Bryant v. The CIT Group/Consumer Finance, Inc. et al
MEMORANDUM OPINION AND ORDER GRANTING 22 MOTION to Dismiss and Brief in Support, Attorney Marc Daniel Cabrera terminated, Ditech Financial LLC and The Bank of New York Mellon (as Trustee for the CWABS, Inc. Asset-Backed Certificates, Series 2006-BC4) terminated.(Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
STANLEY J. BRYANT,
THE CIT GROUP/CONSUMER FINANCE, et al.,
CIVIL ACTION H-16-1840
MEMORANDUM OPINION AND ORDER
Pending before the court is a motion to dismiss filed by defendants Ditech Financial, LLC
(“Ditech”) and The Bank of New York Mellon f/k/a The Bank of New York, as Trustee for the
benefit of the Certificateholders of the CWABS, Inc. Asset-Backed Certificates, Series 2006-BC4
(“BONYM”) (collectively, “Defendants”).1 Dkt. 22. After considering the motion, response, and
applicable law, the court is of the opinion that Defendants’ motion to dismiss should be GRANTED.
This case relates to the foreclosure sale of real property located at 2234 Dawn Shadow Way,
Fresno, Texas 77545 (the “Property”). Dkt. 20 (first am. compl.). Plaintiff Stanley J. Bryant
executed a mortgage note on the Property secured by a deed of trust on December 20, 2005
(collectively, the “Loan”). Dkt. 20, Ex. 1. CIT Group/Consumer Finance, Inc. (“CIT”) was the
lender, and the Mortgage Electronic Registration System (“MERS”) was listed as the beneficiary of
the deed of trust. Id. MERS assigned the deed of trust to BONYM on August 23, 2011. Dkt. 20,
Defendants The CIT Group/Consumer Finance, Inc. and CWABS, Inc. have not been
served. Dkt. 1. Defendants Countrywide Home Loans, Inc., now know as Bank of America NA,
and Mortgage Electronic Registration Systems, Inc. have appeared but did not join in the motion to
dismiss. See Dkts. 1-4, 22.
Ex. 10. Bryant claims that at some point in 2011 he had medical problems and struggled to pay his
mortgage and medical bills, which resulted in his falling into default on his home loan. Dkt. 20. He
attaches six different notices of sale to his complaint, the earliest of which is dated November 2011
and the most recent of which is dated April 2016. Id. & Exs. 2–7. Defendant Bank of America,
N.A. (“BOA”) is listed as the acting mortgage servicer on some of the notices, which were served
by a substitute trustee or trustees. See, e.g., Dkt. 20, Ex. 2. The final attached notice of sale lists the
sale date as April 5, 2016. Dkt. 20, Ex. 7. On April 5, 2016, the house was sold to BONYM via a
credit bid. Dkt. 20, Ex. 8. Bryant contends, however, that he holds legal title to the house. Id.
According to Bryant’s amended complaint, the only recorded assignment of the Loan is a
fraud and forgery and, even if it were not, there is no complete and unbroken chain of assignments
from CIT to BONYM. Dkt. 20. Bryant argues that Chester Levings, an Assistant Secretary of
MERS, “purportedly signed” an assignment of the Loan to BONYM on August 23, 2011, but the
assignment does not state that MERS was acting as nominee for any entity. Dkt. 20. Bryant asserts
that this and other documents related to the chain of assignments are void ab initio because they are
forgeries. Id. He also asserts that if the loan was securitized into the 2006-BC4 Trust as BONYM
claims, it was not properly and validly transferred according to the Trust’s Pooling and Servicing
Agreement (“PSA”) and the law of the state in which the Trust was created—New York. Id. He
contends the note was not legally or validly assigned and/or transferred as required by Texas and
New York law and that BONYM thus had no standing to foreclose as a real party in interest. Id.
Bryant raises eleven causes of action: (1) violation of section 12.002 of the Texas Civil Practices and
Remedies Code against BOA, MERS, and BONYM; (2) negligence per se against BOA, MERS, and
BONYM; (3) gross negligence and gross negligence per se against BOA, MERS, and BONYM; (4)
money had and received against BONYM, BOA, and Ditech Financial LLC (“Ditech”); (5) unjust
enrichment against BONYM, BOA, and Ditech; (6) declaratory judgment of lack of standing to
foreclose against BONYM and Ditech; (7) declaratory judgment against all defendants; (8) quiet title
against all defendants; (9) declaratory relief under the statute of limitations against all defendants;
(10) fraud against the CWABS, Inc. Asset-Backed Certificates, Series 2006-BC4 Trust (the
“CWABS Trust”), BONYM, and Ditech; and (11) violation of the Texas Debt Collection Act
(“TDCA”) against BONYM, BOA, and Ditech. Id.
