Ankus, L.L.C. v. PHH Mortgage Corp. et al
Filing
36
MEMORANDUM OPINION AND ORDER - For the reasons explained, the court concludes that Plaintiff's quiet title and trespass to try title fail as a matter of law. Plaintiff's Third Amended Complaint would not cure these deficiencies. However, Plaintiff has stated a plausible statute of limitations claim. Defendant PHH Mortgage Corporation's 25 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM is therefore GRANTED as to the quiet title and trespass to try title claims and DENIED as to the statute of limitations claim and request for declaratory judgment. Plaintiff's Motion for Leave to Amend Complaint (Docket Entry No. 28, p. 13) is DENIED. (Signed by Judge Sim Lake) Parties notified.(sanderson, 4)
Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 1 of 14
United States District Court
Southern District of Texas
ENTERED
September 15, 2022
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ANKUS I L.L.C.'
Plaintiff,
v.
PHH MORTGAGE CORPORATION,
Defendant.
§
§
§
§
§
§
§
§
§
Nathan Ochsner, Clerk
CIVIL ACTION NO. H-22-0355
MEMORANDUM OPINION AND ORDER
Plaintiff, Ankus, L.L.C. ("Plaintiff"}, filed this action in
the 125th Judicial District Court of Harris County, Texas, against
Defendant PHH Mortgage Corp. ("Defendant") on December 29, 2021,
challenging a scheduled foreclosure of real property.1
Pending
before the court is Defendant PHH Mortgage Corporation's Motion to
Dismiss and Brief in Support ("Defendant's MTD" or "Defendant's
Motion to Dismiss") (Docket Entry No. 25) .
For the reasons set
forth below, Defendant's Motion to Dismiss will be granted in part
and denied in part.
Plaintiff's Original Petition and Application for Temporary
Restraining Order ("Original Petition") , Exhibit E to Notice of
Removal, Docket Entry No. 1-5, p. 1. The real property in question
is located at 9510 Gentry Shadows Lane, Houston, Texas 77396 ("the
Property"). Id. For purposes of identification all page numbers
reference the pagination imprinted at the top of the page by the
court's Electronic Case Filing ("ECF") system.
1
Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 2 of 14
I.
Factual and Procedural Background
Plaintiff alleges that on August 10, 2009, Demetrius L. Harris
borrowed $282,955.00 from USAA Federal Savings Bank {"USAA") to buy
the Property.2
As security for the debt, Harris executed a Deed of
Trust on the Property in favor of Mortgage Electronic Registration
Systems, Inc.
("MERS") and USAA. 3
transferred to PHH. 4
was accelerated
The Deed of Trust was later
Plaintiff alleges that the Note's maturity
by November 10, 2015.5
In support of this
allegation, Plaintiff attaches a Notice of [Substitute] Trustee
Sale that scheduled a foreclosure sale for December 1, 2015, and
another Notice of
[Substitute]
Trustee Sale that scheduled a
foreclosure sale for December 6, 2016 {collectively, "Foreclosure
Notices") .6
Plaintiff purchased the Property at a Constable's Sale
on May 1, 2018.7
PHH posted the Property for a Substitute
Trustee's Sale scheduled for January 4, 2022.8
Plaintiff's Second Amended Complaint {"Second Amended
Complaint" or "Complaint"), Docket Entry No. 20, pp. 1-2 � 5.
2
4
Id. at 2 � 6.
Notice of [Substitute] Trustee Sale ("2015 Foreclosure
Notice"), Exhibit A to Original Petition, Exhibit E to Notice of
Removal, Docket Entry No. 1-5, p. 6; Notice of [Substitute] Trustee
Sale {"2016 Foreclosure Notice"), Exhibit B to Original Petition,
Exhibit E to Notice of Removal, Docket Entry No. 1-5, p. 8.
6
7
Complaint, Docket Entry No. 20, p. 1 � 4.
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On December 29 1 2021, Plaintiff brought this action in the
125th Judicial District Court of Harris County, Texas, challenging
the scheduled foreclosure. 9
Defendant removed the case to this
court on February 2, 2022. 10
Plaintiff filed the Second Amended
Complaint on May 30, 2022, asserting claims to quiet title and
trespass to try title and requesting declaratory judgment that the
foreclosure statute of limitations has expired.n
Defendant filed its Motion to Dismiss on July 6,
2022. 12
Plaintiff filed Plaintiff's Response to Defendant's Rule 12(b) (6)
Motion to Dismiss ("Plaintiff s Response") on August 9,
I
2022. 13
Defendant filed its Reply in Support of Motion to Dismiss and
Response to Motion for Leave to Amend Complaint ("Defendant's
Reply") on August 30, 2022. 14
II.
