Hernandez et al v. Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through Certificates, Series 2007-QS3 et al
Filing
19
MEMORANDUM OPINION AND ORDER denying 13 Amended MOTION to Remand; granting 12 MOTION to Dismiss and Brief in Support. (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 DISTRICT OF TEXA S
HOUSTON DIVISION
August 23, 2018
David J. Bradley, Clerk
LUIS HERNANDEZ and ALEXI
HERNANDEZ,
Plaintiffs,
CIVIL ACTION NO . H-18-0724
RESIDENTIAL ACCREDIT LOANS
INC ., MORTGAGE A SSET-BACKED
PASS-THROUGH CERTIFICATES,
SERIES 2007-QS3, DEUTSCHE BANK
TRUST COMPANY AMERICA S as
TRUSTEE with WELLS FARGO BANK,
N . . as the Mortgage Servicer,
A
Defendants .
MEMORANDUM OPINION AND ORDER
Plaintiffs,
Hernandez and Alexi Hernandez, Husband and
Wife (
uplaintiffs'), sued defendants Deutsche Bank Trust Company
/
Americas, as Trustee
Asset-Backed Pass-Through Certificates, Series 2007-Q531 (
uDeutsche
Bank') and Wells Fargo Bank, N. . C'
'
A
Wells Fargo/) (
' collectively,
uDefendants/)
'
the
County, Texasx
Defendants timely removed
courtx
Pending before the court
and Brief
Harris
Judicial District
action
Defendants' Motion to Dismiss
Support (
uMotion to Dismiss/) (
' Docket Entry
and Plaintffs'
Motion to Remand (
nMotion to Remand') (
' Docket
l
see Plaintiff's g
sicq Original Petition Seeking Declaratory
Judgment and Application for Temporary Restraining Order (
noriginal
Petition'), Exhibit D-1 to Notice of Removal, Docket Entry No. 1-5.
'
2See Notice of Removal, Docket Entry No .
Entry No. 13)
For the reasons stated below, the Motion to Remand
will be denied, the Motion
Dismiss will be granted , and this
action will be dismissed with prejudice.
1.
Factual Allega tions and Procedural Backcround3
-
-
In their Original Petition Plaintiffs allege that they owned
the real property located at 13138 Chatfield Manor Lane, Tomball,
Texas 77375 (
uthe Property'). On December
/
Hernandez obtained
the amount of $225,000.00 from
Wachovia Mortgage Corporation , secured by
Trust (
collectively,
2006, Plaintiff Luis
Note
a Deed
uLoan').4 Only Luis Hernandez signed the
'
Note, and 50th Luis and Alexi Hernandez signed the Deed of Trustx
December
2009, the Loan was assigned
Wells Fargo was
Wells Fargo Bank,
mortgage servicer for Deutsche Bank,
mortgagee of the Note and Deed of Trustx
3see Original Petition, Exhibit
Docket Entry No . 1-5, pp . 2-4.
On January
Notice
2018,
Removal,
4See Note, Exhibit 5 to Original Petition , Exhibit D-1 to
Notice of Removal, Docket Entry No. 1-57 Deed of Trust, Exhibit 1
to Motion to Dism iss, Docket Entry No . 12-1.
ssee id .
6
Assignment of Note and Deed of Trust, Exhibit 2 to Motion to
Dismiss, Docket Entry No . 12-2,
2.
Rsee Notice of Acceleration, Exhibit 2 to Original Petition,
Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 16 .
Wells Fargo issued
notice
acceleration
connection w ith
Plaintiffs' Loan and initiated foreclosure proceedings.'
On March 1, 2018, Plaintiffs filed suit against Defendants in
state court seeking
restraining orderx
declaratory judgment and
temporary
On March 2, 2018, the State Court issued a
Temporary Restraining O rder and suspended
foreclosure sale of
the Propertyx o Defendants move to dismiss a1l claims for failure
to state
claim upon which relief can be granted under Federal
Rule of Civil Procedure l2 ( (
b) 6)
Plaintiffs oppose Defendants'
Motion to Dismissl and move to remand this action to State Courtx 3
z
II .