Ditech and BONYM removed the case to this court on June 27, 2016, alleging diversity
jurisdiction. Dkt. 1. They noted that defendants BOA and MERS consented to the removal, and
they asserted that no consent was required from the CWABS Trust or CIT because they are nominal
parties that had been fraudulently joined. Id. They additionally contended that the consent of the
CWABS Trust, CIT, and CWABS, Inc., was not required because these parties have not been served
and no citations have been issued to them. Id. Bryant filed a motion to remand, arguing that the case
should be remanded because the notice of removal failed to state the citizenship of the CWABS
Trust. Dkt. 16. Ditech and BONYM argued that the trustee’s citizenship, not the trust’s, is what
matters in this case. Dkt. 21. The court held that the trustee was the real party in interest whose
citizenship counted for diversity purposes and denied the motion to remand. Dkt. 43.
Defendants filed a motion to dismiss. Dkt. 22. They argue that (1) Bryant lacks standing to
assert any violations of the PSA and challenge any assignment that purportedly violates the PSA;
(2) Bryant’s conclusory forgery allegations do not meet the pleading standards, which require
allegations as to who, what, when, where, and how of the alleged fraud; (3) the Fifth Circuit and
Texas court have repeatedly held that MERS has the authority to assign deeds as a beneficiary,
foreclosing Bryant’s argument that MERS did not have the authority to execute the assignments;
(4) Bryant’s quiet title claim fails because it is based on inadequate allegations of forgery rather than
the strength of Bryant’s title; (5) Bryant’s statutory fraudulent lien claims relating to the filings of
the assignment and substitute trustees in the real property records of Fort Bend County are timebarred; (6) even if the statutory fraudulent lien claims were not time-barred, a document assigning
a deed of trust does not qualify as a “lien or claim” under the statute; (7) moreover, Bryant’s statutory
fraudulent lien claims fail because Bryant did not adequately plead that the defendants intended to
cause physical or financial injury or mental anguish; (8) the negligence-based claims are time-barred;
(9) the negligence-based claims also fail because there is no private right of action under the relevant
statute and, regardless, the defendants did not violate the statute because the statute does not require
recording of an assignment of a deed of trust; (9) the unjust enrichment and money had and received
claims fail because there is a valid contract covering the subject matter of this dispute; (10) the fraud
claims fail under the economic loss rule and were not pled with particularity; and (11) the TDCA
claim fails because it is based on the deficient lack of standing to foreclose and forgery allegations
and also because it is conclusory, lacks specific facts, and is insufficient to plead plausible harm.
Dkt. 22. Defendants argue that because all of these claims fail, Bryant’s requests for declaratory
relief also necessarily fail. Id.
In response, Bryant contends that he has alleged sufficient facts for all claims that require a
heightened pleading standard, that all of his claims are properly pled, and that the statute-oflimitations defense is a red herring. Dkt. 29.
II. LEGAL STANDARD
“Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the
claim showing that the pleader is entitled to relief.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127
S. Ct. 1955, 1964–65 (2007). In considering a Rule 12(b)(6) motion to dismiss a complaint, courts
generally must accept the factual allegations contained in the complaint as true. Kaiser Aluminum
& Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). The court
does not look beyond the face of the pleadings, and attachments thereto, in determining whether the
plaintiff has stated a claim under Rule 12(b)(6). Collins v. Morgan Stanley Dean Witter, 224 F.3d
496, 498 (5th Cir. 2000); Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). “[A] complaint
attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, [but] a
plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555 (citations omitted). The “[f]actual allegations must be enough to raise a
right to relief above the speculative level.” Id. The supporting facts must be plausible—enough to
raise a reasonable expectation that discovery will reveal further supporting evidence. Id. at 556.
In addition to meeting the plausibility standard, under Federal Rule of Civil Procedure 9(b),
if a party is alleging fraud or mistake, the pleading must “state with particularity the circumstances
constituting fraud or mistake.” Fed. R. Civ. P. 9(b); United States ex rel. Grubbs v. Kanneganti, 565
F.3d 180, 185 (5th Cir. 2009) (noting that Rule 9(b) does not “supplant” Rule 8(a)). However, this
particularity requirement “does not ‘reflect a subscription to fact pleading.’” Id. (quoting Williams
v. WMX Techs., Inc., 112 F.3d 175, 178 (5th Cir. 1997)). Instead, pleadings alleging fraud must
contain “simple, concise, and direct allegations of the circumstances constituting the fraud, which
. . . must make relief plausible, not merely conceivable, when taken as true.” Id. (internal quotations
omitted) (referring to the standard enunciated in Twombly).
The Fifth Circuit interprets Rule 9(b) strictly, “requiring a plaintiff pleading fraud to 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.” Id. (quoting Herrmann Holdings Ltd.
v. Lucent Techs. Inc., 302 F.3d 552, 564–65 (5th Cir. 2002)). Thus, Rule 9(b) generally requires the
complaint to “set forth ‘the who, what, when, where, and how’ of the events at issue.” Id. (quoting
ABC Arbitrage Plaintiffs Grp. v. Tchuruk, 291 F.3d 336, 350 (5th Cir. 2002)). However, “Rule
9(b)’s ultimate meaning is context-specific.” Grubbs, 565 F.3d at 185. Thus, “[d]epending on the
claim, a plaintiff may sufficiently ‘state with particularity the circumstances constituting fraud or
mistake’ without including all the details of any single court-articulated standard—it depends on the
elements of the claim at hand.” Id.
