Allen v. Washington Mutual Bank et al

Filing 7

REPORT AND RECOMMENDATION that the District Court GRANT Defendants' 6 Motion to Dismiss. In the alternative, the undersigned RECOMMENDS the District Court GRANT Defendants 6 Motion to Dismiss on its merits and DISMISS each of Plaintiffs claims. Signed by Judge Mark Lane. (klw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
PATRICIA ALLEN,
Plaintiff,
V.
WASHINGTON
MUTUAL
BANK,
SELECT PORTFOLIO SERVICING, INC.,
LONG BEACH SECURITIES CORP.,
DEUTSCHE BANK NATIONAL TRUST
COMPANY AS TRUSTEE FOR LONG
BEACH MORTGAGE LAON TRUST
2006-9, AND DOES I-X,
Defendants.

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A-15-CV-0411-LY-ML

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
Before the Court are Defendants Washington Mutual Bank (“WaMu”), Select Portfolio
Servicing, Inc. (“SPS”), Long Beach Securities Corp. (“Long Beach”), and Deutsche Bank
National Trust Company as Trustee for Long Beach Mortgage Loan Trust 2006-9 (“Deutsche
Bank”) (collectively, “Defendants”)’ Notice of Removal [Dkt. #1], filed May 15, 2015, and
Motion to Dismiss [Dkt. #6], filed June 12, 2015. Plaintiff Patricia Allen has not contested
removal, and the time to do so on any grounds other than lack of subject matter jurisdiction has
expired. 28 U.S.C. § 1447(c). Plaintiff has not responded to the Motion to Dismiss, and the time
to do so has expired under Local Rule CV-7(e).
All pending nondispositive motions in the above-styled cause have been referred to the
undersigned by United States District Judge, Lee Yeakel, for resolution pursuant to 28 U.S.C.
§ 636(b)(1)(A), Federal Rule of Civil Procedure 72, and Rule 1(c) of Appendix C of the Local
Rules of the United States District Court for the Western District of Texas. Likewise, all

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dispositive motions have been referred to the undersigned for a Report and Recommendation as
to the merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure,
and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the
Western District of Texas. After reviewing the pending motions, the relevant case law, as well
as the entire case file, the undersigned issues the following Report and Recommendation.
I.

Background

On April 1, 2015, Plaintiff Patricia Allen (“Plaintiff”) filed her original Petition in the
98th Judicial District Court of Travis County, Texas, styled Patricia Allen, Attorneys Pro Se v.
Washington Mutual Bank, Select Portfolio Servicing Inc., Long Beach Securities Corp.,
Deutsche Bank National Trust Company as Trustee for Long Beach Mortgage Loan Trust
2006-9, and Does I-X, Cause No. D-l-GN-15-001221. Notice of Removal [Dkt. #1], Ex. B, Orig.
Pet. Plaintiff’s original Petition sought a declaratory judgment that Defendants could not pursue
administrative foreclosure on Plaintiff’s home, located at 7320 Gaines Mill Lane, Austin, Texas
78745 (“the Property). Orig. Pet. ¶¶ 2, 48. Plaintiff also asserted claims against Defendant
WaMu for breach of contract and against all Defendants for slander of title. Id. at ¶¶ 29-38.
Plaintiff’s factual allegations are as follows: She resides on the Property. Id. at ¶ 2. On
or about August 25, 2006, Plaintiff executed a Tangible Texas Home Equity Security Instrument
(the “Security Instrument”) in the amount of $152,000 (one hundred fifty-two thousand dollars)
in favor of Defendant WaMu. Id. at ¶ 9. The Security Instrument was recorded in the official
records of the Travis County Clerk in the name of Washington Mutual Bank on or about August
31, 2006. Id. at ¶ 10.
Plaintiff alleges WaMu then sold the Security Instrument to Long Beach pursuant to a
Special Purpose Vehicle (Long Beach Mortgage Loan Trust 2006-9) Pooling and Servicing
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Agreement (PSA) dated October 1, 2006. Id. at ¶ 11. Plaintiff contends WaMu’s sale of the
Security Instrument to Long Beach should have triggered “Covenant 22” of the Security
Instrument, which provides that “[w]ithin a reasonable time after termination and full payment of
the Extension of Credit, the lender shall cancel and return the note to the owner of the property
and give the owner, in recordable form, a release of the lien securing the Extension of
Credit . . . .” Id. at ¶ 12. Additionally, she contends the “local law of [the] jurisdiction” required
Long Beach to properly perfect its interest in the Security Instrument by recording it. Id. at ¶13.
Plaintiff alleges Long Beach “bifurcate[ed] rights to the payment stream intangible
payment obligation evidenced by the [Security Instrument]” and conveyed a “separate and
distinct intangible obligation to Long Beach Mortgage Loan Trust 2006-9” pursuant to the PSA.
Id. at ¶ 14. This interest in the payment stream (the “transferable record,” as Plaintiff terms it)
was then “deposited and monetized in multiple classes of the Long Beach Mortgage Loan Trust
2006-9.” Id. at ¶ 22. As a result, “payments under the . . . transferable record . . . are disbursed
to the investors of Special Purpose Vehicle (Long Beach Mortgage Loan Trust 2006-9) holding
certificates to the investment classes.” Id. According to Plaintiff, Long Beach “purportedly
sold” the Security Instrument to Long Beach Mortgage Loan Trust 2006-9 pursuant to the PSA.
Id. at ¶ 15. Plaintiff contends these rights (the “transferable record” and the Security Instrument)
“were not contemporaneously sold (conveyed).” Id. at ¶ 16.
Plaintiff asserts that on July 14, 2008, two years after the assignment of the Security
Instrument and the transferable record to Long Beach Mortgage Loan Trust 2006-9 pursuant to
the PSA, WaMu executed an assignment of the Note and Deed of Trust on the Property,
assigning the Note and Deed of Trust to Deutsche Bank National Trust Company as Trustee for