Plaintiffs' Motion to Remand
Defendants removed this action on March 7, 2018, arguing that
the court has subject matter jurisdiction under
because there
5 1332
complete diversity of citizenship and the amount
8see Notice of Acceleration , Exhibit 2 to Original Petition,
Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 16;
Notice of Sub stitute Trustee Sale , Exhib it 2 to Original Petition,
Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 18.
g
original Petition , Exhibit
Entry No . 1-5,
2.
Notice of Removalr Docket
l Temporary Restraining Order, Exhibit
o
Removal, Docket Entry No . 1-6, pp . 2-3 .
H see Motion
Notice
Dismiss, Docket Entry No .
Hsee Plaintffs' (
sicq Second Amended Response in Opposition
to Motion to Dismiss for Failure to State a Claim CA
plaintiffs'
Response'), Docket Entry No. 18.
'
l
3see Motion to Remandr Docket Entry No .
in controversy exceeds $75,000.1 Plaintiffs argue that the action
1
should be remanded because the Loan violates the Texas Constitution
supplemental jurisdiction
1367 ,1
5
under
they
argue that complete
diversity does not exist or that the jurisdictional minimum is not
A.
Standard of Review
28 U . C. 5 1441( provides that
S.
a)
civil action brought
State court of which the district courts of the United States
have original jurisdiction, may be removed by the defendant or the
defendants,
the district
the United States
district and division embracing the place where such action
pending.' Original federal jurisdiction exists where the civil
'
action arises uunder the Constitution , laws,
United States .'
'
1331.
treaties
addition, u g
tqhe district
courts shall have original jurisdiction of a11 civil actions where
matter
exclusive
value
controversy exceeds the sum
interest and costs, and is between
$75,000,
citizens
different States.' 28
'
5 1332.
jurisdiction is based on
diversity an
be removed if any of the parties
interest properly joined and served as defendants
l Notice
4
Removal, Docket Entry No .
i
ssee Motion
Remand, Docket Entry No .
p.
pp .
a citizen
the State
which E
the) action
1441 ( )( ). That
b 2
brought .'
'
28
5
district court cannot exercise diversity
the plaintiffs shares the same state
jurisdiction
citizenship as one of the defendants.' Whalen v . Carter, 954
'
1087, 1094 (
5th Cir. 1992).
A fter removal
uE
if)
case, the plaintiff may move for remand and
appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.' 28
'
l447(
c).
Removal jurisdiction depends
the plaintiffs' state court
pleadings at the time of removal.
Cavallini v . State Farm Mutual
Auto Insurance Co., 44 F.3d 256, 259 (
5th Cir. 1995). The removing
party bears the burden of showing that subject matter jurisdiction
existed and that the removal procedure was properly followed .
Manguno v . Prudential Propertu & Casualtv Insurance Co ., 276 F.3d
2002).
Fifth Circuit has held that
removal statutes are to be construed ustrictly against removal and
for remand .'
'
Eastus v . Blue 5ell Creameries, L .P., 97 F .3d 100,
(5th Cir. 1996) (
citing Shamrock Oil & Gas Coro . v. Sheets,
868,
B.
(
1941)).
Analysis
Because Plaintiffs are domiciled in Harris County, Texas ,
where they have their fixed residence and an intent
l original Petition , Exhib it
6
Entry No . 1-5, p . 3.
remain,lf
to Notice of Rem oval, Docket
they are citizens of Texas for diversity purposes . See Freeman v .
Northwest Accertance Corr w 754 F.2d
555-56
1985).
Deutsche Bank is a New York corporation with its principal place of
business in New YorkxR Deutsche Bank is therefore a citizen of New
York,
Plaintiffs
do
not
argue
otherwise .
28
5 l332 ( (
c) 1); Bynane v . Bank of New York Mellon,
(
5th
2017) (
holding that a trustee's citizenship controls for
diversity purposes when
party sued
capacity as a
trustee). Defendant Wells Fargo is a national banking association
which , under
articles of association , has
South Dakota.
