Allen v. Bank of America, NA et al

Filing 13

ORDER GRANTING 11 Motion to Dismiss for Failure to State a Claim; GRANTING 12 Motion to Dismiss. Terminated party Jack O'Boyle & Associates and Jack O'Boyle (Jack O'Boyle & Associates). IT IS FURTHER ORDERED that Plaintiff may f ile a motion to amend the complaint and re-plead her RESPA notification claim and her cause of action to quiet title on or before May 4, 2015. If Plaintiff fails to file an amended complaint by this deadline, the Court will dismiss the Case. Signed by Judge Kathleen Cardone. (vm1)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
ANNA J. ALLEN,
Plaintiff,
v.
BANK OF AMERICA, N.A. et al.,
Defendants.

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EP-14-CV-429-KC

ORDER
On this day, the Court considered the Bank Defendants’ Motion to Dismiss Plaintiff’s
Petition and Brief in Support (the “Banks’ Motion”), ECF No. 11, and Defendants Jack
O’Boyle’s, Christopher Ferguson’s, and Jack O’Boyle and Associates’ Motion to Dismiss
Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) (the “O’Boyle
Defendants’ Motion”), ECF No. 12, in the above-captioned cause (the “Case”). For the reasons
set forth below, the Court GRANTS both the Banks’ Motion and the O’Boyle Defendants’
Motion.
I.

BACKGROUND
A.

Factual Background

Plaintiff Anna J. Allen (“Plaintiff”) filed her original complaint (“Complaint”) in this
Court on November 21, 2014. See Compl. 1.1 By the Complaint, Plaintiff asserts various causes
of action against Bank of America, N.A. (“BANA”) and Deutsche Bank National Trust
Company (“Deutsche Bank”) (collectively, the “Bank Defendants”) in connection with the Bank
Defendants’ foreclosure of a homestead property located at 19 Garnet Crest Way, El Paso, Texas
79902 (the “Property”). Id. at 1-3. The Complaint is jumbled, conclusory, and devoid of any

1

For all court documents, the Court refers to the pagination assigned by the Court’s electronic docketing system.

facts explaining the circumstances preceding the Bank Defendants’ foreclosure. Nevertheless,
because the Bank Defendants attach copies of the actual mortgage and loan documents to their
motion,2 the Court has been able to discern the following facts relevant to its resolution of the
instant motions to dismiss:
On December 14, 2004, Plaintiff’s husband, Martin Armendariz (“Armendariz”),
obtained a $483,000 home equity loan (the “Loan”) from Accredited Home Lenders, Inc.
(“AHL”). See Texas Home Equity Adjustable Rate Note, Banks’ Mot. Ex. A (“Note”), ECF No.
11-1. The Loan was evidenced by a Note, see id., and secured by a first lien on Plaintiff’s and
Armendariz’s Property. See Texas Home Equity Security Instrument, Banks’ Mot. Ex. B
(“Security Instrument”), ECF No. 11-2. The Security Instrument identifies both Armendariz and
Plaintiff as “Borrower[s],” and AHL as the “Lender.” See Security Instrument 2. The Security
Instrument further identifies the Mortgage Electronic Registration System (“MERS”)3 as the
“nominee for Lender and Lender’s successors and assigns” and as “the beneficiary under this
Security Instrument.” Id. While both Plaintiff and Armendariz signed the Security Instrument,
only Armendariz signed the Note. Compare id. at 15, with Note 6.
2

As the Fifth Circuit has repeatedly observed, “[d]ocuments that a defendant attaches to a motion to dismiss are
considered part of the pleadings if they are referred to in the plaintiff’s complaint and are central to her claim.”
Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004); see also In re Katrina Canal Breaches
Litig., 495 F.3d 191, 205 (5th Cir. 2007); Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir.
2000). Here, the Bank Defendants attach copies of both the promissory note and the original security instrument to
their motion. See Texas Home Equity Adjustable Rate Note, Banks’ Mot. Ex. A, ECF No. 11-1; Texas Home
Equity Security Instrument, Banks’ Mot. Ex. B, ECF No. 11-2. Because Plaintiff repeatedly refers to these same
documents throughout her Complaint, and because these documents are central to her contention that the Bank
Defendants “do not have the right of enforcement of the note and Deed of Trust,” Compl. 4, the Court may, and
does, consider them without converting the Banks’ Motion and the O’Boyle Defendants’ Motion into motions for
summary judgment. See In re Katrina Canal Breaches Litig., 495 F.3d at 205; Causey, 394 F.3d at 288; Collins,
224 F.3d at 498-99. Moreover, the Court’s decision to consider these documents is especially appropriate here, as
Plaintiff filed no response to Defendants’ motions, and therefore presumably does not object to their inclusion. See
Crucci v. Seterus, Inc., No. EP-13-CV-317-KC, 2013 WL 6146040, at *5 (W.D. Tex. Nov. 21, 2013).
3

“The MERS system is merely an electronic mortgage registration system and clearinghouse that tracks beneficial
ownerships in, and servicing rights to, mortgage loans.” Richardson v. CitiMortgage, Inc., Civil Action No.
6:10CV119, 2010 WL 4818556, at *5 (E.D. Tex. Nov. 22, 2010); see also Campbell v. Mortg. Elec. Registration
Sys., Inc., No. 03-11-00429-CV, 2012 WL 1839357, at *4 (Tex. App. May 18, 2012).

2

On October 8, 2009, MERS assigned both the Note and the Security Instrument to
Deutsche Bank. See Compl. Ex. C (the “Assignment”); see also Compl. 8. The Assignment was
recorded in the Official Public Records of Real Property in El Paso County, and is attached here
as an exhibit to Plaintiff’s Complaint.4 See Assignment; see also Compl. 8. Plaintiff identifies
BANA as the entity that was tasked with servicing the Loan on Deutsche Bank’s behalf. Compl.
10; see also Banks’ Mot. 6.
At some point following the Assignment, Plaintiff alleges that BANA contacted her and
Armendariz and advised them to stop making monthly payments on the Loan pending a
modification agreement. Compl. 4; see also Compl. Ex. A (Plaintiff’s and Armendariz’s
September 6, 2010, application for a loan modification). Plaintiff alleges that BANA refused to
modify the Loan in bad faith, and instead “began the foreclosure process.” See Compl. 4. While
Plaintiff does not provide a date or even a general time period for the foreclosure, it is clear that
one or both of the Bank Defendants eventually foreclosed on the Property.5 See id. at 9, 23. On
June 24, 2013, Deutsche Bank purchased the Property at a foreclosure sale, and was granted a
Substitute Trustee’s Deed. See Banks’ Mot. Ex. D (the “Substitute Trustee’s Deed”), ECF No.
11-4.6 Plaintiff then initiated this action challenging the propriety of the Bank Defendants’
foreclosure and asserting various causes of action under federal and state law.

4

As an attachment to the Complaint, the Assignment is considered part of the pleadings for the purposes of a Rule
12(b)(6) motion. See Collins, 224 F.3d at 498. Moreover, because the Assignment is a “matter[] of public record
directly relevant to the issue at hand,” it is the proper subject of judicial notice and may be considered on a motion to
dismiss. See Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011).
5

The Complaint is ultimately ambiguous as to which of the Bank Defendants actually foreclosed on the Property.
Compare Compl. 4 (indicating that BANA “began the foreclosure process”), with id. at 9 (indicating that Deutsche
Bank “foreclose[d] on behalf of” BANA).
6

Because the Substitute Trustee’s Deed was recorded and is therefore a matter of public record, the Court considers
it for purposes of resolving the instant motions to dismiss. See Funk, 631 F.3d at 783.

3

B.

