Bryant v. The CIT Group/Consumer Finance, Inc. et al
Filing
57
MEMORANDUM OPINION AND ORDER GRANTING IN PART, DENYING IN PART 49 MOTION for Summary Judgment and Brief in Support, DENYING 46 MOTION to Sever. Defendants may file a renewed motion by April 10, 2018, requesting summary judgment on the remaining claims with consideration given to the summary judgment standard as opposed to the standard applicable to a motion to dismiss. Bryant shall respond to the renewed motion within fifteen days.(Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
STANLEY J. BRYANT,
Plaintiff,
v.
THE CIT GROUP/CONSUMER
FINANCE, INC., et al.,
Defendants.
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March 28, 2018
David J. Bradley, Clerk
CIVIL ACTION H-16-1840
MEMORANDUM OPINION AND ORDER
Pending before the court is a motion for summary judgment filed by Countrywide Home
Loans, Inc. n/k/a Bank of America, North America (“BANA”), and Mortgage Electronic Registration
Systems, Inc. a/k/a MERS (“MERS”) (collectively, “Defendants”), and a motion to sever filed by
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 CWABS, Inc. Asset-Backed Certificates, Series
2006-BC4 (“BONYM”).1 Having considered the motions, related filings, and applicable law, the
court is of the opinion that the motion for summary judgment should be GRANTED IN PART AND
DENIED IN PART, and the motion to sever should be DENIED.
1
Ditech Financial, LLC 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—have been dismissed from the case. See Dkt. 44 at 1. Defendants CIT
Group/Consumer Finance, Inc. and CWABS, Inc. have not been served and consequently are
DISMISSED WITHOUT PREJUDICE. See Fed. R. Civ. P. 4(m).
I. BACKGROUND
A.
Facts
Plaintiff Stanley J. Bryant filed suit to challenge the foreclosure sale of the real property at
2234 Dawn Shadow Way, Fresno, Texas 77545 (the “Property”). Dkt. 49 at 2. On December 20,
2005, he executed a $130,736 mortgage note secured by a deed of trust (collectively, the “Loan”).
Dkt. 20 at 3. It conveyed a security interest in the Property to CIT Group/Consumer Finance, Inc.
(“CIT”), the original lender. Dkt. 20 at 3. Bryant defaulted on the Loan in 2011, allegedly because
he struggled to pay the bills after experiencing medical problems. Id. at 4. He received an
unequivocal notice of default and intent to accelerate the Loan from BANA in September of that
year. Dkt. 54 at 2 & Ex. 4. In November, Recontrust Company, N.A.—acting for BANA, which
in turn was acting for BONYM—sent Bryant a foreclosure sale notice. Dkt. 20, Ex. 2; Dkt. 54, at
2 & Ex. 4. Bryant also received five other notices of sale, the most recent of which is dated April
2016. Dkt. 54 at 2 & Exs. 2–7. Defendant BANA 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
Property was sold on April 5, 2016, to BONYM via a credit bid. Dkt. 20, Ex. 8; Dkt. 54 at 4. Bryant
contends, however, that he still holds legal or equitable interest in the house. See Dkt. 20 at 4, 29.
B.
Bryant’s Claims Against BANA and MERS
Bryant asserts eleven causes of action involving BANA, MERS, or both.2 Bryant first alleges
that several documents in the chain of title—some of which were allegedly prepared by MERS or
BANA—are frauds and forgeries or are otherwise inadequate, breaking the chain of assignments
from the original lender, CIT, to BONYM. Dkt. 20 at 4–7. Bryant also argues that Chester Levings,
2
Bryant’s claims and Defendants’ arguments regarding their motion for summary judgment
have been reorganized for clarity.
2
who was acting as assistant secretary for MERS, did not actually sign the assignment on file with
Fort Bend County Property Records and that it is void as a forgery. Id. at 5. He similarly maintains
that Melanie Cowan—acting as vice president of BANA, which was acting as attorney-in-fact for
BONYM—did not sign the substitute trustee document bearing her signature and that the document
is therefore a forgery. Id. at 6. He also argues that the chain of title was broken because MERS
failed to specify for whom it was acting as “nominee” on its assignment to BONYM and that,
because MERS was not the owner of the note or deed of trust, the assignment is void. Id. at 4–6.
Bryant’s second claim is that his Loan was not properly “securitized into the 2006-BC4
Trust . . . according to that Trust’s Pooling and Servicing Agreement (“PSA”) and the law of the
state under which the 2006-BC4 Trust was created.” Id. at 7. He argues that the assignment on
record with Fort Bend County is dated “well after the Trust’s closing date” and that other relevant
paperwork was improperly filed. Id. at 11–14.
Bryant’s third claim, which he labels as his first cause of action, is that BANA and MERS
violated section 12.002 of the Texas Civil Practice and Remedies Code which prohibits
mak[ing], present[ing], or us[ing] a document or other record with: (1) knowledge that the
document or other record is a fraudulent court record . . . (2) intent that the document or other
record be given the same legal effect as a court record . . . evidencing a valid lien or claim
against real or personal property or an interest in real or personal property; and (3) intent to
cause another person to suffer . . . financial injury; or . . . mental anguish or emotional
distress.
