Law et al v. Ocwen Loan Servicing, LLC et al

Filing 24

MEMORANDUM OPINION AND ORDER granting 23 MOTION to Dismiss (Plaintiffs' Response due by 6/9/2017.) (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

United States District Court
Southern District of Texas

ENTERED
May 26, 2017

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

ROGER LAW and LUCINDRA LAW,

§
§
§
§
§
§
§
§
§

Plaintiffs,
v.

OCWEN LOAN SERVICING, LLC,
Defendant.

David J. Bradley, Clerk

CIVIL ACTION NO. H-16-2675

MEMORANDUM OPINION AND ORDER

Pending before the court is Defendant's Motion to Dismiss and
Brief

in Support

Although

the

("Motion to Dismiss")

motion was

filed

Roger Law and Lucindra Law,

on April

(Docket
11,

Entry No.

2017,

23) .

Plaintiffs,
For the

have not responded to it.

reasons explained below, Ocwen Loan Servicing's ( "Ocwen") Motion to
Dismiss will be granted.
I.

Factual and Procedural Background

Plaintiffs Roger Law and Lucindra Law ("Plaintiffs")
that

on

September

29,

2005,

they

purchased

property

Woodlake Lane, Missouri City, Texas ("the Property") . 1

allege

at

4115

Plaintiffs'

initial lender sold their loan to U.S. Bank N.A., as Trustee for
the Registered Holders of MASTR Asset Backed Securities Trust 2006AM1,

Mortgage Pass-Through Certificates,

1

Series 2006-AM1

("U.S.

Plaintiffs' Original Petition, Factual Background, Exhibit D-1
to Notice of Removal, Docket Entry No. 1-4, pp. 6-8.

Bank") .

Their loan was

Servicing,
U.S.

LLC

then serviced by defendant Ocwen Loan

( "Ocwen" or "Defendant") .

Bank purchased the Property in a

On December 3,

2013,

non-judicial foreclosure

sale.
On October 13, 2014, U.S. Bank filed suit to evict Plaintiffs.
On October 27, 2014, Ocwen sold the Property to a third party.
on

October

u.s.

2014,

30,

Mackie Wolf Zientz & Mann,

Bank's

counsel,

PC ("MWZM"), allegedly represented to

the court that U.S. Bank still owned the Property.
ruled in favor of U.S.

But

Bank.

The trial court

Plaintiffs appealed.

On appeal,

U.S. Bank allegedly represented again that it owned the Property.
Plaintiffs were evicted in March of 2015.
Plaintiffs filed suit against Ocwen and MWZM 2 in the 434th
Judicial District Court of Fort Bend, Texas, asserting claims of
negligence and statutory fraud arising from the statements made in
state court.
court. 3
allege

Defendant Ocwen timely removed the case to this

Plaintiffs moved
a

claim

for

to amend their Original

common

law

fraud

and

2

to

seek

Petition to
additional

The attorneys have since been dismissed. See Order Granting
Mackie Wolf Zientz & Mann, PC' s Motion to Dismiss Pursuant to
Federal Rule of Civil Procedure 12(b) (6), Docket Entry No. 8.
3

Notice of Removal, Docket Entry No. 1.
-2-

remedies,

which the court granted in part and denied in part. 4

Ocwen now moves to dismiss for failure to state a claim.

II.
A Rule 12(b) (6)
pleadings

and

is

Standard of Review

motion tests the formal sufficiency of the

"appropriate

when

a

defendant

attacks

the

complaint because it fails to state a legally cognizable claim."
Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert.
denied sub nom. Cloud v. United States, 122 S. Ct. 2665 (2002).

To

defeat a motion to dismiss, a plaintiff must plead "enough facts to
state a claim to relief that is plausible on its face."
Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007).

The court

generally is not to look beyond the pleadings in deciding a motion
to dismiss.
1999).

Spivey v.

Robertson,

197 F.3d 772,

774

(5th Cir.

"Pleadings" for purposes of a Rule 12(b) (6) motion include

the complaint, its attachments, and documents that are referred to
in the complaint and central to the plaintiff's claims.

Collins v.

Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000).
The court does not
plaintiffs"

or

"strain to find inferences favorable to the

"accept

conclusory

4

allegations,

unwarranted

Plaintiffs' Motion for Leave to Amend Pleadings ("Motion to
Amend"), Docket Entry No. 13; Plaintiffs' Amended Original Petition
("Amended Petition") , Docket Entry No. 14, pp. 13-14.
Because
Plaintiffs have not filed an amended complaint that conforms with
the court's earlier opinion (Docket Entry No. 20), the court will
refer to Docket Entry No. 14 as Plaintiffs' live pleading with the
exception of the claim for common-law fraud.
-3-

deductions, or legal conclusions."
INSpire Ins.

Solutions,

Inc.,

Southland Securities Corp. v.

365 F.3d 353,

361

(internal quotation marks and citations omitted) .

(5th Cir.

2004)

"[C] ourts are

required to dismiss, pursuant to [Rule 12(b) (6)], claims based on
invalid legal theories,
pleaded."

Flynn v.

even though they may be otherwise well-

State Farm Fire and Casualty Insurance Co.

(Texas), 605 F. Supp. 2d 811, 820 (W.D. Tex. 2009)

(citing Neitzke

v. Williams, 109 S. Ct. 1827, 1832 (1989)).

III.

