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)

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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

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