Exhibit B-4
Docket Entry No. 1-2, pp. 27, 29
17
See id. at 30.
19
See id. at 33.
20
Removal,
See id.
18
to Notice of
See id. at 29.
21
Exhibit A to Amended Petition,
Removal, Docket Entry No. 1-2, p. 37.
Exhibit B-4
22
Exhibit B to Amended Petition, id. at 41.
23
Exhibit
24
Exhibit D to Amended Petition, id. at 52.
c to Amended Petition, id. at 46.
-6-
to Notice of
complaint
and
may
be
considered
in
a
12(b) (6)
dismissal
proceeding.").
Nationstar asserts that the "[Amended Petition] is premised on
the
notion
that
the
foreclosure
sale
was
wrongful
because
Nationstar is required to prove it owns and holds the original note
in open court. " 25
Nationstar quotes from the Amended Petition: 26
•
Plaintiff hereby claims the powers, protections and
benefits of the Statute of Frauds Annotated, especially
where it speaks to the fact that in order to have
standing to sue on a debt .
. the defendant or moving
party must prove the existence of a debt which may only
be established by submission of the "original contract,"
"original promissory note" or agreement in open court, on
the record, as evidenced through the testimony of a
competent fact witness with personal firsthand knowledge,
under oath, and be subject to the test and "fire" of
cross examination. 27
•
Defendant or moving party must
28
Holder in Due Course .
prove
it
is
the
•
Further, any party that asserts a claim upon
Plaintiffs [sic] property must prove with specificity
that Plaintiff received equal value, as consideration to
the contract, by demonstrating, possession of the
29
original unaltered promissory note .
•
[T] o streamline the securitization process, the
investment banks created an entity called Mortgage
Electronic Registrations System ( "MERS")
[and]
25
Motion to Dismiss, Docket Entry No. 16, pp. 3-4.
26
Id. at 4.
27
Amended Petition, Exhibit B-4 to Notice of Removal, Docket
Entry No. 1-2, p. 28.
-7-
would transfer deeds of trust to MERS, thereby separating
the mortgage note from the deed of trust. 30
•
Plaintiff alleges that Defendants, and each of them,
cannot show proper receipt,
possession,
transfer,
negotiations, assignment, and ownership of the borrower's
31
original Promissory Note and Deed of Trust .
Nationstar
characterizes
Wilmington's
"underlying
theories"
as
"show-me-the-note" and "split-the-note," which it argues fail as a
matter of law, causing her claims to fail as well. 32
In Martins v. BAC Home Loans Servicing, L.P.,
722 F.3d 249,
253 (5th Cir. 2013), the plaintiff argued that the defendant could
not foreclose "because it was assigned only the mortgage, and not
the note itself .
. the assignment split the note from the deed
of trust and [the defendant] therefore had a meaningless piece of
paper rather than a debt on which it could foreclose."
"split-the-note" theory.
"Show-me-the note" argues that a party
must produce the original note bearing a
order to foreclose.
Id.
That is the
"wet ink signature" in
The Fifth Circuit rejected both theories,
finding that Texas courts have "rejected the argument that a note
and its security are inseparable .
II
Id. at 255.
It also
found no authority in Texas requiring production of the "original"
note.
Id. at 254
30
(citing Blankenship v. Robins,
899 S.W.2d 236,
Id. at 32.
31Id.
32
Motion to Dismiss, Docket Entry No. 16, pp. 4, 6-7.
-8-
238 (Tex. App.-Houston [14th Dist.] 1994, no writ)).
Therefore, to
the extent Wilmington's claims rely on these two theories,
the
Amended Petition fails to state claims upon which relief can be
granted.
The Fifth Circuit has also rejected quiet title claims relying
on challenges
to
Nationstar here.
379, 383
assignments
by MERS,
like
the
assignment
to
See Warren v. Bank of America, N.A., 566 F. App'x
(5th Cir. 2014)
("Additionally, we have previously held
that arguments that merely question the validity of an assignment
of a deed of trust from MERS to another mortgage servicer are not
a sufficient basis for a quiet title action under Texas law.
11
)
•
Therefore, Wilmington's quiet title claim cannot survive the motion
to dismiss based solely on challenges to that assignment.
Nationstar also argues that Wilmington's related challenges to
the
securitization
process
have
been
"repeatedly
rejected.
1133
Wilmington's claims regarding this process are not entirely clear.
The Amended Petition has no distinct statement of facts;
three
pages are devoted to a general description of the "securitization
process. 1134
Courts in the 5th Circuit have commonly dismissed
claims based on challenges to the securitization process.
