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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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 3 of 14

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.
-8-

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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Case 4:22-cv-00355 Document 36 Filed on 09/15/22 in TXSD Page 14 of 14

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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