Tex. Civ. Prac. & Rem. Code § 12.002(a); Dkt. 20, at 20–21. He alleges that BANA and MERS
violated this statute by using fraudulent mortgage assignments and trustee substitution documents
that did not accurately represent their interest in the Property. Dkt. 20, at 20–22. He also pleads the
discovery rule on this claim, stating that “his legal injury was inherently un-discoverable due to
Defendants’ conduct.” Id. at 22.
3
Fourth, he contends that the actions of BANA and MERS regarding the mortgage
assignments violated the following statutes and accordingly rendered BANA and MERS negligent
per se: Texas Civil Practice & Remedies Code sections 12.002, 41.008(c)(8), 41.008(c)(12); Texas
Local Government Code section 192.007; and Texas Penal Code sections 32.21 and 32.47. Dkt. 20
at 22–24. Bryant also argues that BANA and MERS were grossly negligent and grossly negligent
per se based on violations of the same statutes. Id. at 24–25. He also pleads the discovery rule on
these claims. Id. at 25.
Fifth, Bryant brings a money had and received claim against BANA, contending that it held
“money and property that in equity and good conscience belongs to Plaintiff.” Id. at 25.
Sixth, Bryant contends that BANA was unjustly enriched by its receipt of his payments when
BANA “was not the legal owner and holder of the mortgage loans, mortgage liens, mortgage Note,
or Deeds of Trust.” Id. at 26. He pleads the discovery rule on this claim as well. Id.
Seventh, he seeks a declaratory judgment against BANA and MERS regarding whether they
had the authority to foreclose or ownership interest in the note. Id. at 28–29. He also seeks a
declaration “that Plaintiff is entitled to the exclusive possession of the property” and that BANA and
MERS have no interest in the Property. Id. at 29.
Eighth, Bryant brings a quiet title claim against BANA and MERS, alleging that he has
equitable interest in the Property. Id. He asserts that Defendants’ claims to interest in the Property
“constitute clouds on Plaintiff’s rightful title to the Property.” Id. at 30. He seeks a declaratory
judgment that “no Defendant has or had any interest in the Property at the time of sale and that
Plaintiff is entitled to quiet and peaceful possession of the Property against all Defendants now and
forever.” Id.
4
Ninth, Bryant seeks declaratory relief against BANA and MERS because the statute of
limitations “for any Defendant or their mortgage servicer to conduct a non-judicial or judicial
foreclosure against the Plaintiff’s Property” under Texas Civil Practice and Remedies Code section
16.035 had expired, and they took no actions that could be construed as waiver or abandonment of
acceleration of the Loan. Id. at 30–31.
Tenth, Bryant asserts that Defendants fraudulently asserted an interest in the Property or note,
made attempts to collect on the Property with a broken chain of title, and failed to disclose that they
were time-barred from foreclosing on the Loan. Id. at 31–32. He also pleads the discovery rule
regarding this claim. Id. at 33.
Eleventh, Bryant contends that BANA violated the Texas Debt Collection Act under Texas
Financial Code sections 392.301(a)(8), 392.304(a)(14), and 392.304(a)(19). Id. at 33–34. He argues
that BANA violated these provisions “by threatening foreclosure and engaging in foreclosure activity
against Plaintiff, attempting to collect the mortgage Note debt from Plaintiff without legal standing
to do so,” and “filing . . . forged assignments and attempt[ing] to foreclose past the limitations
period.” Id. at 34. Bryant alleges that these actions make him eligible for actual and statutory
damages. Id. He also pleads the discovery rule regarding this claim. Id. Bryant also requests
attorneys’ fees and uncapped exemplary damages. Id. at 35–37.
C.
Motion for Summary Judgment
BANA and MERS now move for summary judgment on all of Bryant’s remaining claims.
Dkt. 49 at 1, 4. Addressing Bryant’s securitization challenges, BANA and MERS argue that Bryant
lacks standing to assert violations of the PSA. Dkt. 49 at 5–6. Regarding his claim involving MERS
and the chain of title, they argue that MERS was a beneficiary of the deed of trust, had the right to
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assign the deed of trust to BONYM, and “did not purport to assign the Note in the Assignment.”
Id. at 9.
Defendants assert that Bryant’s negligence per se, gross negligence, and gross negligence per
se claims fail because (1) they are time-barred; (2) Texas Local Government Code section 192.007
provides no cause of action and “does not require recordation of an assignment of a deed of trust;”
(3) assignments are not liens under Texas Civil Practice and Remedies Code section 12.002;
(4) Bryant failed to cite authority that violations of 12.002 or 192.007 constitute negligence per se
or gross negligence per se; (5) he “fail[ed] to allege any facts that he belongs to the class that the
statutes were intended to protect and that the statute is one for which tort liability may be imposed
when violated;” (6) he failed to allege “any non-conclusory facts that Defendants’ conduct caused
him injury;” and (7) he failed to “allege facts showing Defendants owed him a legal duty.” Dkt. 49
at 18–19. Defendants also argue that Bryant’s Penal Code violation claim fails because the statute
provides no private cause of action. Id. at 19–20.
