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Bryant v. Cit Group/Consumer Finance, Inc.

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

March 28, 2018

Stanley J. Bryant, Plaintiff,
The CIT Group/Consumer Finance, Inc., et al., Defendants.


          Gray H. Miller United States District Judge.

         Pending before the court is a motion for summary judgment filed by Countrywide Home Loans, Inc. n/k/a Bank of America, North America (“BANA”), and Mortgage Electronic Registration Systems, Inc. a/k/a MERS (“MERS”) (collectively, “Defendants”), and a motion to sever filed by 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 Certificate holders of CWABS, Inc. Asset-Backed Certificates, Series 2006-BC4 (“BONYM”).[1] Having considered the motions, related filings, and applicable law, the court is of the opinion that the motion for summary judgment should be GRANTED IN PART AND DENIED IN PART, and the motion to sever should be DENIED.

         I. Background

         A. Facts

         Plaintiff Stanley J. Bryant filed suit to challenge the foreclosure sale of the real property at 2234 Dawn Shadow Way, Fresno, Texas 77545 (the “Property”). Dkt. 49 at 2. On December 20, 2005, he executed a $130, 736 mortgage note secured by a deed of trust (collectively, the “Loan”). Dkt. 20 at 3. It conveyed a security interest in the Property to CIT Group/Consumer Finance, Inc. (“CIT”), the original lender. Dkt. 20 at 3. Bryant defaulted on the Loan in 2011, allegedly because he struggled to pay the bills after experiencing medical problems. Id. at 4. He received an unequivocal notice of default and intent to accelerate the Loan from BANA in September of that year. Dkt. 54 at 2 & Ex. 4. In November, Recontrust Company, N.A.-acting for BANA, which in turn was acting for BONYM-sent Bryant a foreclosure sale notice. Dkt. 20, Ex. 2; Dkt. 54, at 2 & Ex. 4. Bryant also received five other notices of sale, the most recent of which is dated April 2016. Dkt. 54 at 2 & Exs. 2-7. Defendant BANA 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 Property was sold on April 5, 2016, to BONYM via a credit bid. Dkt. 20, Ex. 8; Dkt. 54 at 4. Bryant contends, however, that he still holds legal or equitable interest in the house. See Dkt. 20 at 4, 29.

         B. Bryant's Claims Against BANA and MERS

         Bryant asserts eleven causes of action involving BANA, MERS, or both.[2] Bryant first alleges that several documents in the chain of title-some of which were allegedly prepared by MERS or BANA-are frauds and forgeries or are otherwise inadequate, breaking the chain of assignments from the original lender, CIT, to BONYM. Dkt. 20 at 4-7. Bryant also argues that Chester Levings, who was acting as assistant secretary for MERS, did not actually sign the assignment on file with Fort Bend County Property Records and that it is void as a forgery. Id. at 5. He similarly maintains that Melanie Cowan-acting as vice president of BANA, which was acting as attorney-in-fact for BONYM-did not sign the substitute trustee document bearing her signature and that the document is therefore a forgery. Id. at 6. He also argues that the chain of title was broken because MERS failed to specify for whom it was acting as “nominee” on its assignment to BONYM and that, because MERS was not the owner of the note or deed of trust, the assignment is void. Id. at 4-6.

         Bryant's second claim is that his Loan was not properly “securitized into the 2006-BC4 Trust . . . according to that Trust's Pooling and Servicing Agreement (“PSA”) and the law of the state under which the 2006-BC4 Trust was created.” Id. at 7. He argues that the assignment on record with Fort Bend County is dated “well after the Trust's closing date” and that other relevant paperwork was improperly filed. Id. at 11-14.

         Bryant's third claim, which he labels as his first cause of action, is that BANA and MERS violated section 12.002 of the Texas Civil Practice and Remedies Code which prohibits

mak[ing], present[ing], or us[ing] a document or other record with: (1) knowledge that the document or other record is a fraudulent court record . . . (2) intent that the document or other record be given the same legal effect as a court record . . . evidencing a valid lien or claim against real or personal property or an interest in real or personal property; and (3) intent to cause another person to suffer . . . financial injury; or . . . mental anguish or emotional distress.

Tex. Civ. Prac. & Rem. Code § 12.002(a); Dkt. 20, at 20-21. He alleges that BANA and MERS violated this statute by using fraudulent mortgage assignments and trustee substitution documents that did not accurately represent their interest in the Property. Dkt. 20, at 20-22. He also pleads the discovery rule on this claim, stating that “his legal injury was inherently un-discoverable due to Defendants' conduct.” Id. at 22.

         Fourth, he contends that the actions of BANA and MERS regarding the mortgage assignments violated the following statutes and accordingly rendered BANA and MERS negligent per se: Texas Civil Practice & Remedies Code sections 12.002, 41.008(c)(8), 41.008(c)(12); Texas Local Government Code section 192.007; and Texas Penal Code sections 32.21 and 32.47. Dkt. 20 at 22-24. Bryant also argues that BANA and MERS were grossly negligent and grossly negligent per se based on violations of the same statutes. Id. at 24-25. He also pleads the discovery rule on these claims. Id. at 25.

         Fifth, Bryant brings a money had and received claim against BANA, contending that it held “money and property that in equity and good conscience belongs to Plaintiff.” Id. at 25.

         Sixth, Bryant contends that BANA was unjustly enriched by its receipt of his payments when BANA “was not the legal owner and holder of the mortgage loans, mortgage liens, mortgage Note, or Deeds of Trust.” Id. at 26. He pleads the discovery rule on this claim as well. Id.