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Long Beach Mortgage Loan Trust 2006-9 “as an alternate means of collection.” Id. at ¶ 23. This
assignment was recorded with the Travis County Clerk on July 18, 2008. Id. at ¶ 24.
Plaintiff alleges the July, 2008 assignment of the Note and Deed of Trust were void
because “one cannot sell what one does not own,” id. at ¶ 36.b, and at the time of the assignment,
“all parties had knowledge the (personal property) security interest as collateral to the [Security
Instrument] had been dissolved by operation of law . . ..” Id. at ¶ 36.d. Specifically, Plaintiff
contends that, by selling the Security Instrument to Long Beach, WaMu triggered the obligation
under the Security Instrument Covenant 22 to release the note and lien on the Property, because
Long Beach allegedly paid WaMu all sums due on the Security Instrument in the course of
purchasing it. Id. at ¶ 12. Plaintiff further alleges that, by “bifurcating” the right to the payment
stream from the Security Instrument, Defendant Long Beach “became the account debtor for the
payment stream (transferable record) intangible obligation sold to the Defendant Long Beach
Mortgage Loan Trust 2006-9.” Id. at ¶ 44. Plaintiff further contends that this “bifurcation” of
the payment stream from the Security Instrument “rendered the [Security Instrument] less than
full value, id. at ¶ 45, and further “render[ed] the beneficial interest security (personal property)
as an alternate means of collection a nullity by operation of statutory requirements of law.”
Id. at ¶ 46. For all these reasons, Plaintiff contends Defendants have no authority to foreclose on
her property as an “alternate means of collection” of the amounts she owes on her $152,000 loan.
Id. at ¶¶ 48-52.
Based on these sparse factual allegations and recitations of legal conclusions, Plaintiff
asserts claims against WaMu for breach of contract (for failing to release the note and lien on the
Property) and claims against all Defendants for slander of title (arising out of the assignment of
the Note and Deed of Trust recorded July18, 2008). Id. at ¶¶ 29-38. Plaintiff additionally seeks
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a declaratory judgment that, inter alia, Defendants Long Beach and Long Beach Mortgage Loan
Trust 2006-9 “individually and collectively failed to acquire any rights to enforce an alternate
means of collection [foreclosure on the Property] . . . of the [Security Instrument],” id. at ¶ 47,
that “Defendants, individually and collectively cannot enforce the [Security Instrument] recorded
with the Travis County Recorder,” id. at ¶ 48, and that “the July 14, 2008 Assignment of the
[Security Instrument] is void.” Id. at ¶ 52.
II.

