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Carter v. Bayview Loan Servicing LLC

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

June 11, 2019




         Before the Magistrate Judge, upon referral from the District Judge, is Defendant Bayview Loan Servicing, LLC's ("Bayview") Motion to Dismiss (Document No. 32), and Mortgage Electronic Registration Systems, Inc.'s ("MERS") Motion to Dismiss (Document No. 35). Defendants, through their respective motions, seek dismissal of all of Plaintiff s claims because Plaintiff fails to allege sufficient facts to state a plausible cause of action against Defendants Bayview and MERS upon which relief can be granted. Plaintiff has responded to the motions. (Document No. 36, 38), to which Defendants have replied. (Document Nos. 37, 40). Defendants have also filed a Motion to Abate Proceedings Pending Ruling on Motion to Dismiss. (Document No. 45). Plaintiff has not responded to the motion. Having considered the Motions, and the applicable law, the Magistrate Judge RECOMMENDS, for the reasons set forth below, that Defendant Bayview's and MERS's Motions to Dismiss both be GRANTED, and the Joint Motion to Abate Proceedings be DENIED as MOOT.

         I. Background and Allegations in Amended Complaint

         On March 2, 2018, Plaintiff Anitra Carter ("Carter" or "Plaintiff'), proceeding pro se, filed her Original Petition ("the Petition") in the 113th Judicial District Court of Harris County, Texas, Cause No. 2018-14159 (the "State Court Action"), seeking to preclude foreclosure of the property located at 6907 Plum Creek Trail Lane, Houston, Texas 77087 (the "Property"). (Defendant's Notice of Removal, Document No. 1-5). On March 15, 2018, Defendant Bayview timely removed the Action to this Court on the basis of diversity jurisdiction. (Document No. 1). On December 6, 2018, Plaintiff filed an "Original Petition Amended" (the "Amended Complaint"). (Document No. 31). In her Amended Complaint, Plaintiff alleges that, on or about February 15, 2007, Plaintiff executed a Note ("Note") and Deed of Trust ("Deed of Trust") in the amount of $155, 920.00 from America's Wholesale Lender to purchase the Property. Amended Complaint (Document No. 31, ¶ 17).[1] She further alleges that she "faithfully" made payments to Countrywide Home Loans, Inc. and Bank of America Home Loans, Inc. until she "began receiving billing statements from Bayview Loan Servicing, LLC." Amended Complaint (Document No. 31, ¶¶18-21). With respect to changes to the loan and loan servicing, Plaintiff generally alleges that she was not notified about changes to the loan or its servicing. Amended Complaint (Document No. 31, ¶ 22-24). Plaintiff alleges she "received a phone call" from "a person alleging to be working for Bayview," who indicated that she "needed to pay over eight thousand dollars" to "cure the arrears in my loan." Plaintiff alleges that she agreed that, if Bayview sent documentation showing it was "entitled to act as servicer of my loan," she would make the payment. Amended Complaint (Document No. 31, ¶ 25-26). She further alleges that she wired, through Western Union, to Bayview $8, 396.97, on or about October 12, 2016, but sent no further funds to Bayview because she had not "received any documentation from Bayview stating or showing its connection to the subject loan transaction." Amended Complaint (Document No. 21, ¶ 27-28). Plaintiff further alleges that on or about January 29, 2018, she received "Notice of Maturity/Acceleration of Texas Recourse Loan and Enclosing Notice of Substitute Trustee Sale" indicating that "Bayview was the servicer for BNY Mellon" and that the Substitute Trustee would sell the Property on March 6, 2018. Plaintiff alleges that the "Substitute Trustee Deed" shows that the Property was sold by the Substitute Trustee to "BNY Mellon as Trustee for WALT Alternative Loan Trust 2007-4CB for $ 140, 000.00 on March 6, 2018." Amended Complaint (Document No.31, ¶ 29-32). Plaintiffs Amended Complaint purports to allege claims challenging the assignment of the Deed of Trust and Note, fraud, and adverse possession Amended Complaint (Document No. 31, p. 6- 12). Plaintiff seeks actual, nominal and exemplary damages. Amended Complaint (Document No. 31, at 13). Defendants Bayview and MERS have each moved to dismiss Plaintiffs Amended Complaint. Because Defendants' motions address similar grounds for dismissal, the undersigned will address them together.