Plaintiff’s Allegations

Although Plaintiff styles this Case as an action arising under the Truth in Lending Act
(“TILA”), 15 U.S.C. § 1601 et seq., see Compl. 2, her claims are actually far more expansive.
The Court summarizes Plaintiff’s contentions below.
First, Plaintiff alleges that because she and her husband executed the Loan with AHL, an
entity that has since entered bankruptcy, the Bank Defendants are “strangers to the transaction”
who foreclosed on the Property “without [proving] their possession of the original note.” Id. at
3, 10; see also id. at 4, 6-9. Specifically, Plaintiff maintains that there is a “broken chain of title
to the note” from AHL to Deutsche Bank, and therefore the Bank Defendants “do not have good
and perfected title and the foreclosure is invalid and void.” Id. at 9. Second, Plaintiff flatly
declares that the Bank Defendants’ foreclosure is invalid because “the note and mortgage cannot
be split,” thus appearing to contend that such a split occurred in this Case when MERS
transferred its interest in the Note and the Security Instrument to Deutsche Bank. Id. at 7-8.
Third, Plaintiff insists that the Assignment from MERS to Deutsche Bank “never was a valid or
enforceable transfer” because it occurred more than six months after AHL, the original lender,
filed for bankruptcy. Id. at 7. Plaintiff further asserts that, in any event, MERS does not have
any authority to assign a mortgage on behalf of a third party. Id. at 11. Fourth, Plaintiff
contends that the Bank Defendants “never brought forward evidence that they provided the
proper notification regarding any alleged assignment of the note or specifically what rights were
assigned.” Id. at 4. And fifth, Plaintiff alleges that neither Deutsche Bank nor BANA responded
to Plaintiff’s “Qualified Written Request” demanding that they “exhibit the instrument.” Id. at 7,
10. The Court understands Plaintiff’s fourth and fifth contentions as invoking the rights and

4

protections set forth under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §
2601 et seq.
In addition to these assertions, Plaintiff expressly files claims under TILA on the basis
that one or both of the Bank Defendants are vicariously liable for AHL’s failure to accurately
disclose the amount financed, the finance charges, and the annual percentage rate at the time of
the Loan’s origination. Compl. 2, 12-17. Plaintiff further brings claims against the Bank
Defendants for breach of fiduciary duty, common law fraud, and an action to quiet title based on
these same allegations. Id. at 17-20, 22.
Finally, Plaintiff also brings claims against two different law firms involved in the
foreclosure of her home. First, Plaintiff asserts an Intentional Infliction of Emotional Distress
(“IIED”) Claim against Defendants Jack O’Boyle and Associates, Jack O’Boyle, and Christopher
Ferguson (the “O’Boyle Defendants”) in connection with their legal work on behalf of their
client, Deutsche Bank. Id. at 23. In support of her IIED claim, Plaintiff alleges that the O’Boyle
Defendants “knew or should have known that there are numerous violations of the [TILA]” and
“knew or should have known that their client does not have standing to foreclose” on the
Property. Id. Plaintiff also sues the law firm of Barrett Daffin Frappier Turner & Engel, LLP
(“Barrett Daffin”) based on the theory that the firm is independently liable for certain legal work
it performed on behalf of its client, Deutsche Bank, because the firm “cannot establish [its]
client’s property interest in the note.” Id. at 6. There is no indication that Barrett Daffin was
ever served with process in connection with this Case.
Among a long list of legal and equitable remedies, Plaintiff requests an order enjoining
Defendants from evicting her from her home, id. at 21, actual damages arising from Defendants’
violations of state and federal law, id., monetary sanctions against the Bank Defendants’ for
5

fraud, including “80,000.00 silver one ounce coins from [BANA] and 80,000.00 silver one ounce
coins from [Deutsche Bank],” id. at 17, and reasonable costs and attorney’s fees associated with
the prosecution of this Case. Id. at 21. In addition, Plaintiff also seeks a judicial declaration that
Defendants violated various federal criminal statutes, including 18 U.S.C. § 1951 (criminalizing
actual or attempted robbery or extortion affecting interstate commerce), 18 U.S.C. § 1001
(criminalizing certain false statements to the federal government), 18 U.S.C. § 1010
(criminalizing false statements in connection with loan transactions involving the Department of
Housing and Urban Development), 18 U.S.C. § 1014 (criminalizing false statements or reports in
loan and credit applications to federally insured financial institutions), 18 U.S.C. § 1028
(criminalizing knowing and unlawful production, transfer, or possession of a false identification
document), 18 U.S.C. § 1341 (criminalizing fraud by mail), 18 U.S.C. § 1342 (criminalizing the
use of a fictitious name or address to further mail fraud or another unlawful business), 18 U.S.C.
§ 1343 (criminalizing fraud by wire, radio, or television), and 18 U.S.C. § 1344 (criminalizing
fraud against banks). Id. at 22-23.
The Bank Defendants filed their motion to dismiss on December 16, 2014. See Banks’
Mot. 1. The O’Boyle Defendants filed their motion to dismiss on December 17, 2014. See
O’Boyle Defs.’ Mot. 1. To date, Plaintiff has not filed a response to either motion.
II.

DISCUSSION
A.

Standard

A motion to dismiss pursuant to Rule 12(b)(6) challenges a complaint on the basis that it
fails to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). In ruling on a
Rule 12(b)(6) motion, the Court must accept well-pleaded facts as true and view them in the light
most favorable to the plaintiff. Calhoun v. Hargrove, 312 F.3d 730, 733 (5th Cir. 2002); Collins
6

v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Though a complaint need
not contain “detailed” factual allegations, a plaintiff’s complaint must allege sufficient facts “to
state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555, 570 (2007); Colony Ins. Co. v. Peachtree Constr., Ltd., 647 F.3d 248, 252 (5th Cir. 2011).
“A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “[A] plaintiff’s obligation to provide the grounds of
his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotation
marks and citation omitted); Gulf Coast Hotel-Motel Ass’n v. Miss. Gulf Coast Golf Course
Ass’n, 658 F.3d 500, 506 (5th Cir. 2011). Ultimately, the “[f]actual allegations [in the
complaint] must be enough to raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555 (internal citation omitted). Nevertheless, a “well-pleaded complaint may proceed
even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery
is very remote and unlikely.’” Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
All documents filed by a pro se litigant “must be held to less stringent standards than
formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (internal
quotation marks and citation omitted); see also Fed. R. Civ. P. 8(e) (“Pleadings must be
construed so as to do justice.”). It is appropriate to treat a pro se petition as one seeking the
appropriate remedy, however inartfully pleaded. Clymore v. United States, 217 F.3d 370, 373
(5th Cir. 2000); United States v. Robinson, 78 F.3d 172, 174 (5th Cir. 1996). However, pro se
litigants are still required to provide sufficient facts in support of their claims; mere conclusory
allegations are insufficient. United States v. Pineda, 988 F.2d 22, 23 (5th Cir. 1993).
7

B.

The Banks’ Motion

Because the Bank Defendants treat the Complaint as asserting only TILA violations, a
breach of fiduciary duty claim, an action to quiet title, and a cause of action for common law
fraud, many of Plaintiff’s contentions go unaddressed in the Banks’ Motion. See Banks’ Mot. 514. This decision by the Bank Defendants to simply ignore any allegations not explicitly framed
within the Complaint as a distinct cause of action is inconsistent with the well-established
principle that pro se pleadings should be construed liberally. See Erickson, 551 U.S. at 94;
Clymore, 217 F.3d at 373. Thus, notwithstanding the Bank Defendants’ unwise election to
construe the Complaint narrowly, this Court reviews the Complaint broadly and with an eye
towards identifying all causes of action reasonably raised by Plaintiff’s allegations, no matter
how inartfully pleaded. See Erickson, 551 U.S. at 94; Clymore, 217 F.3d at 373. Consistent with
this obligation, the Court addresses each of Plaintiff’s contentions in turn.
1.