Federal Subject Matter Jurisdiction

Defendants timely removed the case to federal court on grounds of diversity jurisdiction.
Notice of Removal [Dkt. #1] at 2. There is complete diversity between the parties. 28 U.S.C.
§ 1332(a)(1). Plaintiff is domiciled in Texas and is therefore a citizen of Texas for purposes of
diversity jurisdiction. Orig. Pet. ¶ 2;

Coury v. Prot, 85 F.3d 244, 249 (5th Cir. 1996).

Defendants WaMu and Long Beach no longer exist. 1 Notice of Removal [Dkt. #1] at 3, n.1. At
the time of the transactions underlying this suit, however, WaMu was a federal association with
its home office in Nevada, and was therefore a citizen of Nevada for purposes of diversity

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Long Beach was acquired by WaMu, whose assets were subsequently held in receivership by the FDIC and
then acquired by JPMorgan Chase Bank, N.A. (“Chase.”). Notice of Removal [Dkt. #1] at 3, n.1. Defendants
contend the citizenship of Chase, which is not a named Defendant but which is the successor in interest of two of the
named Defendants, should not be considered for purposes of evaluating diversity jurisdiction. Id. Defendants cite
no authority regarding this position, but they do point out that, in any event, Chase is not a citizen of Texas for
diversity purposes. Id. Chase is a national bank, whose citizenship is determined by 28 U.S.C. § 1348. The
Supreme Court has interpreted Section 1348 to fix a national bank’s citizenship in the state designated as its main
office by the bank’s articles of incorporation. Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 318, 126 S. Ct. 941,
(2006). Defendants assert that Chase has been found to be a citizen of New York, where it maintains its principle
place of business, for purposes of diversity jurisdiction. Notice of Removal [Dkt. #1] at 3, n.1. (citing Excelsior
Funds v. JP Morgan Chase Bank, N.A., 470 F. Supp. 2d 312, 313 (S.D. N.Y. 2006)). Excelsior is an extension of
Wachovia that has not necessarily been adopted in the Fifth Circuit; it is not clear on this record whether the Fifth
Circuit would consider Chase a citizen of the state where its principal place of business is located pursuant to 28
U.S.C. § 1348. The Fifth Circuit, however, has previously found that Chase is a citizen of Ohio, where its main
office is located. Crear v. J.P. Morgan Chase, No. 10-10875, 2011 U.S. App. LEXIS 6376, *7 (5th Cir. March 28,
2011) (unpublished) (citing Wachovia, 546 U.S. at 318). Therefore, complete diversity exists in this action whether
or not the citizenship of Chase, as the successor in interest to WaMu and Long Beach, is considered, and regardless
of whether Chase is considered a citizen only of the state where its main office is located (Ohio) or of both the states
where its main office and its principle place of business are located (Ohio and New York). See 28 U.S.C. §
1332(a)(1).

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jurisdiction. Id. at 3; 12 U.S.C. § 1464(x)). Long Beach was a corporation incorporated under
Delaware law, with its principle place of business in California, and was therefore a citizen of
both Delaware and California for purposes of diversity jurisdiction. Notice of Removal [Dkt. #1]
at 3; 28 U.S.C. § 1332(c)(1). Defendant SPS is a corporation incorporated under the laws of
Utah with its principal place of business in Salt Lake City, Utah, and is therefore a citizen of
Utah for purposes of diversity jurisdiction. Notice of Removal [Dkt. #1] at 3; 28 U.S.C. §
1332(c)(1). Deutsche Bank is the Trustee for Long Beach Mortgage Loan Trust 2006-9, and
therefore the court looks to Deutsche Bank to determine the citizenship of Long Beach Mortgage
Loan Trust 2006-9. Navarro Say. Ass'n v. Lee, 446 U.S. 458, 464-65, 100 S. Ct. 1779 (1980).
Deutsche Bank is a national banking association with its main office in New York, and therefore
it is a citizen of New York for purposes of diversity jurisdiction. 28 U.S.C. § 1348; Wachovia,
546 U.S. at 307. The Doe defendants, none of whom have been named or served, need not be
considered in the diversity analysis. 28 U.S.C. § 1441(b)(1). As none of the Defendants are
domiciled in Texas, the Plaintiff’s home state, removal was not foreclosed by the “forum state
defendant” rule, 28 U.S.C. § 1441(b)(2), and complete diversity exists in this action. 28 U.S.C. §
1332(a)(1).
The amount in controversy requirement of Section 1332 is also satisfied in this case.
28 U.S.C. § 1332(a). Where a defendant can show, by a preponderance of the evidence, that the
amount in controversy is greater than the jurisdictional amount, removal is proper. White v. FCI
U.S.A., Inc., 319 F.3d 672, 675 (5th Cir. 2003). Plaintiff’s Original Petition in state court seeks
declaratory relief invalidating the Defendants’ attempts to enforce a deed of trust through
foreclosure on a specific Property. In such circumstances, the “value of that property represents
the amount in controversy” for purposes of diversity jurisdiction. Farkas v. GMAC Mortgage,