         Seventh, he seeks a declaratory judgment against BANA and MERS regarding whether they had the authority to foreclose or ownership interest in the note. Id. at 28-29. He also seeks a declaration “that Plaintiff is entitled to the exclusive possession of the property” and that BANA and MERS have no interest in the Property. Id. at 29.

         Eighth, Bryant brings a quiet title claim against BANA and MERS, alleging that he has equitable interest in the Property. Id. He asserts that Defendants' claims to interest in the Property “constitute clouds on Plaintiff's rightful title to the Property.” Id. at 30. He seeks a declaratory judgment that “no Defendant has or had any interest in the Property at the time of sale and that Plaintiff is entitled to quiet and peaceful possession of the Property against all Defendants now and forever.” Id.

         Ninth, Bryant seeks declaratory relief against BANA and MERS because the statute of limitations “for any Defendant or their mortgage servicer to conduct a non-judicial or judicial foreclosure against the Plaintiff's Property” under Texas Civil Practice and Remedies Code section 16.035 had expired, and they took no actions that could be construed as waiver or abandonment of acceleration of the Loan. Id. at 30-31.

         Tenth, Bryant asserts that Defendants fraudulently asserted an interest in the Property or note, made attempts to collect on the Property with a broken chain of title, and failed to disclose that they were time-barred from foreclosing on the Loan. Id. at 31-32. He also pleads the discovery rule regarding this claim. Id. at 33.

         Eleventh, Bryant contends that BANA violated the Texas Debt Collection Act under Texas Financial Code sections 392.301(a)(8), 392.304(a)(14), and 392.304(a)(19). Id. at 33-34. He argues that BANA violated these provisions “by threatening foreclosure and engaging in foreclosure activity against Plaintiff, attempting to collect the mortgage Note debt from Plaintiff without legal standing to do so, ” and “filing . . . forged assignments and attempt[ing] to foreclose past the limitations period.” Id. at 34. Bryant alleges that these actions make him eligible for actual and statutory damages. Id. He also pleads the discovery rule regarding this claim. Id. Bryant also requests attorneys' fees and uncapped exemplary damages. Id. at 35-37.

         C. Motion for Summary Judgment

         BANA and MERS now move for summary judgment on all of Bryant's remaining claims. Dkt. 49 at 1, 4. Addressing Bryant's securitization challenges, BANA and MERS argue that Bryant lacks standing to assert violations of the PSA. Dkt. 49 at 5-6. Regarding his claim involving MERS and the chain of title, they argue that MERS was a beneficiary of the deed of trust, had the right to assign the deed of trust to BONYM, and “did not purport to assign the Note in the Assignment.” Id. at 9.

         Defendants assert that Bryant's negligence per se, gross negligence, and gross negligence per se claims fail because (1) they are time-barred; (2) Texas Local Government Code section 192.007 provides no cause of action and “does not require recordation of an assignment of a deed of trust;” (3) assignments are not liens under Texas Civil Practice and Remedies Code section 12.002; (4) Bryant failed to cite authority that violations of 12.002 or 192.007 constitute negligence per se or gross negligence per se; (5) he “fail[ed] to allege any facts that he belongs to the class that the statutes were intended to protect and that the statute is one for which tort liability may be imposed when violated;” (6) he failed to allege “any non-conclusory facts that Defendants' conduct caused him injury;” and (7) he failed to “allege facts showing Defendants owed him a legal duty.” Dkt. 49 at 18-19. Defendants also argue that Bryant's Penal Code violation claim fails because the statute provides no private cause of action. Id. at 19-20.

         Regarding Bryant's declaratory relief request involving the statute of limitations, Defendants argue that Bryant's allegations that the Loan was accelerated and not abandoned are conclusory. Id. at 27. Addressing the forgery allegations, BANA and MERS argue that “assignments of deeds of trust and appointments of substitute trustees are not liens, ” Bryant failed to allege sufficient facts to support the fraudulent lien claim, and the claim is time-barred. Id. at 3, 6-7. Regarding Bryant's fraudulent lien claim, Defendants argue that the claim is time-barred, the document assigning the deed of trust is not a “lien or claim” for purposes of Texas Civil Practice and Remedies Code section 12.002, Bryant's allegations are conclusory and lacking the factual support necessary to establish the elements of this claim under Texas law, and his claim should be dismissed with prejudice because he “lacks standing to challenge the Assignment.” Id. at 11-14. Responding to Bryant's money had and received claim, BANA asserts that it fails “because it is based on the flawed assignment challenges” and “because the Note and Deed of Trust govern the subject matter of the dispute.” Id. at 20. BANA and MERS argue that Bryant's unjust enrichment allegations fail “because Plaintiff does not allege sufficient facts to support such claims.” Id. at 20-21.

         BANA and MERS note that declaratory relief “is remedial in nature and dependent upon the assertion of viable causes of action.” Id. at 26. They argue none of Bryant's causes of action is viable and Bryant failed to allege in more than a conclusory fashion that Defendants did not abandon acceleration of the Loan. Id. at 27. Regarding Bryant's quiet title claim, BANA and MERS argue this claim fails both because Bryant “cannot demonstrate that he has superior title to the property” and because he has admitted that he is in default and failed to pay the amount he owes on the note. Id. at 4, 11. BANA and MERS argue “[t]he fraud claim is barred by the economic loss rule” and that Bryant failed to meet the pleading standards of Rule 9(b). Id. at 4, 21, 23-24. BANA argues that Bryant's Texas Debt ...

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