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Halton v. Select Portafolio Servicing Inc.

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

March 3, 2019

REWA C. HALTON, Plaintiff,


         Before the Court in this pro se civil action is Defendants Select Portfolio Servicing, Inc. and Mortgage Electronic Registration Systems, Inc.'s Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim (ECF No. 9). For the reasons stated, the motion should be GRANTED.


         This lawsuit arises out of the foreclosure of residential property located in Dallas, Texas (the “Property”). Pl.'s Compl. 2 (ECF No. 3). On September 22, 2005, Plaintiff Rewa C. Halton (“Halton”) and her husband Rodney G. Halton obtained a mortgage loan (the “Loan”) from Long Beach Mortgage Company (“Long Beach”) for the Property. Defs.' Mot. 8. In connection with the Loan, the Haltons executed a promissory note (the “Note”) and a deed of trust (the “Deed of Trust”) in favor of Long Beach.[1] Thereafter, Long Beach assigned the Deed of Trust to Deutsche Bank National Trust Company, as Trustee, in trust for registered Holders of Long Beach Mortgage Loan Trust 2006-WL2, Asset-Backed Certificates, Series 2006-WL2.[2]

         On April 4, 2018, Halton filed this lawsuit to stop foreclosure proceedings initiated against the Property. As best the Court understands her complaint, Halton alleges that any default on the Loan was the result of poor recordkeeping or other wrongdoing by Defendants Select Portfolio Servicing, Inc. (“SPS”)-the current mortgage servicer-and Mortgage Electronic Registration Systems, Inc. (“MERS”), as well as “Doe Insurance Company” and 1-20 “Doe Defendants.” See Pl.'s Compl. She further appears to allege that Doe Insurance Company and the other Doe Defendants wrongfully profited from an insurance policy purportedly in place to compensate them if Halton defaulted on the Loan. Id. 3-4. Additionally, she maintains that if some entity was compensated for her default, the Property is not subject to foreclosure. Id. Lastly, she alleges her obligations under the Loan were extinguished. Id. Her complaint asserts claims for: (1) negligence; (2) fraudulent misrepresentation, deceit, and concealment by deceptive account maintenance and fraudulent intent causing foreclosure; (3) breach of two written contracts; (4) unjust enrichment (by conversion) and restitution; and (5) trespass to try title and quiet title. In addition to damages, Plaintiff seeks declaratory and injunctive relief, an accounting, and attorneys' fees.

         Defendants filed their Rule 12(b)(6) motion on May 11, 2018, arguing that Halton failed to state a claim for any alleged cause of action. Halton failed to respond to the motion, so the Court considers Defendants' motion without the benefit of a response.

         Legal Standard

         To survive Defendants' Rule 12(b)(6) motion to dismiss, Halton's complaint “must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Halton's factual allegations must “‘raise [her] right to relief above the speculative level, '” but they do not need to be detailed. Lee v. Verizon Commc'ns, Inc., 837 F.3d 523, 533 (5th Cir. 2016) (citing Rosenblatt v. United Way of Greater Hous., 607 F.3d 413, 417 (5th Cir. 2010)). Halton's claims have facial plausibility if she “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

         The Court must “accept all well-pleaded facts as true and construe the complaint in the light most favorable to [Halton].” In re Great Lakes Dredge & Dock Co. LLC, 624 F.3d 201, 210 (5th Cir. 2010) (citing Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir. 2008)). However, the Court does not accept as true “‘conclusory allegations, unwarranted factual inferences, or legal conclusions.'” Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007) (quoting Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005)).

         Additionally, it is well-established that “pro se complaints are held to less stringent standards than formal pleadings drafted by lawyers.” Miller v. Stanmore, 636 F.2d 986, 988 (5th Cir. Unit A Feb. 1981) (citing Haines v. Kerner, 404 U.S. 519, 520 (1972) (per curiam)). However, regardless of whether the plaintiff is proceeding pro se or is represented by counsel, pleadings must show specific, well-pleaded facts, not mere conclusory allegations, to avoid dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992) (citing Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989)).


         A. Negligence Claim[3]

         Halton first alleges that Defendants were negligent in servicing the Loan by failing to keep an accurate accounting of, or properly credit, her payments and by preparing and filing false and inaccurate documents. Pl.'s Compl. 4-5, ¶ 17-18. Defendants argue that these allegations fail to state a claim as a matter of law because (1) Plaintiff's claim for negligence is barred by the economic loss rule, and (2) Defendants owed no tort duty to Halton. Defs.' Mot. 11, ¶ 1-2.

         Under Texas law, the elements of a negligence claim are: (1) a legal duty owed by one person to another; (2) breach of that duty; and (3) damages proximately caused by the breach. Lane v. Halliburton, 529 F.3d 548, 565 (5th Cir. 2008) (citing Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453, 466 (5th Cir. 2003)); see also Nabors Drilling, USA, Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009) (quoting D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002)). However, “there is no special relationship between a mortgagor and a mortgagee, or between a servicer and a borrower, that would impose an independent common law duty on Defendant[s].” Miller v. CitiMortgage, Inc., 970 F.Supp.2d 568, 585 (N.D. Tex. 2013) (citing Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962); UMLIC VP LLC v. T & M Sales & Envtl. Sys., Inc., 176 S.W.3d 595, 613-15 (Tex. App.-Corpus Christi 2005, pet. denied); Fraley v. BAC Home Loans Servicing, LP, 2012 WL 779130, at *8 (N.D. Tex. Jan. 10, 2012), adopted by 2012 WL 779654 (N.D. Tex. Mar. 9, 2012); see also Riley v. Wells Fargo Bank, N.A., 2014 WL 129397, at *8 (S.D. Tex. Jan. 8, 2014) (citations omitted) (“In the mortgage context, there is, as a matter of law, no such legal duty that would give rise to a negligence claim.”). Although Halton states that Defendants “had a duty to exercise reasonable care and skill to maintain proper and accurate loan records, ” and that they owed her a “duty of care and skill . . . in the servicing of [her] loan, ” she has failed to plead Defendants owed her any legal duty recognized under Texas law. Pl.'s Compl. 4-5, ¶ 17-18. Even accepting as true any nonconclusory facts alleged in her complaint, Halton cannot state a negligence claim because she cannot plead Defendants owed her a tort duty. Accordingly, her claim for negligence should be dismissed.

         Because Halton cannot plead that Defendants owed her a legal duty, the Court pretermits consideration of Defendants' ...

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