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L.L.C., 737 F.3d 338, 342-43 (5th Cir. 2013). Defendants ask the Court to take judicial notice
that the tax assessed value of the Property, recorded in the Travis County Property Tax Record,
is $246,014.00. Notice of Removal [Dkt. #1] at 5, n.2, Ex. B. Defendants have thus established
by a preponderance of the evidence that the amount in controversy in this case exceeds the
jurisdictional threshold of $75,000. Farkas, 737 F.3d at 342-43. Because there is complete
diversity between the parties and the amount in controversy requirement is satisfied, federal
subject matter jurisdiction exists pursuant to 28 U.S.C. § 1332(a)(1), and Defendants’
unchallenged removal of this case to federal court is proper. 28 U.S.C. § 1441(a).
III.

Standard of Review

Defendants have now moved to dismiss Plaintiff’s state court Petition for failure to state a
claim on which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).
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 Cty. Narcotics Intelligence & Coordination Unit, 507
U.S. 163, 164, 113 S. Ct. 1160, 1161 (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, 127 S. Ct. 1955, 1965-66 (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., 550 U.S. at 570. The Supreme Court has made clear this
plausibility standard is not simply a “probability requirement,” but imposes a standard higher
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than “a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S. Ct. 1937, 1949 (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., 556
U.S. at 678. 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., 556 U.S. 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. Id., 556 U.S.
at 679. 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)).
IV.

Analysis

Because Plaintiff has failed to respond to Defendant’s Motion to Dismiss, the
undersigned RECOMMENDS the District Court GRANT the Motion as unopposed. Local Rule
CV-7(e)(2). In the alternative, the undersigned RECOMMENDS the District Court grant the
Motion to Dismiss on its merits for the reasons outlined below.
A.

Breach of Contract Claim

Plaintiff’s breach of contract claim turns on Paragraph 22 of the Security Instrument,
which is attached to Defendant’s Motion to Dismiss as Exhibit B. Because this document is
referenced in and integral to Plaintiff’s complaint, the Court’s consideration of the Security
Instrument does not convert the Motion to Dismiss into a Motion for Summary Judgment. FED.
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R. CIV. P. 12(d); Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S. Ct. 2499
(2007).
Paragraph 22 reads:
Release: Within a reasonable time after termination and full
payment of the Extension of Credit, the Lender shall cancel and
return the Note to the owner of the property and give the owner, in
recordable form, a release of the lien securing the Extension of
Credit or a copy of an endorsement of the Note and assignment of
the lien to a lender that is refinancing the Extension of Credit.
Owner shall pay only recording costs.
OWNER’S
ACCEPTANCE OF SUCH RELEASE, OR ENDORSEMENT
AND ASSIGNMENT, SHALL EXTINGUISH ALL OF
LENDER’S OBLIGATIONS UNDER SECTION 50, ARTICLE
XVI OF THE TEXAS CONSTITUTION.
Mot. Dismiss [Dkt. 6], Ex. B. This Paragraph must be read together with the contract as a whole,
which also contains the following Paragraph 18:
Sale of Note; Change of Loan Servicer. The Note or a partial
interest in the Note (together with this Security Instrument) can be
sold one or more times without prior notice to Borrower. A sale
may result in a change in the entity (known as the “Loan
Servicer”) that collects monthly payments due under the Note
and this Security Instrument. There also may be one or more
changes of the Loan Servicer unrelated to a sale of the Note. . . .
Id. (emphasis added). Paragraph 18 of the Security Instrument “not only provides for but
contemplates assignment of interests under the Note that result[] in a change of the party entitled
to receive Plaintiff[’s] payments but do[] not otherwise affect Plaintiff[’s] obligations to make
payments under the Note.” Summers v. PennyMac Corp., No. 3:12-CV-01235-L, *20-21 2012
U.S. Dist. LEXIS 168990 (N.D. Tex. Nov. 28, 2012) (interpreting substantively similar language
in a mortgage security instrument).

