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(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.
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.
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)
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).
Parties' Arguments and Analysis
Plaintiff's Challenge to Defendants' Authority to
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
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).
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).
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.
Violations of the Texas Property Code Section 51.002 and
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.
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
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. Foster,
848 F.3d at 406.