Michael Green, Trustee for 2016 Wolf Trust v. Bank of America, N.A.

Filing 11

MEMORANDUM OPINION AND ORDER granting in part, denying in part 4 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM . ( Initial Conference reset for 5/19/2017 at 02:00 PM in Courtroom 9B before Judge Sim Lake)(Signed by Judge Sim Lake) Parties notified.(gclair, 4)

United States District Court
Southern District of Texas

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

April 20, 2017
David J. Bradley, Clerk

MICHAEL GREEN, Trustee for the
2016 WOLF TRUST ,

Plaintiff ,
CIV IL A CTION NO . H-17-0772
BANK OF AMERICA , N . .,
A

Defendant .

MEMOPANPUM OPIN ION AND ORDER
Pending before the court is Defendant Bank of America, N . .'S
A

(
UBANA') Motion to Dismiss Plaintiff's Complaint with Incorporated
'
Memorandum of Law (nMotion to Dismigs') (
' Docket Entry No . 4)
the reasons stated below , the motion will be granted

Fo r

Part and

denied in part .
1.

Factual and Procedural Backqround

In 2008 Edgar and Maria Cortes (u
Borrowers' obtained a loan
')
secured by a deed of trust on real estate located at 6822 Liberty

Creek Trail, Houston, Texas, 77049 (uthe Property' x
o

The deed of

trust was later assigned to BANA , successor by merger to BAC Home

l
Factual allegations are taken from Plaintiff's Verified First
Amended Original Petition to Qu iet Title for Declaratory and

Injunctive Relief, TRO, and Request for Disclosure (Bpetition' ,
o
Exhibit A to Notice of Removal, Docket Entry No . 1, pp . 6-7 and
uncontested allegations from Defendant 's Motion to Dismiss , Docket
Entry No . 4, pp . 5-9 .

Loan Servicing , LP FKA Countrywide Home Loans Servicing .

The

Property is subject to restrictions and covenants that permitted
the Liberty Lakes (
Houston) Homeowners' Association, Inc. ('HOA'
A ')
to assess a lien for unpaid HOA assessments .

In February of 2015

the HOA prevailed in a suit against Borrowers and foreclosed its

lien against the Property .

The 2016 Wolf Trust CA
the Trust' purchased the Property
')

subject to Defendant's existing senior lien at a Constable's Sale
in May of 2016 . Defendant filed a Notice of Substitute Trustee's
Sale with the Harris County Clerk on January
was schedu led for March
the

113th

2017 .

The sale

Plaintiff filed this action in

Judicial District Court, Harris

February

2017 .

County , Texas, on

2017, seeking to enjoin Defendant from foreclosing.

Plaintiff also claimed an equitable right of redemption and sued

for qu iet title . Plaintiff alleges that the Trust seeks to pay off
Defendant 's

lien

but

that

Defendant

has

not

responded

Plaintiff's attempts to commun icate . Defendant timely removed the
action and now moves to dism iss for failure to state a claim upon
which relief can be granted under Federal Rule of Civil Procedure

12 (
b)
II . App licable Law

A Rule 12( 6) motion tests the formal sufficiency of the
b)(
pleadings

and

is

uappropriate

when

a

defendant

attacks

the

comp laint because it fails to state a legally cognizab le claim .'
'

Ramminq v . United States, 281 F . 158, 161 (
3d
5th Cir. 2001), cert .
denied sub nom . Cloud v . United States, 122 S .

2665 (
2002).

The court must accept the factual a llegations of the comp laint as
true and view them in the light most favorable to the plaintiff.

Id. (
citing Oppenheimer v . Prudential Securities Inc., 94 F . 189,
3d
l94 (
5th Cir. 1996)). To defeat a motion to dismiss, a plaintiff
must plead

uenough facts to state a claim to relief that is

plausible on its face .'
'

Twomb ly ,

1974 .

The court

does not 'strain to find inferences favorable to the p laintiffs' or
'
'
uaccept conclusory allegations, unwarranted deductions , or legal
conclusions .' Southland Securities Corp . v . INspire Ins . Solutions,
'

Incw 365 F. 353, 36l (
3d
5th Cir. 2004) (
internal quotation marks
and citations omitted). ul
clourts are required to dismiss, pursuant
to (
Ru1e 12( (
b) 6)2, claims based on invalid legal theories, even
though they may be otherwise well-pleaded .'
'

Flynn v . State Farm

Fire and Casualty Insurance Co . (
Texas), 605 F. Supp . 2d 811, 82O

( . . Tex . 2009) (
W D
citing Neitzke v. Williams, 1O9 S. Ct. 1827, 1832
(
1989)).
111 . Ar plication
Equitable Redemption

To properly

state a claim

for thy

equitable right of

redemption, a plaintiff must show it: ( has an equitable or legal
l)

right to the property ; ( based on which it would suffer a loss
2)
from foreclosure ; and

'is lready , able or willing to redeem the

properties

controversy by pay ing off the amount of valid and

subsisting liens to which the properties (
are) subject.'' Scott v.
'
Schneider Estate Trust, 783 S. . 26, 28 (
W 2d
Tex . App .
-Austin 1990,

no writ) (
quoting Houston v . Shear, 210 S . . 976, 981 ( . Civ.
W
Tex
App .
-Austin 1919, writ dism 'd

uThe party w ishing to redeem

must also be w illing to pay amounts expended by the mortgagee in
association with the default .' Id .
'
Defendant

argues

that

Plaintiff

offers

no

facts

that

demonstrate that the Trust would suffer a loss from foreclosure or

that Plaintiff is ready , able , or willing to pay off the amount of
the existing lien and other amounts owed to Defendant

to the default and foreclosure attemptsx

relation

Defendant further argues

that Plaintiff Mdoes not assert that (
the Trustl has tendered the
amount owed on the Note , which is a 'necessary prerequisite to the
recovery of title

Plaintiff has plead sufficient facts to state a claim for its
equitable right

redemption that is p lausible on its face .

