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White v. Ameriquest Mortgage

United States District Court, S.D. Texas, Houston Division

May 30, 2019

AMERIQUEST MORTGAGE, et al., Defendants.


          Lee H. Rosenthal Chief United States District Judge.

         In October 2018, Joseph White and Rebecca White, representing themselves, sued Ameriquest Mortgage Company; Wells Fargo Bank, N.A.; Structured Asset Mortgage Investments II Inc.; JPMorgan Chase Bank, N.A.; Issuing Entity Trust Bear Stearns ALT-A Trust 2005-5; and other unnamed defendants over a foreclosure dispute. Seeking injunctive and declaratory relief, damages, and to quiet title, the Whites allege wrongful foreclosure; unjust enrichment; violations of the Fair Debt Collection Practices Act and Pennsylvania's Fair Credit Extension Uniformity Act; slander of title; fraud in the concealment and fraud in the inducement; contract breach, rescission, and unconscionability; intentional and negligent infliction of emotional distress; and a RICO violation. The defendants have moved for summary judgment and to dismiss, submitting documents related to the mortgage, default, and foreclosure. The Whites have not responded or requested more time to do so.

         After a careful review of the complaint, the motion, the record evidence, and the applicable law, the court grants the defendants' motion for summary judgment. (Docket Entry No. 16). An order of final judgment is separately entered.

         The reasons are explained in detail below.

         I. Background

         In March 2005, the Whites obtained a $136, 000 home-mortgage loan from Ameriquest Mortgage Company. (Docket Entry No. 16-1 at 1). Their promissory note required them to make payments on the first day of each month for 30 years beginning on May 1, 2005. (Id.). The Whites were required to pay $859.62 each month until April 1, 2010, when the loan's interest rate became adjustable. (Id. at 1-2). From then, the interest rate was based on the London Inter-Bank Offered Rate index, meaning that the interest rate and the amount owed by the Whites each month were subject to change. (Id. at 2). The note provided that the interest rate would be recalculated every six months, and that the Whites would be in default if they did “not pay the full amount of each monthly payment” when due. (Id. at 2-3). A default meant that the defendants could send the Whites notice that they had to pay the overdue amount within 30 days, or their entire loan balance would become immediately due. (Id. at 3).

         The Whites' deed of trust also required them to make timely payments under the note. (Docket Entry No. 16-2 at 4). If the Whites missed payments and did not repay the overdue amounts, even after receiving notice and time to do so, the deed allowed the defendants to demand “immediate payment” of the full loan balance. (Id. at 13). After giving the Whites notice and an opportunity to reinstate the loan, the defendants had the right to sell the Whites' home if they failed to pay the amount due. (Id. at 14).

         The deed stated that Ameriquest, the trustee, could add or appoint successor trustees “at its option” and “without the necessity of any formality other than a [written] designation” by Ameriquest. (Id. at 15). Ameriquest assigned the deed to JPMorgan, and JPMorgan later assigned the deed to Bank of New York Mellon. (See Docket Entry Nos. 16-3, 16-4). Under the second assignment, Bank of New York Mellon became JPMorgan's successor in interest and trustee for Structured Asset Mortgage Investments II Inc., Bear Sterns ALT-A Trust, and Mortgage Pass-Through Certificates, Series 2005-5. (Docket Entry No. 16-4 at 1). The assignments were recorded in the official public records of Harris County. (Docket Entry No. 16 at 16).

         The Whites stopped making loan payments in January 2018. (Docket Entry No. 16-6 at 2- 3). In February 2018, Specialized Loan Servicing LLC, the loan servicer, sent the Whites written notice that they were in default and owed $1, 672.61, giving them 33 days to cure. (Docket Entry No. 16-7 at 1). The notice reminded the Whites that failing to make the necessary payment by the deadline could result in the full loan balance becoming due and the sale of their home. (Id.).