Bryant has asserted eleven causes of action plus a request for exemplary damages and
attorneys’ fees. Dkt. 20. The court will first address two overarching themes in Bryant’s amended
complaint—that the Loan was not properly transferred according to the PSA and that various
signatures are forgeries. It will then discuss each claim in the order Bryant asserts them in his
complaint and determine whether Bryant has stated any claims for which relief can be granted.
Bryant contends that the Loan was not properly and validly transferred into the 2006-BC4
Trust according to the Trust’s PSA. Id. Defendants argue that Bryant does not have standing to
assert violations of the PSA or challenge the assignment for purportedly violating the PSA because
Bryant is not a party to the PSA. Dkt. 22. In his response, Bryant makes various arguments relating
to standing, but he does not address Defendants’ contention that Bryant does not have standing to
challenge violations of the PSA. See Dkt. 29. Under Fifth Circuit law, Bryant has no right to
challenge the assignments as being in violation of the PSA unless he is a party to the PSA or an
intended third-party beneficiary of the PSA. Reinagel v. Deutsche Bank Nat’l Trust Co., 735 F.3d
220, 228 (5th Cir. 2013) (applying Texas law). Since Bryant did not plead any facts indicating that
he is an intended third-party beneficiary of the PSA, his claims relating to violations of the PSA
cannot stand. See id. (noting that the plaintiffs had failed to “state any facts indicating that the
parties to the PSA intended that” the plaintiffs be third-party beneficiaries and that, regardless, “the
fact that the assignments violated the PSA—a separate contract—would not render the assignment
void, buy merely entitle [the plaintiffs] to sue for breach of the PSA”). Thus, any claims based on
the invalidity of the assignments due to violations of the PSA fail.
Bryant also contends that he “is informed and believes, and thereon alleges, and alleges upon
information reasonably likely to be discovered, that Chester Levings did not personally sign the
Assignment, nor did a person with authority from the real Chester Levings sign the
Assignment . . . or affix Chester Levings’s electronic signature to the Assignment, . . . [which causes]
the Assignment to be void ab initio as a forgery.” Dkt. 20 (italics corrected). According to the
amended complaint, Bryant based this belief on “out-of-state mortgage assignments in which the
signature for Chester Levings is markedly different from the signature on the Assignment in this
case.” Id. He attached assignments of properties located in Florida and South Carolina that were
purportedly signed by Levings, and in each of these assignments, Levings’ signature is an illegible
right-slanted signature. See Dkt. 20, Exs. 11–14. The signature in this case is also an illegible rightslanted signature. See Dkt. 20, Ex. 10. The signatures on these assignments are similar but not
identical. Compare, Dkt. 20, Exs. 10–14.
Bryant similarly contends in his complaint that he “is informed and believes, and thereon
alleges, or alleges upon information reasonably likely to be discovered, for each of the recorded
substitution documents referenced [in the amended complaint], the signatures of each signer [of the
substitution of trustee filings] were not signed or affixed by the named signer, nor were the
signatures signed or affixed with someone else with the knowledge or authority of the named signers
with regard to the Plaintiff’s specific loan. Thus, all substitution documents are forgeries and void
ab initio.” Dkt. 20. Bryant attached the following to his complaint: an appointment of substitute
trustee purportedly signed by Melanie D. Cowan, Vice President of BONYM, relating to the
Property, and three appointment of substitute trustee forms or assignments of other properties that
are purportedly signed by Cowan. See Dkt. 20, Exs. 16, 18–20. The signatures, like the Levings’s
signatures, are similar but not identical. Bryant contends the Cowan signatures are “markedly
different.” Dkt. 20. Bryant also attaches two additional appointment of substitute trustee forms
appointing substitute trustees for the Property, one purportedly signed by Tanyia Hill, assistant vice
president of BONYM, and one purportedly signed by Brandon Schildts, a BONYM foreclosure
supervisor. Dkt. 20, Exs. 15, 17.
Defendants assert that Bryant must plead the who, what, where, when, and how of the alleged
forgeries and that his conclusory assertions of forgery do not meet this heightened pleading standard.
Dkt. 22. The court agrees that Federal Rule of Civil Procedure 9(b) provides the appropriate
pleading standard for Bryant’s forgery allegations. See Fed. R. Civ. P. 9(b) (“In alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.”); see
also Lopez v. Sovereign Bank, N.A., No. H-13-1429, 2014 WL 7446746, at *8 (S.D. Tex. Dec. 31,
2014) (Rosenthal, J.) (explaining that Rule 9(b) applies to claims in which fraud is alleged, even if
fraud is not an element of that claim, and applying Rule 9(b) to similar forgery allegations).
Bryant argues, however, that his forgery allegations are based on information that is
peculiarly within the opposing party’s knowledge and that, as such, he should be permitted to
discovery information about the alleged forgery. Dkt. 29. He also asserts that pleading fraud with
particularity does not necessarily mean pleading the date, time, or place of the fraud if the party has
“alternative means of injecting precision and some measure of substantiation into its allegations of
fraud.” Id. Bryant contends that allegations of fraud may be based on information and belief when
the facts in question are peculiarly within the opposing party’s knowledge and the complaint sets
forth a factual basis for the plaintiff’s belief. Id.
