United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
ROSENTHAL CHIEF UNITED STATES DISTRICT JUDGE
a mortgage-foreclosure case. Saihat Corporation, which
purchased the property at a constable's sale, seeks a
declaratory judgment that it owns the property and an
injunction preventing Deutsche Bank National Trust Company,
which holds the deed of trust, from selling. (Docket Entry
No. 1, Ex. C-1). Deutsche Bank timely removed and moved to
dismiss. (Docket Entries No. 1, 3). Saihat responded and
alternatively moved for leave to file an amended complaint.
(Docket Entry No. 4). The motion for leave to amend is
granted, and the motion to dismiss is denied as moot. Saihat
must file an amended complaint that corrects the deficiencies
identified and sets out additional facts plausibly supporting
its claims by July 13, 2018.
Moya bought the property from Riku Melartin in February 2003
and recorded the contract for the sale in May 2003. In
November 2003, Melartin obtained a loan from Argent Mortgage
secured by a deed of trust for the same property he had
previously sold to Moya. After a state court entered a
judgment against Melartin, Saihat bought the property at a
constable's sale in July 2009. In October 2009, that deed
of trust was assigned to American Home Mortgage Servicing,
Inc. In December 2009, Deutsche Bank, as the trustee for
American Home Mortgage, listed the property at a
trustee's sale. Saihat argues that by doing so, Deutsche
Bank accelerated the debt, making the deed of trust
unenforceable when Deutsche Bank did not foreclose on the
property within four years of acceleration. (Docket Entry No.
1, Ex. C1) (citing Texas Civ. Prac. & Rem. Code §
The Legal Standard
15(a)(1)(B) allows parties to amend once within 21 days after
being served with a 12(b)(6) motion to dismiss. Fed.R.Civ.P.
15(a)(1)(B). When a plaintiff's complaint fails to state
a claim, the court should generally give the plaintiff a
chance to amend the complaint under Rule 15(a) before
dismissing the action with prejudice, unless it is clear that
to do so would be futile. See Great Plains Tr. Co. v.
Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329
(5th Cir. 2002) (“[D]istrict courts often afford
plaintiffs at least one opportunity to cure pleading
deficiencies before dismissing a case, unless it is clear
that the defects are incurable or the plaintiffs advise the
court that they are unwilling or unable to amend in a manner
that will avoid dismissal.”).
“should freely give leave when justice so
requires.” Fed.R.Civ.P. 15(a)(2). “[T]he language
of this rule evinces a bias in favor of granting leave to
amend.” Jones v. Robinson Prop. Grp., L.P.,
427 F.3d 987, 994 (5th Cir. 2005) (internal quotation marks
omitted). Although leave to amend should not be automatically
granted, “[a] district court must possess a substantial
reason to deny a request for leave to amend.”
Id. (internal quotation marks omitted). Under Rule
15(a), “[d]enial of leave to amend may be warranted for
undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies, undue
prejudice to the opposing party, or futility of a proposed
amendment.” United States ex rel. Steury v.
Cardinal Health, Inc., 625 F.3d 262, 270 (5th Cir.
2010). A proposed amendment is futile if “the amended
complaint would fail to state a claim upon which relief could
be granted.” Stripling v. Jordan Prod. Co.,
LLC, 234 F.3d 863, 873 (5th Cir. 2000). “[T]he
same standard of legal sufficiency as applies under Rule
12(b)(6)” applies to determining futility. Id.
(internal quotation marks omitted).
argues that Deutsche Bank does not have an enforceable deed
of trust because American Home Mortgage Servicing did not
foreclose on its deed of trust within four years from the
date of acceleration. (Docket Entry No. 1, Ex. C1). Although
a notice of trustee's sale can be part of the process of
proving that a debt was accelerated, it is not sufficient
without some indication that the notice of intent to
accelerate was provided to the borrower. Burney v.
Citigroup Glob. Markets Realty Corp., 244 S.W.3d 900,
904 (Tex. App.-Dallas 2008, no pet.) (“We find
instructive cases involving nonjudicial foreclosures that
hold that a notice of a trustee's sale is sufficient to
constitute notice of acceleration if preceded by the required
notice of intent to accelerate.”). Saihat's
state-court petition does not allege that notice of intent to
accelerate was provided to the borrower. (Docket Entry No. 1,
Ex. C-1). Without factual allegations showing that the debt
was accelerated, Saihat does not have a plausible claim for
has not amended since the case was removed to federal court.
It may file an amended complaint to cure the identified
deficiencies, including alleging that Deutsche Bank provided
the borrowers with notice of intent to accelerate, and a
fuller, more thorough description of the facts entitling it
to relief. Because an amended complaint may plausibly support
its claims against Deutsche Bank, amendment is not futile.
is no undue delay because Saihat moved for leave to amend on
May 24, 2018, two weeks after Deutsche Bank removed to
federal court. Saihat's motion is not filed in bad faith;
and amendment will not prejudice Deutsche Bank because the
case was recently removed and no hearings or an initial
conference have been held, and formal discovery has not
motion for leave to amend, (Docket Entry No. 4), is granted.
Saihat must file an amended complaint that complies with the
federal pleading standards and that corrects the deficiencies
Corporation's motion for leave to amend, (Docket Entry
No. 4), is granted, and the motion to dismiss, (Docket Entry
No. 3), is moot. Saihat ...