Plaintiff’s various iterations of the “show-me-the-note” theory

Plaintiff’s first contention is that the Court must issue a declaratory judgment invalidating
the Bank Defendants’ foreclosure because both BANA and Deutsche Bank failed to “document[]
their note-holder status” by establishing “their possession of the original note.” See Compl. 3;
see also id. at 6-10. This argument is colloquially known as the “show-me-the-note” theory, and
stems from its advocates’ belief that “only the holder of the original wet-ink signature note has
the lawful power to initiate a nonjudicial foreclosure.” Preston v. Seterus, Inc., 931 F. Supp. 2d
743, 757 (N.D. Tex. 2013) (internal quotation marks and citation omitted). This theory has been
“roundly rejected” in Texas, and it fares no better when applied to the facts of the instant case.
See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253 (5th Cir. 2013).
In Martins, the Fifth Circuit set out to “clarify what is required regarding production of a
8

note under Texas law.” 722 F.3d at 253. After observing that every federal district court to have
considered the issue had concluded that “assignment of mortgages through MERS and its
equivalents [are] valid and enforceable without production of the original, signed note,” the Fifth
Circuit held that “[t]he original, signed note need not be produced in order to foreclose.” Id. at
253-54. Since Martins, the Fifth Circuit has reaffirmed its unequivocal rejection of the “showme-the-note” theory each time it has surfaced on appeal. See Shaver v. Barrett Daffin Frappier
Turner & Engel, L.L.P., 593 F. App’x 265, 274 (5th Cir. 2014) (“A party does not need the
original note bearing the wet-ink signature to foreclose.”); Casterline v. OneWest Bank, F.S.B.,
537 F. App’x 314, 316 (5th Cir. 2013) (holding that the “show-me-the-note” theory has no merit
under Texas law); see also Crear v. JP Morgan Chase Bank N.A., No. 10-10875, 2011 WL
1129574, at *1 n.1 (5th Cir. Mar. 28, 2011) (observing even before Martins that “[t]he Texas
Property Code provides that either a mortgagee or mortgage servicer may administer a deed of
trust foreclosure without production of the original note”). Because there is simply no
requirement in Texas that a foreclosing party must produce the original note in order to
foreclose, Plaintiff’s “show-me-the-note” claim should be dismissed. See Shaver, 593 F. App’x
at 274.
Plaintiff’s related contentions that the Bank Defendants “must be in possession of the
note” and “prove[] their ownership interest in the note” in order to foreclose are similarly
unavailing. See Compl. 3, 5; see also id. at 8, 10. “Under Texas law, a mortgagee or mortgage
servicer is permitted to foreclose on a house even without holding the note.” Epstein v. U.S.
Bank Nat. Ass’n, 540 F. App’x 354, 356 (5th Cir. 2013); see also Wiley v. Deutsche Bank Nat.
Trust Co., 539 F. App’x 533, 536 (5th Cir. 2013); Casterline, 537 F. App’x at 317; Martins, 722
F.3d at 255. Indeed, the Texas Property Code specifically contemplates that a mortgage servicer
9

may foreclose on behalf of a mortgagee despite not actually possessing the note itself. Epstein,
540 F. App’x at 356 (citing Tex. Prop. Code Ann. § 51.0025). The Texas Property Code defines
a “mortgage servicer” as “the last person to whom a mortgagor has been instructed by the current
mortgagee to send payments for the debt secured by a security instrument.” Tex. Prop. Code
Ann. § 51.0001(3). Furthermore, a mortgagee is defined as “the grantee, beneficiary, owner, or
holder of a security instrument,” “a book entry system,” or “the last person to whom the security
interest has been assigned of record.” Id. § 51.0001(4).
Here, there is no question that Deutsche Bank is the mortgagee, as Plaintiff’s own exhibit
reveals that MERS assigned both the Security Instrument and the Note to Deutsche Bank on
October 8, 2009. See Assignment. Moreover, Plaintiff concedes that BANA was the “loan
servicer” in her Complaint, see Compl. 10, and the Substitute Trustee’s Deed, which is a matter
of public record, confirms the accuracy of Plaintiff’s representation. See Substitute Trustee’s
Deed 2. Plaintiff’s allegations regarding her dispute with BANA over payment further confirm
that BANA was the valid mortgage servicer at the time of the foreclosure. See Compl. 4.
Accordingly, although the Complaint is ambiguous as to which of the Bank Defendants actually
foreclosed on the Property, it is plain that both BANA and Deutsche Bank had authority to
foreclose. See Epstein, 540 F. App’x at 356-57; Wiley, 539 F. App’x at 536; Casterline, 537 F.
App’x at 317; Martins, 722 F.3d at 255; see also Price v. U.S. Bank Nat. Ass’n, Civil Action No.
3:13-CV-0175-O, 2013 WL 3976624, at *7 (N.D. Tex. Aug. 2, 2013) (collecting cases rejecting
similar arguments).7 Plaintiff’s arguments to the contrary are without merit.
7

Throughout the Complaint, Plaintiff repeatedly invokes various provisions of the Uniform Commercial Code
(“UCC”) in support of her various “show-me-the-note” arguments. See Compl. 3-9. Plaintiff’s reliance on these
provisions is misplaced. As numerous courts, including the Fifth Circuit, have held, the UCC does not govern
foreclosure actions relating to liens on real property. See Tremble v. Wells Fargo Home Mortg., Inc., 478 F. App’x
164, 166 (5th Cir. 2012) (citing Tex. Bus. & Com. Code Ann. § 9.109(d)(11)); see also Hearn v. Deutsche Bank
Nat. Trust Co., Civil Action No. 3:13-CV-2417-B, 2014 WL 4055473, at *4 n.2 (N.D. Tex. Aug. 15, 2014)
(discussing the various reasons why the UCC is inapplicable to wrongful foreclosure actions); Thompson v. Bank of

10

2.

The “split-the-note” theory

Plaintiff also seeks a declaratory judgment invalidating the Bank Defendants’ foreclosure
because “the note and mortgage cannot be split.” Compl. 7-8. While Plaintiff fails to elaborate
on this contention or otherwise apply it in any way to the facts of this Case, the Court
understands her argument to be that, because MERS is only referenced in the Security
Instrument, MERS did not have any beneficial interest in the Note itself. Thus, as the theory
goes, when MERS assigned the mortgage to Deutsche Bank, it automatically split the Note from
the Security Instrument, thereby rendering the Assignment void. See Martins, 722 F.3d at 254
(discussing the “split-the-note” theory); Johnson v. Wells Fargo Bank, NA, 999 F. Supp. 2d 919,
927 (N.D. Tex. 2014) (same).
In support of her argument, Plaintiff cites to the United States Supreme Court’s decision
in Carpenter v. Longan, 83 U.S. 271 (1872). See Compl. 8. In Carpenter, the Supreme Court
stated that “[t]he note and the mortgage are inseparable,” and thus “[a]n assignment of the note
carries the mortgage with it, while an assignment of the latter alone is a nullity.” 83 U.S. at 274.
Although this passage appears at face value to support Plaintiff’s position, the Fifth Circuit has
explicitly distinguished Carpenter as “inapposite, because the Court was addressing Colorado
Territorial law and federal common law” and “[n]either controls [the] interpretation of Texas
law.” Martins, 722 F.3d at 254; see also Preston, 931 F. Supp. 2d at 759 (distinguishing
Carpenter).
Instead, like Plaintiff’s “show-me-the-note” arguments, the “split-the-note” theory has
been rejected repeatedly by the Fifth Circuit as inapplicable in Texas. See Wiley, 539 F. App’x
Am., N.A., Civil Action No. 3:13-CV-2120-B, 2014 WL 1373505, at *9 (N.D. Tex. Apr. 7, 2014) (“[T]he UCC does
not apply to foreclosure efforts.”); Sgroe v. Wells Fargo Bank, N.A., 941 F. Supp. 2d 731, 749 (E.D. Tex. 2013)
(“This Court has consistently held that because deeds of trust place liens on real property they are not governed by
the UCC . . . .”); Vogel v. Travelers Indem. Co., 966 S.W.2d 748, 753 (Tex. App. 1998) (“Because the Deed of Trust
places a lien on real property, it is not governed by the UCC.”).

11

at 536-37 (holding that the split-the-note theory is inapplicable where the foreclosing party is a
mortgagee and the mortgage has been properly assigned); Martins, 722 F.3d at 255 (holding that
the split-the-note theory is inapplicable where the foreclosing party is a mortgage servicer and
the mortgage has been properly assigned); see also Rojas v. Wells Fargo Bank, N.A., 571 F.
App’x 274, 278 (5th Cir. 2014) (“We have repeatedly rejected similar attempts to challenge an
assignee’s standing to foreclose under an assignment from MERS.”); Farkas v. GMAC Mortg.,
L.L.C., 737 F.3d 338, 342 (5th Cir. 2013) (“MERS and its assigns [are permitted] to bring
foreclosure actions under the Texas Property Code.”). Thus, to the extent Plaintiff’s request for a
declaratory judgment invalidating the foreclosure is based on the “split-the-note” theory, her
claim fails as a matter of law.
3.

