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Green v. Bank of America, N.A.

United States District Court, S.D. Texas, Houston Division

April 20, 2017

MICHAEL GREEN, Trustee for the 2 016 WOLF TRUST, Plaintiff,
v.
BANK OF AMERICA, N.A., Defendant.

          MEMORANDUM OPINION AND ORDER

          SIM LAKE UNITED STATES DISTRICT JUDGE

         Pending before the court is Defendant Bank of America, N.A.'s ("BANA") Motion to Dismiss Plaintiff's Complaint with Incorporated Memorandum of Law ("Motion to Dismiss") (Docket Entry No. 4). For the reasons stated below, the motion will be granted in part and denied in part.

         I. Factual and Procedural Background

         In 2008 Edgar and Maria Cortes ("Borrowers") obtained a loan secured by a deed of trust on real estate located at 6822 Liberty Creek Trail, Houston, Texas, 77049 ("the Property").[1] The deed of trust was later assigned to BANA, successor by merger to BAC Home Loan Servicing, LP FKA Countrywide Home Loans Servicing. The Property is subject to restrictions and covenants that permitted the Liberty Lakes (Houston) Homeowners' Association, Inc. ("HOA") to assess a lien for unpaid HOA assessments. In February of 2015 the HOA prevailed in a suit against Borrowers and foreclosed its lien against the Property.

         The 2016 Wolf Trust ("the Trust") purchased the Property subject to Defendant's existing senior lien at a Constable's Sale in May of 2016. Defendant filed a Notice of Substitute Trustee's Sale with the Harris County Clerk on January 30, 2017. The sale was scheduled for March 7, 2017. Plaintiff filed this action in the 113th Judicial District Court, Harris County, Texas, on February 24, 2017, seeking to enjoin Defendant from foreclosing. Plaintiff also claimed an equitable right of redemption and sued for quiet title. Plaintiff alleges that the Trust seeks to pay off Defendant's lien but that Defendant has not responded to Plaintiff's attempts to communicate. Defendant timely removed the action and now moves to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b) (6) .

         II. Applicable Law

         A Rule 12(b)(6) motion tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001), cert. denied sub nom. Cloud v. United States, 122 S.Ct. 2665 (2002) . The court must accept the factual allegations of the complaint as true and view them in the light most favorable to the plaintiff. Id. (citing Oppenheimer v. Prudential Securities Inc., 94 F.3d 189, 194 (5th Cir. 1996)). To defeat a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 127 S.Ct. at 1974. The court does not "strain to find inferences favorable to the plaintiffs" or "accept conclusory allegations, unwarranted deductions, or legal conclusions." Southland Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 361 (5th Cir. 2004) (internal quotation marks and citations omitted). "[C]ourts are required to dismiss, pursuant to [Rule 12(b) (6)], claims based on invalid legal theories, even though they may be otherwise well-pleaded." Flynn v. State Farm Fire and Casualty Insurance Co. (Texas), 605 F.Supp.2d 811, 820 (W.D. Tex. 2009) (citing Neitzke v. Williams, 109 S.Ct. 1827, 1832 (1989)).

         III. Application

         A. Equitable Redemption

         To properly state a claim for the equitable right of redemption, a plaintiff must show it: (1) has an equitable or legal right to the property; (2) based on which it would suffer a loss from foreclosure; and (3) "is 'ready, able or willing to redeem the properties in controversy by paying off the amount of valid and subsisting liens to which the properties [are] subject.'" Scott v. Schneider Estate Trust, 783 S.W.2d 26, 28 (Tex. App.-Austin 1990, no writ) (quoting Houston v. Shear, 210 S.W. 976, 981 (Tex. Civ. App.-Austin 1919, writ dism'd)). "The party wishing to redeem must also be willing to pay amounts expended by the mortgagee in association with the default." Id.

         Defendant argues that Plaintiff offers no facts that demonstrate that the Trust would suffer a loss from foreclosure or that Plaintiff is ready, able, or willing to pay off the amount of the existing lien and other amounts owed to Defendant in relation to the default and foreclosure attempts.[2] Defendant further argues that Plaintiff "does not assert that [the Trust] has tendered the amount owed on the Note, which is a 'necessary prerequisite to the . . . recovery of title . . . .'"[3]

         Plaintiff has plead sufficient facts to state a claim for its equitable right of redemption that is plausible on its face. Plaintiff alleges that the Trust possesses a legal interest in the Property as a result of purchasing the Property at the Constable's Sale. It is plausible that, based upon that interest, Plaintiff would suffer a loss in the event of a foreclosure sale. Finally, Plaintiff's alleged attempts to contact Defendant indicate a willingness to pay off Defendant's existing lien.

         Defendant argues that dismissal is warranted because Plaintiff has failed to tender the amount owed, which is a necessary-prerequisite for the recovery of title.[4] Although the cases on which Defendant relies correctly identify tender of the amount owed as a "'condition precedent' to recovery of title, " tender is not required in order to state a legally cognizable claim.[5] If the court were to adopt BANA's reasoning, defendants could defeat equitable redemption claims at the pleading stage by simply withholding payoff information from plaintiffs.

         Plaintiff's factual allegations are sufficient to survive a motion to dismiss. If the Trust is to prevail on its claim, it must eventually tender the amount owed. But in order to do ...


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