Regarding Bryant’s declaratory relief request involving the statute of limitations, Defendants
argue that Bryant’s allegations that the Loan was accelerated and not abandoned are conclusory.
Id. at 27. Addressing the forgery allegations, BANA and MERS argue that “assignments of deeds
of trust and appointments of substitute trustees are not liens,” Bryant failed to allege sufficient facts
to support the fraudulent lien claim, and the claim is time-barred. Id. at 3, 6–7. Regarding Bryant’s
fraudulent lien claim, Defendants argue that the claim is time-barred, the document assigning the
deed of trust is not a “lien or claim” for purposes of Texas Civil Practice and Remedies Code section
12.002, Bryant’s allegations are conclusory and lacking the factual support necessary to establish the
elements of this claim under Texas law, and his claim should be dismissed with prejudice because
he “lacks standing to challenge the Assignment.” Id. at 11–14. Responding to Bryant’s money had
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and received claim, BANA asserts that it fails “because it is based on the flawed assignment
challenges” and “because the Note and Deed of Trust govern the subject matter of the dispute.”
Id. at 20. BANA and MERS argue that Bryant’s unjust enrichment allegations fail “because Plaintiff
does not allege sufficient facts to support such claims.” Id. at 20–21.
BANA and MERS note that declaratory relief “is remedial in nature and dependent upon the
assertion of viable causes of action.” Id. at 26. They argue none of Bryant’s causes of action is
viable and Bryant failed to allege in more than a conclusory fashion that Defendants did not abandon
acceleration of the Loan. Id. at 27. Regarding Bryant’s quiet title claim, BANA and MERS argue
this claim fails both because Bryant “cannot demonstrate that he has superior title to the property”
and because he has admitted that he is in default and failed to pay the amount he owes on the note.
Id. at 4, 11. BANA and MERS argue “[t]he fraud claim is barred by the economic loss rule” and that
Bryant failed to meet the pleading standards of Rule 9(b). Id. at 4, 21, 23–24. BANA argues that
Bryant’s Texas Debt Collection Act (“TDCA”) claim fails both because it is based on the forgery
allegations and because Bryant failed to allege that BANA made an affirmative statement that was
false or misleading. Id. at 3–4, 24–26.
D.
Bryant’s Response
In his response to Defendants’ motion for summary judgment, Bryant only addresses their
contention regarding the statute of limitations. See Dkt. 54, at 3–6. He asserts that four years
expired after Defendants accelerated his Loan and before they foreclosed on his Property. Dkt. 54
at 4–6. For this reason, he contends, “the evidence raises a genuine issue of material fact as to [his]
declaratory judgment claim and [the defendants’] affirmative defense of [the] statute of limitations.”
Id. at 4.
7
E.
Defendants’ Reply
BANA and MERS reply that the initial acceleration of Bryant’s Loan was abandoned and that
the statute of limitations accordingly did not expire before Defendants foreclosed on the house.
Dkt. 55 at 3–6.
II. LEGAL STANDARD
A court shall grant summary judgment when a “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for
the nonmoving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). “For any
matter on which the non-movant would bear the burden of proof at trial . . . , the movant may merely
point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating
by competent summary judgment proof that there is an issue of material fact warranting trial.”
Transamerica Ins. v. Avenell , 66 F.3d 715, 718–19 (5th Cir. 1995). The moving party bears the
initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552 (1986). “[T]he non-moving party must come
forward with ‘specific facts showing that there is a genuine issue for trial’” to prevent summary
judgment. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct.
1348 (1986) (quoting Fed. R. Civ. P. 56(e)). The court must view the evidence in the light most
favorable to the non-movant and draw all justifiable inferences in favor of the non-movant. Envtl.
Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir. 2008).
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III. ANALYSIS
A.
Arguments that Satisfy the Summary Judgment Standard
1.
Securitization Challenges
Bryant contends that the Loan was not properly and validly transferred into the 2006-BC4
Trust according to the Trust’s PSA. Dkt. 20 at 14, 27–28. Defendants move for summary judgment
on this claim, arguing that Bryant lacks standing to assert PSA violations because Bryant is not a
party to, or a third party beneficiary of, the PSA. Dkt. 49 at 5–6.
The Fifth Circuit has established that plaintiffs have no right to challenge assignments as
violating a PSA unless they are parties to the PSA or intended third-party beneficiaries of the PSA.
