United States District Court, S.D. Texas, Houston Division
Stanley J. Bryant, Plaintiff,
The CIT Group/Consumer Finance, et al., Defendants.
MEMORANDUM OPINION AND ORDER
H. Miller United States District Judge.
before the court is a motion to dismiss filed by defendants
Ditech Financial, LLC (“Ditech”) and The Bank of
New York Mellon f/k/a The Bank of New York, as Trustee for
the benefit of the Certificateholders of the CWABS, Inc.
Asset-Backed Certificates, Series 2006-BC4
“Defendants”). Dkt. 22. After considering the motion,
response, and applicable law, the court is of the opinion
that Defendants' motion to dismiss should be GRANTED.
case relates to the foreclosure sale of real property located
at 2234 Dawn Shadow Way, Fresno, Texas 77545 (the
“Property”). Dkt. 20 (first am. compl.).
Plaintiff Stanley J. Bryant executed a mortgage note on the
Property secured by a deed of trust on December 20, 2005
(collectively, the “Loan”). Dkt. 20, Ex. 1. CIT
Group/Consumer Finance, Inc. (“CIT”) was the
lender, and the Mortgage Electronic Registration System
(“MERS”) was listed as the beneficiary of the
deed of trust. Id. MERS assigned the deed of trust
to BONYM on August 23, 2011. Dkt. 20, Ex. 10. Bryant claims
that at some point in 2011 he had medical problems and
struggled to pay his mortgage and medical bills, which
resulted in his falling into default on his home loan. Dkt.
20. He attaches six different notices of sale to his
complaint, the earliest of which is dated November 2011 and
the most recent of which is dated April 2016. Id.
& Exs. 2-7. Defendant Bank of America, N.A.
(“BOA”) is listed as the acting mortgage servicer
on some of the notices, which were served by a substitute
trustee or trustees. See, e.g., Dkt. 20, Ex. 2. The
final attached notice of sale lists the sale date as April 5,
2016. Dkt. 20, Ex. 7. On April 5, 2016, the house was sold to
BONYM via a credit bid. Dkt. 20, Ex. 8. Bryant contends,
however, that he holds legal title to the house. Id.
to Bryant's amended complaint, the only recorded
assignment of the Loan is a fraud and forgery and, even if it
were not, there is no complete and unbroken chain of
assignments from CIT to BONYM. Dkt. 20. Bryant
argues that Chester Levings, an Assistant Secretary of MERS,
“purportedly signed” an assignment of the Loan to
BONYM on August 23, 2011, but the assignment does not state
that MERS was acting as nominee for any entity. Dkt. 20.
Bryant asserts that this and other documents related to the
chain of assignments are void ab initio because they
are forgeries. Id. He also asserts that if the loan
was securitized into the 2006-BC4 Trust as BONYM claims, it
was not properly and validly transferred according to the
Trust's Pooling and Servicing Agreement
(“PSA”) and the law of the state in which the
Trust was created-New York. Id. He contends the note
was not legally or validly assigned and/or transferred as
required by Texas and New York law and that BONYM thus had no
standing to foreclose as a real party in interest.
Id. Bryant raises eleven causes of action: (1)
violation of section 12.002 of the Texas Civil Practices and
Remedies Code against BOA, MERS, and BONYM; (2) negligence
per se against BOA, MERS, and BONYM; (3) gross negligence and
gross negligence per se against BOA, MERS, and BONYM; (4)
money had and received against BONYM, BOA, and Ditech
Financial LLC (“Ditech”); (5) unjust enrichment
against BONYM, BOA, and Ditech; (6) declaratory judgment of
lack of standing to foreclose against BONYM and Ditech; (7)
declaratory judgment against all defendants; (8) quiet title
against all defendants; (9) declaratory relief under the
statute of limitations against all defendants; (10) fraud
against the CWABS, Inc. Asset-Backed Certificates, Series
2006-BC4 Trust (the “CWABS Trust”), BONYM, and
Ditech; and (11) violation of the Texas Debt Collection Act
(“TDCA”) against BONYM, BOA, and Ditech.
and BONYM removed the case to this court on June 27, 2016,
alleging diversity jurisdiction. Dkt. 1. They noted that
defendants BOA and MERS consented to the removal, and they
asserted that no consent was required from the CWABS Trust or
CIT because they are nominal parties that had been
fraudulently joined. Id. They additionally contended
that the consent of the CWABS Trust, CIT, and CWABS, Inc.,
was not required because these parties have not been served
and no citations have been issued to them. Id.