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The transaction between WaMu and Long Beach was a sale of an interest in the Note, as
contemplated by Paragraph 18, not a full payment of the Extension of Credit as contemplated by
Paragraph 22. Mot. Dismiss [Dkt. 6], Ex. B. Plaintiff has not alleged any facts that would
suggest Long Beach paid off the debt on her behalf, as opposed to purchasing the right to collect
the monthly payments still due and owing under the Note. Rice v. JPMorgan Chase Bank, N.A.,
No. H-15-0416, 2015 U.S. Dist. LEXIS 87680, *8-9 (S.D. Tex. July 7, 2015). In fact, Plaintiff’s
factual allegations concerning the “bifurcation” of the income stream from the Security
Instrument necessarily rest on the acknowledgement that Long Beach purchased WaMu’s
interest in collecting the mortgage payments due under the Security Interest, and did not pay off
the loan on behalf of the Plaintiff. See, e.g., Orig. Pet. at ¶¶ 11-22. Plaintiff cites no authority
for the proposition that “a lender must decrease the borrower’s loan balance by the amount
received from third-party transactions, likely because no court has accepted this novel theory.”
Shaver v. Barrett Daffin Frappier Turner & Engel, L.L.P., 593 F. App’x 265, 272 (5th Cir. 2014)
(collecting cases). 2
As Plaintiff has not alleged any facts that would establish there was any “termination and
full payment of the Extension of Credit” on her behalf under Paragraph 22 of the Security
Instument, her breach of contract claim fails for the simple reason that Plaintiff has not
performed her part of the bargain. Vera v. Bank of Am., N.A., 569 F. App’x. 349, 352 (5th Cir.
2014) (citing Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453, 465 (5th Cir. 2003)).

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See, e.g. Rosas v. Carnegie Mortgage, LLC, No. CV 11-7692 CAS CWX, 2012 U.S. Dist. LEXIS 71262 at *8
(C.D. Cal. May 21, 2012) (“[P]laintiffs’ theory that lenders that received funds through loan securitizations or credit
default swaps must waive their borrowers’ obligations fails as a matter of law.”); Taylor v. CitiMortgage, Inc., 2:10CV-505 TS, 2010 U.S. Dist. LEXIS 119808 at *3 (D. Utah Nov. 10, 2010) (“[T]he separate contract that is the result
of securitization does not free Plaintiffs from the terms agreed upon in the Deeds of Trust.”); Flores v. Deutsche
Bank Nat'l Trust, Co., CIV. A. DKC 10-0217, 2010 U.S. Dist. LEXIS 67255 at *5 (D. Md. July 7, 2010) (dismissing
a claim alleging that defendants lacked standing to enforce a note because they had already been compensated by
credit enhancement policies).

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Plaintiff does not allege she paid off her loan or even that she made timely payments on her loan;
in fact, the crux of this dispute is that Defendants wish to foreclose on the Property because of
Plaintiff’s alleged failure to make mortgage payments. Mot. Dism. [Dkt. #6] at 6-7. To the
extent Plaintiff is in default on her obligations to make payments due and owing under the
Security Instrument, she cannot assert a claim for breach of contract arising out of the Security
Instrument. Vera, 569 F. App’x at 352; Sport Supply Group, 335 F.3d at 465. Because Plaintiff
has failed to allege that WaMu breached the terms of the Security Agreement or that Plaintiff
herself performed her obligations under the Security Agreement, the undersigned
RECOMMENDS the District Court GRANT Defendants’ Motion to Dismiss [Dkt. #6] on this
issue and DISMISS Plaintiff’s claim against Defendant WaMu for breach of contract.
B.