Reinagel v. Deutsche Bank Nat. Tr. Co., 735 F.3d 220, 228 (5th Cir. 2013). Because Bryant presents
no facts indicating he was a third-party beneficiary of the PSA, his claim regarding PSA violations
cannot stand and the invalidity of the assignments cannot stand. See id.; Jolem, LLC v. Select
Portfolio Servicing, Inc., No. H-14-3301, 2015 WL 3823642, at *6 (S.D. Tex. June 18, 2015)
(holding similarly that the plaintiff could not assert PSA violations when it was not a third-party
beneficiary of the PSA). Accordingly, Defendants’ motion for summary judgment on this claim is
GRANTED.
2.
Fraudulent Lien Claim
Bryant contends that Defendants violated Texas Civil Practice and Remedies Code section
12.002 by intentionally misrepresenting that they “were entitled to exercise the power of sale
provision contained in the Security Instrument and collect monetarily on the Note” when they “had
no legal, equitable, or actual beneficial interest whatsoever in the Property or the Note.” Dkt. 20
at 20–21, 31. He further argues that Defendants’ alleged misrepresentations induced Bryant to rely
on their misrepresentations to pay on the Loan, and that he deserves actual and punitive damages for
9
Defendants’ fraudulent behavior. Id. at 32–33. He also claims that the discovery rule should apply
to “toll[] the Texas statute of limitations” because he “exercised reasonable diligence in attempting
to discover fraudulent filings on [his] property, his legal injury was inherently un-discoverable due
to defendants’ conduct, . . . [and] application of the discovery rule would not disserve public policy.”
Id. at 33.
Defendants move for summary judgment on this claim, arguing that the four-year statute of
limitations expired and noting that the purported wrongful acts occurred on August 25, 2011—when
the assignment was recorded—but that Bryant did not file suit until May 17, 2016. Dkt. 49 at 11–12;
Dkt 20, Ex. 10; Dkt. 1 at 1. They also argue that the discovery rule does not apply because “the
filing of the Assignment in the real property records of Fort Bend County, Texas ‘charged [Plaintiff]
with notice’ of the facts giving rise to his alleged fraudulent lien claim.” Dkt. 49 at 12 (citing Poag
v. Flories, 317 S.W.3d 820, 826 (Tex. App.—Fort Worth 2010, pet. denied). Defendants also argue
that Bryant failed to show that the lien was fraudulent under Texas Civil Practice and Remedies
Code section 12.002 because Bryant has offered “no factual allegations demonstrating that
Defendants intended to cause Plaintiff physical injury, financial injury, or mental anguish.” Dkt. 49
at 13–15.
The statute of limitations for a fraudulent lien claim is four years. See Vanderbilt Mortg. &
Fin. v. Flores, 692 F.3d 358, 366 (5th Cir. 2012) (interpreting Texas law). Defendants have shown
that the purported wrongful acts occurred more than four years before Bryant filed suit. While
Bryant pleads the discovery rule, he did not respond to this argument when responding to the motion
for summary judgment. Accordingly, he has not met his summary judgment burden. The motion
for summary judgment on the fraudulent lien claim is GRANTED.
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3.
Chain of Title Challenge
Bryant contends in his amended complaint that the chain of assignments from CIT to
BONYM is broken because MERS had no ownership interest in the note or deed of trust when the
assignment was made, nor did it state for whom it was acting as nominee. Dkt. 20 at 4–5.
Defendants move for summary judgment on this claim, arguing that MERS did have authority to
execute the assignment as a beneficiary of the deed of trust because it was assigning the deed, only,
and not the note. Dkt. 49 at 9; see Dkt. 20, Ex. 1.
The Fifth Circuit has established “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.” Reece v. U.S. Bank Nat’l Ass’n, 762 F.3d 422, 425 (5th
Cir. 2014); see Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253–55 (5th Cir. 2013);
Reed v. Bank of Am., N.A., No. H-15-2005, 2015 WL 7736642, at *2 (S.D. Tex. Nov. 30, 2015). As
in Reece, MERS had the authority to assign the deed here. See also Rojas v. Wells Fargo Bank, N.A.,
571 F. App’x 274, 278 (5th Cir. 2014) (observing that the Fifth Circuit has “repeatedly rejected
similar attempts to challenge an assignee’s standing to foreclose under an assignment from MERS”
and stating that MERS, as nominee and beneficiary with the ability to foreclose, had authority to
foreclose on the Property). Accordingly, Defendants’ motion for summary judgment on this claim
is GRANTED.
4.
Negligence Claims and Penal Code Violations
Bryant contends that the defendants were negligent per se, grossly negligent, and grossly
negligent per se because they violated Texas Civil Practice and Remedies Code sections 12.002,
41.008(c)(8), and 41.008(c)(12), as well as Texas Local Government Code section 192.007. Dkt. 20
at 22–25. Bryant also contends that Defendants violated Texas Penal Code sections 32.21 and 32.47
11
through their handling of his mortgage documents, and he asserts that their violation of section 32.47
should exempt him from Texas Civil Practice and Remedies Code section 41.008(b)’s exemplary
damages cap. Dkt. 20 at 22–25.
