United States District Court, S.D. Texas, Houston Division
Steven Charles Rathbone, Independent Executor of the Estate of William M. Rathbone, Plaintiff/Counter-Defendant,
The Bank of New York Mellon, as Co-Trustee for RML Trust 2013-2, Defendant/Counter-Plaintiff.
REPORT AND RECOMMENDATION
Hanovice Palermo United States Magistrate Judge
before this Court is The Bank of New York Mellon's
(“BONY” or “Defendant”) motion to
dismiss. BONY seeks an order dismissing the
Complaint, asserting that Plaintiff is neither the executor
of the estate of William Rathbone (the “estate”)
nor licensed to practice law, and therefore Plaintiff lacks
the capacity to bring this action as a pro se
plaintiff on behalf of the estate or other heirs. ECF No. 13.
The Plaintiff has failed to respond. The Court finds that
Defendant's motion has merit and should be granted.
Steven Charles Rathbone filed his original petition in state
court, pro se, on behalf of himself and the estate
of William Rathbone. Plaintiff asserts claims that arise out
of a note (home equity conversion mortgage) and deed of trust
that were issued in the name of William Rathbone and his
wife, Betty Rathbone, both of whom are deceased. ECF No. 1 at
3-4, ECF No. 6 at 1. BONY is the assignee of the mortgage. ECF
No. 13 ¶1, ECF No. 6 at ¶ 2, ECF No. 1 at ¶ 9.
various claims are based on the contention that William
Rathbone was not of sound mind and, therefore, lacked the
capacity to enter a contract to mortgage his home at the time
he executed the note. Consequently, Plaintiff claims that the
note is a voidable contract. He seeks a declaratory judgment
that the note is void. Id. at 13-14. Plaintiff also
asserts that BONY's claims on the note were time-barred
and any lien on the Property is void. Id. at
14-15. Plaintiff also seeks a declaratory judgment
that he is entitled to exclusive possession of the Property
and owns the Property in fee simple. Id. at
removed this case to federal court on the basis of diversity
jurisdiction. ECF No. 1. Defendant then filed a verified
motion to show authority, claiming that Plaintiff lacks the
capacity to bring this action pro se on behalf of
the estate or other heirs. ECF No. 6. Plaintiff responded and
requested an abatement to cure any defect in capacity. ECF
No. 10. The Court abated the case, allowing Plaintiff until
November 28, 2017 to cure the deficiencies. ECF No. 12.
Plaintiff failed to cure any of the
deficiencies. After the Court-ordered deadlines passed
without any cure, Defendant filed its motion to dismiss.
Plaintiff has not responded.
PLAINTIFF LACKS CAPACITY TO SUE ON BEHALF OF THE ESTATE OR
challenges Plaintiff's capacity to sue on behalf of the
estate because (1) he has not been appointed its legal
representative, and (2) he is a non-lawyer appearing pro
se when there are other heirs and BONY is a creditor of
the estate, precluding pro se representation.
Defendant's arguments have merit.
The Estate Has Standing to Assert Claims Based on the Note
and Deed, But Lacks Capacity to Sue
Rule 17, the issue of capacity must be decided under Texas
law. Fed.R.Civ.P. 17(a) & (c). Standing and capacity are
often confused. Rodgers v. Lancaster Police & Fire
Dep't, 819 F.3d 205, 212 n.18 (5th Cir.) cert.
denied, 137 S.Ct. 304, reh'g denied, 137
S.Ct. 545 (2016). “A plaintiff must have both
standing and capacity to bring a lawsuit.” Austin
Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex.
2005) (citation omitted) (emphasis added). Standing focuses
on whether a party has a sufficient relationship with the
lawsuit so as to have a “justiciable interest” in
its outcome, whereas capacity “is conceived of as a
procedural issue dealing with the personal qualifications of
a party to litigate.” Id. (citing 6A Charles
Alan Wright et al., Federal Practice and Procedure: Civil
§ 1559, at 441 (2d ed.1990)). “A plaintiff has
standing when [he] is personally aggrieved,
regardless of whether [he] is acting with legal authority; a
party has capacity when [he] has the legal authority
to act, regardless of whether [he] has a justiciable interest
in the controversy.” Lovato, 171 S.W.3d at
848-49 (emphasis added).
The estate has standing
undisputed that the mortgage and deed for the Property were
issued to William and Betty Rathbone. ECF No. 1 at 3-4, ECF
No. 6 at 1. Any claims for breach of contract or other
defenses to enforceability belong to them as the parties to
the contract. Neese v. Lyon, 479 S.W.3d 368, 378
(Tex. App.-Dallas), reconsideration en banc denied
(Nov. 19), reh'g overruled (Nov. 19, 2015)
(voidable contract is valid and effective unless and until
the party entitled to avoid it takes steps to disaffirm it.);
Temple EasTex, Inc. v. Old Orchard Creek Partners,
Ltd., 848 S.W.2d 724, 730 (Tex. App.-Dallas 1992, writ
denied) (“Generally, only parties to a contract have
the right to complain of its breach.”); see
Restatement (Second) of Contracts § 7 (Am. Law Inst.
1981) (“A voidable contract is one where one or more
parties have the power, by a manifestation of election to do
so, to avoid the legal relations created by the contract, or
by ratification of the contract to extinguish the power of
the estate would have standing to sue to void the note and
deed of trust. Glickstein v. Sun Bank Miami, 922
F.2d 666, 670 (11th Cir. 1991) (estate had standing to assert
claim against trustee bank for plundering estate's
assets); Lovato, 171 S.W.3d at 850 (estate had
justiciable interest to confer standing in survival action).
Although the estate has standing, it is not a legal entity
and therefore does not have capacity to sue.
Rodgers, 819 F.3d at 210. Thus, the estate is not a
proper plaintiff to bring this suit.
Plaintiff does not have capacity to sue as the ...