Challenges to the validity of the Assignment

Plaintiff’s final basis for her requested declaratory judgment rests upon the validity of the
Assignment. Specifically, Plaintiff contends that “the alleged assignor MERS, cannot function
as a nominee or agent of [AHL], given that [AHL] filed for bankruptcy in May of 2009 and the
Assignment . . . was signed in December of 2009.” Compl. 7. According to Plaintiff, “[t]he
assignment of assets of the bankrupt corporation cannot be done or even entered into when the
bankruptcy trustee is in custody and control of the corporate assets as a trustee and the trustee
has the sole authority to sell or assign assets of the corporation in bankruptcy.” Id. In addition to
her attack on MERS’s authority to assign the Loan, Plaintiff also asserts that “the signer of the
Assignment appears to be an employee of [Barrett Daffin] and not a MERS executive, as
alleged.” Id. at 7-8.
As an initial matter, Plaintiff’s second contention – that the individual who executed the
Assignment lacked actual authority to transfer the Loan – fails for lack of standing. In Reinagel
12

v. Deutsche Bank National Trust Co., 735 F.3d 220 (5th Cir. 2013), the Fifth Circuit held that a
plaintiff lacks standing to challenge an assignment on any basis that merely renders the
assignment voidable at the election of the assignor. See id. at 225-26. Like Plaintiff here, the
Reinagel plaintiffs argued that Deutsche Bank did not have authority to foreclose on their home
because the individual that purported to assign Deutsche Bank the mortgage was not an
authorized agent of the original mortgagee. See id. at 226. The Fifth Circuit concluded that the
plaintiffs lacked standing to assert this argument because, under Texas law, “a contract executed
on behalf of a corporation by a person fraudulently purporting to be a corporate officer is, like
any other unauthorized contract, not void, but merely voidable at the election of the defrauded
principal.” Id.
Like in Reinagel, Plaintiff cannot challenge a facially valid assignment on the basis that
the individual who assigned the mortgage to Deutsche Bank lacked actual authority to execute
the transaction. See id. at 228 (“[U]nder Texas law, facially valid assignments cannot be
challenged for want of authority except by the defrauded assignor.”); see also Golden v. Wells
Fargo Bank, N.A., 557 F. App’x 323, 326 (5th Cir. 2014) (holding that plaintiffs lacked standing
to challenge assignment on the basis that the signer “did not have the authority to execute the
assignment”); Lassberg v. Barrett Daffin Frappier Turner & Engel, L.L.P., No. 4:13-CV-577,
2015 WL 123756, at *4 (E.D. Tex. Jan. 8, 2015) (“An assertion that the person who executed the
assignment lacked authority to do so renders the assignment merely voidable, not void.”).
Instead, only MERS, as the alleged defrauded assignor, can challenge its validity. See Reinagel,
735 F.3d at 228.
Plaintiff’s initial contention – that the Assignment is defective in light of AHL’s 2009
bankruptcy – fails on its own terms. In Texas, security instruments in real property are generally
13

assignable absent a contrary provision. See Miceli v. The Bank of N.Y. Mellon, No. 1:13-CV1032-DAE, 2015 WL 300671, at *5 (W.D. Tex. Jan. 21, 2015) (citing Crowell v. Bexar Cnty.,
351 S.W.3d 114, 117 (Tex. App. 2011)). Here, not only does the Security Instrument contain no
provision limiting assignment, but it affirmatively contemplates MERS assigning its interest in
the Property when it identifies the beneficiary under the Security Instrument as “MERS . . . and
the successors and assigns of MERS.” Security Instrument 3 (emphasis added). Thus, under the
Security Instrument that Plaintiff signed, MERS had every right to assign its interest in the
Property to Deutsche Bank. Moreover, the fact that AHL filed for bankruptcy some four years
after the Security Instrument was executed does not deprive MERS of its previously acquired
authority to assign its interest to a third party.
Indeed, at least three other district courts confronted with this identical argument in the
face of a bankrupt lender have reached the same conclusion. See Newton v. New Century Mortg.
Corp., No. A-14-CA-990-SS, 2014 WL 7016133, at *4 (W.D. Tex. Dec. 11, 2014) (“MERS
obtained its rights under the Deed of Trust in August 2006, and New Century’s subsequent
bankruptcy did not affect its authority to assign its interest to another entity.”); Applin v.
Deutsche Bank Nat. Trust, Civil Action No. H-13-2831, 2014 WL 1024006, at *5 (S.D. Tex.
Mar. 17, 2014) (“[B]ecause MERS obtained its rights under the deed in 2006, before New
Century’s bankruptcy, MERS held the legal title to the interests granted by the Applins and had
the authority, irrespective of New Century’s legal status, to assign its interest in the mortgage to
Deutsche Bank.”) (internal quotation marks and citation omitted); Khan v. Wells Fargo Bank,
N.A., Civil Action No. H-12-1116, 2014 WL 200492, at *8 (S.D. Tex. Jan. 17, 2014) (“The
bankruptcy court’s order does not divest MERS of interests it previously acquired with regard to
properties on which New Century made loans as to which MERS was nominee prior to New
14

Century’s bankruptcy.”); see also L’Amoreaux v. Wells Fargo Bank, N.A., 755 F.3d 748, 750
(5th Cir. 2014) (rejecting similar argument that MERS lacked authority to assign the deed of
trust where, at the time of the assignment, the original lender no longer existed).
In sum, because Plaintiff lacks standing to challenge the Assignment on the basis that the
signer was not an authorized agent of MERS, see Reinagel, 735 F.3d at 226, 228, and because
Plaintiff’s argument that AHL’s bankruptcy cut off MERS’s authority to assign the Note and the
Security Instrument fails as a matter of law, see, e.g., Newton, 2014 WL 7016133, at *4, the
Court finds that Plaintiff is not entitled to a declaratory judgment invalidating the Bank
Defendants’ foreclosure.
4.

Equitable action to quiet title

Plaintiff also seeks an order quieting title to the Property and declaring the Bank
Defendants’ foreclosure void. See Compl. 22. A suit to quiet title is an equitable cause of action
to remove a cloud from the title of a property created by an invalid claim. See Hahn v. Love, 321
S.W.3d 517, 531 (Tex. App. 2009). In order to prevail, a plaintiff must establish that: (1) she
has an interest in a specific property, (2) title to the property is affected by a claim by the
defendant, and (3) the claim, although facially valid, is invalid or unenforceable. Hurd v. BAC
Home Loans Servicing, LP, 880 F. Supp. 2d 747, 766 (N.D. Tex. 2012) (citation omitted); see
also Wagner v. CitiMortgage, Inc., 995 F. Supp. 2d 621, 626 (N.D. Tex. 2014). “A plaintiff in a
suit to quiet title must prove and recover on the strength of [her] own title, not the weakness of
[her] adversary’s title.” Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex. App. 2001); see also
Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App. 2012).
As discussed in detail above, the Complaint contains no facts that would allow the Court
to infer that Plaintiff possesses superior title to the Property. Plaintiff does not allege that she or
15

Armendariz are current on their mortgage payments, nor does she deny that Armendariz
defaulted on the Note. Plaintiff’s unsupported attacks on the Bank Defendants’ authority to
foreclose are insufficient to survive a motion to dismiss. See, e.g., Herrera v. Wells Fargo Bank,
N.A., Civil Action No. H-13-68, 2013 WL 961511, at *9 (S.D. Tex. Mar. 12, 2013) (holding that
a plaintiff’s attacks on the mortgagee’s authority to foreclose on the property are “not relevant”
to a claim to quiet title); Bell v. Bank of Am. Home Loan Servicing LP, Civil Action No. 4:11CV-02085, 2012 WL 568755, at *7 (S.D. Tex. Feb. 21, 2012) (collecting cases).
5.