Defendants move for summary judgment on Bryant’s negligence claims, arguing that the twoyear statute of limitations for negligence expired before Bryant filed suit. Dkt. 49 at 16. Defendants
note that the assignment to BONYM was filed on August 25, 2011, and assert that the claim began
to accrue on that day, more than four years before Bryant filed this lawsuit on May 17, 2016. Id.
Defendants also 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)). Defendants
additionally contend that the Texas Local Government Code section 192.007 claim fails because the
statute does not offer a private right of action, the Texas Civil Practices and Remedies Code section
12.002 claim fails because assignments do not constitute liens, and Bryant failed to cite any authority
that violations of either statute could constitute negligence per se or gross negligence per se. Dkt.
49 at 18–19. Defendants further argue that Bryant failed to allege facts that would establish him as
a member of the class the statutes were meant to protect, failed to cite authority that tort liability
accrues from violations of those statutes, failed to establish that Defendants owed him a legal duty,
and based his arguments that Defendants’ conduct caused him injury on conclusory allegations.
Dkt. 49 at 18–19. Defendants also move for summary judgment with regard to Bryant’s Penal Code
violation claim by arguing that “the Penal Code does not create private causes of action.” Dkt. 49
at 19–20 (quoting A.H. Belo Corp. v. Corcoran, 52 S.W.3d 375, 379 (Tex. App.—Houston [1st
Dist.] 2001, pet. denied)).
12
The statute of limitations for negligence, negligence per se, gross negligence, and gross
negligence per se is two years. See Resolution Tr. Corp. v. Acton, 49 F.3d 1086, 1089 (5th Cir.
1995); Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a); Silva v. Wells Fargo Bank, N.A.,
1:12-CV-180, 2014 WL 12586396, at *6 (S.D. Tex. Mar. 17, 2014) (“The statute of limitations for
a negligence per se claim is two years.”). Defendants have shown that the purported wrongful acts
occurred more than two years before Bryant filed suit. While Bryant pleads the discovery rule, he
did not respond to this argument when responding to the motion for summary judgment.
Accordingly, he has not met his summary judgment burden.
Bryant’s section 192.007 and Penal Code violation contentions also fail because those
statutes do not offer private causes of action. See Dal. Cty., Tex. v. MERSCORP, Inc., 2 F. Supp.
3d 938, 946 (N.D. Tex. 2014), aff’d sub nom. Harris Cty. Tex. v. MERSCORP Inc., 791 F.3d 545
(5th Cir. 2015) (stating that section 192.007 “contains no remedy provision and nothing stating or
suggesting that a county or any other litigant may seek relief under the statute”); Mathis v. DCR
Mortg. III Sub, I, LLC, 952 F. Supp. 2d 828, 836 (W.D. Tex. 2013) (quoting Hamilton v. Pechacek,
319 S.W.3d 801, 813 (Tex. App.—Fort Worth 2010, no pet.) (“[T]he Texas Penal Code does not
create a private cause of action.”). Accordingly, Defendants’ motion for summary judgment
regarding Bryant’s claims involving Texas Civil Practice and Remedies Code sections 12.002,
41.008(c)(8), and 41.008(c)(12), Texas Local Government Code section 192.007, and Texas Penal
Code sections 32.21 and 32.47 is GRANTED.
5.
Statute of Limitations Foreclosure Challenge
Bryant contends that Defendants’ foreclosure sale is void because the four-year statute of
limitations expired before the sale was made. Dkt. 54 at 2, 4. He notes that he received a notice of
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default and intent to accelerate the Loan in September 2011 and a notice of foreclosure in November
of that year, but that his Property was not sold until April 2016. Dkt. 54 at 2.
Defendants argue that acceleration of Bryant’s Loan was abandoned before the four years
elapsed, resetting the statute of limitations. Dkt. 55 at 3–4. They argue that this occurred in 2012
when Bryant applied for a Loan modification and was placed on a Trial Period Plan (TPP) that
December. Dkt. 55, Ex. 1. They note that when Bryant successfully completed the TPP in March
2013, BANA forgave $74,846.35 of Bryant’s Loan balance and lowered his interest rate. Id.;
Dkt. 55, Ex. 2–3. Thus, according to Defendants, “as late as March 20, 2013, Defendants indicated
a willingness to accept less than the full amount due under its previous acceleration.” Dkt. 55 at 5.
Under the Texas Property Code, mortgage servicers may foreclose on behalf of the mortgagee
if their agreement allows it and the proper notices are provided.
See Tex. Prop. Code
§ 51.0025(a)–(b). Texas law requires such a sale to be performed within four years. See Tex. Civ.
Prac. & Rem. Code § 16.035(b). “If a note or deed of trust secured by real property contains an
optional acceleration clause, default does not ipso facto start limitations running on the note. Rather,
the action accrues only when the holder actually exercises its option to accelerate.” Holy Cross
Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). “Even when a noteholder has
accelerated a note upon default,” however, “the holder can abandon acceleration if the holder
continues to accept payments without exacting any remedies available to it upon declared maturity.”