A.
Legal Standard
Rule 12 (b) (6)
A Rule 12(b) (6) motion tests the formal sufficiency of the
pleadings
and
is
"appropriate
when
a
defendant
attacks
the
Original Petition, Exhibit E to Notice of Removal, Docket
Entry No. 1-5, p. 1; Notice of Removal, Docket Entry No. 1, p. 1.
9
Notice of Removal, Docket Entry No. 1, p. 1.
10
11
Complaint, Docket Entry No. 20, pp. 1, 3-4
11
16-20.
12
Defendant's MTD, Docket Entry No. 25, p. 1.
13
Plaintiff's Response, Docket Entry No. 28, p. 1.
14
Defendant's Reply, Docket Entry No. 35, p. 1.
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 4 of 14
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). In
evaluating a motion to dismiss, the court should "assume [the]
veracity [of well-pleaded factual allegations] and then determine
whether they plausibly give rise to an entitlement to relief."
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009).
But bare legal
conclusions are "not entitled to the assumption of truth."
Id. A
motion to dismiss should be denied "when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that" Plaintiff's claim is meritorious.
B.
Id. at 1949.
Declaratory Judgment
"When a declaratory judgment action filed in state court is
removed to federal court .
. courts analyze claims under the
federal Declaratory Judgment Act."
Collins v. National Football
League, 566 F. Supp. 3d 586, 602-03 (E.D. Tex. 2021) (internal
quotations omitted) . "But when a federal court possesses diversity
jurisdiction,
it may consider a state-law declaratory judgment
claim, so long as that claim presents a justiciable controversy."
Mccurdy v. Mortgage Electronic Registration Systems, Inc., 605
F. App'x 455,
455
(5th Cir. 2015)
(per curiam).
Under the
Declaratory Judgment Act, "any court of the United States, upon the
filing of an appropriate pleading, may declare the rights and other
legal relations of any interested party seeking such declaration."
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 5 of 14
28 U.S.C. § 220l(a).
Declaratory judgment "is merely a procedural
device and does not create any substantive rights or causes of
action."
Smitherman v. Bayview Loan Servicing, LLC, 727 F. App'x
787, 792 (5th Cir. 2018).
III.
Analysis
The Complaint asserts claims under Texas law to quiet title
and to trespass to try title and requests declaratory judgment that
the statute of limitations has expired. 15
Each of Plaintiff's
claims is based on the argument that the lien is void because the
statute of limitations to foreclose has expired.
that "there are no
Defendant argues
'facts' alleged by Plaintiff that raises a
plausible statute of limitations claim." 16
Defendant argues that Plaintiff cannot assert a quiet title
claim because Plaintiff has not tendered the full amount due on the
Defendant also argues that Plaintiff cannot assert a
note . 17
trespass
to
try
title
because
dispossession of the Property. 18
Plaintiff
has
not
alleged
a
Based on these asserted defects,
Defendant argues that Plaintiff has stated no cognizable claim and
that Plaintiff's requests for declaratory judgment and injunctive
relief must therefore also be denied. 19
11
15
Complaint, Docket Entry No. 20, pp. 3-4
16
Defendant's Reply, Docket Entry No. 35, p. 3.
17
Defendant' s MTD, Docket Entry No. 25, p. 4 .
isrd.
19
Id. at 5-6.
5-
16-20.
Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 6 of 14
A.
Statute of Limitations
The
Complaint
alleges
limitations has passed. 20
that
the
foreclosure
statute
of
Texas Property Code § 16.035(b) states
that "[a] sale of real property under a
deed of trust that
creates a real property lien must be made not later than four years
after the day the cause of action accrues."
expires, the lien becomes void.
When this period
Id. § 16.035(d).
If a "deed of
trust secured by real property contains an optional acceleration
clause
the action accrues only when the holder actually
exercises its option to accelerate."
Holy Cross Church of God in
Christ v. Wolf, 44 S.W.3d 562, 566 {Tex. 2001).