The court agrees that the requirements of Rule 9(b) may be relaxed where the facts relating
to the alleged fraud are peculiarly within the opposing party’s knowledge; however, this exception
“must not be mistaken for license to base claims of fraud on speculation and conclusory allegations.”
U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)
(quoting Tuchman v. DSC Commc’ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994)); see also id.
(“[E]ven where allegations are based on information and belief, the complaint must set forth a
factual basis for such belief.”). Bryant has provided only conclusory statements that the signature
on the assignment was forged. See Dkt. 20; see also Reed v. Bank of Am, N.A., No. h-15-2005, 2016
WL 3058303, at *3 (S.D. Tex. May 3, 2016) (Miller, J.) (dismissing almost identical forgery
allegations). While he attaches documents that he claims have “markedly different signatures,”
Bryant has provided no information regarding who executed these alleged forgeries, how the forgery
scheme was carried out, or why the alleged forged signatures were made. See Tuchman, 14 F.3d at
1068 (“Rule 9(b) requires the plaintiff to allege the particulars of time, place, and contents of the
false representations, as well as the identity of the person making the misrepresentation and what
[that person] obtained thereby.” (quoting Tel-Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134,
1139 (5th Cir. 1992))). Courts have found allegations similar to Bryant’s insufficient in many cases.
See, e.g., Jemison v. Citimortgage, Inc., No. H-13-2475, 2015 WL 251754, at *2 (S.D. Tex. Jan. 20,
2015) (Rosenthal, J.) (finding bare allegations that signatures on assignments were forged to be
insufficient under Rule 9(b)); Lopez, 2014 WL 7446746, at *8 (same); see also Kreway v.
Countrywide Bank, FSB, 647 F. App’x 437, 438 (5th Cir. 2016) (unpublished). In fact, in Kreway,
the Fifth Circuit addressed a forgery argument almost identical to Bryant’s, and it did not relax the
pleading standard to the extent Bryant advocates. The Kreway plaintiff alleged:
“Upon information and belief, and/or information reasonably
expected to be discovered during this litigation, the 2011 assignment
purportedly signed by [MERS Assistant Secretary] Bud Kamyabi is
also void because it was signed or affixed by a person not Bud
Kamyabi, and signed or affixed by a person without any authority or
knowledge whatsoever from the real Bud Kamyabi.”
The plaintiff in Kreway, like Bryant, attached an exhibit to his pleading containing signature
comparisons. The Fifth Circuit found that the plaintiff “did not plead any facts relating to who
perpetrated the alleged forgery or how, when, and where the alleged forgery was executed. The
allegation therefore [fell] short of the pleading requirements of Rule 9(b).” 647 F. App’x at 438.
All of Bryant’s claims based on his forgery allegations necessarily fail because Bryant has
not met the pleading standard for forgery.
First Cause of Action: Texas Civil Practices and Remedies Code § 12.002
Bryant contends that the defendants made, presented, or used the assignment and substitution
of trustee documents with knowledge that they were fraudulent court records or a fraudulent lien or
claim against real property or an interest in real property in violation of the Texas Civil Practices and
Remedies Code section 12.002. Dkt. 20. Defendants assert that this fraudulent lien claim fails as
a matter of law because (1) it is time-barred; (2) a document assigning a deed of trust does not
qualify as a “lien or claim” under the statute; and (3) Bryant fails to sufficiently plead that the
defendants intended to cause injury. Dkt. 22. Bryant counters that several courts have held that an
assignment of a deed of trust can constitute a lien or claim against an interest in property. Dkt. 29.
And he argues that the statute of limitations argument is a red herring because he has properly pled
the discovery rule. Id.
To state a claim under Section 12.002(a), a plaintiff must plead facts
showing the defendant
“(1) made, presented, or used a document with knowledge that it was
a ‘fraudulent lien or claim against real or personal property or an
interest in real or personal property,’ (2) intended that the document
be given legal effect, and (3) intended to cause the plaintiff physical
injury, financial injury, or mental anguish.”
Ferguson v. Bank of N.Y. Mellon Corp., 802 F.3d 777, 783 (5th Cir. 2015) (quoting Henning v.
OneWest Bank FSB, 405 S.W.3d 950, 964 (Tex. App.—Dallas 2013, no pet.) (quoting Tex. Civ.
Prac. and Rem. Code § 12.002(a))). The court chooses to address only the intent argument, which
is dispositive. In pleading the third element, intent to cause injury, Bryant essentially recites the
statute: “Defendants made, presented, or used a document or other record with intent to cause
Plaintiff to suffer financial injury, mental anguish, or emotional distress.” Dkt. 20. This is
insufficient to state a claim for relief. See Iqbal, 556 U.S. at 678 (“A pleading that offers ‘labels and
conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” (quoting
Twombly, 550 U.S. at 555)). Defendants’ motion to dismiss the statutory claims under section
12.002, which is Bryant’s first cause of action, is GRANTED. Bryant’s claim for a violation of
section 12.002 is DISMISSED WITH PREJUDICE.
