Vestal v. Wells Fargo Bank, N.A. et al

Filing 27

MEMORANDUM OPINION AND ORDER granting 22 MOTION to Dismiss (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

United States District Court
Southern District of Texas

ENTERED

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DANNY D. VESTAL,

§
§
§
§
§
§
§
§
§
§
§

Plaintiff,

v.
FEDERAL NATIONAL MORTGAGE
ASSOCIATION and WELLS FARGO
BANK,

N .A.

I

Defendants.

September 20, 2017
David J. Bradley, Clerk

CIVIL ACTION NO. H-16-3628

MEMORANDUM OPINION AND ORDER

Plaintiff,
Wells

Fargo

Danny D.

Bank,

N.A.

Vestal

("Plaintiff") ,

("Wells

Fargo")

and

sued defendants
Federal

National

Mortgage Association ("Fannie Mae") in the 268th Judicial District
Court of Fort Bend County,
Fannie Mae
court. 2

(collectively

Texas . 1

Defendants Wells Fargo and

"Defendants")

timely

to

this

Pending before the court is Defendants' Motion to Dismiss

and Brief in Support ("Motion to Dismiss")
For

removed

the

reasons

stated below,

the

(Docket Entry No. 22).

Motion

to

Dismiss

will

be

granted, and this action will be dismissed with prejudice.
I.

Factual Allegations and Procedural Background

On September 20, 2012, Plaintiff obtained a home-equity loan
from

Embrace

Home

Loans,

Inc.

("Embrace")

in

1

the

amount

of

See Plaintiff's Original Petition and Request for Disclosures
("Plaintiff's Original Petition"), Exhibit D-1 to Notice of
Removal, Docket Entry No. 1-4.
2

See Notice of Removal, Docket Entry No. 1.

$122,400.00 to refinance a previous loan on 4434 Waterfall Way,
Sugar Land, Texas 77479 ("the Property").
executed

a

Texas

Instrument")

and

("Affidavit")

Home
a

Equity

Texas

Plaintiff simultaneously

Security

Home

Instrument

Equity Affidavit

Embrace is a direct

("Security

and Agreement

lender of Fannie Mae.

On

June 17, 2016, Plaintiff sent Defendants a Notice to Cure alleged
constitutional violations contained in the Security Instrument.
Plaintiff alleged that (1) Plaintiff's home equity loan exceeded 80
percent of the fair market value of the property at the time of
closing in violation of Article XVI section
Texas Constitution, and
execute a
value

at

(2)

50

(a) ( 6) (B)

of the

Plaintiff and Embrace did not properly

written acknowledgment of the property's fair market
the

SO(a) (6) (Q) (ix).

time

of

closing

in

violation

of

section

Based on the alleged constitutional violations,

Plaintiff brings causes of action for breach of contract,

quiet

title, declaratory judgment, and a permanent injunction to preclude
foreclosure on the property.

Defendants move to dismiss all claims

for failure to state a claim upon which relief can be granted under
Federal

Rule

of

Civil

Procedure

Defendants' Motion to Dismiss. 4

12 (b) (6)

3

Plaintiff

opposes

Each claim will be analyzed under

the standard of review set forth below.

3

See Motion to Dismiss, Docket Entry No. 22, p. 20.

4

See Plaintiff's Response to Defendants'
("Plaintiff's Response"), Docket Entry No. 23.
-2-

Motion to Dismiss

II.

Standard of Review

Under the Federal Rules of Civil Procedure a pleading must
contain "a short and plain statement of the claim showing that the
pleader is entitled to relief."

Fed.

R.

Civ.

P.

8 (a) (2).

A

plaintiff's pleading must provide the grounds of his entitlement to
relief, and "a formulaic recitation of the elements of a cause of
action will not do.

s.

Ct .

19 5 5

"

19 6 5

I

(2 0 0 7 ) .

Bell Atlantic Corp. v. Twombly,
"' [N] aked assertion [s] '

127

devoid of

'further factual enhancement'" or " [t] hreadbare recitals of the
elements

of

statements,

a

cause

of

action,

do not suffice."

1937, 1949 (2009).

supported

by

See Ashcroft v.

mere

conclusory

Iqbal,

129 S. Ct.

"[C]onclusory allegations or legal conclusions

masquerading as factual conclusions will not suffice to prevent a
motion to dismiss."
F.2d 278,

284

Fernandez-Montes v. Allied Pilots Ass'n, 987

(5th Cir.

Instead,

1993).

"[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."
A Rule 12(b) (6)
pleadings

and

is

Iqbal, 129 S. Ct. at 1949.

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."
-3-

Twombly,

127 S. Ct. at 1974.

The court does not "strain to find inferences

favorable to the plaintiffs"

or "accept conclusory allegations,

unwarranted deductions, or legal conclusions."

Southland Securities

Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 361 (5th Cir.
2004)

(internal quotation marks and citations omitted).

"[C]ourts

are required to dismiss, pursuant to [Rule 12(b) (6)], claims based
on invalid legal theories, even though they may otherwise be wellFlynn v.

pleaded."

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.
A.