Wells Fargo is therefore a citizen
Plaintiffs
diversity purposes,
Wachovia Bank v. Schmidt, 126
set forth
articles
South Dakota
argue otherwisex 8
941, 945 (
2006) ( E national
u Aq
a citizen of the State in which
bank
main office in
association,
main office, as
located .r).
r
The
parties are therefore completely diverse .
For diversity jurisdiction under 28 U.S.C. 5 1332(
a),
actions
enjoining
lender from
transferring property and
preserving an individual's ownership interest ,
property represents
GMAC Mortcace L . C.,
L.
amount
the value of
controversy .'
'
F.3d 338, 341 (
5th
omitted). Because Plaintiffs seek injunctive relief
Farkas v .
(
citation
preclude
foreclosure of the Property and seek a declaration that the lien is
l
RNotice
1 Id .
8
Removal, Docket Entry No .
void, and because the current market value of the Property
$290,091,1
9
amount
controversy exceeds
jurisdictional
minimum of $75,000.
Because the parties are completely diverse and the amount-incontroversy requirement has been met, the court has original
diversity
U .S .C .
1332 .
Plaintiffs'
arguments that the court should abstain from adjudicating this case
have
merit because
federal district court may exercise
any civil action that
diversity requirem ents
satisfies
Energv Manacement Services , LLC v .
Citv of Alexandria, 739 F.3d 255, 259-60 (
5th
The
court therefore will deny Plaintiffs' Motion to Remand .
111 .
A.
Defendants' Motion to Dismiss
Standard of Review
Civil Procedure
Under the Federal Rules
contain ua short and plain statement
pleader
entitled
the claim showing that the
relief .'
'
plaintiff's pleading must provide the grounds of
relief, and Na formulaic recitation of the elements
'
action will not
1955, 1965
pleading must
entitlement
cause of
Dell Atlantic Corp . v . Twombly ,
(
2007).
u'g
Nlaked assertion g
sq' devoid
'further factual enhancement''
'
ul
tjhreadbare recitals
lg
Harris county Appraisal District Real Property Account
Information, Exhibit E to Notice of Removal, Docket Entry No . 1-8,
p. 2.
elements of a cause
action , supported
not suffice .'
'
statements,
mere conclusory
See Ashcroft v . Iqbal,
1937, 1949 (
2009). nl
cqonclusory allegations or legal conclusions
masquerading as factual conclusions will not suffice to prevent
motion to dismiss .' Fernandez-Montes v . A llied Pilots Rss 'n, 987
'
F .2d
1993).
Instead, ' aq claim has facial
'E
plausibility
the court
that allows
draw the reasonable inference that the defendant
liable for the misconduct alleged .' Igbal, l29
'
1949.
Rule l2 ( 6) motion tests the formal sufficiency
b)(
p leadings
and
complaint because
uappropriate
fails
when
state
defendant
attacks
the
legally cognizable claim .'
'
Ramminc v. United States, 281 F.3d 158,
denied sub nom . Cloud v . United States,
2001), cert.
2665 (
2002).
defeat a motion to dism iss, a plaintiff must plead nenough facts
state
claim to relief that
plausible on
face .' Twomblv,
'
1974. The court
favorable
find inferences
the plaintiffs'
'
'accept conclusory allegations,
'
unwarranted deductions, or legal conclusions .' Southland Securities
'
Corr. v. INsrire Ins. Solutions, Incw 365 F.3d 353,
(
5th Cir.
2004) (
internal quotation marks and citations omitted). nl
clourts
are required to dismiss, pursuant
E
Rule 12 ( (
b) 6)2, claims based
invalid legal theories, even though they may otherwise be wellpleaded.'
'
Flynn v . State Farm Fire and Casualtv Insurance Co.
-
8-
(
Texas), 605 F. Supp . 2d 811, 82O (
W.D. Tex. 2009) (
citing Neitzke
v. Williams, 109
Ct. 1827, 1832 (
1989)).