Plaintiff’s RESPA claim

In addition to challenging the Bank Defendants’ authority to foreclose, Plaintiff also
asserts that the Bank Defendants failed to comply with certain statutory obligations.
Specifically, Plaintiff asserts that the Bank Defendants “never brought forward evidence that
they provided the proper notification regarding any alleged assignment of the note or specifically
what rights were assigned, which is required under [the] Uniform Commercial Code.” See
Compl. 4.8 Plaintiff further asserts that the Bank Defendants never responded to her “Qualified
Written Request” demanding that they “exhibit the instrument.” See id. at 7, 10. As noted
briefly above, the Court construes these allegations as invoking the protections set forth under
RESPA, see Clymore, 217 F.3d at 373, and addresses each of Plaintiff’s contentions separately
below.
a.

Notice of assignment, sale, or transfer

RESPA is a federal statute enacted “to insure that consumers throughout the Nation are
8

Plaintiff never identifies the specific provision of the UCC that she is relying upon in support of this statement of
law. Instead, she cites to Kirby v. Palos Verdes Escrow Co., 183 Cal. App. 3d 57 (Cal. Ct. App. 1986), a 1986
California Court of Appeal case which held that an escrow company with actual notice of an assignment was
negligent in paying escrow funds to the assignor rather than the assignee. See id. at 65-66. Setting aside the fact
that Kirby was decided under California law, its holding plainly has no connection to any material issue in this Case.
Moreover, as already noted, Texas’s version of the UCC does not apply to “the creation or transfer of an interest in
or lien on real property.” See Tex. Bus. & Com. Code Ann. § 9.109(d)(11).

16

provided with greater and more timely information on the nature and costs of the settlement
process and are protected from unnecessarily high settlement charges caused by certain abusive
practices that have developed in some areas of the country.” 12 U.S.C. § 2601(a). Section 2605
of RESPA requires that both the “transferor” and “transferee” loan servicer notify a borrower in
writing whenever the servicing of a borrower’s mortgage is assigned, sold, or transferred from
one entity to another. See § 2605(b)(1), (c)(1); see also Lombardi v. Bank of Am., Civil Action
No. 3:13-CV-1464-O, 2014 WL 988541, at *17 (N.D. Tex. Mar. 13, 2014). To state a claim
under this provision, a plaintiff must allege actual damages resulting from the RESPA violation.
See 12 U.S.C. § 2605(f)(1); Kareem v. Am. Home Mortg. Servicing, Inc., 479 F. App’x 619, 620
(5th Cir. 2012); Lombardi, 2014 WL 988541, at *17; Hurd, 880 F. Supp. 2d at 768-69.
Here, Plaintiff’s vague and conclusory allegations are insufficient to state a claim under
RESPA for several reasons. At the outset, a careful reading of the Complaint reveals that
Plaintiff is not even alleging that the Bank Defendants failed to timely notify her of the
Assignment; rather, she merely states that the Bank Defendants “never brought forward
evidence” that they affirmatively complied with their obligations under the statute. See
Compl. 4. Because RESPA does not require a loan servicer to “bring forward evidence” of its
compliance absent any allegation of wrongdoing, Plaintiff’s claim fails on this basis alone. See
Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above
the speculative level.”).
Moreover, because RESPA imposes obligations solely upon loan servicers,9 its
notification provisions are only triggered if the servicing of a borrower’s loan is transferred from

9

RESPA defines “servicer” as “the person responsible for servicing of a loan . . . .” 12 U.S.C. § 2605(i)(2).

17

one entity to another.10 See 12 U.S.C. § 2605(b)(1), (c)(1) (imposing notification obligation only
upon “servicer[s]” and “transferee servicer[s]”). Here, though it is undisputed that the Loan was
assigned from MERS to Deutsche Bank on October 8, 2009, Plaintiff alleges no facts supporting
an inference that the servicing of the Loan was ever transferred between different entities. As a
result, Plaintiff fails to state a plausible cause of action under § 2605’s notification provisions.
See Jones v. ABN Amro Mortg. Grp., Inc., 606 F.3d 119, 124-25 (3d Cir. 2010) (finding that
mortgagees were not “servicers” under the terms of the loan and therefore could not as a matter
of law incur liability under RESPA); Daw v. Peoples Bank & Trust Co., 5 F. App’x 504, 505
(7th Cir. 2001) (holding that RESPA’s notification provisions were not triggered where the loan
assignment did not affect the servicing of the borrower’s loan); Newcomb v. Cambridge Home
Loans, Inc., 861 F. Supp. 2d 1153, 1161 (D. Haw. 2012) (Ezra, J.) (“RESPA governs the notice
requirements where loan servicing is assigned, sold, or transferred, see 12 U.S.C. § 2605, but
does not govern notice requirements where a note or mortgage is transferred.”).
Finally, even assuming that there was a change in the servicing of the Loan, and even
assuming that Plaintiff did not receive the required notification under RESPA, Plaintiff’s claim
still fails because the Complaint contains no facts explaining how this alleged violation impeded
Plaintiff’s ability to pay the mortgage, or otherwise caused her to incur actual damages. See
Kareem, 479 F. App’x at 620; see also Hurd, 880 F. Supp. 2d at 768-69 (dismissing a plaintiff’s
RESPA claim where the plaintiff failed to allege any facts supporting a reasonable inference that
she suffered actual damages as a result of the servicer’s failure to provide the required notice);
Akintunji v. Chase Home Fin., L.L.C., Civil Action No. H-11-389, 2011 WL 2470709, at *2-3

10

Under RESPA, the term “servicing” is defined as “receiving any scheduled periodic payments from a borrower
pursuant to the terms of any loan, including amounts for escrow accounts described in section 2609 of this title, and
making the payments of principal and interest and such other payments with respect to the amounts received from
the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3).

18

(S.D. Tex. June 20, 2011) (same).
b.

Qualified written requests

Next, § 2605(e) of RESPA provides that if a loan servicer receives a qualified written
request from the borrower for information relating to the servicing of her loan, the loan servicer
must send a written response acknowledging receipt of the correspondence within five days,
unless the requested action is taken before the five-day period expires. See 12 U.S.C. §
2605(e)(1)(A). Additionally, RESPA requires that the loan servicer take corrective action or
otherwise substantively respond to the borrower’s inquiry within thirty days of receiving the
qualified written request. See id. § 2605(e)(2). Section 2605(e) defines a “qualified written
request” as “a written correspondence, other than notice on a payment coupon or other payment
medium supplied by the servicer, that . . . includes, or otherwise enables the servicer to identify,
the name and account of the borrower; and [that] includes a statement of the reasons for the
belief of the borrower, to the extent applicable, that the account is in error or provides sufficient
detail to the servicer regarding other information sought by the borrower.” Id. § 2605(e)(1)(B).
To state a claim for a loan servicer’s failure to respond to a qualified written request, a borrower
must allege facts supporting an inference of actual damages. See Whittier v. Ocwen Loan
Servicing, L.L.C., No. 13-20639, 2014 WL 6791382, at *3 (5th Cir. Dec. 3, 2014); see also
Steele v. Quantum Servicing Corp., Civil Action No. 3:12-CV-2897-L, 2013 WL 3196544, at *6
(N.D. Tex. June 25, 2013); Hurd, 880 F. Supp. 2d at 768; Bittinger v. Wells Fargo Bank NA, 744
F. Supp. 2d 619, 627 (S.D. Tex. 2010).
To corroborate her RESPA allegations, Plaintiff attaches three substantially identical
letters to her Complaint. See Compl. Ex. D. All three of these letters were sent not by Plaintiff,
but by her husband, Armendariz, on February 12, 2014. See id. Only one of these letters was
19