Bryant filed a motion to remand, arguing that the case should
be remanded because the notice of removal failed to state the
citizenship of the CWABS Trust. Dkt. 16. Ditech and BONYM
argued that the trustee's citizenship, not the
trust's, is what matters in this case. Dkt. 21. The court
held that the trustee was the real party in interest whose
citizenship counted for diversity purposes and denied the
motion to remand. Dkt. 43.
filed a motion to dismiss. Dkt. 22. They argue that (1)
Bryant lacks standing to assert any violations of the PSA and
challenge any assignment that purportedly violates the PSA;
(2) Bryant's conclusory forgery allegations do not meet
the pleading standards, which require allegations as to who,
what, when, where, and how of the alleged fraud; (3) the
Fifth Circuit and Texas court have repeatedly held that MERS
has the authority to assign deeds as a beneficiary,
foreclosing Bryant's argument that MERS did not have the
authority to execute the assignments; (4) Bryant's quiet
title claim fails because it is based on inadequate
allegations of forgery rather than the strength of
Bryant's title; (5) Bryant's statutory fraudulent
lien claims relating to the filings of the assignment and
substitute trustees in the real property records of Fort Bend
County are time-barred; (6) even if the statutory fraudulent
lien claims were not time-barred, a document assigning a deed
of trust does not qualify as a “lien or claim”
under the statute; (7) moreover, Bryant's statutory
fraudulent lien claims fail because Bryant did not adequately
plead that the defendants intended to cause physical or
financial injury or mental anguish; (8) the negligence-based
claims are time-barred; (9) the negligence-based claims also
fail because there is no private right of action under the
relevant statute and, regardless, the defendants did not
violate the statute because the statute does not require
recording of an assignment of a deed of trust; (9) the unjust
enrichment and money had and received claims fail because
there is a valid contract covering the subject matter of this
dispute; (10) the fraud claims fail under the economic loss
rule and were not pled with particularity; and (11) the TDCA
claim fails because it is based on the deficient lack of
standing to foreclose and forgery allegations and also
because it is conclusory, lacks specific facts, and is
insufficient to plead plausible harm. Dkt. 22. Defendants
argue that because all of these claims fail, Bryant's
requests for declaratory relief also necessarily fail.
response, Bryant contends that he has alleged sufficient
facts for all claims that require a heightened pleading
standard, that all of his claims are properly pled, and that
the statute-of-limitations defense is a red herring. Dkt. 29.
Rule of Civil Procedure 8(a)(2) requires only ‘a short
and plain statement of the claim showing that the pleader is
entitled to relief.'” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65 (2007).
In considering a Rule 12(b)(6) motion to dismiss a complaint,
courts generally must accept the factual allegations
contained in the complaint as true. Kaiser Aluminum
& Chem. Sales, Inc. v. Avondale Shipyards, Inc.,
677 F.2d 1045, 1050 (5th Cir. 1982). The court does not look
beyond the face of the pleadings, and attachments thereto, in
determining whether the plaintiff has stated a claim under
Rule 12(b)(6). Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498 (5th Cir. 2000); Spivey v.
Robertson, 197 F.3d 772, 774 (5th Cir. 1999). “[A]
complaint attacked by a Rule 12(b)(6) motion to dismiss does
not need detailed factual allegations, [but] a
plaintiff's obligation to provide the ‘grounds'
of his ‘entitle[ment] 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 (citations omitted). The
“[f]actual allegations must be enough to raise a right
to relief above the speculative level.” Id.
The supporting facts must be plausible-enough to raise a
reasonable expectation that discovery will reveal further
supporting evidence. Id. at 556.
addition to meeting the plausibility standard, under Federal
Rule of Civil Procedure 9(b), if a party is alleging fraud or
mistake, the pleading must “state with particularity
the circumstances constituting fraud or mistake.”
Fed.R.Civ.P. 9(b); United States ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009) (noting
that Rule 9(b) does not “supplant” Rule 8(a)).