Id. at 566–67; see Alcala v. Deutsche Bank Nat’l Tr. Co. for Long Beach Mortg. Loan Tr. 2006-5,
684 F. App’x 436, 439 (5th Cir. 2017) (“[A] noteholder may unilaterally abandon acceleration after
its exercise ‘by requesting payment on less than the full amount of the loan.’”). “‘Abandonment of
acceleration has the effect of restoring . . . the note’s original maturity date,’ and thus resetting
maturity of the last installment as the accrual date for the purpose of the statute of limitations.”
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Alcala, 684 F. App’x at 439 (quoting Khan v. GBAK Props., Inc., 371 S.W.3d 347, 353 (Tex.
App.—Houston [1st Dist.] 2012, no pet.)).
Defendants have provided sufficient evidence that they abandoned their initial 2011
acceleration by placing Bryant on a TPP, accepting his payments, and modifying his Loan agreement.
As a result, the statute of limitations did not expire before the house was sold. Bryant has come
forward with no evidence suggesting otherwise. Defendants’ motion for summary judgment
regarding Bryant’s statute of limitations claim is therefore GRANTED.
B.
Arguments That Do Not Meet the Summary Judgment Standard
1.
Forgery Challenges
Bryant contends in his amended complaint that the chain of assignments from CIT to
BONYM is broken because the assignment purportedly signed by Chester Levings of MERS and the
substitute trustee document purportedly signed by Melanie Cowan of BANA are forgeries. Dkt. 20
at 4–7. Several of Bryant’s exhibits feature Levings’s signature on other documents, and he argues
that the signature on those documents appears “markedly different” from that on the assignment in
this case. Id. at 5. He also provides exhibits and offers a similar argument regarding Cowan’s
signature. Id. at 6–7. Defendants argue in their motion for summary judgment that Bryant’s forgery
allegations are “based on pure speculation . . . without any factual enhancement” and do not meet
the heightened pleading requirement of Federal Rule of Civil Procedure 9(b). Dkt. 49 at 6–7.
Accordingly, they maintain that the chain of title between CIT and BONYM is unbroken. Id.
Defendants’ motion for summary judgment regarding Bryant’s forgery allegations relies on
Rule 9(b)’s pleading standard and related case law, not the summary judgment standard. See
Ashcroft v. Iqbal, 556 U.S. 662, 686, 129 S. Ct. 1937, 1954 (2009) (explaining what Rule 9(b)
requires in the context of pleadings); Massey v. EMC Mortg. Corp., 546 F. App’x 477, 481–82 (5th
15
Cir. 2013) (justifying dismissal on the basis that plaintiffs did not “amend their complaint to comply
with the requirements of Rule 9”); compare Fed. R. Civ. P. 9(b), with id. at 56(a). The summary
judgment standard requires the moving party to demonstrate the absence of a genuine issue of
material fact or, on claims for which they do not bear the burden, point to an absence of evidence.
Celotex Corp., 477 U.S. at 323, 106 S. Ct. at 2552. Rule 9(b), by contrast, is a pleading standard
meant to provide a defendant with particularized notice of certain types of claims. See Tuchman v.
DSC Commc’ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994). Alleging that Bryant failed to meet Rule
9(b)’s pleading standard does not meet Defendants’ summary judgment burden to establish that there
is no genuine issue of material fact or, in this case, an absence of evidence, and that they are entitled
to judgment as a matter of law. Indeed, even the case law Defendants cite addresses forgery
allegations in the context of motions to dismiss, not motions for summary judgment. See Dkt. 49
at 6–8. Thus, Defendants have not met their burden under the summary judgment standard regarding
Bryant’s forgery allegations. Their motion for summary judgment regarding this claim is thus
DENIED WITHOUT PREJUDICE.
2.
Declaratory Judgment and Quiet Title
Bryant asserts in his amended complaint that even though he “lost [the] legal ownership of
the Property he had pursuant to that warranty deed he received from the previous owners,” he still
has “an equitable interest in the Property . . . which he is enforcing via this lawsuit.” Dkt. 20 at 29.
He contends that this is because MERS allegedly forged its assignment to BONYM. Id. at 27.
Bryant seeks a declaration “that Plaintiff is entitled to the exclusive possession of that property” and
that BANA and MERS have no interest in the Property. Id. at 29. He also seeks the removal of
Defendants’ “clouds on Plaintiff’s rightful title to the Property.” Id. at 30.
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Defendants move for summary judgment regarding Bryant’s request for declaratory judgment
and his quiet title action because, first, “the quiet title claim . . . is not based on the strength of
Plaintiff’s purported title to the Property, but rather the fatally flawed forgery allegations.” Dkt. 49
at 11. Second, “any ownership interest that [Bryant] purportedly claims he had in the Property was
wiped away by the foreclosure of the Property, thereby giving BONYM superior title.” Id. Third,
the quiet title claim fails because Bryant is in default. Id. (citing Campo v. Bank of Am., N.A., No.
CV H-15-1091, 2016 WL 1162199, at *5 (S.D. Tex. Mar. 24, 2016), aff’d, 678 F. App’x 227 (5th
Cir. 2017) (“Campo is in default and has not alleged that he has tendered the balance of his Loan.