sent to BANA, the actual loan servicer in this Case.11 See id. The letter Armendariz sent to
BANA reads as follows:
Please exhibit the Instrument for loan number 068893073 BANK
OF AMERICA, NA, pursuant to UCC 3-501(b)(2). This is a
Qualified Written Request submitted under the authority of Title
12 USC, Section 2605e.
Id.
Accepting Plaintiff’s allegations as true, and applying the standards discussed above, the
Complaint fails to state a claim upon which relief may be granted. Even if the Court were to
assume that Plaintiff’s status as a signee on the Security Instrument allows her to maintain this
claim on Armendariz’s behalf, the February 12, 2014, letter to BANA plainly does not constitute
a qualified written request. Courts have consistently held that a borrower’s written demand for
the production of certain loan documents does not relate to the “servicing” of a loan, and
therefore does not trigger a loan servicer’s response obligations under the statute. See Ward v.
Sec. Atl. Mortg. Elec. Registration Sys., Inc., 858 F. Supp. 2d 561, 574 (E.D.N.C. 2012) (letter
demanding copies of loan documents was “a communication challenging the validity of the loan
and not a communication relating to the servicing of the loan as defined by statute.”); Junod v.
Dream House Mortg. Co., No. CV 11-7035-ODW (VBKx), 2012 WL 94355, at *3-4 (C.D. Cal.
Jan. 5, 2012) (letter demanding, among other things, “a true and present copy of the promissory
note and deed of trust” was not a qualified written request as contemplated under RESPA);
Liggion v. Branch Banking & Trust, No. 1:11-CV-01133-WSD, 2011 WL 3759832, at *3 (N.D.
Ga. Aug. 24, 2011) (“Plaintiff’s information document requests are not a proper qualified written
request under RESPA because they do not relate to the servicing of the loan.”); Jones v. PNC
Bank, N.A., No. 10-CV-01077-LHK, 2010 WL 3325615, at *2 (N.D. Cal. Aug. 20, 2010) (“A
11

The other two letters were sent to Barrett Daffin and Select Portfolio Servicing, Inc., respectively. See Compl.
Ex. D. Plaintiff does not mention Select Portfolio Servicing, Inc. at any other point in the Complaint, and the entity
is not named as a defendant in this Case.

20

QWR must seek information relating to the servicing of the loan; a request for loan origination
documents is not a QWR.”); see also Kelly v. Fairon & Assocs., 842 F. Supp. 2d 1157, 1160 (D.
Minn. 2012) (“Requests for information pertaining to the identity of a note holder or master
servicer do not relate to servicing.”).
Additionally, like her previous RESPA claim, Plaintiff’s claim arising under § 2605(e)
fails for the additional reason that the Complaint contains no factual allegations that Plaintiff
sustained actual damages as a result of BANA’s alleged failure to respond to Armendariz’s
February 12, 2014, letter. See Whittier, 2014 WL 6791382, at *3; see also Steele, 2013 WL
3196544, at *6; Hurd, 880 F. Supp. 2d at 768; Bittinger, 744 F. Supp. 2d at 627. Accordingly,
for all these reasons, the Court dismisses Plaintiff’s RESPA claim.
6.

TILA violations

Read broadly, Plaintiff brings two distinct causes of action against the Bank Defendants
under TILA: (1) an action for rescission of the Loan, and (2) an action for actual and statutory
damages. See Compl. 12-17. In support of these claims, Plaintiff asserts that the original lender,
AHL, “did not disclose the ‘amount financed,’ the ‘finance charge,’ and the ‘annual percentage
rate’ applicable to the loan.” Id. at 13. Plaintiff further asserts that “the [Bank] Defendants are
vicariously liable for these violations.” Id. The Bank Defendants respond that Plaintiff does not
have standing to assert violations of TILA because she is not listed as a borrower under the Note.
See Banks’ Mot. 8-9. The Bank Defendants further argue that Plaintiff’s claims are barred by the
applicable statute of limitations. Id. at 9-10.
Because the Court credits the Bank Defendants’ second argument, it does not address
whether Plaintiff’s signature on the Security Instrument is alone sufficient to confer the requisite
statutory standing under TILA. The Court first addresses Plaintiff’s claim for rescission. Under
21

TILA, “when a loan made in a consumer credit transaction is secured by the borrower’s principal
dwelling, the borrower may rescind the loan agreement if the lender fails to deliver certain forms
or to disclose important terms accurately.” Beach v. Ocwen Fed. Bank, 523 U.S. 410, 411
(1998) (citing 15 U.S.C. § 1635). However, a borrower’s right to rescind a loan is not unending;
the statute provides that it “shall expire three years after the date of consummation of the
transaction or upon the sale of the property, whichever occurs first.” 15 U.S.C. § 1635(f); see
also Beach, 523 U.S. at 411, 413; Lowery v. Capital One Mortg., 429 F. App’x 377, 378 (5th
Cir. 2011) (“[T]he right to rescission under the TILA expires after three years.”); Taylor v.
Domestic Remodeling, Inc., 97 F.3d 96, 98 (5th Cir. 1996) (“If the creditor fails to deliver the
forms, or fails to provide the required information, then the consumer’s right of rescission
extends for three years after the date of consummation of the transaction.”).
Here, because Plaintiff and Armendariz executed the Note and the Security Instrument on
December 14, 2004, the deadline for rescission expired on December 14, 2007. See Note 2;
Security Instrument 2; 15 U.S.C. § 1635(f). Accordingly, Plaintiff’s request for rescission
almost a decade after the Loan was originally consummated fails as a matter of law. See Beach,
523 U.S. at 411, 413; Lowery, 429 F. App’x at 378; Taylor, 97 F.3d at 98.
Plaintiff’s TILA claim for damages is similarly time-barred. Under TILA, a claim
seeking damages arising from a lender’s non-disclosure must be filed within one year from the
date of the occurrence of the violation. See 15 U.S.C. § 1640(e); see also Hopson v. Chase
Home Fin. LLC, 14 F. Supp. 3d 774, 785 (S.D. Miss. 2014); Bittinger, 744 F. Supp. 2d at 628.
The Fifth Circuit has clarified that a violation “‘occurs’ when the transaction is consummated.”
Moor v. Travelers Ins. Co., 784 F.2d 632, 633 (5th Cir. 1986) (internal quotation marks and
citation omitted). Moreover, it is well-settled that “[n]ondisclosure is not a continuing violation
22

for purposes of the statute of limitations.” Id. Thus, as noted above, it is apparent from the face
of the Complaint that Plaintiff’s suit for monetary damages under TILA expired long before she
instituted the instant Case. See Note 2; Security Instrument 2; 15 U.S.C. § 1640(e); Moor, 784
F.2d at 633; Hopson, 14 F. Supp. 3d at 785; Bittinger, 744 F. Supp. 2d at 628.
The fact that Plaintiff characterizes her TILA non-disclosure action as “a claim in
recoupment” does not compel an alternative result. Compl. 12; see also id. at 15-16, 22. Under
certain circumstances, a plaintiff may maintain a defensive action for recoupment without
running afoul of TILA’s one-year statute of limitations for damages claims. See Williams v.
Countrywide Home Loans, Inc., 504 F. Supp. 2d 176, 187 (S.D. Tex. 2007), aff’d, 269 F. App’x
523 (5th Cir. 2008). Specifically, TILA provides that the one-year statute of limitations
provision “does not bar a person from asserting a violation of this subchapter in an action to
collect the debt which was brought more than one year from the date of the occurrence of the
violation as a matter of defense by recoupment or set-off in such action, except as otherwise
provided by State law.” See 15 U.S.C. § 1640(e). “To meet the requirements for recoupment, a
debtor must show that: (1) the TILA violation and the debt are products of the same transaction;
(2) the debtor asserts the claim as a defense; and (3) the main action is timely.” Williams, 504 F.
Supp. 2d at 188 (citing Moor, 784 F.2d at 634).
Generally, “[w]hen the debtor hales the creditor into court . . . the claim by the debtor is
affirmative rather than defensive.” Moor, 784 F.2d at 634. Nevertheless, the mere fact that the
party raising the recoupment claim is the plaintiff in a TILA case does not necessarily preclude a
finding that the claim is raised defensively. See Coxson v. Commonwealth Mortg. Co. of Am.,
L.P., 43 F.3d 189 (5th Cir. 1995). In Coxson, the Fifth Circuit held that the plaintiffs’ TILA
claim was not barred by the one-year statute of limitations because it fell within the definition of
23