However, this particularity requirement “does not
‘reflect a subscription to fact pleading.'”
Id. (quoting Williams v. WMX Techs., Inc.,
112 F.3d 175, 178 (5th Cir. 1997)). Instead, pleadings
alleging fraud must contain “simple, concise, and
direct allegations of the circumstances constituting the
fraud, which . . . must make relief plausible, not merely
conceivable, when taken as true.” Id.
(internal quotations omitted) (referring to the standard
enunciated in Twombly).
Fifth Circuit interprets Rule 9(b) strictly, “requiring
a plaintiff pleading fraud to specify the statements
contended to be fraudulent, identify the speaker, state when
and where the statements were made, and explain why the
statements were fraudulent.” Id. (quoting
Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302
F.3d 552, 564-65 (5th Cir. 2002)). Thus, Rule 9(b) generally
requires the complaint to “set forth ‘the who,
what, when, where, and how' of the events at
issue.” Id. (quoting ABC Arbitrage
Plaintiffs Grp. v. Tchuruk, 291 F.3d 336, 350 (5th Cir.
2002)). However, “Rule 9(b)'s ultimate meaning is
context-specific.” Grubbs, 565 F.3d at 185.
Thus, “[d]epending on the claim, a plaintiff may
sufficiently ‘state with particularity the
circumstances constituting fraud or mistake' without
including all the details of any single court-articulated
standard-it depends on the elements of the claim at
has asserted eleven causes of action plus a request for
exemplary damages and attorneys' fees. Dkt. 20. The court
will first address two overarching themes in Bryant's
amended complaint-that the Loan was not properly transferred
according to the PSA and that various signatures are
forgeries. It will then discuss each claim in the order
Bryant asserts them in his complaint and determine whether
Bryant has stated any claims for which relief can be granted.
contends that the Loan was not properly and validly
transferred into the 2006-BC4 Trust according to the
Trust's PSA. Id. Defendants argue that Bryant
does not have standing to assert violations of the PSA or
challenge the assignment for purportedly violating the PSA
because Bryant is not a party to the PSA. Dkt. 22. In his
response, Bryant makes various arguments relating to
standing, but he does not address Defendants' contention
that Bryant does not have standing to challenge violations of
the PSA. See Dkt. 29. Under Fifth Circuit law,
Bryant has no right to challenge the assignments as being in
violation of the PSA unless he is a party to the PSA or an
intended third-party beneficiary of the PSA. Reinagel v.
Deutsche Bank Nat'l Trust Co., 735 F.3d 220, 228
(5th Cir. 2013) (applying Texas law). Since Bryant did not
plead any facts indicating that he is an intended third-party
beneficiary of the PSA, his claims relating to violations of
the PSA cannot stand. See Id. (noting that the
plaintiffs had failed to “state any facts indicating
that the parties to the PSA intended that” the
plaintiffs be third-party beneficiaries and that, regardless,
“the fact that the assignments violated the PSA-a
separate contract-would not render the assignment void, buy
merely entitle [the plaintiffs] to sue for breach of the
PSA”). Thus, any claims based on the invalidity of the
assignments due to violations of the PSA fail.
also contends that he “is informed and believes, and
thereon alleges, and alleges upon information reasonably
likely to be discovered, that Chester Levings did not
personally sign the Assignment, nor did a person with
authority from the real Chester Levings sign the Assignment .
. . or affix Chester Levings's electronic signature to
the Assignment, . . . [which causes] the Assignment to be
void ab initio as a forgery.” Dkt. 20 (italics
corrected). According to the amended complaint, Bryant based
this belief on “out-of-state mortgage assignments in
which the signature for Chester Levings is markedly different
from the signature on the Assignment in this case.”
Id. He attached assignments of properties located in
Florida and South Carolina that were purportedly signed by
Levings, and in each of these assignments, Levings'
signature is an illegible right-slanted signature.
