Paul et al v. Bank of America, N.A.
OPINION AND ORDER OF DISMISSAL adopting MEMORANDUM AND RECOMMENDATIONS re: 4 MOTION to Dismiss, 11 Memorandum and Recommendations (Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
PAUL COX AND PATRICIA CHANCE
BANK OF AMERICA, N.A.,
May 02, 2017
David J. Bradley, Clerk
CIVIL ACTION H-16-2624
OPINION AND ORDER OF DISMISSAL
Pending before the Court in the above referenced cause for
unfair debt collection practices under the Texas Debt Collection
Act, removed from state court on diversity jurisdiction, are (1)
Defendant Bank of America N.A.’s motion to dismiss with prejudice
all claims against it under Federal Rules of Civil Procedure
12(b)(6) and 8(a)(instrument #4) based on res judicata and failure
to state a claim, and (2) United States Magistrate Judge Frances
Stacy’s Memorandum and Recommendation (#11) that the motion be
Plaintiffs have not responded to the motion to dismiss.
Standard of Review
Federal Rule of Civil Procedure 8(a) states,
A pleading that states a claim for relief must contain:
(1) a short and plain statement of the grounds for the
court’s jurisdiction, unless the court already has
jurisdiction, and the claim needs no new jurisdictional
(2) a short and plain statement of the claim showing that
the pleader is entitled to relief; and
(3) a demand for the relief sought, which may include
relief in the alternative or different types of relief.
Under the Rule’s requirement of notice pleading, “defendants in all
lawsuits must be given notice of specific claims against them.”
Anderson v. U.S. Dept. of Housing and Urban Development, 554 F.3d
525, 528 (5th Cir. 2008). While a plaintiff need not plead specific
facts, the complaint must provide “the defendant fair notice of
what the . . . claim is and the grounds upon which it rests.”
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
complaint lacks facts necessary to put defendant on notice as what
inadequate to meet the notice pleading standard.
Anderson, 554 at
The complaint must not only name the laws which the defendant
has allegedly violated, but also allege facts about the conduct
that violated those laws.
When a district court reviews a motion to dismiss pursuant to
Fed. R. Civ. P. 12(b)(6), it must construe the complaint in favor
of the plaintiff and take all well-pleaded facts as true. Randall
D. Wolcott, MD, PA v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011),
citing Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009).
assumption. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(“The tenet
that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.”), citing Bell
Atlantic Corp. v. Twombly, 556 U.S. 662, 678 (2007); Hinojosa v.
U.S. Bureau of Prisons, 506 Fed. Appx. 280, 283 (5th Cir. Jan. 7,
“While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, . . . a
conclusions, and a formulaic recitation of the elements of a cause
of action will not do . . . .”
Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007)(citations omitted). “Factual allegations must
be enough to raise a right to relief above the speculative level.”
Id. at 1965, citing 5 C. Wright & A. Miller, Federal Practice and
Procedure § 1216, pp. 235-236 (3d ed. 2004)(“[T]he pleading must
contain something more . . . than . . .
a statement of facts that
merely creates a suspicion [of] a legally cognizable right of
requirement of Conley v. Gibson, 355 U.S. 41 . . . (1957)[“a
complaint should not be dismissed for failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to
relief”], and instead required that a complaint allege enough facts
to state a claim that is plausible on its face.”
St. Germain v.
Howard,556 F.3d 261, 263 n.2 (5th Cir. 2009), quoting In re Katrina
Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). “‘A claim
has facial plausibility when the pleaded factual content allows the
court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.’”
Montoya v. FedEx Ground Package
System, Inc., 614 F.3d 145, 148 (5th Cir. 2010), quoting Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009).
The plausibility standard is
not akin to a “probability requirement,” but asks for more than a
“possibility that a defendant has acted unlawfully.”
U.S. at 556.
Dismissal is appropriate when the plaintiff fails to
allege “‘enough facts to state a claim to relief that is plausible
on its face’” and therefore fails to “‘raise a right to relief
above the speculative level.’”
