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Law v. Ocwen Loan Servicing, LLC

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

May 26, 2017




         Pending before the court is Defendant's Motion to Dismiss and Brief in Support ("Motion to Dismiss") (Docket Entry No. 23). Although the motion was filed on April 11, 2017, Plaintiffs, Roger Law and Lucindra Law, have not responded to it. For the reasons explained below, Ocwen Loan Servicing's ("Ocwen") Motion to Dismiss will be granted.

         I. Factual and Procedural Background

         Plaintiffs Roger Law and Lucindra Law ("Plaintiffs") allege that on September 29, 2005, they purchased property at 4115 Woodlake Lane, Missouri City, Texas ("the Property").[1] Plaintiffs' initial lender sold their loan to U.S. Bank N.A., as Trustee for the Registered Holders of MASTR Asset Backed Securities Trust 2006-AM1, Mortgage Pass-Through Certificates, Series 2006-AM1 ("U.S. Bank"). Their loan was then serviced by defendant Ocwen Loan Servicing, LLC ("Ocwen" or "Defendant"). On December 3, 2013, U.S. Bank purchased the Property in a non-judicial foreclosure sale.

         On October 13, 2014, U.S. Bank filed suit to evict Plaintiffs. On October 27, 2014, Ocwen sold the Property to a third party. But on October 30, 2014, U.S. Bank's counsel, Mackie Wolf Zientz & Mann, PC ("MWZM"), allegedly represented to the court that U.S. Bank still owned the Property. The trial court ruled in favor of U.S. Bank. Plaintiffs appealed. On appeal, U.S. Bank allegedly represented again that it owned the Property. Plaintiffs were evicted in March of 2015.

         Plaintiffs filed suit against Ocwen and MWZM[2] in the 434th Judicial District Court of Fort Bend, Texas, asserting claims of negligence and statutory fraud arising from the statements made in state court. Defendant Ocwen timely removed the case to this court.[3] Plaintiffs moved to amend their Original Petition to allege a claim for common law fraud and to seek additional remedies, which the court granted in part and denied in part.[4]Ocwen now moves to dismiss for failure to state a claim.

         II. Standard of Review

         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). To defeat a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). The court generally is not to look beyond the pleadings in deciding a motion to dismiss. Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). "Pleadings" for purposes of a Rule 12(b)(6) motion include the complaint, its attachments, and documents that are referred to in the complaint and central to the plaintiff's claims. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000). 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)).

         Ill. Analysis

         As a preliminary matter, it is not clear from Plaintiffs' pleadings exactly which alleged misrepresentations were made by whom.[5] Plaintiffs allege that "attorneys from MWZM, upon Ocwen's instruction, presented sworn evidence and represented to the Court that U.S. Bank owned the property in question."[6] Plaintiffs then allege that counsel from MWZM were "the Bank's lawyers."[7]Elsewhere in the pleadings Plaintiffs allege that "Defendants Ocwen and MWZM in the course of the foreclosure action and subsequent eviction proceeding made [sic] and represented to the Plaintiffs and to the courts that they were in fact the party in interest respectively when in fact they no longer owned the property."[8] For the purposes of Defendant's 12(b) (6) motion, and for the benefit of Plaintiffs, the court will assume that the alleged misrepresentations are ultimately attributable to Ocwen. But Plaintiffs are far from clear on this point.

         A. Negligent Misrepresentation

         Negligent misrepresentation cases typically arise from representations or evaluations made in a transactional context. See McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 793 (Tex. 1999).

The elements of a cause of action for the breach of this duty are: (1) the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplies "false information" for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; ...

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