Analysis

Breach of Contract
Plaintiff alleges that Defendants breached their agreement with

Plaintiff by failing to "conform strictly to provisions of the Texas
Constitution applicable to Extension of Credit as defined by Section
50 (a) (6). " 5

Specifically,

Plaintiff brings a breach of contract

action for Defendants' alleged violation of sections 50(a) (6) (B) and
50 (a) (6) (Q) (ix)
prohibits a

of

the Texas

Constitution.

Section 50 (a) (6) (B)

forced sale if the extension of credit secured by a

voluntary lien exceeds 80 percent of the fair market value of the
homestead on the date the extension of credit is made.
art .

XVI ,

§

5 o (a) ( 6 ) ( B ) .

Section

5

50 (a) (6) (Q) (ix)

See Plaintiff's Original Petition, p. 9
Notice of Removal, Docket Entry No. 1-4.
-4-

~

TEx. CoNST.

requires

the

17, Exhibit D-1 to

borrower and lender to sign a written acknowledgment as to the fair
market value of the homestead property on the date the extension of
credit is made.

TEX. CaNsT. art. XVI,

Section 50 (a)

50 (a) (6)

§

(Q)

(ix).

of the Texas Constitution does not create a

separate cause of action, rather it "simply describes what a homeequity

loan

must

look

like

if

a

lender

wants

foreclose on a homestead upon borrower default."
Loan Servicing,

L.L.C.,

497 S.W.3d 474,

478

the

option

to

Garofolo v. Ocwen

(Tex.

2016).

But a

borrower may assert constitutional violations through a breach of
contract action when the constitutional forfeiture provision is
incorporated into the terms of the home-equity loan.
Wells Fargo Bank, N.A.,

867 F.3d 593

Alexander v.

(5th Cir. 2017); Johnson v.

Citigroup Mortgage Loan Trust Inc., Civil Action No. 5:16-cv-1114RCL, 2017 WL 3337268, at *9 (W.D. Tex. Aug. 3, 2017); Garofolo, 497
S.W.3d at 484; Wood v. HSBC Bank USA,
(Tex. 2016).

N.A.,

546

As such, the relevant statute of limitations for the

underlying breach of contract action controls.
593;

505 S.W.3d 542,

Johnson,

2017

WL 3337268,

at

*9.

Alexander, 867 F. 3d

Actions

for breach of

contract are governed by the four-year statute of limitations. TEx.
Crv.

PRAC.

&

REM. CODE ANN.

592 (Tex. 2002).
of breach.

§

16.051; Stine v. Stewart, 80 S.W.3d 586,

A breach of contract action accrues at the time

Via Net v.

TIG Ins.

Co.,

211 S.W.3d 310,

314

(Tex.

2006); Stine, 80 S.W.3d at 592.
Compliance with section 50(a)
exists

at

origination

and

"is measured by the loan as it

whether
-5-

it

includes

the

terms

and

conditions required to be foreclosure-eligible."
S.W.3d at 478.
violation
Alexander,

of

section

50(a)

867 F.3d 593;

for

497

The proper accrual date for breach of contract for

failure

section 50(a) (6) (B)

occurs

Sims v.

L.L.C., 440 S.W.3d 10, 17 n.28
violations

Garofolo,

at

the

date

of

closing.

Carrington Mortgage Services,

(Tex. 2014).

to comply with the

Plaintiff's alleged
80

percent

rule of

and failure to include an Acknowledgment of

Fair Market Value under section 50(a) {Q) (ix) therefore accrued on
September 20, 2012, the date the loan was closed.
F.3d 593; Johnson, 2017 WL 3337268, at *11.

Alexander, 867

Under the four-year

statute of limitations Vestal was therefore required to raise a
breach of contract claim by September 20, 2016.

Because he filed

his state court petition for breach of contract on November 3,
2016, his claim is barred by limitations.
B.

Quiet Title Action

Plaintiff
Property.

also

seeks

to

remove

a

cloud

on

title

to

the

A suit to remove cloud or to quiet title exists "'to

enable the holder of the feeblest equity to remove from his way to
legal title any unlawful hindrance having the appearance of better
right.'"

Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388

(Tex. App. -Houston [1st Dist.] 2012, pet. denied); Hahn v. Love,
321 S.W.3d 517,
denied) .

531

(Tex. App. -Houston [1st Dist.]

2009,

pet.

The plaintiff has the burden of proof to establish his

superior equity and right to relief.

Id.

To do so the plaintiff

must show (1) an interest in a specific property,
-6-

(2) title to the

property is affected by a claim by the defendant,
claim,

although

facially

valid,

is

invalid

or

and

( 3)

the

unenforceable.

Vernon v. Perrien, 390 S.W.3d 47, 61-62 (Tex. App. - El Paso 2012,
no pet.)

(citation omitted).

The plaintiff must recover on the

strength of his own title, not on the weakness of a defendant's
title.
767
No.

Hurd v. BAC Home Loans Servicing, LP, 880 F. Supp. 2d 747,

(N.D.

Tex.

2012);

4:17-CV-075-A,

Ventura

v.