~.
Shaver v. Barret Daffin Frappier Turner & Engel, L.L.P., 593
33
Id. at 7.
34
Amended Petition, Exhibit B-4 to Notice of Removal, Docket
Entry No. 1-2, pp. 30-32.
-9-
F. App'x 265 1 270-71 (5th Cir. 2014)
("The Shavers have not stated
a claim for fraud by nondisclosure because NCM did not have a duty
or other transaction related
to disclose any securitization .
to the loan."); Gibbs v. Ocwen Loan Servicing, LLC, No 3:14-CV1153-M,
2014
WL
4414809,
at
*4-5
(N.D.
Tex.
Sept.
5,
2014)
("Plaintiff's arguments that his mortgage was destroyed when it was
packaged and sold as
security 1
part
of
a
collateralized mortgage-backed
that there are flaws within the chain of title,
and
Plaintiffs similar allegations concerning the securitization of the
mortgage
are
merely
"show-me-the-note"
iterations
theories
circuit."); Marban v.
that
of
the
have
PNC Mortgage,
No.
3356285, at *10 (N.D. Tex. July 3, 2013)
claims
based
on
a
challenge
to
the
"split-the-note"
been
rejected
in
3:12-CV-3952-M,
and
this
2013 WL
(listing cases rejecting
securitization
process).
Wilmington's description of the securitization process, lacking any
information about these defendants' conduct 1 is not sufficient to
state a claim challenging the creation, assignment, or transfer of
the security interest in her property.
Nationstar argues that Wilmington has also failed to state a
claim as to fraud,
35
intentional infliction of emotional distress,
35
Although the fraud pleading suffers from the same infirmities
as the other claims, Fed. R. Civ. P. 9(b) provides a heightened
pleading
standard under which
"a party must
state with
particularity the circumstances constituting fraud .
"
See
also Benchmark Electronics, Inc. v. J.M. Huber Corg., 343 F.3d 719,
724 (5th Cir. 2003) ("Put simply, Rule 9(b) requires the who, what,
(continued ... )
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TILA violations, 36 and RESPA violations because Wilmington has not
pleaded any facts to support these causes of action. 37
The Amended
Petition does not contain factual statements regarding Nationstar's
conduct.
For example, one paragraph- in the middle of the generic
historical recitation- states: "When the Plaintiff, in this case
closed on the property at issue, Plaintiff's original lender (or
other entity claiming ownership of the note)
signed a PSA that
governed plaintiff's particular mortgage note.
The PSA agreement,
as described in more detail below,
which
the
homeowner's
loan must
detailed the closing date by
be
'sold'
to
the
REMIC,
and
described exactly how the homeowner's note is to find its way from
the original lender to the REMIC trust." 38
35
However, the following
continued)
when, where, and how to be laid out.") (quotations omitted).
Amended Petition falls short of this requirement.
( •••
The
36
Nationstar
also
argues
that
Wilmington's
claim
for
"rescission" under TILA is barred by the statute of limitations.
See Motion to Dismiss, Docket Entry No. 16, p. 8. "[A] complaint
that shows relief to be barred by an affirmative defense, such as
the statute of limitations, may be dismissed for failure to state
a cause of action."
Kaiser Aluminum & Chemical Sales, Inc. v.
Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982); see
also Simmons v. Local 565 Air Transp. Div. Transp. Workers Union of
Am. AFL-CIO, No. 3:09-CV-1181-B, 2010 WL 2473840, at *4 (N.D. Tex.
June 16, 2010).
Because the Amended Petition does not contain
facts that give rise to a plausible claim for a violation of TILA,
the court need not address this argument.
37
Motion to Dismiss, Docket Entry No. 16, pp. 8-10.
38
Amended Petition, Exhibit B-4 to Notice of Removal, Docket
Entry No. 1-2, p. 31.
-11-
paragraphs do not provide any details about the transactions in
this case. 39
Another paragraph states:
The Warranty Deed AND SUBSTITUTE TRUSTEE DEED, under
which the defendants asserts and interest that interferes
with the plaintiff's title, although appearing valid on
its face, is in fact invalid and of no force or effect.
The plaintiff will show that BAY AREA UTILITIES,
NATIONSTAR MORTGAGE LLC, LEB KEMP, SUBSTITUTE TRUSTEE had
no title or interest in the property described and had no
authority,
actual
or
apparent,
to
encumber
the
plaintiff IS property • 1140
However,
no
facts
are
provided
to
support
these
allegations.
