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Seddiq v. Federal National Mortgage Association

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

July 27, 2017

Rohollah R. Seddiq, Plaintiff,
Federal National Mortgage Association, Defendant.



         Pending before the court is the defendant Federal National Mortgage Association's (“Fannie Mae”) motion to dismiss (Dkt. 5) a suit filed by plaintiff Rohollah Seddiq. Having considered the motion, responses, reply, and applicable law, the court finds that Fannie Mae's motion to dismiss should be GRANTED IN PART and DENIED IN PART.

         I. Background

         This case relates to the refinancing of a property located at 23102 North Waterlily Drive, Richmond, Fort Bend County, Texas 77406 (the “Property”). Dkt. 1, Ex. 1 at 9. On September 20, 2017, Seddiq filed suit against Fannie Mae in the 268th Judicial District Court in Fort Bend County, Texas. Dkt. 1 at 1. Seddiq asserts that he executed a Texas Home Equity Note and a Home Equity Security Agreement (“Deed of Trust” or “DOT”) on August 29, 2012, with Nations Reliable Lending, L.L.C. (“Lender”). Id. Ex. 1 at 9. Further, Seddiq asserts that he has complied with his obligations under the DOT and that he is current on his mortgage payments. Id. The DOT specifies that the parties expressly intend to conform to Article XVI, Section 50(a)(6)(E) of the Texas Constitution. Id.

         According to Seddiq's original complaint, Lender, and Fannie Mae as Lender's successor in interest, violated Section 50(a)(6)(E) by charging Seddiq more than the constitutional limit on home equity loan fees-3 percent of the loan principle. Dkt. 1, Ex. 1 at 10. Seddiq alleges he was required to pay $5, 231.39. Dkt. 1, Ex. 1 at 10. Fannie Mae asserts Seddiq was only required to pay $2, 893.74. Dkt. 5 at 6. Seddiq claims that he sent a Notice to Cure the violations to Fannie Mae on April 20, 2016, and that as of the filing date Fannie Mae had failed to cure the violations. Id. Seddiq also alleges that Fannie Mae breached its contract by breaching its obligations under the DOT. Id. at 11. Seddiq requests remedies of quiet title, declaratory judgment, a permanent injunction, and attorney's fees. Id. at 13-16.

         On November 10, 2016, Fannie Mae removed the case to this court on the basis of diversity jurisdiction under 28 U.S.C. § 1332. Dkt. 1. On November 17, 2016, Fannie Mae filed a motion to dismiss. Dkt. 5. On December 8, 2016, Seddiq filed a response to Fannie Mae's motion. Dkt. 13. On December 14, 2016, Seddiq filed a supplemental response. Dkt. 15. On December 23, 2016, Fannie Mae filed its reply. Dkt. 16.

         II. Legal Standard

         “Federal 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, 555127 S.Ct. 1955 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99 (1957)). 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 in determining whether the plaintiff has stated a claim under Rule 12(b)(6). 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.

         III. Analysis

         Fannie Mae seeks dismissal of Seddiq's claims for constitutional violations and breach of contract in addition to Seddiq's requests for quiet title, declaratory judgment, injunctive relief, and attorney's fees. Dkt. 5. The court will address the causes of action and the requests for relief in turn.

         A. The Three Percent Rule

         Seddiq contends that Fannie Mae violated the Texas Constitution by charging fees exceeding the three percent cap. Dkt. 1, Ex. 1 at 10. Under the Texas Constitution a home equity loan must:

not require the owner or owner's spouse to pay, in addition to any interest, fees to any person that are necessary to originate, evaluate, maintain, record, insure, or service the extension of credit that exceed, in the aggregate, three percent ...

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