B . Analysis
Plaintiffs
allege
that
the
Loan
violates
Texas
Constitution because Plaintiff Alexi Hernandez
sign
Note or consent to the Loan .20 Plaintiffs appear to assert a cause
action
quiet title, and seek an injunction
preclude foreclosure of the Property, a declaratory judgment, and
damages .zl
Plaintiffs also argue that Defendants
have
standing to foreclose on the Property because the Loan violates the
Texas Constitution.z
z
Plaintiffs
assert
one sentence of their Original Petition
b reach
contract
claim
against
Defendants.z
3
Defendants move
dism iss Plaintiffs' claims arguing that
Plaintiffs' quiet title claim fails
M original Petition, Exhibit
Entry No. 1-5, p . 4 .
matter
to Notice
and that
Removal, Docket
21 ee id . a t
S
22zc . at
i
2 Id. at
3
4.
(
MThus Plaintiffs pleading using
the Texas
constitution should resolve this conflict in Plaintiffs favor
according where M rs. Hernandez did not sign the loan note thus the
Hernandez promissory loan was a written agreement where the
applicable law the and thus a breach of contract since the
Defendants purchased a note which did not follow the strict
Constitution
standards
there
is
no
Mrs.
Hernandez
consent
.').
'
Plaintiffs are
entitled
injunctive relief.2 In response
4
Plaintiffs reiterate the arguments in their Original Petition and
argue that Defendants have
cured the constitutional defect
after Plaintiffs served a notice
right to cure .25
Quiet Title Action
remove cloud
quiet title exists u Ato enable
the holder of the feeblest equity to rem ove from his way to legal
any unlawful hindrance having
appearance
right.'' Essex Crane Rental Corr . v . Carter,
'
(
Tex. App.
Houston
n.r.e.)). The plaintiff has
superior equity and right
property
affected by
facially
Waco 1980,
ref'd
burden of proof to establish his
relief.
Id .
do so the plaintiff
specific property ,
an interest
claim , although
S .W .3d 366, 388
Dist.q 2012, pet. denied) (
quoting Bell
v. Ott, 606 S. .2d 942, 952 (
W
Tex. App.
must show
better
title
the
claim by the defendant, and
valid ,
invalid
unen forceable .
Vernon v. Perrien, 39O S. .
W 3d
61-62 (
Tex. App . - E1 Paso 2012,
pet.) (
citation omitted).
The plaintiff must recover on the
strength of his own title ,
the weakness
a defendant 's
Hurd v . BAC Home Loans Servicing, LP, 88O F . Supp .
24
see Motion to Dismiss, Docket Entry
M plaintiffs' Responser Docket Entry No . 18,
pp .
( .D.
N
2012); Ventura v. Wells Farco Bank, N.
A., Civil
Action No . 4:17-O75-A, 2017 WL 1194370,
20177 Martin v. Amerman,
( .D. Tex. March 30,
N
S.
W.3d 262,
(
Tex. 2004) (
citation
omitted).
seek removal
Plaintiffs appear
Property arguing
the
cloud on title
Defendants do not have standing foreclose and
that the Loan violates the Texas Constitutionx 6 Plaintiffs argue
Defendants assert an interest , although
L oan
facially valid,
invalid and
Defendants'
uncured
constitutional
Defendants'
underlying
Defendants'
claim
lien
therefore
void .27
force
violations
effect because
have
Plaintiffs
interferes
rendered
allege
their
that
title .2'
Defendants contend that Plaintiffs' claim fails as a matter
Plaintiffs' claim
superior title
based
the
strength of Plaintiffs' title to the Property , but on the weakness
Defendants' title
the Property resulting from the alleged
violations of the Texas Constitution . Therefore, Plaintiffs' quiet
26
original Petition, Exhibit D-1 to Notice of Rem oval, Docket
Entry No. 1-5, p. 7 (
nWas the title to the property affected by a
claim by the Defendant?/).
/
2 (d .
7g
2 jd .
8
2 Motion to Dismiss, Docket Entry No .
9
title
claim
fails
as
matter
law .