a defensive recoupment action. Id. at 194. There, the plaintiffs executed a loan secured by a
deed of trust on their property with Commonwealth Mortgage Company of America
(“Commonwealth”). Id. at 190. After defaulting on their mortgage payments, the plaintiffs filed
for bankruptcy. Id. The bankruptcy court issued an agreed order restructuring the plaintiffs’
payments and establishing certain procedural requirements for foreclosure. Id. Just two months
later, Commonwealth filed a “proof of claim” in the bankruptcy court asserting that the plaintiffs
were in default under the terms of the agreed order, and immediately attempted to foreclose on
the subject property. Id. In response, plaintiffs filed an adversary proceeding in the bankruptcy
court claiming that the original loan documents violated TILA. Id. While the bankruptcy court
found that the plaintiffs’ TILA claim was time barred, id., both the district court and the Fifth
Circuit held that because the plaintiffs filed the TILA action in response to Commonwealth’s
proof of claim and its subsequent foreclosure efforts, the TILA claim was defensive in nature,
and therefore not subject to the one-year statute of limitations. Id. at 194.
Applying these standards here, the Court finds that Plaintiff’s TILA claim is not subject
to the recoupment exception. Unlike in Coxson, Plaintiff’s claim was not filed as a defense to a
lender’s foreclosure efforts, but rather as an affirmative action seeking to invalidate a foreclosure
that had already taken place. See Substitute Trustee’s Deed 2. Moreover, while Plaintiff
references an eviction case currently pending in state court, see Compl. 10, an eviction
proceeding is not “an action to collect [a] debt,” and therefore cannot support Plaintiff’s assertion
of a defensive recoupment action as a matter of law. See 15 U.S.C. § 1640(e). Finally, while
Plaintiff’s Complaint is not a model of clarity, Plaintiff does not appear to be “seeking to reduce
the sums owed to the lender or to reduce its recovery, but is instead seeking affirmative relief for
an independent claim.” Williams, 504 F. Supp. 2d at 188 (distinguishing Coxson and holding
24

that a plaintiff’s TILA claim was not a defensive recoupment action). Under these
circumstances, the Court finds that Plaintiff’s TILA claim is not a defensive recoupment action,
and is therefore barred by TILA’s one-year statute of limitations. See id.
7.

Breach of fiduciary duty

Plaintiff next alleges a state law cause of action for breach of fiduciary duty against the
Bank Defendants. “Under Texas law, the elements of a cause of action for breach of fiduciary
duty are: (1) that the plaintiff and defendant had a fiduciary relationship; (2) the defendant
breached its fiduciary duty to the plaintiffs; and (3) the defendant’s breach resulted in injury to
the plaintiff.” Williams, 504 F. Supp. 2d at 192 (citing Jones v. Blume, 196 S.W.3d 440, 447
(Tex. App. 2006)). Here, Plaintiff fails to meet these elements as a matter of law because “Texas
courts have held that the relationship between a borrower and lender is not a fiduciary one.” Id.
(citing 1001 McKinney Ltd. v. Credit Suisse First Bos. Mortg. Capital, 192 S.W.3d 20, 36 (Tex.
App. 2005); Mfrs.’ Hanover Trust Co. v. Kingston Investors Corp., 819 S.W.2d 607, 610 (Tex.
App. 1991)); see also Bittinger, 744 F. Supp. 2d at 626 (“Texas law does not recognize a
fiduciary relationship between a borrower and a lender.”). For this reason alone, Plaintiff cannot
state a claim for breach of fiduciary duty against either of the Bank Defendants.
8.

Common law fraud

Plaintiff’s final cause of action against the Bank Defendants is one for common law
fraud. “The elements of fraud in Texas are (1) the defendant made a representation to the
plaintiff; (2) the representation was material; (3) the representation was false; (4) when the
defendant made the representation the defendant knew it was false or made the representation
recklessly and without knowledge of its truth; (5) the defendant made the representation with the
intent that the plaintiff act on it; (6) the plaintiff relied on the representation; and (7) the
25

representation caused the plaintiff injury.” Shandong Yinguang Chem. Indus. Joint Stock Co. v.
Potter, 607 F.3d 1029, 1032-33 (5th Cir. 2010) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life
Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001)). When a plaintiff brings a state law fraud claim in
federal court, she must satisfy the heightened pleading requirements set forth in Federal Rule of
Civil Procedure 9(b). See Sullivan v. Leor Energy, LLC, 600 F.3d 542, 550-51 (5th Cir. 2010).
Here, the entirety of Plaintiff’s fraud allegations concern statements that AHL allegedly
made to Plaintiff and Armendariz during the Loan origination process. See Compl. 19-20.
Indeed, Plaintiff does not even mention Deutsche Bank or BANA in setting out her fraud claim.
Id. Thus, even if this Court were to ignore the fact that Plaintiff’s allegations do not approach
the specificity required to satisfy the heightened pleading standard applicable to fraud under Rule
9(b), Plaintiff’s fraud claim still fails because the entity that committed the alleged fraud, AHL,
is not a party to this Case. Moreover, to the extent Plaintiff’s fraud claim is predicated upon
statements and omissions allegedly made during the Loan origination process in December of
2004, her claim is barred by the applicable statute of limitations. See Tex. Civ. Prac. & Rem.
Code Ann. § 16.004 (setting forth four-year statute of limitations for fraud claims). For these
reasons, the Court dismisses Plaintiff’s fraud claim.
9.

Plaintiff’s remaining requests for declaratory and injunctive relief

As noted above, Plaintiff requests a variety of injunctive and declaratory relief. See
Compl. 21-23. “Generally, a request for injunctive relief is not considered an independent ‘cause
of action,’ but rather a remedy sought to redress the wrongs alleged in the underlying substantive
claims.” La. Crisis Assistance Ctr. v. Marzano-Lesnevich, 878 F. Supp. 2d 662, 669 (E.D. La.
2012) (collecting numerous federal cases so holding). Similarly, the federal Declaratory
Judgment Act, 28 U.S.C. §§ 2201-02, “is merely a vehicle that allows a party to obtain an ‘early
26

adjudication of an actual controversy’ arising under other substantive law.” Metropcs Wireless,
Inc. v. Virgin Mobile USA, L.P., Civil Action No. 3:08-CV-1658-D, 2009 WL 3075205, at *19
(N.D. Tex. Sept. 25, 2009) (quoting Collin Cnty., Tex. v. Homeowners Ass’n for Values Essential
to Neighborhoods, (HAVEN), 915 F.2d 167, 170 (5th Cir. 1990)). Thus, once a court has
dismissed all the substantive causes of action, there is no longer a live case or controversy, and
therefore no longer any rights left for the court to declare. See Lyons v. Am.'s Wholesale Lender,
13 F. Supp. 3d 636, 660 (N.D. Tex. 2014) (“[A] request for declaratory judgment is remedial in
nature and dependent upon the assertion of viable causes of action.”); Miller v. CitiMortgage,
Inc., 970 F. Supp. 2d 568, 591 (N.D. Tex. 2013) (same); Hurd, 880 F. Supp. 2d at 769 (similar).
As discussed in detail above, none of Plaintiff’s federal or state claims survive the Banks’
Motion. Accordingly, in the absence of a cognizable cause of action, the Court finds that
Plaintiff is not entitled to any declaratory or injunctive relief. Young v. Bank of Am., N.A., Civil
Action No. 4:13-CV-2489, 2014 WL 4202491, at *11 (S.D. Tex. Aug. 19, 2014) (“The law is
clear that injunctive relief is an equitable remedy, not a cause of action, and should be dismissed
when no substantive legal claims are pled.”); Smith v. JPMorgan Chase Bank, N.A., Civil No.
3:13-CV-4533-M-BK, 2014 WL 1318526, at *3 (N.D. Tex. Apr. 2, 2014) (“[B]ecause Plaintiff’s
substantive claim fails for the reasons stated above, she is not entitled to any relief under the
Declaratory Judgment Act.”), aff’d, 594 F. App’x 221 (5th Cir. 2014); Turner v.
AmericaHomeKey Inc., Civil Action No. 3:11-CV-0860-D, 2011 WL 3606688, at *6 (N.D. Tex.
Aug. 16, 2011) (“Because Turner has not pleaded a plausible substantive claim, the court
declines in its discretion to entertain his request for a declaratory judgment.”), aff’d, 514 F.
App’x 513 (5th Cir. 2013).