Plaintiff alleges that the Trust possessqs a legal interest in the
Property as a result of purchasing the Property at the Constable's
Sale .

It is plausible that , based upon that interest, Plaintiff

would suffer a loss in the event of a foreclosure sale .

z
Defendant's Motion to Dismiss , Docket Entry No .

Finally ,

p.

3 . at 13-14 (
Id
citing Kinqman Holdings, LLC v . BAC Home Loans
Servicing , LP, Civil Action No . 4 :1O-cv -698 , 2011 WL 1882269, at *4

( D . Tex. Apr. 2l, 2011).
E.

Plaintiff's alleged

attempts

to contact Defendant

indicate a

willingness to pay off Defendant 's existing lien .
Defendant argues that dism issal is warranted becau se Plaintiff
has

failed

tender the amount owed , which

prerequisite for the recovery of title .l

is a

necessary

Although the cases on

which Defendant relies correctly identify tender of the amount owed
as a l
hlcondition precedent ' to recovery of title /' tender is not
'
required in order to state a legally cognizable claim .5

If the

court were to adopt BANA 'S reasoning , defendants could defeat

equitab le

redemption

claims

at the pleading

stage by

simply

withholding payoff in formation from p laintiffs .
Plaintiff's factual allegations are su fficient to survive a

motion to dismiss .

If the Trust is to prevail on its claim ,

must eventually tender the amount owed .

But in order to do so ,

Defendant must first provide that amount to the Trust .

B.

Quiet Title
Plaintiff also

Property .

asks

the

court

to

uquiet

title'
'

the

A suit to remove cloud or to quiet title seeks an

4
Defendant Bank of America , N .A .'S Reply Brief in Support of

Motion to Dismiss Plaintiff's Complaint ('Reply' Docket Entry No .
'
'),
9, pp . 4-5 (
citing two virtually identical holdings: Kingman
Holdinqs , LLC v . BAC Home Loans Serv icing , LP , 2011 WL 1882269, at
*4 ,and Kingman Holdings, LLC v . CitiMortqaqe Inc w Civil Action No .

4:10-cv-619z 2011 WL 1883829, at *4 ( D . Tex . Apr . 21, 2011) (nthe
E.
Kingman Holdinq cases' ).
o

s
The magistrate judge in the Kinqman Holdinq cases cited
several Texas cases on which the court relied in recommending
dismissal.
But none of the cited cases were resolved at the
p leading stage based solely upon failure to tender the amount owed .

equitable remedy .

Katz v . Rodriquez, 563 S. .
W 2d 627, 629 (
Tex .
-

Civ . App .
-corpus Christi 1977, writ ref'd n . e .)
r.
must show

The plaintiff

an interest in a specific property , ( title to the
2)

property is affected by a claim by the defendant , and

claim , although

facially valid , is invalid

the

or unenforceable .

Vernon v. Perrien, 39O S. . 47, 61-62 (
W 3d
Tex . App .
-El Paso 2012, no
pet.) (
citation omitted). Defendant argues that Plaintiff's quiet
title claim fails as a matter of law because Plaintiff purchased

the Property subject to a valid superior and senior 1ien. Because
6
Plaintiff

does

not

dispute

the

validity

or

superiority

of

Defendant 's claim , Plaintiff's quiet title claim will be dismissed .
C.

Injunctive Relief

Plaintiff seeks injunctive relief
foreclosing on the Property pursuant

Substitute Trustee's Salex

prevent Defendant from
Defendant 's Notice of

Plaintiff alleges that the notice was

defective due to Defendant 's failure to prov ide a street address
for the substitute tru stees , as required by statute .

Defendant

argues that this claim is moot because the date of the proposed

sale has passed x

The court agrees, and Plaintiff's claim for

E
Defendant's Motion to D ism iss, Docket Entry No . 4, pp . 10-12 .
z
Exhibit A to Plaintiff 's Verified First Amended Original

Petition to Quiet Title E,) for Declaratory and Injunctive Relief,
TRO, and Request for Disclosure, Exhibit A to Notice of Removal ,
Docket Entry No . 1-1 , pp . 13-14 .

B
Defendant's Reply , Docket Entry No . 9, pp . 2-3 .

injunctive relief will be denied as moot. If Defendant seeks to
move forward w ith

foreclosure proceedings while this case

is

pending, Plaintiff may again seek injunctive relief.
IV . Conckupions and Orders
For the reasons explained above , the court concludes that
Plaintiff has plead a

redemption .

legally cognizab le claim

Plaintiff 's quiet

title claim

for equitable

is DISMISSED with

prejudice. Plaintiff's claim for injunctive relief is DISMISSED as
moot.

Defendant's Motion to Dismiss (
Docket Entry No.

is

therefore GRANTED in part and DENIED in part .
For the reasons stated above , Defendant is ORDERED to provide
Plaintiff

w ith

a

total

of

the

amount

required

to

pay

Defendant's valid and subsisting lien and any amounts Defendant

expended
Plaintiff

association with

the

default by April 28, 2017 .

respond to the offer by May

2017 .

The initial

conference is RESCHEDULED for May 19, 2017, at 2 :00 p . .
m

SIGNED at Houston , Texas , on this 20th day of April, 2017 .

h

A
SIM LAKE
UNITED STATES DISTRICT JUDGE