His quiet-title claim is legally insufficient for this additional reason and is dismissed.”); Cook-Bell
v. Mortg. Elec. Registration Sys., Inc., 868 F. Supp. 2d 585, 591 (N.D. Tex. 2012) (noting that the
plaintiff had “failed to argue that her title [was] superior to the defendants’” and that she had “not
tendered the amount owed on the note”).
As to Defendants’ contention regarding the forgery allegations, this argument fails for the
reasons stated above. Addressing their second point, if there was a break in the chain of title because
some relevant documents were forged, the foreclosure was invalid. See Leavings v. Mills, 175
S.W.3d 301, 310 (Tex. App.—Houston [1st Dist.] 2004, no pet.) (“To prove his right to foreclose
. . . Mills was required to prove the note and an unbroken chain of assignments transferring to him
the right to enforce the note according to its terms.”). To their third contention, Defendants lacked
the right to receive payments on the house if the documents purportedly granting them authority to
receive Bryant’s payments were forged. Accordingly, Defendants’ motion for summary judgment
regarding these claims is DENIED WITHOUT PREJUDICE.
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3.
Money Had and Received and Unjust Enrichment
Bryant contends that BANA was unjustly enriched by receiving mortgage payments from
Bryant when it had no interest in or claim to the Property and that BANA “made . . . mortgage
assignments associated with Plaintiff’s loan with knowledge that the documents or other records are
fraudulent court records or liens.” Dkt. 20 at 25–26. He also contends that BANA holds Bryant’s
monthly payments and Property when “in equity and good conscience” these belong to him. Id. at
25. Defendants move for summary judgment on Bryant’s unjust enrichment and money had and
received claims, arguing that they are based on flawed forgery allegations, that the note and deed of
trust—contracts that Bryant signed—govern the matter in dispute, and that Bryant failed to allege
facts supporting the money had and received and unjust enrichment claims. Dkt. 49 at 20.
“Unjust enrichment demands restitution when a party receiving property or benefits would
be unjustly enriched if it were permitted to retain the property or benefits at the expense of another.”
Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 43 (Tex. 1992). “Generally
speaking, when a valid, express contract covers the subject matter of the parties’ dispute, there can
be no recovery under a quasi-contract theory” like unjust enrichment. Fortune Prod. Co. v. Conoco,
Inc., 52 S.W.3d 671, 684 (Tex. 2000). But “[a] party may recover under the unjust enrichment
theory when one person has obtained a benefit from another by fraud, duress, or the taking of an
undue advantage.” Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992).
Like unjust enrichment, “[t]he existence of an express contract forecloses equitable relief under a
‘money had and received’ theory.” See Tex. Star Motors, Inc. v. Regal Fin. Co., 401 S.W.3d 190,
202 (Tex. App.—Houston [14th Dist.] 2012, no pet.).
Defendants’ arguments regarding Bryant’s forgery arguments and what Bryant alleged or
failed to allege fail for reasons discussed above because they do not satisfy Defendants’ burden under
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the summary judgment standard. Because it is unclear whether Bryant was induced to enter an
agreement with Defendants through fraudulent means, it is unclear whether Defendants obtained the
property and payments via fraud. Accordingly, Defendants’ motion for summary judgment regarding
these claims is DENIED WITHOUT PREJUDICE.
4.
Fraud
Bryant contends in his amended complaint that Defendants “intentionally misrepresented”
that they held the note, were beneficiaries of the Security Instrument with an unbroken chain of title
from the original lender, and “were entitled to exercise the power of sale provision contained in the
Security Instrument and collect monetarily on the Note.” Dkt. 20 at 31. He also contends that they
failed to disclose that they had no legal interest in the note or that they were time-barred from
foreclosing on the Loan, and he argues that their false representations induced Bryant to give them
payments on his Loan. Dkt. 20 at 31–32. He asserts that these “actions were malicious and done
willfully in conscious disregard” of Bryant’s legal rights. Id. He also “pleads the discovery rule”
because the “legal injury was un-discoverable due to defendants’ conduct, and application of the
discovery rule would not disserve public policy.” Id. at 33.
Defendants move for summary judgment on Bryant’s fraud claim, asserting that the fraud
claim is barred by the economic loss rule because “Plaintiff has not alleged any independent injuries
outside of the purported economic losses relating to the subject matter of the contracts between the
parties, i.e. the Note and Deed of Trust.” Dkt. 49 at 22 (emphasis added). They also assert that
Bryant “has not pled facts, which if true, would establish the elements of a fraud clam.” Id. at 23
(emphasis added). Finally, Defendants argue that Bryant has not met Rule 9(b)’s heightened
pleading standard or asserted a special relationship between himself and “Defendants to support his
failure to disclose allegations.” Id. at 23–24.