Analysis

As a preliminary matter,

it is not clear from Plaintiffs'

pleadings exactly which alleged misrepresentations were made by
whom. 5

Plaintiffs allege that "attorneys from MWZM, upon Ocwen's

instruction, presented sworn evidence and represented to the Court
that U.S. Bank owned the property in question." 6
allege

that

counsel

from

MWZM

were

"the

Plaintiffs then

Bank's

lawyers." 7

Elsewhere in the pleadings Plaintiffs allege that "Defendants Ocwen
and MWZM in the course of the foreclosure action and subsequent

5

The court notes that both parties' briefing leaves much to be
desired.
Plaintiffs' drafting and formatting render portions of
their Amended Complaint virtually incoherent.
Ocwen's Motion to
Dismiss
makes
generic
and
inapplicable
arguments
against
Plaintiffs' negligence claims and addresses a nonexistent breachof-contract claim while failing to address Plaintiffs' statutory
fraud claim.
6

~

Plaintiffs' Amended Complaint,
5.4 (emphasis added).
7

Id.
-4-

Docket Entry No.

14,

p.

3

eviction proceeding made

[sic]

and represented to the Plaintiffs

and to the courts that they were in fact the party in interest
respectively when in fact they no longer owned the property. " 8

For

the purposes of Defendant's 12(b) (6) motion, and for the benefit of
Plaintiffs,

the

court

misrepresentations

are

will

ultimately

assume

that

attributable

the

alleged

to

Ocwen.

But

typically

arise

from

Plaintiffs are far from clear on this point.
A.

Negligent Misrepresentation

Negligent

misrepresentation

cases

representations or evaluations made in a transactional context.
See McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests,
991 S.W.2d 787, 793 (Tex. 1999)
The elements of a cause of action for the breach of this
duty are: (1) the representation is made by a defendant
in the course of his business, or in a transaction in
which he has a pecuniary interest; ( 2) the defendant
supplies "false information" for the guidance of others
in their business; ( 3) the defendant did not exercise
reasonable
care
or
competence
in
obtaining
or
communicating the information; and ( 4) the plaintiff
suffers pecuniary loss by justifiably relying on the
representation.
Federal Land Bank Association of Tyler v. Sloane, 825 S.W.2d 439,
442 (Tex. 1991)
The

facts

pled by Plaintiffs

negligent misrepresentation.

fail

to support a

claim for

The allegedly false representations

were not made in the course of Ocwen's business as a loan servicer.
Nor

were

8

they

Id. at 9,

made

~

for

the

guidance

6.2.
-5-

of

Plaintiffs

in

their

business.

The representations were made by an adverse party in the

context of litigation.

"Generally, courts have acknowledged that

a third party's reliance on an attorney's representation is not
justified when the representation takes place in an adversarial
context."

F.E.

Appling,

991 S.W.2d at

Similar reasoning

794.

applies to representations made directly by adverse parties.
Statutory Fraud 9

B.

Plaintiffs allege

that Ocwen' s

misrepresentations violated

Texas Civil Practice and Remedies Code

§

12.002, which provides

liability for fraudulent claims against real property.

Plaintiffs'

statutory fraud claim fails as a matter of law.
To state a claim under Section 12.002, a plaintiff must
plead facts showing that 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 New York Mellon Corp., 802 F.3d 777, 783
Cir. 2015)

(citations omitted).

(5th

Plaintiffs acknowledge that U.S.

Bank purchased the Property at a non-judicial foreclosure sale. 10
And

Plaintiffs

allege

that

Ocwen

sold

the

property after

the

9

As noted in footnote 6, supra, Ocwen's Motion to Dismiss does
not address Plaintiffs' statutory fraud claim. The court, finding
Plaintiffs' claim for statutory fraud fails as a matter of law,
addresses it sua sponte. Ocwen's counsel is warned, however, that
the court will not do its research in the future.
10

~

Plaintiffs'

Amended Complaint,

5.2.
-6-

Docket Entry No.

14,

p.

2

eviction suit had been filed. 11

Although the court could find no

Texas cases addressing the effect of

selling a

property after

initiating an eviction proceeding, sellers may, as a general rule,
maintain an eviction proceeding under those circumstances.
A.L.R.2d 1170 (Originally published in 1956)

("A

~onveyance

47

of the

premises during the pendency of a

forcible detainer or similar

summary possessory action seems .

. not to deprive the original

landowner of the right to maintain the action.").
assuming

that

U.S.

Bank

had

no

claim

after

Moreover, even

transferring

the

property to a third party or that it misrepresented its ownership
status to the court, Plaintiffs fail to plead that Ocwen, or any
other

party

to

the

eviction

proceeding,

made

the

alleged

misrepresentations to the state court with the intent to cause
Plaintiffs injury or mental anguish.
IV.

Conclusion and Order

For the reasons discussed above,

Plaintiffs have failed to

state a claim for negligent misrepresentation.

Defendants' Motion

to Dismiss and Brief in Support (Docket Entry No. 23) is therefore
GRANTED.

Because Ocwen failed to address Plaintiffs'

fraud claim,

statutory

the court evaluated that claim sua sponte.

"[A]

district court may dismiss a claim on its own motion as long as the
procedure employed is fair."

Davoodi v. Austin Independent School

District, 755 F.3d 307, 310 (5th Cir. 2014) (citations and internal
quotation marks omitted).

nrd. at 3,

~~

Plaintiffs have already been given one

5.3, 5.5.
-7-

opportunity to amend their pleadings and have failed to respond to
Ocwen's

Motion

to

Dismiss

or

to

take

any

substituting counsel since January 20, 2017.

action

other

than

This opinion serves

as fair notice to Plaintiffs of the court's intent to dismiss this
action with prejudice unless Plaintiffs respond with argument or

authority contrary to the court's sua sponte analysis of their
statutory fraud claim by June 9, 2017.
SIGNED at Houston, Texas, on this

UNITED STATES DISTRICT JUDGE

-8-