See Dkt. 20, Exs. 11-14. The signature in this case
is also an illegible right-slanted signature. See
Dkt. 20, Ex. 10. The signatures on these assignments are
similar but not identical. Compare, Dkt. 20, Exs.
similarly contends in his complaint that he “is
informed and believes, and thereon alleges, or alleges upon
information reasonably likely to be discovered, for each of
the recorded substitution documents referenced [in the
amended complaint], the signatures of each signer [of the
substitution of trustee filings] were not signed or affixed
by the named signer, nor were the signatures signed or
affixed with someone else with the knowledge or authority of
the named signers with regard to the Plaintiff's specific
loan. Thus, all substitution documents are forgeries and void
ab initio.” Dkt. 20. Bryant attached the
following to his complaint: an appointment of substitute
trustee purportedly signed by Melanie D. Cowan, Vice
President of BONYM, relating to the Property, and three
appointment of substitute trustee forms or assignments of
other properties that are purportedly signed by Cowan.
See Dkt. 20, Exs. 16, 18-20. The signatures, like
the Levings's signatures, are similar but not identical.
Bryant contends the Cowan signatures are “markedly
different.” Dkt. 20. Bryant also attaches two
additional appointment of substitute trustee forms appointing
substitute trustees for the Property, one purportedly signed
by Tanyia Hill, assistant vice president of BONYM, and one
purportedly signed by Brandon Schildts, a BONYM foreclosure
supervisor. Dkt. 20, Exs. 15, 17.
assert that Bryant must plead the who, what, where, when, and
how of the alleged forgeries and that his conclusory
assertions of forgery do not meet this heightened pleading
standard. Dkt. 22. The court agrees that Federal Rule of
Civil Procedure 9(b) provides the appropriate pleading
standard for Bryant's forgery allegations. See
Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a
party must state with particularity the circumstances
constituting fraud or mistake.”); see also Lopez v.
Sovereign Bank, N.A., No. H-13-1429, 2014 WL
7446746, at *8 (S.D. Tex. Dec. 31, 2014) (Rosenthal, J.)
(explaining that Rule 9(b) applies to claims in which fraud
is alleged, even if fraud is not an element of that claim,
and applying Rule 9(b) to similar forgery allegations).
argues, however, that his forgery allegations are based on
information that is peculiarly within the opposing
party's knowledge and that, as such, he should be
permitted to discovery information about the alleged forgery.
Dkt. 29. He also asserts that pleading fraud with
particularity does not necessarily mean pleading the date,
time, or place of the fraud if the party has
“alternative means of injecting precision and some
measure of substantiation into its allegations of
fraud.” Id. Bryant contends that allegations
of fraud may be based on information and belief when the
facts in question are peculiarly within the opposing
party's knowledge and the complaint sets forth a factual
basis for the plaintiff's belief. Id.
court agrees that the requirements of Rule 9(b) may be
relaxed where the facts relating to the alleged fraud are
peculiarly within the opposing party's knowledge;
however, this exception “must not be mistaken for
license to base claims of fraud on speculation and conclusory
allegations.” U.S. ex rel. Thompson v. Columbia/HCA
Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)
(quoting Tuchman v. DSC Commc'ns Corp., 14 F.3d
1061, 1068 (5th Cir. 1994)); see also Id.
(“[E]ven where allegations are based on information and
belief, the complaint must set forth a factual basis for such
belief.”). Bryant has provided only conclusory
statements that the signature on the assignment was forged.
See Dkt. 20; see also Reed v. Bank of Am,
N.A., No. h-15-2005, 2016 WL 3058303, at *3 (S.D. Tex.
May 3, 2016) (Miller, J.) (dismissing almost identical
forgery allegations). While he attaches documents that he
claims have “markedly different signatures, ”
Bryant has provided no information regarding who executed
these alleged forgeries, how the forgery scheme was carried
out, or why the alleged forged signatures were made. See
Tuchman, 14 F.3d at 1068 (“Rule 9(b) requires the
plaintiff to allege the particulars of time, place, and
contents of the false representations, as well as the
identity of the person making the misrepresentation and what
[that person] obtained thereby.” (quoting
Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975
F.2d 1134, 1139 (5th Cir. 1992))). Courts have found
allegations similar to Bryant's insufficient in many
cases. See, e.g., Jemison v. Citimortgage,
Inc., No. H-13-2475, 2015 WL 251754, at *2 (S.D. Tex.
Jan. 20, 2015) (Rosenthal, J.) ...