The weight of
authority, and all recent Texas cases the court is aware of, hold
that acceleration requires both (1) a notice of an intent to
accelerate and (2) a subsequent notice of acceleration, notice of
intent to foreclose, or other conduct making clear that the note is
accelerated.
Reddell,
See Jasper Federal Savings
730 S.W.2d 672,
&
Loan Association v.
674 (Tex. 1987); Burney v. Citigroup
Global Markets Realty Corp., 244 S.W.3d 900, 903 (Tex. App.-Dallas
2008, no pet.); Wilmington Trust, National Association v. Rob, 891
F.3d 174, 176-77 (5th Cir. 2018) {applying Texas law).
Defendant argues that the Complaint's statute of limitations
claim is "conclusory, speculative, based on conjecture, and devoid
of any factual enhancement." 21 In response to Plaintiff's assertion
1
20
complaint, Docket Entry No. 2 o, p. 2
21
Defendant's Reply, Docket Entry No. 35, p. 3.
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9.
Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 7 of 14
that the debt had been accelerated by at least 2015, Defendant
argues that "Plaintiff does not state these allegations as facts
and does not state how it would be in any position to know when the
Note was accelerated. " 22
The Complaint's allegations plausibly support Plaintiff's
claim that the
note was accelerated by 2015.
Although the
Complaint does not attach a notice of intent to accelerate, it need
not conclusively prove the elements of acceleration to survive a
motion to dismiss.
The Complaint must allege facts plausibly
supporting the assertion that the acceleration occurred.
Complaint refers to two Foreclosure Notices,
The
which scheduled
foreclosure sales in 2015 and 2016 respectively. 23 Each Foreclosure
Notice asserts that "[a] default has occurred in the payment of
indebtedness, and the same is now wholly due." 24
The fact that the
Deed of Trust holder signed and posted these foreclosure notices,
claiming to have accelerated the note, makes it at least plausible
that the holder took the necessary steps to accelerate, including
a notice of intent to accelerate.
22
Defendant acknowledges that
rd. at 4.
2015 Foreclosure Notice, Exhibit A to Original Petition,
Exhibit E to Notice of Removal, Docket Entry No. 1-5, p. 6; 2016
Foreclosure Notice, Exhibit B to Original Petition, Exhibit E to
Notice of Removal, Docket Entry No. 1-5, p. 8.
23
2015 Foreclosure Notice, Exhibit A to Original Petition,
Exhibit E to Notice of Removal, Docket Entry No. 1-5, p. 6; 2016
Foreclosure Notice, Exhibit B to Original Petition, Exhibit E to
Notice of Removal, Docket Entry No. 1-5, p. 9.
24
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"Plaintiff had no relationship whatsoever with Mr. Harris, and was
in
no
position
to
have
Mr.
Harris's
loan
correspondence from PHH about the Note. 1125
documents
and/or
It is therefore not
surprising that Plaintiff does not have the notice of intent to
accelerate,
if one was given.
But the Foreclosure Notices,
including their assertions that notes were accelerated, "allow[]
the court to draw the reasonable inference that" the acceleration
requirements were met in 2015 or 2016.
Igbal, 129 S. Ct. at 1949.
Plaintiff alleges that a foreclosure sale never took place, 26
and there are no facts to indicate that the acceleration was ever
abandoned.
as true,
Plaintiff has therefore alleged sufficient facts, taken
to plausibly support its claim that the statute of
limitations has expired.
B.
Quiet Title
Plaintiff seeks to quiet title to the Property based on the
foreclosure statute of limitations. 27
Under Texas law,
"[t] he
elements of the cause of action to quiet title are that the
plaintiff must show
(1)
an interest in a specific property,
(2) title to the property is affected by a claim by the defendant,
and
(3)
the
claim,
unenforceable."
although
facially
valid,
is
or
Vernon v. Perrien, 390 S.W.3d 47, 61 (Tex. App.-
25
Defendant's Reply, Docket Entry No. 35, p. 4.
26
Plaintiff's Response, Docket Entry No. 28, p. 6.
27
invalid
Complaint, Docket Entry No. 20, p. 4 1 19.
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 9 of 14
El Paso 2012).
Moreover, in a suit to quiet title, "a necessary
prerequisite to the .
