Crawford et al v. Green Tree Servicing, LLC
ORDER DENYING 9 Motion to Dismiss. Signed by Judge Robert Pitman. (dm)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
JAMES I. CRAWFORD and
MARY K. CRAWFORD,
GREEN TREE SERVICING, LLC and
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A. as Trustee on
Behalf of CWABS, Inc. Asset-Backed
Certificates Trust 2005-4,
Before the Court are Green Tree Servicing, LLC and The Bank of New York Mellon Trust
Company, N.A. as Trustee on Behalf of CWABS, Inc. Asset-Backed Certificates Trust 2005-4's
Motion to Dismiss, filed May 13, 2015 (Clerk’s Dkt. #9) and the responsive pleadings thereto. After
reviewing the pleadings, relevant case law, as well as the entire case file, the Court issues the
On February 18, 2015 Plaintiffs James I. Crawford and Mary K. Crawford filed this action
in the 277th Judicial District Court of Williamson County, Texas. Plaintiffs named as sole defendant
Green Tree Servicing, LLC (“Green Tree”). Defendant removed the action to this court on March
20, 2015. Plaintiffs thereafter filed an amended complaint, adding defendant The Bank of New
York Mellon Trust Company, N.A. as Trustee on Behalf of CWABS, Inc. Asset-Backed Certificates
Trust 2005-4 (“BONY”).
By way of their amended complaint, Plaintiffs allege they are the owners of residential real
property located at 303 Dove Creek Dr., Round Rock, Texas (“the Property”). According to
Plaintiffs, they executed a Texas Home Equity Adjustable Rate Note (“Note”) and Texas Home
Equity Security Instrument (“Security Instrument”) in March 2005 to obtain a home equity loan on
the Property from APB Mortgage, LLC (“APB”). According to Plaintiffs, within a few months, APB
transferred the loan to Bank of America, N.A., as successor by merger to BAC Home Loans
Servicing, LP ("BOA"). Plaintiffs state they thereafter made payments in accordance with the terms
of the Note to BOA. (First Am. Compl. ¶¶ 4.1-4.3).
Plaintiffs further allege, in 2009, they suffered a loss of income and began falling behind on
their loan payments. Plaintiffs state, at BOA’s suggestion, they applied for a modification of their
loan. They allege, while in consideration for modification, they still received from BOA notices of
default and intent to accelerate, as well as other foreclosure-related communications. Plaintiffs
further allege that, during the modification process, BOA sold and transferred their loan. They state
they repeatedly tried, without success, to find out from BOA to whom their loan was transferred.
In addition, Plaintiffs state at some point they obtained sufficient funds to satisfy the arrearage on
their loan, but BOA would not give them a reinstatement quote or inform them who they should be
paying. (Id. ¶¶ 4.4-4.5).
Plaintiffs further allege that they discovered their loan had been purchased by BONY in
January 2012 when BONY instituted foreclosure proceedings against them. They allege the
foreclosure action was dismissed in July 2012. Plaintiffs additionally allege BONY did not afford
them an opportunity to make payments on their loan. (Id. ¶ 4.6).
According to Plaintiffs, nearly a year would pass before they received contact from Green
Tree, as mortgage servicer for BONY. Plaintiffs state, by that time, they had incurred a substantial
arrearage and were unable to simply pay the amount owed. They further state, to date, they have
not been afforded a reasonable opportunity to reinstate their loan payments. Plaintiffs additionally
allege Green Tree, on behalf of BONY, instituted another foreclosure action in Texas state court
on August 22, 2014. (Id. ¶¶ 4.7-4.8).
Plaintiffs assert a claim for breach of contract, on the ground that the Security Instrument
entitles them to written notice regarding changes in ownership of their loan and changes in the loan
servicer, as well as a right to reinstatement after acceleration by paying all sums due under the
Security Instrument. (Id. ¶¶ 5.1-5.5). Plaintiffs also assert a cause of action for a declaratory
judgment that Defendants’ breach of contract deprives them of the right to foreclose, and also that
any right Defendants have to foreclose is barred by the statute of limitations, due to the prior
acceleration of the loan. (Id. ¶¶ 5.6-5.10). Plaintiffs demand monetary damages, specific
performance, declaratory relief, costs and attorney’s fees. (Id. at 6-7).
Defendants have now filed a motion to dismiss Plaintiffs’ complaint for failure to state a
claim. The parties have filed responsive pleadings and the matter is ripe for determination.