         II. Applicable law

         Because Defendants have filed a Rule 12(b)(6) motion, the undersigned Magistrate Judge construes the complaint in favor of the Plaintiff and has accepted as true all well-pleaded facts. Randall D. Wolcott, MD, PA v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (citing Gonzales v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)). "To survive a motion to dismiss, a 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)). A claim is plausible if the complaint contains "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. Plausibility will not be found where the claim alleged in the complaint is based solely on legal conclusions, or a "formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555. In addition, plausibility will not be found where the complaint "pleads facts that are merely consistent with a defendant's liability" but "stops short of the line between possibility and plausibility" or where the complaint is made up of '"naked assertions devoid of further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557)). The Supreme Court has further held that plausibility, not sheer possibility or even conceivability, is required to survive a Rule 12(b)(6) motion to dismiss. Twombly, 550 U.S. at 556-557; Iqbal, 556 U.S. at 678-680. "[T]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice" under Rule 12(b). Iqbal, 556 U.S. at 678. Therefore, a Plaintiff must plead specific facts, not merely conclusory allegations to avoid dismissal. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). A court is not bound to accept as true "a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

         The Court may consider any documents attached to the complaint and any documents attached to a motion to dismiss that are central to the claim referenced by the complaint. See Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). Also, the court may take judicial notice of matters of public record. See Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011). The Magistrate Judge has, therefore, considered the documents attached to Defendant Bayview's Motion (Document No. 32, Exhibits A-C); to Defendant MERS' Motion to Dismiss (Document No. 35, Exhibits A-C); and to Plaintiffs Response. (Document No. 36). The undersigned has also taken judicial notice of matters contained in public records. Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007).

         III. The Relevant Documents

         Plaintiff obtained a loan from America's Wholesale Lender to purchase the Property. On or about February 15, 2007, Plaintiff executed a promissory note in the amount of $155, 920.00 and a Deed of Trust. (Exhibit A to Document Nos. 32 & 35). The Deed of Trust names MERS as the beneficiary as nominee for America's Wholesale Lender and its successors and assigns. The Security Instrument was filed in the Official Public Records of Harris County, Texas as Instrument No. 20070111903 on February 22, 2007. In September 2012, MERS assigned the Deed of Trust to the Bank of New York Mellon FKA The Bank of New York, as Trustee (WALT 2007-4CB). (Exhibit B to Document Nos. 32 & 35). The Assignment was filed in the Official Public Records of Harris County, Texas on September 18, 2012 as Instrument No. 20120429876. The Substitute Trustee's Deed of Sale shows that the Property was bought by The Bank of New York Mellon FKA The Bank of New York, as Trustee (WALT 2007-4CB) on March 6, 2018. (Exhibit C to Document Nos. 32 & 35). The Substitute Trustee's Deed was filed in the Official Public Records of Harris County, Texas as Instrument No. RP-2018-165062.

         IV. Discussion

         Defendants move to dismiss Plaintiffs claims relating to the Deed of Trust and Assignment because such claims fail as a matter of law. The Magistrate Judge agrees.

         Plaintiff alleges, in pertinent part, that the Deed of Trust is a "legal nullity" because America's Wholesale Lender, "never existed and therefore could not have contracted with Plaintiff concerning the subject property." Amended Complaint (Document No. 31, ¶ 34-39). In Sparks v. The Bank of New York Mellon, No. H-14-813, 2015 WL 4093944 at * 3 (S.D.Tex. July 7, 2015), the plaintiff similarly argued that the original lender and payee on the Note, America's Wholesale Lender never existed, and therefore the Note was void and could not be assigned. The Court rejected this argument, writing: [T]he Court takes judicial notice that the entity known as American's Wholesale Lender has been a party to other litigation in this Court, and the Court previously observed that 'America's Wholesale Lender is the trade name for Countrywide Home Loans.'" Id. (quoting Benitez v. America's Wholesale Lender, No. Civ. A. H-14-953, 2014 WL 3388650, at *1 n.3 (S.D.Tex. July 9, 2014)(Werlein, J)); and see Ostberg v. Bank of Am., N.A., No. 05-17-00255-CV, 2018 WL 2749695, at *3 & n. 3 (Tex. App.- Dallas May 31, 2018, pet. denied)(rejecting claim that America's Wholesale Lender did not exist because "New York Corporation Countrywide Homes Loans, Inc., existed in 2005 and was entitled to use the name America's Wholesale Lender when it transacted business in Texas.). Thus Plaintiffs claim fails as a matter of law.

