Phillips v. Beauly LLC et al
MEMORANDUM AND ORDER granting 20 Amended MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM , and denying 25 MOTION for Leave to File Second Amended Petition (Signed by Magistrate Judge Stephen Wm Smith) Parties notified.(jmarchand, 4)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
M ARYANNE P HILLIPS,
B EAULY, LLC AND S TARWOOD W AYPOINT
August 07, 2017
David J. Bradley, Clerk
C IVIL A CTION N O. 4:16-CV-02272
MEMORANDUM AND ORDER
Before the Court is defendants Beauly, LLC and Starwood Waypoint’s Rule
12(b)(6) motion to dismiss (Dkt. 20) and plaintiff Maryanne Phillips’s second motion for
leave to amend her complaint (Dkt. 25). The parties consented to magistrate judge
jurisdiction. Dkt. 23. After reviewing the pleadings and the law, Defendants’ motion for
summary judgment is granted, and Phillips’s motion for leave is denied.
Plaintiff Maryanne Phillips initially filed suit against Beauly, LLC and Starwood
Waypoint TRS, LLC (“Starwood”) in Texas state court. On July 29, 2016, Defendants
timely removed the case to federal court on the basis of diversity jurisdiction. Dkt. 1. On
November 5, 2008, Phillips executed a “deed of trust” granting a security interest in real
property in favor of JPMorgan Chase (“JPM”). Dkt. 20 at 4. Phillips defaulted in payment
and, on April 3, 2012, JPM took title via a substitute trustee’s deed. Dkt. 20-2. On
October 24, 2014, Beauly purchased the properly from JPM at auction and Beauly
subsequently transferred the properly to Starwood Waypoint via general warranty deed.
Dkt. 20 at 5.
Phillips’s complaint alleges that (1) she is entitled to quiet title; (2) the defendants
cannot evict Phillips because the statute of limitations has expired; (3) the defendants
violated Phillips’ constitutional right to due process; and (4) injunctive relief is
appropriate.1 Plaintiff also requests leave to amend her complaint. If allowed, the second
amended complaint would add another cause of action alleging the property was
fraudulently transferred from Beauly to Starwood Waypoint. Now, Defendants move to
dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). Dkt. 20.
I. Defendants’ Rule 12(b)(6) Motion to Dismiss 2
Federal Rule of Procedure 12(b)(6) provides that a party may move for dismissal
of an action for failure to state a claim upon which relief may be granted. In reviewing a
pleading under Rule 12(b)(6), the Court must accept as true all well-pleaded facts
contained in the plaintiff’s complaint and view them in the light most favorable to the
plaintiff. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). However, only facts are entitled
to an assumption of truth; legal conclusions unsupported by factual allegations do not
suffice. Id. To survive a Rule 12(b)(6) motion to dismiss, the allegations must be enough
Phillips’ response to the motion to dismiss indicates that any request for injunction is withdrawn. Dkt. 26 at 8. Therefore,
the claim for injunctive relief is withdrawn.
Phillips’s petition refers to a “deed of trust”, “substitute trustee’s deed”, and “deed without
warranty” as the controlling docum ents in question, but did not attach them to her petition. Generally,
on a Rule 12(b)(6), the Court’s consideration is lim ited to the contents of the pleadings and any
attachm ents to the pleadings. Brand Coupon Network, L.L.C. v. Catalina Marketing Corp., 748 F.3d
631, 635 (5th Cir. 2014). Because the previously mentioned documents are attached to Defendants’
motion (Dkt. 20-1; 20-2; 20-3), the Court may properly consider the documents in its analysis.
Catalina, 748 F.3d at 635 (“The Court may also consider documents attacked to either a motion to
dismiss or an opposition to that motion when the documents are referred to in the pleadings and
are central to plaintiff’s claims.”).
to state a claim of relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678.
A. Quiet Title
Phillips claims that she has a right in the real property because JPM violated the
“deed of trust” when it transferred title via a “deed without warranty.” Dkt. 16 at 6. To
prevail in an action to quiet title, the plaintiff must prove: (1) her right, title, or ownership
in real property; (2) that the defendant has asserted a ‘cloud’ on his property, meaning an
outstanding claim or encumbrance valid on its face that, if it were valid, would affect or
impair the property owner’s title, and (3) that the defendant’s claim or encumbrance is
invalid.” Warren v. Bank of America, N.A., 566 Fed. App’x 379, 382 (5th Cir. 2014). To
quiet title in her favor, Phillips “must allege right, title, or ownership in himself or herself
with sufficient certainty to enable the court to see he or she has a right of ownership that
will warrant judicial interference.” Wright v. Matthews, 26 S.W.3d 575, 578 (Tex. App.
