United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND OPINION
Rosenthal Chief United States District Judge
Ballard sued Carrington Mortgage Services, LLC, Bank of
America, N.A., and the Mortgage Electronic Registration
Systems, Inc. (collectively, the “Lenders”),
challenging the attempted nonjudicial foreclosure sale of his
home. He seeks damages and a declaratory judgment that the
Lenders lacked the authority to foreclose on and sell his
home. The Lenders have moved to dismiss, submitting documents
relating to Ballard's loan, default, and foreclosure.
Ballard did not respond.
careful review of the motion, the properly considered
evidence, and the applicable law, the court grants the motion
to dismiss, (Docket Entry No. 9), dismissing Ballard's
claims, without prejudice and with leave to amend by June 14,
2019. The reasons are explained in detail below.
facts are drawn from Ballard's well-pleaded allegations,
accepted as true for this motion, and the documents that
“are referred to in the pleadings and are central
to” his claims. Brand Coupon Network, L.L.C. v.
Catalina Mktg. Corp., 748 F.3d 631, 635 (5th Cir. 2014).
March 2010, Ballard obtained a $275, 793 home-mortgage loan
from Southwest Funding, L.P., to purchase a home in Fort Bend
County, Texas. (Docket Entry No. 9 at 12). Ballard signed a
Promissory Note, agreeing to repay the loan amount, and a
Deed of Trust, giving the Lenders a security interest in the
home. The Deed was recorded in the Official Public Records of
Fort Bend County. (Docket Entry No. 1-2 at 5; Docket Entry
No. 9 at 12).
Deed named the Mortgage Electronic Registration Systems,
known as MERS, as the nominee for Southwest Funding and the
Deed beneficiary. (Docket Entry No. 9 at 12). The Deed stated
that “MERS holds only legal title to the interests
granted by [Ballard] in this Security Instrument, but, if
necessary, ” MERS “has the right: to exercise any
or all of those interests, including, but not limited to, the
right to foreclose and sell the [p]property; and to take any
action required.” (Id.). Carrington Mortgage
Services serviced the loan. (Id. at 26).
Deed required Ballard to make timely payments under the Note.
(Id. at 13). A failure to pay on time would result
in default. (Id. at 14-15). If Ballard failed to
cure a default, even after receiving notice and opportunity
to do so, the Deed authorized the Lenders to “require
immediate payment in full of all sums secured by this
Security Instrument, ” called a loan acceleration.
(Id.). The Lenders had the right to foreclose on and
sell Ballard's home if he failed to pay the loan balance,
after notice and an opportunity to cure the default and
reinstate the loan. (Id. at 15-16).
December 2016, MERS assigned the Deed to the Bank of America.
(Id. at 23-24). That assignment was recorded in the
Fort Bend County Official Public Records. (Id.).
failed to make the Note payments and defaulted. The Lenders
required immediate payment of the full loan balance. Ballard
did not seek to pay any part of the loan balance. Ballard
alleged that he did not receive notice of the default or of
the acceleration, but he did not explain why. (Docket Entry
No. 1-2 at 7). The Lenders filed a notice with Fort Bend
County scheduling a foreclosure sale for November 6, 2018.
(Docket Entry No. 9 at 32). That sale was postponed because
Ballard filed bankruptcy. The Lenders then filed a notice
setting a foreclosure sale for July 3, 2018. (Id. at
29). The sale was again delayed because Ballard filed a
second bankruptcy. In January 2019, the Lenders filed a
notice with Fort Bend County that set a foreclosure sale for
March 5, 2019. (Id. at 26). The notice was
“posted at the FORT BEND County courthouse.”
the foreclosure sale, Ballard sued in the 400th Judicial
District Court of Harris County. (Docket Entry No. 1-2).
Ballard asserted Texas-law claims against the Lenders related
to the foreclosure sale, sought a declaratory judgment and
damages, and requested a temporary restraining order.
(Id. at 7-12). His state-court petition asserted
violations of the Texas Property Code and the Texas Civil
Practice and Remedies Code, as well as a quiet-title claim.
The petition alleged that: MERS lacked authority to assign
the Note and Deed; the Lenders failed to give proper notice
of acceleration or the foreclosure sale; the assignment to
Bank of America was not recorded; the Lenders failed to
perfect their security interest; and the Lenders “made,
presented, or used the assignments associated with the
mortgage loan with knowledge that the documents or other
records [were] fraudulent.” (Id. at 5-11). The
state court granted a temporary restraining order barring the
Lenders from holding the scheduled March 5 foreclosure sale.
(Docket Entry No. 1-3).
Lenders answered, removed based on diversity jurisdiction,
and then moved to dismiss. (Docket Entry Nos. 1, 1-5, 9). The
Lenders contend that: MERS, as a mortgagee, has authority to
assign the Deed to a third party; Ballard has neither
standing nor a legal basis to challenge the assignment;
Ballard's allegations do not state a plausible claim that
the Lenders' interest on his home is invalid or
unenforceable; the Deed, Note, and assignment were perfected
under Texas law; and Ballard has failed to state a plausible
claim for wrongful foreclosure. (Docket Entry No. 9 at 2-8).
has not responded to the motion to dismiss, though the
deadline to do so has expired. The Lenders' motion and
arguments are considered in detail below.