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As addressed above, Defendants’ arguments regarding the Plaintiff’s allegations and whether
he met Rule 9(b)’s requirements would be appropriate in a motion to dismiss, but not a motion for
summary judgment. Accordingly, Defendants have not met their burden on this claim, and their
motion for summary judgment on the claim is DENIED WITHOUT PREJUDICE.
5.
Texas Debt Collection Act
Bryant contends in his amended complaint that BANA is a “debt collector[]” that engaged
in the collection of consumer debt with regard to Bryant’s mortgage Loan. Dkt. 20 at 33. He alleges
that BANA violated the TDCA “by threatening foreclosure and engaging in foreclosure activity
against Plaintiff” and “attempting to collect the mortgage Note debt from Plaintiff without legal
standing to do so.” Id. at 34. Bryant also alleges that BANA’s actions in processing the
foreclosure—which include filing the allegedly forged assignments and attempting to collect past
the limitations period—constitute false, deceptive, or misleading practices in violation of Texas
Finance Code sections 392.301(a)(8), 392.304(a)(14), and 392.304(a)(19). Dkt. 20 at 33–34. He
also pleads the discovery rule. Id.
BANA argues that the court should grant summary judgment on Bryant’s TDCA claim for
the following reasons: (1) Bryant “fails to allege sufficient facts to state a TDCA claim;” (2) Bryant’s
TDCA claim fails because it is based on “fatally flawed forgery allegations;” (3) his “allegations are
conclusory, lacking specific facts, and therefore insufficient to plead a plausible claim;” (4) Bryant
has improperly alleged the TDCA claim because he has not identified the damages allegedly
suffered; (5) 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; and (6) Texas Finance Code
sections 392.304(a)(14) and (19)—portions of the TDCA—require proof that violators made
affirmative statements that are false or misleading but Bryant has not alleged that BANA made false
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affirmative statements. Dkt. 49 at 25–26 (citing Chavez v. Wells Fargo Bank, N.A., 578 F. App’x
345, 348 (5th Cir. 2014).
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.”
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.”
Id. § 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 . . . using any other false representation or deceptive means to collect a
debt or obtain information concerning a consumer.” Id. § 392.304(a)(19).
To address BANA’s first, third, fourth, and sixth contentions, as discussed above, these
regard Bryant’s allegations and do not satisfy BANA’s burden under the summary judgment
standard. Addressing BANA’s second point, the forgery allegations remain unresolved. To BANA’s
fifth contention, while it is true that foreclosure in and of itself is not illegal, if the chain of title
documents were forged, the foreclosure would be unlawful. For these reasons, BANA’s motion for
summary judgment on Bryant’s TDCA claim is DENIED WITHOUT PREJUDICE.
IV. MOTION TO SEVER
The claims against Ditech and BONYM have already been dismissed, and they now move
for the court to sever them from the case. See Dkt. 44 at 1; Dkt. 46 at 1. They argue that “further
delay of a final judgment to address” the claims against BANA and MERS “will prejudice [Ditech
and BONYM] by delaying their ability to enforce their rights in the subject property.” Dkt. 46 at 1.
They also argue that “severance would . . . allow the Court to finalize a judgment in favor of
Defendants sooner, which would ensure a quicker and more cost-effective result.” Id. at 3. Bryant
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contends that severing Ditech and BONYM would “prolong the ultimate termination of the action,
add to the cost of resolving the lawsuit, and create duplicitous litigation over a shared subject matter
increasing the likelihood of inconsistent verdicts.” Dkt. 50 at 2–3. Bryant also contends that MERS
and BANA have a “respondeat superior . . . relationship with CIT and the 2006-BC4 Trust” and that
severing Ditech and BONYM would force Bryant “to prosecute his loan-related claims against the
various parties in separate actions.” Id. at 3. Ditech and BONYM allege that “[n]either CIT nor the
2006-BC4 Trust has requested a severance” and that Bryant has not shown how severing Ditech and
BONYM “would prolong this lawsuit, increase the cost of this lawsuit, or create duplicitous
litigation.” Dkt. 52 at 1–2.
While the claims against Ditech and BONYM have already been dismissed, the remaining
claims will be resolved either via summary judgment or trial in the near future. Keeping the case
intact will not lead to substantial delay in the resolution of Bryant’s claims, and Ditech and BONYM
have not shown how failing to sever them would delay their ability to enforce their rights to the
Property. Accordingly, Ditech and BONYM’s motion to sever is DENIED.
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V. CONCLUSION
Defendants’ motion for summary judgment is GRANTED IN PART AND DENIED IN
PART. The claims on which summary judgment is granted are DISMISSED WITH PREJUDICE;
the claims on which summary judgment is denied are DENIED WITHOUT PREJUDICE.
Defendants may file a renewed motion by April 10, 2018, requesting summary judgment on the
remaining claims with consideration given to the summary judgment standard as opposed to the
standard applicable to a motion to dismiss. Bryant shall respond to the renewed motion within
fifteen days. The motion to sever is DENIED.
Signed at Houston, Texas on March 28, 2018.
___________________________________
Gray H. Miller
United States District Judge
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