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Reese v. Wells Fargo Bank, N.A.

United States District Court, N.D. Texas, Dallas Division

December 4, 2017

KAREN REESE, et al., Plaintiffs,
WELLS FARGO BANK, N.A., et al., Defendants.



         Before the court is the motion of the defendants Wells Fargo Bank, National Association (“Wells Fargo”) and U.S. Bank National Association (“U.S. Bank”) to dismiss the claims of the plaintiffs Karen and Wendell Reese (“Reeses”) (docket entry 4). For the reasons set forth below, the motion is granted.

         I. BACKGROUND

         On August 4, 2005, [*] the Reeses executed a Texas Home Equity Adjustable Rate Note (“note”) for $225, 500 payable to Wells Fargo for a loan secured by a lien on the property. Motion at 1. Subsequently, Wells Fargo assigned the note and security instrument to U.S. Bank. Original Petition at 3. According to loan closing documents, on August 4, 2005, the date of the extension of credit, the fair market value of the property was $282, 000. Id. at 4. On January 1, 2005, a tax lien attached to the property. Id. In 2005, the taxes on the property amounted to $1, 183.54. Id.

         In total, the Reeses paid $124, 340.77 to Wells Fargo and $14, 828.32 to U.S. Bank on the note. Id. at 3. After their last payment in September 2012, $511, 577.04 remained on the Reeses' note. Id.

         On July 21, 2017, the Reeses filed this suit against Wells Fargo and U.S. Bank in the 192nd Judicial District Court of Dallas County seeking a declaratory judgment, monetary relief, and to quiet title. Original Petition at 5-6. The Reeses alleged that Wells Fargo and U.S. Bank violated the Texas Constitution because the principal on the note plus the tax liens on the property exceeded 80% of the fair market value of the property on the date of the extension of credit. Id. at 5. Wells Fargo and U.S. Bank filed an answer generally denying the Reeses' claims and asserting various affirmative defenses. Defendants' Original Answer at 1-3 (docket entry 1, exhibit 5). On August 16, 2017, Wells Fargo and U.S. Bank removed the case to this court. Notice of Removal ¶ 9 (docket entry 1). On August 17, 2017, Wells Fargo and U.S. Bank filed the instant motion to dismiss. Motion. The Reeses filed a response on August 31, 2017. Response to Motion to Dismiss (“Response”) (docket entry 7). Shortly thereafter, on September 8, 2017, Wells Fargo and U.S. Bank filed a reply. Reply in Support of Motion to Dismiss (docket entry 8). On September 19, 2017, the court granted the Reeses' motion for leave to file a surreply, and on September 19, 2017, the Reeses filed a surreply. Plaintiffs' Unopposed Motion and Brief for Leave to File Surreply to Motion to dismiss (docket entry 11); Order (docket entry 12); Plaintiffs' Surreply to Motion to Dismiss (docket entry 13). The motion to dismiss is now ripe for decision.

         II. ANALYSIS

         A. Legal Standard

         1. Rule 12(b)(6)

         “To survive a Rule 12(b)(6) motion to dismiss, the plaintiff[s] must plead ‘enough facts to state a claim to relief that is plausible on its face.'” In re Katrina Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 570 (2007)), cert. denied, 552 U.S. 1182 (2008). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, [the plaintiffs'] obligation to provide the grounds of [their] entitlement 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, quotation marks, and brackets omitted). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” In re Katrina Canal, 495 F.3d at 205 (quoting Twombly, 550 U.S. at 555) (internal quotation marks omitted). “The court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff[s].” Id. (quoting Martin K. Eby Construction Company, Inc. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)) (internal quotation marks omitted).

         The Supreme Court has prescribed a “two-pronged approach” to determine whether a complaint fails to state a claim under Rule 12(b)(6). See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The court must “begin by identifying the pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 679. The court should then assume the veracity of any well-pleaded allegations and “determine whether they plausibly give rise to an entitlement of relief.” Id. The plausibility principle does not convert the Rule 8(a)(2) notice pleading to a “probability requirement, ” but “a sheer possibility that a defendant has acted unlawfully” will not defeat a motion to dismiss. Id. at 678. The plaintiffs must “plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not ‘show[n]' -- ‘that the pleader[s] [are] entitled to relief.' ” Id. at 679 (alteration in original) (quoting Fed.R.Civ.P. 8(a)(2)). The court, drawing on its judicial experience and common sense, must undertake the “context-specific task” of determining whether the plaintiffs' allegations “nudge” their claims against the defendants “across the line from conceivable to plausible.” See id. at 679, 683.

         A court may review the contents of the pleadings and attachments in considering a motion to dismiss for failure to state a claim. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Additionally, a court may consider documents attached by the defendants to their motion to dismiss if the document is referred to in the plaintiffs' complaint and it is central to the claim. Id. at 498-99. Here, the Reeses referenced the sworn affidavit attached by Wells Fargo and U.S. Bank in their pleadings. Original Petition at 2-3; see generally Motion, exhibit C. Also, the affidavit is central to the Reeses' claim that the terms of the loan are unconstitutional. Therefore, the court will consider the affidavit in determining whether to grant the defendants' motion.

         B. Application

         1. The ...

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