Second and Third Causes of Action: Negligence Per Se, Gross Negligence, and Gross
Negligence Per Se Claims
Bryant contends that the defendants were “negligent per se in the misconduct alleged herein”
because they violated section 12.002, the Texas Local Government Code section 192.007, and the
Texas Civil Practices and Remedies Code section 41.008(c)(8) and (c)(12). Dkt. 20. Defendants
argue that the statute of limitations for these claims is two years and that negligence claims accrue
at the time of the wrongful act that allegedly caused the injury. Dkt. 22. Defendants note that the
assignment to BONYM was filed on August 25, 2011, and assert that the claim accrued on that day;
yet, this lawsuit was not filed until May 17, 2016. Dkt. 22. Defendants argue that the discovery rule
does not apply because the filing of the assignment in the real property records of Fort Bend County
“‘charged [Plaintiff] with notice.’” Id. (quoting Poag v. Flories, 317 S.W.3d 820, 826 (Tex.
App.—Fort Worth 2010, pet. denied)).
Under Texas law, “the statute of limitations does not begin to run until the injured party
‘discovers’ or with reasonable care and diligence should have discovered that a particular injury has
occurred.” In re Swift, 129 F.3d 792, 796 (5th Cir. 1997) (interpreting Texas law). “For the
discovery rule to apply, the injury must be inherently undiscoverable and objectively
verifiable. . . . An injury is inherently undiscoverable if it is the type of injury that is not generally
discoverable by the exercise of reasonable diligence.” Poag, 317 S.W.3d at 826. In Poag v. Flories,
the Fort Worth Court of Appeals held that recording an administrator’s deed charged the plaintiff
with notice and commenced the running of the limitations period. Id. at 827. This court agrees with
Defendants that, like the recording of the administrator’s deed in Poag, the filing of the assignment
in this case in Fort Bend County’s real property records charged Bryant with notice and commenced
the running of the limitations period. If the allegedly forged documents were filed in the real
property records, they were not inherently undiscoverable. Defendants’ motion to dismiss the
negligence per se, gross negligence, and gross negligence per se claims under the statute of
limitations is GRANTED. Bryant’s negligence per se, gross negligence, and gross negligence per
se claims, which are his second and third causes of action, are DISMISSED WITH PREJUDICE.
Fourth and Fifth Causes of Action: Equitable Tort Claims
Bryant’s claims of money had and received and unjust enrichment stem from his claim that
the assignments were forged. See Dkt. 29 (arguing that the equitable and tort claims are properly
pled because “the assignment of the deed of trust is void and do[es] not transfer the contractual rights
from one Defendant to another”). Specifically, Bryant contends that Defendants were unjustly
enriched by receiving mortgage payments from Bryant when they were not the legal owners of the
mortgage lien, loan, note, or deed of trust. Dkt. 20. Bryant additionally argues that Defendants made
mortgage assignments with knowledge that the documents or records were fraudulent court records
or lines. Id. He contends that BONYM, BOA, and Ditech hold the monthly payments they received
from Bryant as well as the Property when in equity and good conscience the money and Property
belong to Bryant. Id.
Defendants argue that the unjust enrichment and money had and received claims fail because
Bryant cannot recover under both tort and contract claims, and that the claims are based on the
flawed assignment challenges, anyway, and therefore must be dismissed.
A money had and received claim is “‘equitable in nature’” and “‘belongs conceptually to the
doctrine of unjust enrichment.’” Fowler v. U.S. Bank Nat’l Ass’n, 2 F. Supp. 3d 965, 983 (S.D. Tex.
2014) (Lake, J.) (quoting Best Buy Co. v. Barrera, 248 S.W.3d 160, 162 (Tex. 2007), and Edwards
v. Mid-Continent Office Distribs., L.P., 252 S.W.3d 833, 837 (Tex. App.—Dallas 2008, pet.
denied)). To establish a claim for money had and received, Bryant must show that the “defendants
hold money which in equity and good conscience belongs to him.” Id. at 983.
Under Texas law, unjust enrichment “characterizes the result of failing to make restitution
or benefits received under circumstances giving rise to an implied or quasi-contract.” TransAmerica
Natural Gas Corp. v. Finkelstein, 933 S.W.2d 591, 600 (Tex. App.—San Antonio 1996, writ
denied). The purpose for the claim is to prevent unconscionable loss to the payor and unjust
enrichment to the payee. Bryan v. Citizens Nat’l Bank in Abilene, 628 S.W.2d 761, 763 (Tex. 1982).
An unjust enrichment claim “is based on quasi-contract and is unavailable when a valid, express
contract governing the subject matter of the dispute exists.” Coghlan v. Wellcraft Marine Corp., 240
F.3d 449, 454 (5th Cir. 2001) (applying Texas law); see also Finkelstein, 933 S.W.2d at 600.