Montoya, 614 F.3d at 148, quoting
Twombly, 550 U.S. at 555, 570.
Dismissal under Rule 12(b)(6) is proper not only where the
plaintiff fails to plead sufficient facts to support a cognizable
legal theory, but also where the plaintiff fails to allege a
cognizable legal theory.
Kjellvander v. Citicorp, 156 F.R.D. 138,
140 (S.D. Tex. 1994), citing Garrett v. Commonwealth Mortgage
Corp., 938 F.2d 591, 594 (5th Cir. 1991).
“A complaint lacks an
‘arguable basis in law’ if it is based on an indisputably meritless
legal theory’ or a violation of a legal interest that does not
Ross v. State of Texas, Civ. A. No. H-10-2008, 2011 WL
5978029, at *8 (S.D. Tex. Nov. 29, 2011).
As noted, on a Rule 12(b)(6) review, although generally the
court may not look beyond the pleadings, the Court may examine the
complaint, documents attached to the complaint, and documents
attached to the motion to dismiss to which the complaint refers and
which are central to the plaintiff’s claim(s), as well as matters
of public record.
Lone Star Fund V (U.S.), L.P. v. Barclays Bank
PLC, 594 F.3d 383, 387 (5th Cir. 2010), citing Collins, 224 F.3d at
498-99; Cinel v. Connick, 15 F.3d 1338, 1341, 1343 n.6 (5th Cir.
See also United States ex rel. Willard v. Humana Health
Plan of Tex., Inc., 336 F.3d 375, 379 (5th Cir. 2003)(“the court may
consider . . . matters of which judicial notice may be taken”).
Taking judicial notice of public records directly relevant to the
issue in dispute is proper on a Rule 12(b)(6) review and does not
transform the motion into one for summary judgment.
Stryker Corp., 631 F.3d 777, 780 (5th Cir. 2011).
noticed fact must be one not subject to reasonable dispute in that
jurisdiction of the trial court or (2) capable of accurate and
ready determination by resort to sources whose accuracy cannot
reasonably be questioned.”
Fed. R. Evid. 201(b).
“‘[D]ocuments that a defendant attaches to its motion to
dismiss are considered part of the pleadings if they are referred
to in the plaintiff’s complaint and are central to [its] claim.’”
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th
Cir. 2000), quoting Venture Assocs. Corp. v. Zenith Data Sys.
Corp., 987 F.2d 429, 431 (7th Cir. 1993).
By such attachments the
defendant simply provides additional notice of the basis of the
suit to the plaintiff and aids the Court in determining whether a
claim has been stated.
Id. at 499.
The attachments may also
provide the context from which any quotation or reference in the
motion is drawn to aid the court in correctly construing that
quotation or reference.
In re Enron Corp. Securities, Derivative
& “ERISA” Litig., No. H-04-0087, 2005 WL 3504860, at 11 n.20 (S.D.
Tex. Dec. 22, 2005). “Where the allegations in the complaint are
contradicted by facts established by documents attached as exhibits
Martinez v. Reno, No. 3:97-CV-0813-P, 1997 WL
786250, at *2 (N.D. Tex. Dec. 15, 1997), citing Nishimatsu Const.
Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).
When conclusory allegations and unwarranted deductions of fact are
contradicted by facts disclosed in the appended exhibit, which is
treated as part of the complaint, the allegations are not admitted
Carter v. Target Corp., 541 Fed. Appx. 413, 417 (5th Cir.
Oct. 4, 2013), citing Associated Builders, Inc. v. Alabama Power
Co., 505 F.2d 97, 100 (5th Cir. 1974), citing Ward v. Hudnell, 366
F.2d 247 (5th Cir. 1966). See Northern Indiana Gun & Outdoor Shows,
Inc. v. City of South Bend, 163 F.3d 449, (7th Cir. 1996)(“It is a
well settled rule that when a written instrument contradicts
allegations in the complaint to which it is attached, the exhibit
trumps the allegations.”); Roth v. Jennings, 489 F.3d 499, 509 (2d
contradict the allegations in the complaint, the documents control
and the court need not accept as true the allegations contained in
“‘Under res judicata, a final judgment on the merits of an
action precludes the parties or their privies from relitigating
issues that were or could have been raised in that action.