. recovery of title
whatever amount is owed on the note."
is tender of
E.g.
1
Fillion v. David
Silvers Co., 709 S.W.2d 240, 246 (Tex. App.-Houston [14th Dist.]
1986).
Defendant argues that Plaintiff has failed to tender the full
balance of the note.28
Plaintiff argues that it need not tender
anything because it owes nothing to Defendant as the Deed of Trust
is void. 29
However, courts have not made an exception even where
the defendant's lien is alleged to be void.
See Inge v. Bank of
America, N.A., 2018 WL 4561622, at *3 (E.D. Tex. Sep. 24, 2018)
(requiring tender where Plaintiff challenged the validity of the
underlying lien). Because Plaintiff "has not alleged that [it] has
tendered the balance of [the] loan," the quiet title claim fails as
a matter of law.
Campo v. Bank of America, N.A., 2016 WL 1162199,
at *5 (S.D. Tex. Mar. 24, 2016).
Defendant's Motion to Dismiss
will therefore be granted as to Plaintiff's quiet title claim.
c.
Trespass to Try Title
Plaintiff also asserts the claim of trespass to try title. 30
To state a claim for trespass to try title, a complaint must state:
28
29
3
Defendant's MTD, Docket Entry No. 25, p. 4.
Plaintiff's Response, Docket Entry No. 28, p. 7.
°Complaint, Docket Entry No. 2 o, p. 3 , 18.
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 10 of 14
"(l} the real names of the parties and their residence, if known;
(2) a legally sufficient description of the premises; (3) the
plaintiff's claimed interest; (4) that the plaintiff possesses the
premises or is entitled to possession; (5) that the defendant
unlawfully entered and dispossessed the plaintiff of the premises
and withholds possession;
sought.'"
and (6) a
'prayer for the relief
Brumley v. McDuff, 616 S.W.3d 826, 832 (Tex. 2021).
Plaintiff asserts that Brumley demonstrates that a person in
possession of the disputed property can still assert a trespass to
try title claim.31
But the court in Brumley explained that the
plaintiffs were not required to allege dispossession only because
the defendants had impliedly admitted that they possessed the
disputed property.
See Brumley. 616 S.W.3d at 834 n.42. Defendant
argues that Plaintiff's trespass to try title claim fails because
the Complaint does not allege that Defendant ever entered and
dispossessed Plaintiff of the Property. 32
requests
leave
to
file
Plaintiff's
Plaintiff's Response
Third
Amended
Complaint
("Plaintiff's TAC" or "Third Amended Complaint") to correct this
deficiency.33
However, the proposed Third Amended Complaint does
not allege that Defendant entered or dispossessed Plaintiff of the
31
Plaintiff's Response, Docket No. 28, p. 10.
3
Defendant's MTD, Docket Entry No. 25, pp. 3-4.
2
Plaintiff's Response, Docket Entry No. 28, p. 10; Plaintiff's
Motion for Leave to Amend Complaint, included in Plaintiff's
Response, Docket Entry No. 28, p. 13.
33
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 11 of 14
Property. 34
Instead it states that "[a] s required by Texas law
. . . a Plaintiff must plead .
[that] Defendant has afterward
unlawfully entered upon and dispossessed Plaintiff of the premises
and withholds the possession thereof. " 35
Even ignoring the fact
that this merely states the element without pleading it, the Third
Amended Complaint includes no factual allegations to support a
claim that a dispossession occurred.
Because the Third Amended
Complaint would not correct the pleading deficiency, Plaintiff's
Motion for Leave to Amend Complaint36 will be denied as futile. See
Marucci Sports, L.L.C. v. National Collegiate Athletic Association,
751 F.3d 368, 378 (5th Cir. 2014)
("An amendment is futile if it
would fail to survive a Rule 12 (b) (6) motion.") . Because Defendant
has not entered and dispossessed Plaintiff of the Property, the
trespass to try title claim fails as a matter of law. Defendant's
Motion to Dismiss will be granted as to Plaintiff's trespass to try
title claim.
D.
Declaratory Judgment and the Statute of Limitations
Defendant asserts that Plaintiff has failed to plead a
cognizable legal claim because of the defects in Plaintiff's quiet
title and trespass to try title claims. 37
p. 4
34
1
Defendant argues that
Plaintiff's Third Amended Complaint, Docket Entry No. 29,
20.