Bryant does not sufficiently state a claim for either of these claims because he bases these
claims on his allegations of forgery, which the court has ruled do not meet the pleading standard.
Therefore, Defendants’ motion to dismiss the money had and received and unjust enrichment claims,
which are Bryant’s third and fourth causes of action, is GRANTED. The money had and received
and unjust enrichment claims are DISMISSED WITH PREJUDICE.
Sixth Cause of Action: Lack of Standing to Foreclose
Bryant contends that BONYM did not have standing to conduct the foreclosure sale due to
the allegedly forged assignment. Dkt. 20. Bryant also asserts that the assignment to BONYM is
invalid and demonstrates a break in the chain of assignments of the Deed of Trust and Note because
MERS failed to state for whom it was acting as nominee on the face of the Assignment. Id.
Defendants argue that the conclusory forgery allegations cannot support the lack of standing to
foreclose claim and that the chain of title argument is invalid because MERS had the right to assign
the Deed of Trust to BONYM. Dkt. 29.
The court agrees with Defendants on both counts. First, all claims stemming from the alleged
forgery fail because Bryant has not adequately pled that the assignment was forged. Second,
Bryant’s chain of title argument fails because MERS assigned only the Deed of Trust and had
authority to do so as the beneficiary of the Deed of Trust. See Reece v. U.S. Bank Nat’l Ass’n, 762
F.3d 422, 425 (5th Cir. 2014) (“Our Court has expressly recognized that MERS may assign a deed
of trust to a third party and that such assignments confer the new assignee standing to non-judicially
foreclose on property associated with that particular deed of trust.” (citing Martins v. BAC Home
Loan Servicing, L.P., 722 F.3d 249, 253–55 (5th Cir. 2013)). Accordingly, Defendants’ motion to
dismiss Bryant’s sixth cause of action, lack of standing to foreclose, is GRANTED. Bryant’s lack
of standing to foreclose claim is DISMISSED WITH PREJUDICE.
Seventh Cause of Action: Declaratory Judgment
Bryant contends that BONYM and its agents do not have authority to foreclose because
BONYM is not a real party in interest to the Note or Deed of Trust and requests judicial
determination of the rights and obligations of the parties with regard to the Property. Dkt. 20. He
requests, specifically, a determination whether any defendant has an ownership interest in the Note,
a decree declaring that he is entitled to the exclusive possession of the Property and that Defendants
have no monetary interest in the Note, and a decree declaring that he owns a fee simple and is
entitled to the quiet and peaceful possession of the Property. Id. Defendants argue that since the
request for declaratory judgment is dependent on the underlying causes of action and because Bryant
has not asserted any claims that are viable, the request for declaratory relief must also be denied.
Dkt. 22. The court agrees. “The Declaratory Judgment Act is remedial only.” Collin Cnty., Tex.
v. Homeowners Ass’n for Values Essential to Neighborhoods, 915 F.2d 167, 170 (5th Cir. 1990).
“A party’s legal interest must relate to an actual ‘claim arising under federal law that another asserts
against him . . . .’” Id. (quoting Loew v. Ingalls Shipbuilding, 723 F.2d 1173, 1179 (5th Cir. 1984));
see also Mbache v. Wilmington Trust, Nat’l Ass’n, No. 4:15-CV-1846, 2016 WL 1162200, at *4 n.5
(S.D. Tex. Mar. 24, 2016) (Hoyt, J.) (“Claims for injunctive relief and declaratory relief are remedial
in nature, and are therefore dependent on the plaintiff’s assertion of a viable cause of action.”). As
Bryant has pled no viable causes of action, Defendants’ motion to dismiss Bryant’s seventh cause
of action seeking declaratory relief is GRANTED. Bryant’s request for declaratory relief is
Eighth Cause of Action: Quiet Title
Bryant contends that “[u]nder the lien theory of mortgages, which is followed in Texas, the
homeowner retains legal ownership of the mortgaged property while the trustee named in the deed
of trust retains equitable ownership in favor of the original lender or their successors and assigns.”
Dkt. 20. Bryant argues that he has currently “lost legal ownership of the Property he had pursuant
to that warranty deed he received from the previous owners” but that he has “an equitable interest
in the Property . . . which he is enforcing via this lawsuit.” Id. He argues that this equitable interest
is superior to BONYM’s legal title resulting from the foreclosure sale because BONYM “wrongly
claimed a secured monetary interest and estate in the Property that was adverse to Plaintiff’s legal
title at the time of sale.” Id.
Defendants assert that the quiet title claim fails as a matter of law because it is not based on
the strength of Bryant’s title “but rather on the fatally flawed forgery allegations.” Dkt. 22.
Defendants argue that Bryant cannot demonstrate that he has superior title because any ownership
interest he claims he had was “wiped away by the foreclosure of the Property, thereby giving
BONYM superior title to the Property as a matter of law.” Id. Defendants also argue that the quiet
title claim fails because Bryant admitted he was in default in his amended complaint and the
amended complaint does not state that Bryant tendered the amount owed on the Note. Id.