         As for Plaintiffs claim that the Deed of Trust did not provide for MERS to assign the mortgage, and therefore any assignment is void, the Fifth Circuit has ruled otherwise. The Fifth Circuit has "repeatedly upheld MERS assignment of mortgages to other entities" because, under Texas law, MERS "qualifies as a mortgagee." Van Dozer v. U.S. Bank Nat'l Ass 'n, 582 Fed.Appx. 279, 282 (5th Cir. 2014)(citing Martins v. Bac Home Loans Servicing, LP, 722 F.3d 249, 255 (5thCir. 2013). Under Texas law, either a mortgagee or a mortgage servicer may foreclose on a property. Martins, 722 F.3d at 255. A mortgage servicer is "the last person to whom the mortgagor has been instructed by the current mortgagee to send payment for the debt secured by a security instrument. Tex.Prop.Code § 51.0001(3). There is no additional requirement that the mortgagee or mortgage servicer also be the owner or holder of the mortgage note." Martins, 722 F.3d at 254; Epstein v. U.S. Bank Nat'l Ass 'n, 540 F.Appx. 354, 356 (5th Cir. 2013 ("Under Texas law, a mortgagee or mortgage servicer is permitted to foreclose on a house without holding the note."); Reece v. U.S. Nat'l Ass 'n, 762 F.3d 422, 425 (5th Cir. 2014)("Our Court has expressly recognized that MERS may assign a deed of trust to a third party and that such assignments confer the new assignee standing to non-judicially foreclose on property associated with that particular deed of trust."); Bellforest Trust v. U.S. Bank, Nat'l Ass'n for JP ALT 2006-S1, No. 4:17-CV-1586, 2018 WL 706467, at *2 (S.D.Tex. Feb. 5, 2018).

         As for Plaintiff s allegations that the Assignment is "fraudulent" and a "legal nullity" because it allegedly violated the terms of the Pooling and Servicing Agreement and/or other Governing Agreements, and because it was executed by Raymond Marquez, who allegedly was not an authorized signer of America's Wholesale Lender or MERS, Plaintiff s claims fail as a matter of law. "[T]he law is settled in Texas that an obligor cannot defend against an assignee's efforts to enforce the obligation on a ground that merely renders the assignment voidable at the election of the assignor..." Reinagel v. Deutsche Bank Nat'l Trust Co.,735 F.3d 220, 224 (5th Cir. 2013)(internal quotations omitted)(concluding that the plaintiffs' allegations that an assignment was void because the person who executed the assignment lacked authority and the signature on the documents was a "forgery" did not give them standing to challenge the assignment because, under Texas law, "a contract executed on behalf of a corporation by a person fraudulently purporting to be a corporation by a person fraudulently purporting to be a corporate officer is, like any other unauthorized contract, not void, but merely voidable at the election of the defrauded principal."). Put simply, "Texas courts follow the majority rule that the obligor may defend on any ground which renders the assignment void." Id. Here, Plaintiff s allegations based on the lack of authority of Raymond Marquez would render the assignment voidable under Reinagel, and as such, Plaintiff does not have standing to challenge the assignment. See also Van Dozer v. U.S. Bank Nat'l Assoc, No. H-13-1398, 995 F.Supp.2d 673, 2014 WL 357878, at *8 (S.D. Tex. Jan. 31, 2014)(finding plaintiffs' challenge of the signer's lack of authority would render the assignment voidable and did not furnish plaintiffs with a basis to ...

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