As an initial matter, Phillips has not shown that she is entitled to the property. She
has not alleged any facts that would lead the Court to believe she has title in the property.
Phillips seems to rely heavily on her belief that a “deed without warranty” is invalid. On
the contrary, transferring title via a deed without warranty has no bearing on the validity
of the transfer. Young v. Rudd, 226 S.W.2d 469, 472 (Tex. Civ. App. 1950).
Phillips also asserts that, at some point, the Housing and Urban Development
Department (HUD) made arrangements to and did reinstate the loan, giving her superior
title to the property. Dkt. 16 at 2. However, the pleadings are devoid of any indication that
the reinstatement occurred and the argument holds no water.
Moreover, Phillips does not claim any wrongdoing by Defendants and the Court
could not reasonably believe that Defendants are liable for the alleged conduct. The only
purported wrongdoer is JPM, which is not a party to this action. Phillips’s claim for quiet
title is dismissed.
B. Trespass Statute of Limitations
Phillips contends that because JPM failed to evict Phillips within two years of
foreclosing on the property, and because Defendants did not move to evict within the
limitations period, Defendants are barred from bringing an action for trespass. Dkt. 16 at
6. The statute of limitations is an affirmative defense raised in a party’s response to a
pleading. F ED. R. C IV. P. 8(c). Defendants have not asserted any counterclaims against
Phillips in this matter. Consequently, the claim is not appropriate and must be dismissed.
C. Fourteenth Amendment Due Process and 42 U.S.C. § 1983
Phillips alleges that because she was never afforded the right to object to the
transfer of title from Beauly to Starwood Waypoint, her constitutional right to due process
was violated. Dkt. 16 at 4. To state a claim under § 1983, Phillips must allege facts that
show (1) she has been deprived of a right secured by the Constitution and the laws of the
United States; and (2) the deprivation occurred under color of state law. Bass v.
Parkwood Hosp., 180 F.3d 234, 241 (5th Cir. 1999).Defendants are private actors not
subject to liability pursuant to 42 U.S.C. § 1983. Phillips has made no allegation that
Defendants are state actors within the meaning of § 1983. Thus, she has failed to state a
viable claim under § 1983 and the claim is dismissed.
D. Declaratory Judgment
When a declaratory judgment action is filed in state court and subsequently
removed to federal court, it is converted to one brought under the federal Declaratory
Judgment Act, 28 U.S.C. §§ 2201, 2202. The Declaratory Judgment Act is a procedural
device that creates no substantive rights; rather, it requires the existence of a justiciable
controversy. Lowe v. Ingalls Shipbuilding, A Div of Litton Sys., Inc., 723 F.2d 1173 (5th
Cir. 1984); Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240 (1937).
“Based on the facts alleged, there must be a substantial and continuing controversy
between two adverse parties.” Bauer v. Texas, 341 F.3d 352, 358 (5th Cir. 2003). As
explained, Phillips has not alleged facts that would lead to the conclusion that a present
controversy exists between Phillips and Defendants. Therefore, Phillips’s request for
declaratory judgment is dismissed.
II. Plaintiff’s Motion for Leave to Amend
Generally, leave to amend should be freely given if justice so requires. F ED. R.
C IV. P. 15(a). However, leave is by no means guaranteed. Marucci Sports, L.L.C. v. Nat’l
Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th Cir. 2014). In denying leave, the Court
considers factors such as “undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment, futility of
amendment, etc.” U.S. ex rel. Adrian v. Regents of Univ. of Cal., 363 F.3d 398, 403-04
(5th Cir. 2004)(internal citation omitted).
Phillips suggests that this second amendment should be allowed because it is made
in good faith, would cure any defects, and will not prejudice the defendants. Dkt. 25 at 2.
The Court disagrees. The proposed amendment would add a new claim for fraudulent and
voided transfer (Dkt 25-1 at 8) and add insignificant changes to the initial claims. The
additions cannot cure the likely incurable defects in the complaint. The assertions in the
complaint, including the fraudulent transfer claim, are unfounded conclusory allegations.
Therefore, the motion is denied.
For these reasons, Defendants’ motion to dismiss (Dkt. 20) is granted, and
Phillips’s second motion to amend (Dkt. 25) is denied.
Signed at Houston, Texas, on August 7, 2017.
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