Elsewhere, the Amended Petition makes conclusory statements like
"The defendants have been making false claims,
record,
contrary to the statues
[sic]
contrary to the
regarding real estate and
foreclosures and have denied Plaintiff Is due process. " 41
"A pleading that offers labels and conclusions or a formulaic
recitation of the elements of a cause of action will not suffice.
Likewise, a complaint that articulates 'naked assertions devoid of
further factual enhancement' is similarly insufficient to satisfy
the pleading requirements of Rule 8."
Greater Houston Transp. Co.
v. Uber Technolgies, Inc., No. 4:14-0941, 2015 WL 1034254, at *4
(S.D. Tex. March 10, 2015)
(citing Twombly and Iqbal).
the Amended Petition in its entirety,
39
See id. at 32.
40
Id. at 3 0.
-12-
Considering
Wilmington has failed to
allege
sufficient
factual
matter that,
when accepted as
true,
states any claim for relief that is plausible on its face.
See
Iqbal, 129 S. Ct. at 1949 (citing Twombly, 127 S. Ct. at 1973-74) . 42
The Texas Declaratory Judgment Act is remedial in nature.
See
Cheaton v. JPMorgan Chase Bank, Nat. Ass'n, No. H-11-1777, 2012 WL
298533,
at
*2
(S.D.
Tex.
Carbon & Gasoline Co. v.
n.3 (5th Cir. 1996)).
Feb.
1,
2012)
Interenergy Resources,
viable
causes
99 F.3d 746, 752
A request for declaratory relief cannot form
the basis of an independent cause of action.
no
(citing Sid Richardson
of
action
remain,
See id. at *1.
Wilmington's
Since
request
for
declaratory judgment is subject to dismissal as well.
Wilmington filed an Opposition to Motion to Dismiss.
Her
primary argument is that Nationstar failed to comply with Texas
Property Code requirements in noticing the Trustee's Sale. 43
She
argues that "there was no street address on the notice of trustee
sale
or
notice
NATIONSTAR. " 44
appointment
However
I
of
substitute
the Notice of Trustee
Is
trustee
sent
by
Sale contains the
42
To the extent the Amended Petition asserts a cause of action
for slander of title (see Amended Petition at 33) or "making false
claims" ( id. at 3 0) , it fails to provide any facts that could
support a plausible claim for relief.
43
See Opposition to Motion to Dismiss, Docket Entry No. 19, pp.
2-3, 4-5.
Wilmington also makes numerous arguments regarding
standing. As the Motion to Dismiss does not challenge Wilmington's
standing, the court will not address her arguments.
44
5.
See Opposition to Motion to Dismiss, Docket Entry No. 19, p.
This instrument contains numerous citations to "RR Vol. 3 11 with
(continued ... )
-13-
street address of Nationstar as noteholder and of the substitute
trustee, c/o Shapiro Schwartz, LLP. 45
Wilmington's arguments do not
point out factual allegations in the Amended Petition that state a
plausible claim for relief. 46
IV.
For the
reasons
See Iqbal, 129 S. Ct. at 1949-50.
Conclusions and Order
stated above,
Wilmington's
claims against
Nationstar will be dismissed pursuant to Fed. R. Civ. P. 12(b) (6).
Accordingly, Nationstar Mortgage, LLC's Motion to Dismiss and Brief
in Support (Docket Entry No. 16) is GRANTED and Wilmington's claims
against Nationstar Mortgage, LLC are DISMISSED WITH PREJUDICE.
Because the court has granted Nationstar's Motion to Dismiss
(Docket Entry No. 16), Nationstar Mortgage, LLC's Motion to Quash
and for Stay of Discovery (Docket Entry No. 18) is DENIED AS MOOT.
SIGNED at Houston, Texas, on this 2nd day
CEMBER, 2015.
SIM LAKE
UNITED STATES DISTRICT JUDGE
44
( • • • continued)
a page number.
It is unclear what Plaintiff is citing to.
45
See Notice of Trustee's Sale, Exhibit D to Amended Petition,
Exhibit B-4 to Notice of Removal, Docket Entry No. 1-2, p. 52.
Brian Middleton is listed as substitute trustee with several names
crossed through with pen under his, including Leb Kemp's.
46
Further, the court need not address claims not properly
included in the complaint and raised for the first time in response
to a motion to dismiss. See Water Dynamics, Ltd. v. HSBC Bank USA
Nat. Ass'n, 2012 WL 34252, at *9 (N.D. Tex. Jan. 6, 2012).
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