Direct, LLC v. Dyson, Inc., 560 F.3d 398, 401 (5th Cir. 2009),
quoting Allen v. McCurry, 449 U.S. 90, 94 (1980).
“‘insures the finality of judgments and thereby conserves judicial
resources and protects litigants from multiple lawsuits.’”
quoting United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994).
To demonstrate that res judicata bars a later suit, a party must
satisfy four conditions:
(1) the parties are identical [or in
privity] in the two actions; (2) the prior judgment was rendered by
a court of competent jurisdiction; (3) a final judgment on the
merits; and (4) the same claim or cause of action must be involved
in both suits.
Id., citing In re Ark-La-Tex Timber Co., 482 F.3d
319, 330 (5th Cir. 2007); Matter of Swate, 99 F.3d 1282, 1286 (5th
Usually the Court determines if two suits involve the
same claim or cause of action by applying the transactional test of
the Restatement (Second) of Judgments § 24.
Petro-Hunt, LLC v.
United States, 365 F.3d 385, 395 (5th Cir. 2004). That test focuses
upon whether the two cases under review are based on “the same
nucleus of operative facts.”
934 (5th Cir. 1999).
In re Southmark Corp., 163 F.3d 925,
Thus it is the operative facts, not the type
of relief sought or substantive theories advanced or type of rights
asserted, that defines the claim. for purposes of res judicata.
United States v. Davenport, 484 F.3d 321, 326 (5th Cir. 2007).
two actions share the same nucleus of operative facts, “the prior
judgment’s preclusive effect “‘extends to all rights the original
plaintiff had ‘with respect to all or any part of the transaction,
or series of connected transactions, out of which the [original
Id., citing Petro-Hunt, 365 F.3d at 395, citing
Restatement (Second) of Judgments § 24(1).
The doctrine “‘insures
the finality of judgments and thereby conserves judicial resources
and protects litigants from multiple lawsuits.’”
United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994).
While the broader “doctrine of res judicata forecloses
all that might have been litigated previously, collateral estoppel
treats as final only those questions actually and necessarily
decided in a prior suit.”
In re Shuler, 722 F.2d 1253, 1255 (5th
Cir. 1984), quoting Brown v. Felsen, 442 U.S. 127, 139 n.10 (1979).
The Fifth Circuit has dubbed res judicata as “claim preclusion” and
collateral estoppel as “issue preclusion.”
White v. World Finance
of Meridian, Inc., 653 F.2d 147, 150, 151 (5th Cir. 1981).
Nevertheless the Fifth Circuit recognizes the modern trend to refer
to both doctrines as
Appx. 360, 363 (5th Cir. 2007).
In re Vollbracht, 276 Fed.
The Fifth Circuit usually uses
“‘collateral estoppel’” when ‘(i) the issue to be precluded [is]
identical to that involved in the prior action, (ii) in the prior
determination made of the issue in the prior action [was] necessary
to the resulting judgment.’”
Id. quoting Shuker, 722 F.2d at 1256
Here Bank of America has attached to its motion to dismiss the
following public records:
(1) Substitute Trustee’s Deed showing
that the property located at 12710 Water Oak Drive, Missouri City,
Texas 77489 (the “Property”) was sold
on December 4, 2012 at a
Substitute Trustee’s sale and that Ameriventure Ltd. acquired the
title to the Property for $25,200.00 (#11, Ex. 1); (2) Plaintiffs’
previously filed Complaint against Bank of America in the 215th
District Court of Harris County, Texas on February 8, 2013 (Ex. 2);
and (3) after removal to federal court, an Order by the Honorable
Grey Miller dated December 23, 2013, H-13-786 (Ex. 3), dismissing
with prejudice the complaint, supra, which Defendant had removed to
Defendant’s Motion and Memorandum of Law (#4 and 5)
Plaintiffs owned the Property at issue when it was damaged by
Although they tried to keep up with their payments, it was
foreclosed and sold to a third party, as reflected in the documents
listed above. Plaintiffs allege that Defendant received a complete
payoff of the Loan in 2012, impliedly through a hazard insurance
claim, before the foreclosure, but that Defendant “refused to
remove the foreclosure from Plaintiff’s credit report.”
at ¶¶ 13, 14, 16.
