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Castillo v. Deutsche Bank National Trust Co.

United States District Court, Fifth Circuit

January 23, 2014

MARIA ISABEL CASTILLO AS NEXT FRIEND OF SAMUEL CASTILLO, Plaintiff,
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE ON BEHALF OF THE HOLDERS OF THE SOUNDVIEW HOME LOAN TRUST 2005-1 ASSET BACKED CERTIFICATES, SERIES 2005-1, Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

DAVID ALAN EZRA, Senior District Judge.

On January 17, 2014, the Court heard oral argument on the Motion to Dismiss filed by Deutsche Bank National Trust Company, as Trustee on behalf of the holders of the Soundview Home Loan Trust 2005-1 asset backed certificates, series 2005-1 ("Defendant"). (Dkt. # 3 ("Motion to Dismiss".) Wade Kricken, Esq., appeared at the hearing on behalf of the Plaintiff; Phillip C. Reeves, Esq., appeared at the hearing on behalf of Defendant. After reviewing the motions' supporting and opposing memoranda, and considering the parties' arguments at the hearing, the Court GRANTS Defendant's Motion to Dismiss. (Dkt. # 4).

BACKGROUND

Maria Isabel Castillo, as "next friend" of Samuel Castillo, brought an action asserting violations of the Texas Debt Collection Practices Act and requesting declaratory judgment. According to the complaint, Samuel Castillo was the title-holder of record of the property located at 218 Irene Avenue, Del Rio, Texas 78840 (the "Property"), and Maria Isabel Castillo has alleged that she occupies the Property. (Dkt. #1 Ex. A.)

In January 2005, Samuel Castillo executed a Promissory Note and Deed of Trust secured by the Property. (Dkt. # 1 Ex. A. ¶¶ 10, 11.) Resmae Mortgage Corporation ("Resmae") was listed as the Lender on the Note, and Mortgage Electronic Registration System ("MERS") was listed as the beneficiary on the Deed of Trust. (Id. ¶ 11.) Later, the mortgage was assigned to Defendant. Samuel Castillo defaulted on the loan, and Defendant sought to foreclose. (Dkt. # 3 at 2.)

The complaint attacks the right of the Defendant to foreclose on Samuel Castillo's property and alleges, essentially, that the Note in its original form "ceased to exist" because the original Lender, Resmae, was not the foreclosing entity. (Id. ¶ 15.) Plaintiff alleges that "any subsequent party enforcing the power of sale provision in the deed of trust would necessarily have acquired rights in the Castillo Note through valid negotiation, " however, "this negotiation never occurred because the loan was securitized wherein the intangible payment stream was stripped from the original promissory note and sold to investors as a certificate." (Id.) Therefore, Plaintiff alleges, the power of sale provisions in the deed of trust became "void" when the Note ceased to exist in its original form. (Id.) Essentially, Plaintiff asserts that Defendant did not have the right to accept mortgage payments and did not have the right to foreclose on the property because Defendant "failed to perfect any security interest in the property." (Id. ¶ 27.)

On June 18, 2013, Plaintiff filed her original complaint and on July 11, 2013, the case was removed to district court based upon diversity jurisdiction under 28 U.S.C. § 1332(a). (Dkt. # 1.) On July 18, 2013, Defendant filed its Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). (Dkt. # 3.) Plaintiff has failed to respond to Defendant's Motion to Dismiss. Defendant's Motion is now before the court.

STANDARDS OF REVIEW

I. Rule 12(b)(1) Motion

Federal Rule of Civil Procedure 12(b)(1) provides that dismissal is authorized for lack of subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The issue of whether a plaintiff has standing is one of subject-matter jurisdiction. Cobb v. Central States , 461 F.3d 632, 635 (5th Cir. 2006). "[W]here federal jurisdiction is based on diversity of citizenship... a federal court is in effect only another court of the state in which it sits and applies the same law that would be applied if the action had been brought in state courts." Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 342 (5th Cir. 2013) (quoting Aerosonic Corp. v. Trodyne Corp. , 402 F.2d 223, 229 (5th Cir. 1968)). "It follows that in diversity cases the federal courts cannot allow recovery if the right to recover is denied by the states, and this is true regardless of the form of the action and whether the remedy is sought at law or in equity." Aerosonic , 402 F.2d at 229.

II. Rule 12(b)(6) Motion

Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." Review is limited to the contents of the complaint and matters properly subject to judicial notice. See Tellabs, Inc. v. Makor Issues & Rights, Ltd. , 551 U.S. 308, 322 (2007). In analyzing a motion to dismiss for failure to state a claim, "[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'" In re Katrina Canal Breaches Litig. , 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit , 369 F.3d 464, 467 (5th Cir. 2004)). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007). "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).

DISCUSSION[1]

I. Rule 12(b)(1) Motion - Lack of ...


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