Bryant argues that Defendants “are wrong on the quiet title” and that the cases cited by
Defendants “mangled Texas law on quiet title.”2 Dkt. 29. Bryant cites various cases in an attempt
to explain to the court and Defendants “what Texas law really is.” Id. Bryant also contends that he
Bryant first explains “lien theory” by referring to a federal bankruptcy court opinion and
a Tyler Court of Appeals decision. See Dkt. 29. The court will instead refer to an opinion by the
Texas Supreme Court. In Taylor v. Brennan, 621 S.W.2d 592 (Tex. 1981), the Texas Supreme Court
explained, “Texas follows the lien theory of mortgages. Under this theory the mortgagee is not the
owner of the property and is not entitled to its possession, rentals or profits.”
does not have to tender equity “at any moment during the litigation to set aside the sale” and that,
instead, he must tender equity to regain title only if he is successful on the merits of setting aside a
foreclosure sale. Dkt. 29.
Removing the Cloud
Bryant next points out that in a suit to quiet title, the equitable relief requested is to remove
a cloud on the title.3 Dkt. 29 (citing MERS v. Groves, No. 14-10-00090-CV, 2011 WL 1364070, at
*5 (Tex. App.—Houston [14th Dist.] Apr. 12, 2011, pet. denied)). Indeed, a “suit to quiet title—also
known as a suit to remove cloud from title—relies on the invalidity of the defendant’s claim to the
property.” Gordon v. W. Hous. Trees, Ltd., 352 S.W.3d 32, 42 (Tex. App.—Houston [1st Dist.]
2011, no pet.). “A cloud on title exists when an outstanding claim or encumbrance is shown, which
on its face, if valid, would affect or impair the title of the owner of the property.” Id. To establish
that he “has a right of ownership and that the adverse claim is a cloud on the title that equity will
remove,” Bryant must show “(1) an interest in a specific property, (2) title to the property is affected
by a claim by the defendant, and (3) the claim, although facially valid, is invalid or unenforceable.”
Vernon v. Perrien, 390 S.W.3d 47, 61 (Tex. App.—El Paso 2012, pet. denied).
The court finds that Bryant has not sufficiently allegedly that BONYM “wrongly claimed a
secured monetary interest and estate in the Property that was adverse to Plaintiff’s legal title at the
time of sale” (Dkt. 20). This assertion depends on the forgery allegations, which are not adequately
Bryant also contends in his response that BONYM is not the bona fide purchaser of the
Property and asserts in his response to the motion to dismiss that “[i]n the instant case, there has not
been a foreclosure sale, yet.” Dkt. 29. This is contrary to the complaint, which states that the
Property sold on April 5, 2016, and expressly indicates that it was a “foreclosure sale.” See Dkt. 20
at 4 (“Before the foreclosure sale, Plaintiff was the legal title-holder to the Property.”). Additionally,
the substitute trustee’s deed attached to the complaint indicates the Property was sold at a foreclosure
sale in Fort Bend County on April 5, 2016. Dkt. 20, Ex. 8. It appears this argument was erroneously
left in the response, and the court therefore does not address it.
pled. Bryant has thus not adequately pled that BONYM’s claim was invalid or unenforceable, which
is necessary to establish the third element. Accordingly, Defendants’ motion to dismiss the quiet
title claim, which is Bryant’s eighth cause of action, is GRANTED. Bryant’s quiet title claim is
DISMISSED WITH PREJUDICE.
Defendants assert that a purchaser at a foreclosure sale has superior title as a matter of law
to the prior owner’s because “the prior owner’s chain of title is cut off by the trustee’s deed that is
executed in favor of the purchaser at the foreclosure sale.” Dkt. 22 (citing Cook-Bell v. MERS, 868
F. Supp. 2d 585, 591 (N.D. Tex. 2012)). Defendants argue that Bryant’s interest in the title was
“wiped away by the foreclosure” and mention that Bryant failed to allege he tendered the amount
owed as an additional reason why the quiet title claim should fail. Id. Bryant contends that he does
not have to tender equity “at any moment during the litigation to set aside the sale” and that, instead,
he must tender equity to regain title only if he is successful on the merits of setting aside a
foreclosure sale. Dkt. 29.
Bryant’s arguments about when he must tender equity are not on point. He clearly did not
pay the amount he owed before the foreclosure sale, so the foreclosure sale proceeded. Bryant has
alleged no facts to support the claim that his interest in the title is superior to BONYM’s.
Bryant’s Ninth Cause of Action: Declaratory Relief Under the Statute of Limitations
Bryant contends that the limitations period began to run more than four years before the April
2016 foreclosure sale and that there were no actions taken by the parties or their agents during the
limitations period that could be construed as a waiver or abandonment of acceleration. Dkt. 20. He
therefore requests a judicial declaration of the rights and interests of the parties and a determination
of the validity of the defendants’ real property liens. Id. Defendants argue that Bryant “fails to
allege when the Loan was accelerated and merely states in a conclusory fashion that no actions were
taken to abandon the acceleration of the Loan.” Dkt. 22. Defendants contend this does not raise a
right to relief above a speculative level. Id. Bryant argues that he lays out the timing in paragraphs
11 and 12 of his amended complaint, which indicate that Defendants first began foreclosure activity
in 2011 and did not complete the foreclosure sale until 2016. Dkt. 29.