As reflected in Exhibit 2 (Orig. Pet., Cox v.
Bank of America, 4:13-cv-786, S.D. Tex.), Plaintiffs filed a suit
identical to the instant action against Defendant in 2013 (“Prior
Action”), naming the same property, the same fire, and a dispute
over Defendant’s credit reporting as a result of the payment of the
The sole difference between the two is that the
Prior Action was filed under the Fair Credit Reporting Act, 15
U.S.C. §§ 1681, et seq., and the instant suit asserts a claim under
Texas Debt Collection Act, Texas Finance Code § 392.301
Defendant contends that this action is barred by
the doctrines of res judicata and collateral estoppel and should be
dismissed with prejudice.
United States Magistrate Frances Stacy examined the complaint
and the documents attached to the memorandum in support of the
motion dismissed, applied the relevant tests, concluded that the
claims in the instant suit are barred by res judicata.
in the Prior Suit was a court of competent jurisdiction, the
Both suits’ Plaintiffs sought to recover for damage to
their credit ratings.
As the Fifth Circuit opined in Maxwell v.
U.S. Bank Nat. Ass’n, 544 Fed. Appx. 470, 472 (5th Cir. Oct. 30,
To determine whether two cases involve the same cause of
action, we engage in an analysis under the transactional
test. In re Paige, 610 F.3d 865, 872 (5th Cir. 2020).
The transactional test extends the prior judgment’s
preclusive effect to all potential claims of the
plaintiff concerning “any part of the transaction, or
series of connected transactions,” out of which the
original action arose.” Id. A subsequent claim is thus
barred if it arises out of the “same nucleus of operative
facts.” Id. Res judicata extends beyond claims that
were actually raised and bars all claims that “could have
been advanced in support of the cause of action on the
occasion of its former adjudication . . . .” In re Howe,
913 F.2d 1138, 1144 (5th Cir. 1990).
America that the claims should also be dismissed because the Fair
Credit Report preempts all state laws in the area.
JPMorgan Chase, N.A., No. 4:13cv3698, 2014 WL 4924128, at *16 (S.D.
Tex. Sept. 29, 2014)(“[A] state law claim based on defendant’s
reporting agency is preempted by the FCRA.”); Ayers v. Aurora Loan
Servs., LLC, 787 F. Supp. 2d 451, 457 (E.D. Tex. 2011).
15 U.S.C. § 1681t(b)(1)(F)(“[N]o requirement or prohibition under
the laws of any State . . . with respect to any subject matter
regulated under . . . section 1681s-2 of this title, relating to
the responsibilities of persons who furnish information to consumer
reporting agencies.”); 15 U.S.C. § 1681s-2(a)(1)(A)(prohibits “any
information relating to a consumer to any consumer reporting agency
if the person knows or has reasonable cause to believe that the
information is inaccurate.”).
Because the two suits are based on the “same nucleus of
operative facts” (same Property, same fire, same dispute over
Defendant’s report to the credit agencies), even though one is
based on a federal statute and the other on a Texas statute, the
Court agrees with the Magistrate that the instant action is barred
by res judicata.
The Court does not agree about the applicability of preemption
in these circumstances.
While it is true that the federal statue
would preempt the state statute if filed in the same suit, the
federal statute was not asserted in the current action.
Accordingly the Court ORDERS
that Bank of America’s motion to dismiss is GRANTED on res
A final judgment shall issue by separate document.
SIGNED at Houston, Texas, this
May , 2017.
UNITED STATES DISTRICT JUDGE
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