27

C.

The O’Boyle Defendants’ Motion

Plaintiff’s final cause of action is an IIED claim that she asserts against the O’Boyle
Defendants. See Compl. 23. Specifically, Plaintiff contends that the O’Boyle Defendants “knew
or should have known that there are numerous violations of the [TILA]” and “knew or should
have known that their client does not have standing to foreclose” on the Property. See id. In
response, the O’Boyle Defendants contend, among other arguments, that Plaintiff fails to state a
claim for IIED as a matter of law.12 See O’Boyle Defs.’ Mot. 14-18.
To establish a claim of IIED in Texas, a plaintiff must show “(1) intentional or reckless
conduct; (2) that is extreme or outrageous; (3) that caused emotional distress; and (4) that was
severe in nature.” Burden v. Gen. Dynamics Corp., 60 F.3d 213, 218 (5th Cir. 1995); see also
Hoffmann-La Roche Inc. v. Zeltwanger, 144 S.W.3d 438, 445 (Tex. 2004). “Extreme and
outrageous conduct is conduct so outrageous in character, and so extreme in degree, as to go
beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in
a civilized community.” Zeltwanger, 144 S.W.3d at 445 (internal quotation marks and citation
omitted). “It is for the court to determine, in the first instance, whether a defendant’s conduct
12

The O’Boyle Defendants also argue that the Court lacks subject matter jurisdiction over Plaintiff’s IIED claim.
See O’Boyle Defs.’ Mot. 7-8, 10-11, 18. According to the O’Boyle Defendants, because “Plaintiff has failed to
allege how this Court has either Federal Question or Diversity Jurisdiction over this claim,” the Court lacks subject
matter jurisdiction over Plaintiff’s cause of action for IIED. See id. at 11. This argument is not an accurate
statement of the law. Subject to certain exceptions not relevant here, it is well-settled that a district court may
exercise supplemental jurisdiction over any claim arising from the same case or controversy as a cause of action
over which the district court possesses original jurisdiction, so long as the federal and state law claims share a
common nucleus of operative fact. See 28 U.S.C. § 1367; see generally United Mine Workers of Am. v. Gibbs, 383
U.S. 715 (1966); Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349 (1988). The O’Boyle Defendants do not
contend that Plaintiff’s IIED claim does not share a common nucleus of operative fact with Plaintiff’s federal
claims, and the Court notes that the existence of a common nucleus of operative fact does not appear to be an issue
here.
The Court is aware, however, that the general rule in this Circuit “is to dismiss state claims when the federal claims
to which they are pendent are dismissed.” Parker & Parsley Petroleum Co. v. Dresser Indus., 972 F.2d 580, 585
(5th Cir. 1992). Nevertheless, this rule is neither mandatory nor absolute. Smith v. Amedisys Inc., 298 F.3d 434,
446-47 (5th Cir. 2002). Here, in the interests of judicial economy, efficiency, and fairness, the Court elects to
exercise its supplemental jurisdiction over all of Plaintiff’s state causes of action. See, e.g., Mendoza v. United
States, 481 F. Supp. 2d 643, 649 (W.D. Tex. 2006).

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was extreme and outrageous.” Id.
Here, the Complaint contains no factual allegations supporting an inference that the
O’Boyle Defendants engaged in any wrongful conduct, let alone conduct so outrageous in
character as to go beyond all possible bounds of decency in a civilized community. See id.; see
also Strange v. Flagstar Bank, FSB, Civil Action No. 3:11-CV-2642-B, 2012 WL 987584, at *5
(N.D. Tex. Mar. 22, 2012) (“Plaintiffs’ allegations centering on foreclosure and contract issues
are far from the type of allegations of outrageous and intolerable conduct required to sustain a
claim for intentional infliction of emotional distress.”); Wieler v. United Sav. Ass’n of Tex., FSB,
887 S.W.2d 155, 159 (Tex. App. 1994) (“Clearly, a foreclosure sale that complies with the terms
of the loan agreements and the applicable law would not justify a claim for intentional infliction
of emotional distress.”). Moreover, the Court agrees with the O’Boyle Defendants that, in
Texas, generally “an attorney cannot be held liable to a third party for conduct that requires the
office, professional training, skill, and authority of an attorney.” Byrd v. Vick, Carney & Smith
LLP, 409 S.W.3d 772, 780 (Tex. App. 2013) (internal quotation marks and citation omitted); see
also Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398, 406 (Tex. App. 2005) (“[A] third
party has no independent right of recovery against an attorney for filing motions in a lawsuit,
even if frivolous or without merit, although such conduct is sanctionable or contemptible as
enforced by the statutory or inherent powers of the court.”). Accordingly, because Plaintiff fails
to plead any facts in support of her claim, and because her IIED claim appears to stem solely
from conduct within the scope of the O’Boyle Defendants’ legal work on behalf of their client
Deutsche Bank, Plaintiff’s IIED claim is dismissed.
D.

Leave to Amend

Having dismissed all of Plaintiff’s federal and state causes of action, the Court must
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determine whether to grant Plaintiff an opportunity to amend any of her claims. See Compl. 23
(requesting leave to amend in the event the Court dismisses some or all of Plaintiff’s claims).
When a court dismisses one or more of a plaintiff’s claims pursuant to Rule 12(b)(6), the court
should generally give the plaintiff an opportunity to amend the complaint. See Hart v. Bayer
Corp., 199 F.3d 239, 247-48 n.6 (5th Cir. 2000). “The court may deny leave to amend, however,
if the defects are incurable or the plaintiffs have already alleged their best case.” Pierce v.
Hearne Indep. Sch. Dist., No. 14-50788, 2015 WL 81995, at *5 (5th Cir. Jan. 7, 2015) (citing
Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002);
Bazrowx v. Scott, 136 F.3d 1053, 1054 (5th Cir. 1998)).
After due consideration, the Court is of the opinion that Plaintiff should be granted one
opportunity to amend her RESPA notification claim, i.e., her contention that she was not
provided the requisite notice when and if the servicing of the Loan was transferred, and one
opportunity to amend her cause of action to quiet title. The Court denies Plaintiff leave to amend
all other causes of action because the defects in the Complaint are incurable, and granting
Plaintiff leave to amend these claims would be futile.13
In the event Plaintiff elects to amend the Complaint and re-plead the two causes of action
identified above, the Court reminds Plaintiff that legal conclusions will be given no weight in
determining whether she states colorable claims. See Twombly, 550 U.S. at 555 (“[A] plaintiff’s
obligation to provide the grounds of [her] entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”)
(internal quotation marks omitted). Indeed, statements of law are unnecessary; all that Federal
Rule of Civil Procedure 8(a)(2) requires is “a short and plain statement of the claim” with
13

Plaintiff’s claims against Barrett Daffin are dismissed without prejudice for failure to effect service. See Williams,
504 F. Supp. 2d at 196 n.13 (citing Nagle v. Lee, 807 F.2d 435, 438 (5th Cir. 1987)); see also Bell, 2012 WL
568755, at *8 n.1.

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enough facts “to raise a right to relief above the speculative level.” See Fed. R. Civ. P. 8(a)(2);
Twombly, 550 U.S. at 555.
III.

CONCLUSION
For the foregoing reasons, it is hereby ORDERED that the Banks’ Motion, ECF No. 11,

and the O’Boyle Defendants’ Motion, ECF No. 12, are both hereby GRANTED.
IT IS FURTHER ORDERED that Plaintiff may file a motion to amend the complaint
and re-plead her RESPA notification claim and her cause of action to quiet title on or before
May 4, 2015. If Plaintiff fails to file an amended complaint by this deadline, the Court will
dismiss the Case.
IT IS FURTHER ORDERED that Plaintiff’s remaining claims are hereby DISMISSED
with prejudice.
IT IS FURTHER ORDERED that the O’Boyle Defendants are dismissed from the
Case.
SO ORDERED.
SIGNED this 15th day of April, 2015.

KATHLEEN CARDONE
UNITED STATES DISTRICT JUDGE

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