The court agrees with Bryant that he sets forth some timing information related to the
foreclosure in his amended complaint. He indicates that he received notices of sale in November
2011, November 2012, December 2012, August 2015, January 2016, and April 2016. See Dkt. 20
¶ 11. He attaches all of these notices to his complaint. See Dkt. 20, Exs. 2–7. He also states that
the Property did was sold on April 5, 2016. Dkt. 20 ¶ 12. He does not, however, state when the note
was accelerated. The court thus agrees with Defendants that Bryant’s request for a declaratory
judgment on the limitations issue is conclusory and Bryant has not provided sufficient information
to state a claim for relief beyond a speculative level. Defendants’ motion to dismiss this claim for
declaratory relief under the statute of limitations, which is Bryant’s ninth cause of action, is
GRANTED. Bryant’s request for declaratory relief is DENIED.
Tenth Cause of Action: Fraud
Bryant’s fraud claim also stems from his allegations that the deed of trust was forged. See
Dkt. 20. Defendants assert that the fraud claim is (1) barred by the economic loss rule; and (2) should
be dismissed regardless because Bryant has not sufficiently pled the specific speaker, the
misrepresentations, or when the misrepresentations were made, which are all necessary to establish
a fraud claim. Dkt. 22. Bryant contends that he alleges “a continuing and systematic series of
statements that Defendants owned the power of sale when in fact they did not.” Dkt. 29. He attaches
documents that he alleges demonstrate six instances in which Defendants claimed to have the power
of sale when they did not. Dkt. 29 & Exs. 2–7.
If Bryant had pled the forgery claims with sufficient particularity, then these documents may
have been sufficient evidence of who, what, when, where, and how to state a claim, but since the
forgery claim fails, the fraud claim based on the defendants not having the power of sale due to the
alleged forgeries also fails. Defendants’ motion to dismiss the fraud claim, which is Bryant’s tenth
cause of action, is GRANTED. Bryant’s fraud claim is DISMISSED WITH PREJUDICE.
Eleventh Cause of Action: Texas Debt Collection Act
Bryant contends that BONYM, BOA, and Ditech are “debt collectors” who engaged in the
collection of consumer debt with regard to Bryant’s mortgage loan. Dkt. 20. Bryant alleges that
BONYM, BOA, and Ditech violated the TDCA “by threatening foreclosure and engaging in
foreclosure activity against [Bryant], attempting to collect the mortgage Note debt from [Bryant]
without legal standing to do so, and when [BONYM] threatened to sell [Bryant’s] home pursuant
to a foreclosure order based on such wrongful charges.” Dkt. 20. Bryant also alleges that the
defendants’ actions in processing the foreclosure, including filing the allegedly forged assignments
and the attempts to collect past the limitations period constituted false, deceptive, or misleading
Defendants argue that Bryant’s TDCA claim fails because it is based on the fatally flawed
forgery allegations. Dkt. 22. Defendants additionally assert that his allegations are conclusory, lack
specific facts, and are thus insufficient to state a plausible claim. Id. Defendants further point out
that foreclosure is not an action prevented by law and thus cannot constitute a violation of the
TDCA, particularly since Bryant admits he defaulted on his loan. Id.
Bryant alleges violations of Texas Finance Code sections 392.301(a)(8), 392.304(a)(14), and
392.304(a)(19). Under Texas Finance Code section 392.301(a)(8), a debt collector “may not use
threats, coercion, or attempts to coerce that employ . . . threatening to take an action prohibited by
law.” Tex. Fin. Code Ann. § 392.301(a)(8). Under section 392.304(a)(14), a debt collector “may
not use a fraudulent, deceptive, or misleading representation that employs . . . representing falsely
the status or nature of the services rendered by the debt collector or the debt collector’s business.”
Tex. Fin. Code Ann. § 392.304(a)(14). Under section 392.304(a)(19), the catch-all provision, a debt
collector “may not use a fraudulent, deceptive, or misleading representation that employs . . . using
any other false representation or deceptive means to collect a debt or obtain information concerning
a consumer.” Tex. Fin. Code Ann. § 392.304(a)(19).
The court agrees with the defendants that Bryant fails to state a claim for violations of these
statutes because they are all based on the forgery allegations. Defendants’ motion to dismiss the
TDCA claims is GRANTED. All of Bryant’s TDCA claims, which are asserted in his eleventh cause
of action, are DISMISSED WITH PREJUDICE.
Requests for Attorneys’ Fees and Exemplary Damages
Since none of Bryant’s claims survive the motion to dismiss, his requests for attorneys’ fees
and exemplary damages are also DENIED.
Defendants’ motion to dismiss is GRANTED. All of Bryant’s claims against Ditech and
BONYM are DISMISSED WITH PREJUDICE. The claims against the remaining defendants
Signed at Houston, Texas on May 17, 2017.
Gray H. Miller
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?