2017 WL 1194370,

Wells
at *2

Fargo

Bank,

(N.D.

Tex.

N.A.,

Mar.

30,

2017); Martin v. Amerman, 133 S.W.3d 262, 265 (Tex. 2004); Hejl v.
Wirth, 161 Tex. 609, 610, 343 S.W.2d 226, 226 (1961).
Plaintiff asserts that (1) Plaintiff is the undisputed owner
of

the

property

( 2)

Defendants have clouded Plaintiff's title by claiming that

Defendants

have

by

a

virtue

lien

for

of

Plaintiff's

security

purposes

recorded

on

deed;

Plaintiff's

Property and that Defendants have the power to foreclose on said
property; and (3) the home equity lien upon which Defendants assert
an interest, although facially valid, is in fact invalid and of no
force

or

violations
ab initio.

effect

because

Defendants'

have

rendered

Defendants'

uncured

underlying

Plaintiff alleges that Defendants'

interferes with his title. 6

constitutional
lien

void

claim therefore

Defendants contend that Plaintiff's

claim fails as a matter of law. 7

6

See Plaintiff's Original Petition, Exhibit D-1 to Notice of
Removal, Docket Entry No. 1-4, p. 11 ~ 24.
7

Motion to Dismiss, Docket Entry No. 22, p. 18.
-7-

Plaintiff's

claim

to

superior

title

is

not

based on

the

strength of Plaintiff's title to the Property, but on the weakness
of Defendants'

title to the Property resulting from the alleged

violations of the Texas Constitution.
title

claim

fails

as

a

matter

of

Therefore, Plaintiff's quiet
See

law.

Ventura,

2017

WL 1194370, at *2-*3 (dismissing the plaintiff's quiet title claim
that was based on the same alleged constitutional violations to the
home equity loan as in Vestal's claim because it rested on the
weakness of the defendant's title rather than on the strength of
the plaintiff's title).
C.

Request for Declaratory Judgment

Plaintiff seeks a declaratory judgment pursuant to Chapter 37
of the Texas Civil Practice and Remedies Code.
Texas

Civil

Practice

and

Declaratory Judgments Act,"

Remedies

Code,

is a procedural,

Chapter 37 of the
titled

the

"Texas

not a substantive,

provision and therefore does not apply to actions in federal court.
Vera v.
2014).

Bank of America,

N.A.,

569 F. App'x 349,

352

(5th Cir.

A request for declaratory judgment under state law is thus

considered as a claim under the federal Declaratory Judgment Act.
See 28 U.S.C.

§

2201.

"Both Texas and federal law require the

existence of a justiciable case or controversy in order to grant
declaratory relief."

Val-Com Acquisitions Trust v. CitiMortgage,

Inc., 421 F. App'x 398, 400

(5th Cir. 2011)

(citing Bonham State

Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995)).
-8-

"A declaratory

judgment action requires the parties to litigate some underlying
claim or cause of action."

Conrad v. SIB Mortgage Corp. , No. 4: 14-

CV-915-A, 2015 WL 1026159, at *7 (N.D. Tex. March 6, 2015).

When,

as is the case here, a plaintiff 1 s claims will be dismissed, his
request for declaratory relief has no merit.

Wheeler v. U.S. Bank

Nat,l Ass,n, Civil Action No. H-14-0874, 2016 WL 554846, at *8 n.53
(S.D. Tex. Feb. 10, 2016).
Plaintiff requests a declaration that "(a)

[] Defendants have

failed to cure Constitutional defects in the loan documents,

(b)

[]

the mortgage lien is noncompliant with the Texas Constitution and
thereby VOID, and

(c)

[]

title be quieted in Plaintiff 1 s name." 8

This request duplicates Plaintiff,s breach of contract and quiet
title

Because

claims.

Plaintiff, s

underlying

claims

will

be

dismissed, the court will not grant declaratory relief.
D.

Request for Injunctive Relief

Plaintiff
Defendants.

has

requested

a

permanent

injunction

against

"Under Texas law, a request for injunctive relief is

not itself a cause of action but depends on an underlying cause of
action.,,
No.

Cook

v.

3:10-CV-0592-D,

Wells

Fargo

2010 WL 2772445,

Bank,
at *4

N.A.

Civil

I

(N.D.

Tex.

2010); Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204

Action
July 12,

(Tex. 2002).

Because Plaintiff has failed to state a claim upon which relief can
be granted, he is not entitled to injunctive relief.
8

See Plaintiff,s Original Petition, Exhibit D-1 to Notice of
Removal, Docket Entry No. 1-4, p. 12 ~ 31.
-9-

IV.

Conclusions and Order

For the reasons discussed above, Plaintiff has failed to state
in his Original Complaint any claims upon which relief
granted.

can be

Neither has the Plaintiff provided the court with any

reason to believe amending his pleadings would cure the deficiency.
Defendants' Motion to Dismiss

(Docket Entry No.

22)

is therefore

GRANTED, and this action will be dismissed with prejudice.
SIGNED at Houston, Texas, on this 20th day of September, 2017.

JUDGE

-10-