II. STANDARD OF REVIEW
When evaluating a motion to dismiss for failure to state a claim under Rule 12(b)(6) the
complaint must be liberally construed in favor of the plaintiff and all facts pleaded therein must be
taken as true. Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S.
163, 164 (1993); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). Although Federal Rule of Civil
Procedure 8 mandates only that a pleading contain a “short and plain statement of the claim
showing that the pleader is entitled to relief,” this standard demands more than unadorned
accusations, “labels and conclusions,” “a formulaic recitation of the elements of a cause of action,”
or “naked assertion[s]” devoid of “further factual enhancement.” Bell Atl. v. Twombly, 550 U.S. 544,
555-57 (2007). Rather, a complaint must contain sufficient factual matter, accepted as true, to
“state a claim to relief that is plausible on its face.” Id. at 570. The Supreme Court has made clear
this plausibility standard is not simply a “probability requirement,” but imposes a standard higher
than “a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 456 U.S. 662,
678 (2009). The standard is properly guided by "[t]wo working principles." Id. First, although "a
court must accept as true all of the allegations contained in a complaint," that tenet is inapplicable
to legal conclusions and "[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice." Id. Second, "[d]etermining whether a complaint
states a plausible claim for relief will ... be a context-specific task that requires the reviewing court
to draw on its judicial experience and common sense." Id. at 679. Thus, in considering a motion
to dismiss, the court must initially identify pleadings that are no more than legal conclusions not
entitled to the assumption of truth, then assume the veracity of well-pleaded factual allegations and
determine whether those allegations plausibly give rise to an entitlement to relief. If not, “the
complaint has alleged–but it has not ‘show[n]’–‘that the pleader is entitled to relief.’” Id. (quoting
FED. R. CIV. P. 8(a)(2)).
Defendants have moved to dismiss Plaintiffs’ complaint for failure to state a valid claim. In
so doing, they assert Plaintiffs have not alleged “sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678. However, a review of their
motion makes clear that the focus of the arguments raised by Defendants is not the factual
insufficiencies of Plaintiffs’ pleadings, but rather, their contention that they have “provide[d] facts
and evidence that show Plaintiffs’ [First Amended Complaint] does not state a claim upon which
relief can be granted.’ (Def. Reply at 2).
Defendants correctly point out that, in determining a motion to dismiss, courts must consider
the complaint as well as “documents incorporated into the complaint by reference and matters of
which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308,
322, 127 S. Ct. 2499, 2509 (2007). See Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285,
288 (5th Cir. 2004) (documents that defendant attaches to motion to dismiss are considered part
of pleadings if they are referred to in plaintiff's complaint and are central to her claim). Thus, as
Plaintiffs concede, for example, the Court could properly consider the Note and Security Instrument
in reviewing Defendants’ motion.
But Defendants have not limited themselves to those documents. Rather, in their motion
they provide copies of, and ask the Court to consider, an array of other documents. For example,
Defendants maintain Plaintiffs’ contention that they did not receive notice of the change in the
owner and servicer of their loan is rebutted by letters and notices sent to them, copies of which they
attach to their motion. (Def. Mot. Exs. G-1, G-3). Defendants also contend Plaintiffs were provided
a reinstatement quote, and attach a copy of that correspondence. (Id. Ex. G-2). And Defendants
rely on these, and other, documents in arguing Plaintiffs’ breach of contract claim should be
dismissed as “factually inaccurate.” (Def. Mot. at 8).
Simply put, Defendants have ventured far outside the pleadings in their motion to dismiss.
While the Court could convert the motion to a motion for summary judgment, this case is still in its
early stages, and the parties have not had time to engage in any discovery. See General Retail
Servs., Inc. v. Wireless Toyz Franchise, LLC, 255 F. App'x 775, 783 (5th Cir. 2007) (district court
has complete discretion when presented “matters outside the pleading” with motion to dismiss
under Rule 12(b)(6) to convert motion to motion for summary judgment). Accordingly, the Court
declines to convert the motion to one for summary judgment. As Defendants have not shown they
are entitled to dismissal of Plaintiffs’ claims for failure to state a claim, their motion to dismiss is
The Court hereby DENIES Green Tree Servicing, LLC and The Bank of New York Mellon
Trust Company, N.A. as Trustee on Behalf of CWABS, Inc. Asset-Backed Certificates Trust 20054's Motion to Dismiss (Clerk’s Dkt. #9).
SIGNED on September 1, 2015.
ROBERT L. PITMAN
UNITED STATES DISTRICT JUDGE
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