         The Whites did not cure the default. (Docket Entry No. 16-6 at 2-3). In August 2018, Bank of New York Mellon accelerated the loan and petitioned the 164th Judicial District Court of Harris County for an expedited foreclosure order. (Docket Entry No. 16-8). In December 2018, the court entered a default order permitting Bank of New York Mellon to foreclose on the Whites' home. (Docket Entry No. 16-9). On January 10, 2019, Bank of New York Mellon served the Whites written notice that a foreclosure sale was scheduled for February 5, 2019. (Docket Entry No. 16 at 6-7; Docket Entry No. 16-11 at 1). Bank of New York Mellon posted notice of the scheduled sale on January 14, 2019. (Docket Entry No. 16-10).

         The Whites sued the defendants in this court in October 2018, asking for a temporary restraining order, permanent and preliminary injunctions, and declaratory relief. (Docket Entry Nos. 1, 2). The court declined to hold ex parte hearings and directed the Whites to serve the defendants. (Docket Entry Nos. 4, 11). Bank of New York Mellon received a summons on January 22, 2019, just two weeks before the foreclosure sale. (Docket Entry No. 16 at 7). Because the Whites challenged the foreclosure in federal court, the sale was automatically stayed under Texas Rule of Civil Procedure 736.11. (Id.).

         The defendants have moved for summary judgment and to dismiss for failure to state a claim, arguing that the record shows that the Whites defaulted; received proper notice of the default and of the foreclosure sale; and did not cure the default. The defendants also argue that the Whites lack standing to challenge the deed assignments; their quiet-title and slander-of-title claims lacks merit; no misrepresentations were made to the Whites as to the loan, default, assignment, or foreclosure sale; and that the Whites, not the defendants, breached the note and deed.

         II. The Legal Standards A. Rule 12(b)(6)

         Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A complaint must 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). Rule 8 “does not require ‘detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “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.” Id. (quoting Twombly, 550 U.S. at 556).

         “To withstand a Rule 12(b)(6) motion, [a] complaint must allege ‘more than labels and conclusions, '” and “a formulaic recitation of the elements of a cause of action will not do.” Norris v. Hearst Tr., 500 F.3d 454, 464 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (alteration in original) (quoting Twombly, 550 U.S. at 557). “[A] complaint ‘does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief-including factual allegations that when assumed to be true ‘raise a right to relief above the speculative level.'” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “Conversely, when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court.” Id. (quotation and alteration omitted) (quoting Twombly, 550 U.S. at 558).

         When a complaint fails to state a claim, the court should generally give the plaintiff a chance to amend under Rule 15(a) before dismissing the action with prejudice, unless it is clear that to do so would be futile. See Carroll v. Fort James Corp., 470 F.3d 1171, 1175 (5th Cir. 2006) (Rule 15(a) “evinces a bias in favor of granting leave to amend”); Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002) (“[D]istrict courts often afford plaintiffs at least one opportunity to cure pleading deficiencies before dismissing a case, unless it is clear that the defects are incurable or the plaintiffs advise the court that they are unwilling or unable to amend in a manner that will avoid dismissal.”). A court has discretion to deny a motion to amend for futility if the amended complaint would fail to state a plausible claim. Villarreal v. Wells Fargo Bank, N.A., 814 F.3d 763, 766 (5th Cir. 2016).

         B. Rule 9(b)

         Under Rule 9(b), in “alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “At a minimum, Rule 9(b) requires that a plaintiff set forth the ‘who, what, when, where, and how' of the alleged fraud.” United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (citing Williams v. WMX Techs., Inc., 112 F.3d 175, 179 (5th Cir. 1997)). The pleader must “specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Williams, 112 F.3d at 177. A claim that a fraud allegation is not made with particularity is properly raised by a Rule 12(b)(6) motion to dismiss. United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 n.8 (5th Cir. 2009).

         C. Rule 56

         “Summary judgment is appropriate only when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Shepherd on Behalf of Estate of Shepherd v. City of Shreveport, 920 F.3d 278, 282-83 (5th Cir. 2019) (quoting Fed.R.Civ.P. 56(a)). “A material fact is one that might affect the outcome of the suit under governing law, ” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018) (quotations and citations omitted). The moving party “always bears the initial responsibility of informing the district court of the basis ...

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