Slander of Title Claim

A claim for slander of title requires the plaintiff to allege facts establishing the “(1)
uttering and publishing of disparaging words; (2) falsity; (3) malice; (4) special damages; (5)
possession of an estate or interest in the property disparaged; and (6) the loss of a specific sale.”
Rice, 2015 U.S. Dist. LEXIS 87680, *11; see also Davis v. Countrywide Home Loans, Inc., 1 F.
Supp. 3d 638, 646, n.9 (S.D. Tex. 2014). Plaintiff alleges Defendants’ recording of the 2008
assignment of the Note and Deed of Trust for purposes of foreclosure satisfies these elements
because the Defendants were aware, at the time they made the public recording, that WaMu did
not possess title to the Note and Deed of Trust to assign, and that the “bifurcation” of the income
stream from the Security Instrument destroyed the right of any creditor to foreclose on the note
and Deed of Trust as an “alternate means of collection” of the amounts due on the mortgage.
Orig. Pet. at ¶¶ 33-38.

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Plaintiff’s arguments fail as a matter of law. As discussed above, WaMu was not
obligated to release the Note and Deed of Trust when Long Beach purchased an interest in the
Security Instrument in 2006.

See Rice, 2015 U.S. Dist. LEXIS 87680 at*8-9. Therefore,

Plaintiff’s assertion that WaMu could not assign what it did not own, Orig. Pet. at ¶ 36.b, is a
non sequitur. Plaintiff alternatively contends there was no recordable interest to assign in 2008
because Long Beach’s securitization or “bifurcation” of the note destroyed any ability to
foreclose on the Property. Id. at ¶ 36.d. This “split-the-note” theory is inconsistent with Texas
law. Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 255 (5th Cir. 2013). “[T]he
right to recover a personal judgment for a debt secured by a lien on land and the right to have a
foreclosure of lien are severable,” id., and therefore the “bifurcation” of a note and a deed of
trust or “securitization” of a note do not destroy the right to foreclose on the underlying lien. Id.;
see also Green v. JP Morgan Chase Bank, N.A., 562 F. App’x 238, 240 (5th Cir. 2014); Shaver,
593 F. App’x at 274.
Because Plaintiff’s “split-the-note” theory fails as a matter of law, Shaver, 593 F. App’x
at 274, her allegation that “all parties had knowledge the (personal property) security interest as
collateral to the [Security Instrument] had been dissolved by operation of law” at the time they
recorded the 2008 assignment is unsupported. Orig. Pet. at ¶ 36.d. Plaintiff has therefore failed
to plead anything more than conclusory allegations with regard to the essential elements of
falsity or malice on the part of the Defendants in the recording of the 2008 assignment of the
Note and Deed of Trust, and she has failed to state a viable claim for slander of title. Rice, 2015
U.S. Dist. LEXIS 87680, *11, Twombly, 550 U.S. at 555-57.

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3

Because Plaintiff has failed to

The court further notes that a slander of title claim requires the plaintiff to allege facts that would establish the
loss of a specific sale. Rice, 2015 U.S. Dist. LEXIS 87680 at * 12-13. The mere fact that the recording of the 2008
assignment was incident to Defendant’s attempt to sell the property in foreclosure does not satisfy this element. Id.
In addition to the deficiencies noted above, Plaintiff’s slander of title claim is insufficiently plead for this reason. Id.

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state a viable claim for slander of title, the undersigned RECOMMENDS the District Court
GRANT Defendants’ Motion to Dismiss [Dkt. #6] on this issue and DISMISS Plaintiff’s claim
for slander of title against all Defendants.
C.