See Ventura,
2017
WL 1194370, at *2-*3 (
dismissing the plaintiff's quiet title claim
because
rested on the weakness of the defendant's title rather
than on the strength
the plaintiff's title)
Breach of Contract and Constitutional V iolations
Although Plaintiffs' argument
Constitution is not applicable
court will evaluate
Constitution
suit
validity
order
quiet title,
Loan under
determine
whether
Plaintiffs
Texas
have
of contract . Plaintiffs argue
that because Alexi Hernandez did
their Loan,
Constitution
sign the Note that secured
violates Section 5O( 6)( )
a)( A
therefore
'
'Plaintiffs' lien
does
constitutional provision because
va1id .3
0
Texas
Defendants argue that
fall within
scope
that
a purchase-money lien ,
a home-equity lien ./ C
'3
prohibits a forced sale if the extension
of credit secured by a voluntary
under a written agreement was
created without the consent of each owner and each owner's spouse .
TEx. Co T. art. XVI, 5 50( ( (
Ns
a) 6) A). Section 50 ( ( states that
a) 1)
Moriginal
Entry No . 1-5, p .
Exhibit D-1 to Notice of Removal, Docket
3 Motion to Dism iss, Docket Entry No .
l
p.
the homestead is 'protected from forced sale,
A
the payment of
debts except for: the purchase money thereof, or a part of such
purchase money E.q'
'
Id.
50 ( (
a) 1).
Section 50(
a)
the Texas
Constitution does not create a separate cause of action,
describes what a home-equity
the option
must look like
foreclose
usimply
a lender wants
homestead upon borrower default .'
'
Garofolo v. Ocwen Loan Servicina, L.
L.C.,
S. .3d 474,
W
(
Tex.
2016). But a borrower may assert constitutional violations through
breach
provision
contract action when the constitutional forfeiture
incorporated
Alexander v. Wells Farco Bank, N.
A., 867 F.3d 593 (
5th Cir. 2017)7
Johnson v . Citiqrour Mortgage
No. 5:16-cv-ll14-RCL,
2017); Garofolo,
Loan
Trust
WL 3337268,
S. .3d at
W
Incw
Action
( .
W D. Tex. Aug.
Wood v . HSBC Bank USA , N .A .,
S. . 542, 546 (
W 3d
Tex. 2016).
measured by the loan
includes
exists
origination and whether
term s and conditions required
eligible .' Garofolo, 497 S .W .3d at 478.
'
foreclosure-
Deed
Trust
connection with
Loan that b0th
plaintiffs signed identifies the Loan as a purchase money 1ien3 and
2
states that :
Loan is Not a Home Equity Loan . The Loan evidenced by
the Note is not an extension of credit as defined by
Section 50( (6) or Section 50( (
a)
a) 7), Article XVI, of the
Texas Constitution .B
3
Because the Loan is a purchase money lien, not
home equity
lien, the requirements and protections of the Texas Constitution do
not apply to
836
S.
W.2d
TEX. Co T. art. XVI,
Ns
145,
146
(
Tex. 1992)
50(
a); HegGen v. Pemelton,
('
'The
Texas
Constitution
specifically protects homesteads from forced sale except to satisfy
liens securing purchase money, tax,
home improvement debts./)
'
The court therefore concludes that Plaintiffs have failed to state
contract based
claim for breach
violations of the Texas
Constitution .
3.
Standing
Foreclose
Plaintiffs' arguments that Defendants do not have standing to
foreclose are based on alleged constitutional violations . Because
the court has concluded
the
3
2Deed of Trust , Exhibit 1 to Motion to Dismiss, Docket Entry
No. 12-1, p. 11 % 27 (
marking an AX' in the box for nPurchase
' '
Money' and stating that A tqhe funds advanced to Borrower under
'
'E
the Note were used to pay all or part of the purchase price of the
Property.').
/
3 . at
3Id
% 28.
the Loan , Plaintiffs' arguments have no merit . Moreover, under
Texas Property Code,
party has standing
nonjudicial foreclsoure sale
party
EverBank, N .A . v . Seedergy Ventures, Incw
initiate
mortgagee.'
'
499 S .W .3d 534, 539
(
Tex. App.--Houston (14th Dist.q 2016, reh'g overruled) (
citing
Tex. Prop . Code 55 51.002, 51.0025).
grantee, beneficiary, owner,
such as
mortgagee includes
holder of a security instrument,
deed
security interest has been
assigned of record, the last person
has been assigned
record.''