Plaintiff's Motion for Leave to Amend Complaint, included in
Plaintiff's Response, Docket Entry No. 28, p. 13.
36
37
Defendant's Reply, Docket Entry No. 35, pp. 4-7.
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 12 of 14
Plaintiff only has a request for declaratory relief without an
independent legal claim.
Under both Texas
and
federal law
declaratory judgment is merely a procedural mechanism that must be
accompanied by an independent legal claim to survive a motion to
dismiss. Williams v. Davis, 628 s. W. 3d 946, 958 (Tex. App.-Houston
[14th Dist.] 2021); Smitherman, 727 F. App'x at 792.
But the Texas
Supreme Court has treated a foreclosure statute of limitations
argument as an independent legal claim.
s. W. 3d
at
574.
In
See Holy Cross Church, 44
Holy Cross Church the debtor plaintiff
challenged a foreclosure sale alleging wrongful foreclosure, unjust
enrichment, and constructive trust and seeking declaratory judgment
Id. at 565.
that the foreclosure was void.
The plaintiff
subsequently nonsuited all claims without prejudice except the
statute of limitations argument.
Id. After determining that "the
Texas four-year statute of limitation applicable to foreclosure
actions governs this case," the court rendered judgment for the
Id.
plaintiff.
at 574.
The court in Holy Cross Church was
satisfied that the statute of limitations could serve as a claim
supporting a request for declaratory judgment.
In Mccurdy,
605
F.
App'x
declaratory judgment that
at 455,
the plaintiff sought
"the statute of limitations
rendered a prior foreclosure notice nugatory."
court
dismissed
the
claim
"in
part
because
Id.
'a
The district
request
for
declaratory relief is simply a remedy and not a free-standing
claim.'"
Id.
The Fifth Circuit reversed, concluding that a court
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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 13 of 14
sitting in diversity could hear the state law declaratory judgment
claim, even though all other claims were dismissed.
Id.
The court therefore concludes that Plaintiff's statute of
limitations argument is an independent legal claim, and that the
court can consider the request for declaratory judgment without the
quiet title and trespass to try title claims.
Defendant's Motion
to Dismiss will therefore be denied as to Plaintiff's statute of
limitations claim and request for declaratory judgment.
E.
Injunctive Relief
The Second Amended Complaint abandons the earlier requests for
injunctive relief, as confirmed by Plaintiff's Response. 38
The
Defendant's Motion to Dismiss is therefore moot as to injunctive
relief.
IV.
Conclusion and Order
For the reasons explained above, the court concludes that
Plaintiff's quiet title and trespass to try title fail as a matter
of law.
Plaintiff's Third Amended Complaint would not cure these
deficiencies.
However, Plaintiff has stated a plausible statute of
limitations claim.
Defendant PHH Mortgage Corporation's Motion to
Dismiss (Docket Entry No. 25) is therefore GRANTED as to the quiet
title and trespass to try title claims and DENIED as to the statute
Complaint, Docket Entry No. 20, pp. 3-4; Plaintiff's Response,
Docket Entry No. 28, p. 13.
38
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of
limitations
claim
and
request
for
declaratory
Plaintiff's Motion for Leave to Amend Complaint
judgment.
(Docket Entry
No. 28, p. 13) is DENIED.
Because of the number of dispositive motions pending on the
court's docket,
the court normally limits the parties to one
dispositive motion.
in this case.
There is no reason to depart from this policy
Instead of filing a motion for summary judgment with
supporting documentation,
Defendant chose to file a motion to
dismiss under Rule 12 (b) (6) .
judgment,
Were this a motion for summary
Plaintiff would have the benefit of discovery, which
could have helped clarify whether the note was properly accelerated
in 2015 or 2016,
burden.
court
but Plaintiff would also have an evidentiary
Instead Defendant filed a motion to dismiss, requiring the
to
construe
the
Complaint
liberally
in
favor
of
the
Plaintiff, take all facts pleaded in the complaint as true, and ask
only whether those facts make Plaintiff's claim plausible on its
face. United States ex rel. Rafizadeh v. Continental Common, Inc.,
553 F.3d 869, 872 (5th Cir. 2008).
SIGNED at Houston, Texas, this 15th day of September, 2022.
SIM LAKE
SENIOR UNITED STATES DISTRICT JUDGE
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