Claims for Declaratory Relief Invalidating Assignment/Foreclosure

Plaintiff seeks thirteen different declarations relating to her theory that the right to
foreclose on the Property has been extinguished, either by the 2006 purchase of the Security
Instrument or its “bifurcation” through securitization. Orig. Pet. at ¶¶ 40-52. As discussed
above, both of these legal theories are foreclosed by Texas law. Shaver, 593 F. App’x at 272;
Martins, 722 F.3d at 255. Therefore, Plaintiff cannot obtain declaratory relief invalidating the
right to foreclosure, the Security Instrument, or the assignment of the Security Instrument based
on these theories. See Williams v. Wells Fargo Bank, N.A., 560 F. App’x 233, 243 (5th Cir.
2014) (failure to state a claim on underlying causes of action warrants dismissal of related claims
for declaratory judgment).
Two of Plaintiff’s requested declarations concern alleged deficiencies in the transfer or
assignment of the note. Orig. Pet. at ¶¶ 49, 50 (alleging Defendants failed to comply with Local
Texas Government Code, Section 192.007, regarding recording of assignments, and Texas
Business and Commerce Code, Section 3.203, regarding transfer of an instrument). Plaintiff,
however, has no standing to challenge the technical sufficiency of the assignments. Reinagel v.
Deutsche Bank Nat'l Trust Co., 735 F.3d 220, 226 (5th Cir. 2013) (“‘[Texas] law is settled that
the obligors of a claim . . . may not defend [against an assignee’s effort to enforce the obligation]
on any ground which renders the assignment voidable only,’”) (quoting Tri-Cities Constr., Inc. v.
American Nat'l Ins. Co., 523 S.W.2d 426, 430 (Tex. App.—Houston [1st Dist.] 1975, no writ)).

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Therefore, Plaintiff cannot obtain declaratory relief on these grounds. Williams, 560 F. App’x at
243. 4
Because Plaintiff has failed to state any underlying claim for which declaratory relief can
be granted, id., the undersigned RECOMMENDS the District Court GRANT Defendants’
Motion to Dismiss [Dkt. #6] on this issue and DISMISS Plaintiff’s claims for declaratory
judgment.
V.

Conclusion

For the reasons outlined in detail above, the undersigned RECOMMENDS the District
Court GRANT Defendants’ Motion to Dismiss [Dkt. #6] without prejudice as unopposed.
In the alternative, the undersigned RECOMMENDS the District Court GRANT
Defendants’ Motion to Dismiss [Dkt. #6] on its merits and DISMISS each of Plaintiff’s claims.
Because each of Plaintiff’s claims fail as a matter of law, it appears that any amendment would
be futile. Rio Grande Royalty Co., Inc. v. Energy Transfer Partners, L.P., 620 F.3d 465, 468
(5th Cir. 2010). Accordingly, should the District Court grant the Motion to Dismiss [Dkt. #6] on
its merits, the undersigned recommends Plaintiff’s claims be DISMISSED WITH PREJUDICE.
VI.

Objections

The parties may file objections to this Report and Recommendation. A party filing
objections must specifically identify those findings or recommendations to which objections are

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The Court does not understand Plaintiff to challenge the timing or manner of Long Beach’s assignment of its
interest to the Long Beach Mortgage Loan Trust 2006-9, but to the extent Plaintiff is attempting to assert the transfer
was untimely or otherwise deficient under the terms of the pooling agreement (PSA), she lacks standing to challenge
this transaction, to which she is not a party, for the same reasons she lacks standing to challenge the assignment of
the Security Instrument. See Bond v. Barrett Daffin Frappier Turner & Engel, LLP, C.A. NO. G-12-188, 2013 U.S.
Dist. LEXIS 55924. *27-28 (S.D. Tex. Mar. 22, 2013) (collecting cases).

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being made. The District Court need not consider frivolous, conclusive, or general objections.
See Battles v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party’s failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the
Report shall bar that party from de novo review by the District Court of the proposed findings
and recommendations in the Report and, except upon grounds of plain error, shall bar the party
from appellate review of unobjected-to proposed factual findings and legal conclusions accepted
by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53, 106
S. Ct. 466, 472-74 (1985); Douglass v. United Services Automobile Ass’n, 79 F.3d 1415 (5th Cir.
1996)(en banc).
To the extent that a party has not been served by the Clerk with this Report &
Recommendation electronically, pursuant to the CM/ECF procedures of this District, the Clerk is
ORDERED to mail such party a copy of this Report and Recommendation by certified mail,
return receipt requested.

SIGNED July 16, 2015

_______________________________
MARK LANE
UNITED STATES MAGISTRATE JUDGE

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