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Rodriguez v. U.S. Bank N. A.

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

March 1, 2019

Joanne Rodriguez, Plaintiff,
U.S. Bank, N.A. and Select Portfolio Servicing, Inc., Defendants.



         Pursuant to 28 U.S.C. § 636(b) and the District Judge's Pretrial Management Order, Doc. 8, this case has been referred to the undersigned United States magistrate judge. Now before the Court is Defendants' Motion to Dismiss. Doc. 5. For the reasons that follow, Defendants' motion should be GRANTED IN PART.

         A. Procedural Background

         In August 2018, Plaintiff, who is represented by counsel, filed a petition against Defendants in state court seeking to prevent the impending foreclosure of her home (the “Property”). Doc. 1-5 at 2. She alleged (1) violations of Texas Property Code subsections 51.002(b)&(d) in connection with Defendants' attempts to foreclose and lack of proper notice; (2) violation of Texas Debt Collection Act (“TDCA”) sections 392.301(a)(8), 392.303(a)(2), and 392.304(a)(8)&(19), in connection with Defendants' debt collection activities; and (3) breach of contract, namely the deed of trust (“DOT”) governing the Property. Doc. 1-5 at 4-9. Plaintiff also sought injunctive and declaratory relief. Doc. 1-5 at 9-10. Defendants removed the case to this Court in August 2018 and filed the instant motion to dismiss thereafter. Doc. 1; Doc. 5.

         B. Applicable Law

         A plaintiff fails to state a claim for relief under Rule 12(b)(6) when the complaint does not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In order to overcome a Rule 12(b)(6) motion, a plaintiff's complaint should “contain either direct allegations on every material point necessary to sustain a recovery . . . or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial.” Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (quotation omitted).

         When considering a Rule 12(b)(6) motion, a court may consider documents outside the complaint when they are: (1) attached to the motion to dismiss; (2) referenced in the complaint; and (3) central to the plaintiff's claims. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). Additionally, a court may take judicial notice of matters of public record without converting a motion to dismiss into a motion for summary judgment. See Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (“Generally, a court ruling on a 12(b)(6) motion may rely on the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.”) (citation and quotation marks omitted).

         C. Parties' Arguments and Analysis

         1. Plaintiff's Challenge to Defendants' Authority to Foreclose

         As an initial matter, Plaintiff appears to claim in her petition that Defendants cannot enforce the DOT or foreclose on the Property because: (1) there is no recorded assignment for transfer of the DOT securing the Property from the original mortgagee, WMC Mortgage Corporation (“WMC”), to any another entity; (2) Defendant U.S. Bank NA (“U.S. Bank”) thus did not have the capacity as mortgagee to appoint Select Portfolio Servicing (“SPS”) as substitute trustee; and (3) as a result, Defendants cannot conduct a trustee's sale of the Property. Doc. 1-5 at 4-5.

         In their motion to dismiss, Defendants assert that (1) there is no legal requirement that an assignment of a DOT must be recorded prior to foreclosure; and (2) in any event, the assignment was publicly recorded and demonstrates that U.S. Bank is the mortgagee of record with the power to enforce the DOT, and SPS may administer the foreclosure on behalf of U.S. Bank. Doc. 5 at 12-13; see Doc. 6 at 25 (“Corporate Assignment of Deed of Trust, ” electronically recorded on January 11, 2013, providing that MERS “as nominee for [WMC], it successors and assigns” assigns the DOT to U.S. Bank).

         Plaintiff responds that WMC no longer existed when the DOT was purportedly assigned by WMC to U.S. Bank in January 2013, because WMC had merged with another entity and been dissolved years earlier. Doc. 10 at 4-5; see also Doc. 15 at 3 (Plaintiff's Appendix containing State of California Secretary of State certificate of filing, which shows that [a] WMC, a California corporation, had merged into WMC Finance Co., a Delaware corporation; and [b] WMC would “cease to exist” on December 28, 2007).

         Upon consideration, the Court concludes that Plaintiff's argument lacks merit. A review of the relevant documents indicates that the DOT between Plaintiff and WMC was signed in May 2006. Doc. 6 at 4. The DOT specifies that WMC is the lender and lists Mortgage Electronic Registration System (“MERS”) as the beneficiary of the DOT and as nominee for WMC and its successors and assigns. Doc. 6 at 4-5. In January 2013, MERS, “as nominee for [WMC], its successors and assigns” assigned the DOT to U.S. Bank. Doc. 6 at 25. The assignment was recorded shortly thereafter. Doc. 6 at 25. Plaintiff has provided proof that WMC was no longer in existence as of December 2007. Doc. 15 at 3. Even so, the 2013 assignment of the DOT from MERS to U.S. Bank is not void because WMC previously had merged into WMC Finance Co., which thus became WMC's “successor” by merger. See Marban v. PNC Mortg., No. 3:12-CV-3952-M, 2013 WL 3356285 at *5 (N.D. Tex. July 3, 2013) (Lynn, J.) (“Here, as the original Lender, National was the ‘beneficiary' under the deed of trust and therefore the mortgagee of Plaintiffs' mortgage. Upon its merger with National, Defendant, as the surviving entity, automatically acquired National's status as Lender and mortgagee, as well as all of its interests in property.”); see also Lewis v. Wells Fargo Bank, NA, 939 F.Supp.2d 634, 638 (N.D. Tex. 2013) (“Wells Fargo's authority to foreclose derives, not from an assignment, but from the fact that it is the successor by merger” with another entity). As such, MERS had the ability to assign the DOT to U.S. Bank.

         2. Violations of the Texas Property Code Section 51.002 and Wrongful Foreclosure

         Defendants next assert that there is no private right of action under section 51.002, and courts have instead construed such claims as claims for wrongful foreclosure, which Plaintiff cannot demonstrate because (1) she does not state in her petition that any foreclosure sale occurred; and (2) she is allegedly still in possession of the Property. Doc. 5 at 13-16. Plaintiff concedes that there is no private cause of action under section 51.002, but asserts that mortgagees and mortgage servicers must still abide by section 51.002's notice mandates and did not do so in this case. Doc. 10 at 5-6.

         As the parties acknowledge, section 51.002 provides no private cause of action, and the case law supports that conclusion. See, e.g., Rucker v. Bank of Am., N.A., 806 F.3d 828, 831 (5th Cir. 2015) (citation omitted); Ashton v. BAC Home Loans Serv., L.P., No. 4:13-CV-810, 2013 WL 3807756, at *4 (S.D. Tex. July 19, 2013); Hill v. Wells Fargo Bank, N.A., No. V-12-11, 2012 WL 2065377, at *7 (S.D. Tex. June 6, 2012)). Thus, Plaintiff's claim sounds in wrongful foreclosure. See Foster v. Deutsche Bank Nat'l Tr. Co., 848 F.3d 403, 406 (5th Cir. 2017) (per curiam) (citing Marsh v. Wells Fargo Bank, N.A., 760 F.Supp. 2d 701, 708 (N.D. Tex. 2011) for the proposition that a trustee's failure to comply with the notice provisions of section 51.002 is not an independent tort and, instead, yields a cause of action for wrongful foreclosure).

         Plaintiff states in her petition that she resides at the Property, describes Defendants' threats to foreclose, and seeks an injunction to bar any foreclosure sale. Doc. 1-5 at 2-9. Because no foreclosure sale has occurred, her construed wrongful foreclosure claim fails.[1] Foster, 848 F.3d at 406.

         3. ...

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