'
whom the security interest
Id . (
citing Tex. Prop . Code 55
51.0001(
4), (
6)). Because the Note and Deed of Trust were assigned
to Wells Fargo3 and Wells Fargo served as the mortgage servicer
l
Deutsche
Bank,
the
mortgagee,3s Defendants
have
standing
foreclose on the Property.
Request for Declaratory Judgment
Plaintiffs also seek a declaratory judgment. Chapter
the Texas
Practice and Remedies Code, titled the uTexas
Declaratory Judgments Act r'
'
procedural,
substantive,
provision and therefore does not apply to actions in federal court .
Vera v . Bank of America, N .A .,
App 'x
Cir .
MA ssignment of Note and Deed of Trust , Exhibit
Defendants' Motion to Dism iss, Docket Entry No . 12-2, p . 2 .
3 See Notice of Acceleration, Exhibit 2 to Original Petition,
5
Exhibit D-1 to Notice of Removal, Docket Entry No . 1-5, p . 16.
2014).
request for declaratory judgment under state law is thus
considered as a claim under the federal Declaratory Judgment Act .
See
2201.
existence of
nBoth Texas and federal
justiciable case
controversy
require the
order
grant
declaratory relief .' Val-com A cguisitions Trust v . CitiMortgaqe,
'
App'x 398,
Inc .,
Bank v . Beadle,
judgment
Cir. 2011) (
citing Bonham State
S. . 465,
W 2d
(
Tex. 1395)). UA declaratory
litigate some underlying
parties
requires
claim or cause of action .' Conrad v . SIB Mortaale Corp w No . 4:14'
CV-9l5-A, 2015 WL 1026159,
this
as
(
N.D. Tex. March
plaintiff's claims
2015). When,
be dismissed,
Wheeler v . U .S . Bank
request
Nat'l A ssrn , Civil Action No . H-14-0874, 2016 WL 554846,
(
S.D. Tex. Feb.
2016).
Plaintiffs request a declaratory judgment that nthe Defendant
must produce the one and only Original Prom issory Note signed
the Plaintiff for inspection
document
examiner prior to proceeding with
judgment that
pursuant
declare that
foreclosure proceedings;
attempt
Texas Property Code Sec . 51.001
foreclose
seq .
an
Plaintiffs do not support this request
36
original Petition , Exhibit
Entry No. 1-5, p . 9 .
-
16-
Notice of Removal, Docket
with
any
legal
factual
Plaintiffs' request
title, breach
arguments .
based
contract,
underlying claim s will
To
the
extent
that
their arguments regarding quiet
standing, because
dism issed ,
Plaintiffs'
w ill not grant
declaratory relief.
Request
Plaintiffs
Injunctive Relief
have
requested
injunction against Defendants.
a
temporary
and
uunder Texas
a
permanent
request
injunctive relief is not itself a cause of action but depends on an
underlying cause of action .' Cook v . Wells Fargo Bank, N .A ., Civil
'
Action No. 3:1O-CV-0592-D, 2010 WL 2772445,
2010); Butnaru v. Ford Motor Co.,
(
N.D.
S.
W.3d 198,
July
(
Tex.
Because Plaintiffs have failed to state a claim upon which
relief can be granted, they
IV .
For the
relief .
Conclusions and Order
reasons discussed
Part
above ,
court
concludes that Defendants have met their burden to prove that the
court has diversity jurisdiction. Accordingly, Plaintiffs' Motion
Remand
(
Docket Entry No.
discussed
their Original
DENIED.
above, Plaintiffs have failed
Petition
any claims upon which relief
reasons
state
be
granted . Nor have Plaintiffs provided the court with any reason to
conclude that amending their pleadings would cure the deficiency.
Defendants' Motion
Dismiss (
Docket Entry No.
therefore
GRANTED, and this action will be dismissed with prejudice.
SIGNED
Houston, Texas, on this
day of August, 2018.
<
r
SIM LAKE
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?