United States District Court, N.D. Texas, Dallas Division
FINDINGS, CONCLUSIONS AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
HARRIS TOLIVER UNITED STATES MAGISTRATE JUDGE.
to 28 U.S.C. § 636 and Special Order 3, this case was
referred to the undersigned United States magistrate judge
for pretrial management. Now before the Court is
Defendants' Motion to Dismiss Pursuant to Federal
Rule of Civil Procedure 12(b)(6), Doc. 5. For the
reasons stated here, the Motion should be
GRANTED, and this case should be
to Plaintiff's Original Petition
(“complaint”) and the attachments thereto, this
cause of action was precipitated by the impending foreclosure
sale of Plaintiffs' residence. In February 2007,
Plaintiffs bought the home located at 1367 Ridgeview Drive,
Cedar Hill, Texas 75104 (“the Property”). Doc.
1-1 at 8. To finance the purchase of the Property, Plaintiffs
signed a promissory note (“Note”) for $180, 473,
with GE Money Bank as the lender. Doc. 1-1 at 8, 29. The Note
was secured by a deed of trust (“Deed of Trust”)
that listed Defendant Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the nominee and
beneficiary. Doc. 1-1 at 29. Subsequently, MERS assigned the
Deed of Trust to Saxon Mortgage Services, which, years later,
assigned it to Residential Credit Solutions,
Doc. 1-1 at 45; Doc. 1-1 at 49.
filed this action in state court on May 30, 2018, to halt the
foreclosure sale of the Property. Doc. 1-1 at 7. On June 22,
2018, Defendants removed the case to this Court, based on
diversity jurisdiction, and on July 17, 2018, filed the
instant Motion seeking dismissal of all of Plaintiffs'
claims for failure to state a viable claim and lack of
defeat a motion to dismiss for failure to state a claim, a
plaintiff must plead “enough facts to state a claim to
relief that is plausible on its face.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct.
1955, 167 L.Ed.2d 929 (2007); Reliable Consultants, Inc.
v. Earle, 517 F.3d 738, 742 (5th Cir. 2008). A claim
meets the plausibility test “when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. The plausibility standard is not akin to a
‘probability requirement,' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal
citations omitted). When the allegations do not allow the
Court to infer more than the mere possibility of wrongdoing,
they fall short of showing that the pleader is entitled to
relief. Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.
ultimate question in a Rule 12(b)(6) motion is whether the
complaint states a valid claim when viewed in the light most
favorable to the plaintiff. Great Plains Trust Co. v.
Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th Cir.
2002). While well-pleaded facts of a complaint are to be
accepted as true, legal conclusions are not “entitled
to the assumption of truth.” Iqbal, 556 U.S.
at 679, 129 S.Ct. 1937 (citation omitted). Further, a court
should not strain to make inferences favorable to the
plaintiff; nor must it accept conclusory allegations,
unwarranted deductions, or legal conclusions. R2 Invs.
LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005).
initial matter, Defendants allege that Plaintiffs lack
standing to contest Defendants' right to enforce the loan
agreement, because “[a] mortgagor who is not a party to
a deed-of-trust assignment must allege a ground that would
render the assignment void to have standing to challenge the
assignment.” Doc. 6 at 5. Article III of the United
States Constitution requires that a litigant have standing to
sue in federal court. Warth v. Seldin, 422 U.S. 490,
498 (1975). Moreover, standing is a question of jurisdiction.
Bender v. Williamsport Area Sch. Dist., 475 U.S.
534, 541-42 (1986). Thus, the Court must consider the issue
of subject matter jurisdiction before addressing any other
challenge. Moran v. Kingdom of Saudi Arabia, 27 F.3d
169, 172 (5th Cir. 1994).
recognizing an intra-circuit split of authority on this
issue, this Court has held that mortgagors indeed have
standing to contest the validity of the assignment where, as
here, their claims derive from a note and a deed of trust to
which they are parties. Preston v. Seterus, Inc.,
931 F.Supp.2d 743, 754 (N.D. Tex. 2013) (Lindsay, J.) (citing
Metcalf v. Deutsche Bank Nat'l Trust Co., No.
3:11-CV-3014-D, 2012 WL 2399369, at *4 (N.D.Tex. June 26,
2012) (Fitzwater, J.)); Miller v. Homecomings Fin.,
LLC, 881 F.Supp.2d 825 (S.D.Tex. 2012)). Quoting
Miller, the Court “conclude[d] that under
Texas law homeowners have legal standing to challenge the
validity or effectiveness of any assignment or chain of
assignments under which a party claims the right to foreclose
on their property.” Preston, 931 F.Supp.2d at
754 (quoted case omitted). For the same reason, the Court
finds that Plaintiffs have standing here.
Wrongful Foreclosure Claim
elements of a wrongful foreclosure claim are: “(1) a
defect in the foreclosure sale proceedings; (2) a grossly
inadequate selling price; and (3) a causal connection between
the defect and the grossly inadequate selling price.”
Biggers v. BAC Home Loans Servicing, LP, 767
F.Supp.2d 725, 729 (N.D. Tex. 2011) (internal quotations
liberally construed, the complaint alleges that any
foreclosure sale is defective since MERS lacked the authority
to transfer the Note and Deed of Trust, as “perfection
of the lien had been lost due to bifurcation.” Doc. 1-1
at 11, 16. Plaintiffs contend that a “Broken Chain of
Assignments rendered the ‘Deed of Trust' void and
unenforceable” under the Uniform Commercial Code, and
the original lender's security interest unenforceable.
Doc. 1-1 at 11. They conclude that Defendants thus lack legal
authority to transfer or assign the Note and Deed of Trust
and to foreclose on the Property. Doc. 1-1 at ...