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Tolliver v. Bank of New York Mellon

United States District Court, N.D. Texas, Fort Worth Division

August 5, 2019

ROY E. TOLLIVER, JR., Plaintiff,



         Before the Court are the Motion to Dismiss (ECF No. 8) with Brief and Appendix in Support (ECF Nos. 9-10) filed February 11, 2019 by Defendant Bank of New York Mellon fka The Bank of New York, as Trustee for the certificate holders of CWABS Inc., asset backed certificates, series 2007-3 (“BoNYM”); Plaintiff's Motion for Leave to Amend and Supplement Complaint and for Joinder of Additional Parties (ECF No. 18) filed March 18, 2019 and combined Reply to BoNYM's Motion to Dismiss and Brief in Support of Plaintiff's Motion for Leave to Amend (ECF No. 21) filed March 23, 2019; and BoNYM's Response to Plaintiff's Motion for Leave to Amend (ECF No. 25) with Brief and Appendix in Support (ECF Nos. 26-27) filed April 1, 2019; BoNYM's Reply in Support of Motion to Dismiss (ECF. No. 28) filed April 2, 2019; and Plaintiff's Reply in support of his Motion for Leave to Amend (ECF No. 30) filed April 15, 2019. This case was automatically referred by United States District Judge Reed O'Connor to the undersigned for pretrial management pursuant to Special Order 3-251 on December 10, 2018. (See ECF No. 3). After considering the pleadings and applicable legal authorities, the undersigned RECOMMENDS that Judge O'Connor GRANT Defendant's Motion to Dismiss (ECF No. 8) and DISMISS WITH PREJUDICE Plaintiff's claims.


         Plaintiff Roy E. Tolliver, Jr. (“Tolliver”) sued Defendant BoNYM in his original state court petition for quiet title, fraud, breach of contract, violations of the Texas Debt Collection Act (“TDCA”), action for declaratory relief, trespass to try title, for wrongful foreclosure, and for violation of the Texas Deceptive Trade Practices Act (“DTPA”), all concerning BoNYM's actions related to the property located at 2509 Featherstone Court, Arlington, Texas 76001 (the “Property”). (ECF No. 1-2). He sought declaratory and various injunctive relief, actual, statutory, and punitive damages, and attorney fees. (Id.). On December 10, 2018, BoNYM timely removed the case to this Court on the basis of diversity jurisdiction. (ECF No. 1).

         As more fully described below, Tolliver's Second Amended Complaint (“SAC”) (ECF No. 18-1) is the live pleading in this case. Accordingly, the following allegations, taken as true, are derived from Tolliver's SAC and attachments referred to by the SAC and that are central to the case. Tolliver alleges he and his spouse, Sheryl Dickerson, purchased the Property in January 2007. (Id. at 5). Tolliver and Ms. Dickerson were informally married on October 25, 2005. (Id. at 4). On January 24, 2007, Tolliver and Ms. Dickerson signed a Declaration and Registration of Informal Marriage, which was filed with the County Clerk of Tarrant County. (ECF No. 18-2 at 5). In the declaration, Tolliver and Ms. Dickerson stated their informal marriage began on October 25, 2005. (Id.).

         In connection with the purchase, a Note in the principal amount of $441, 000.00 and a Deed of Trust that granted a security interest in the Property to secure repayment of the Note was executed. Both the Note and the Deed of Trust (together, the “Loan”) are attached to the SAC and referred to by Tolliver in the SAC. (ECF No. 18-2 at 7-9, 16-31). Tolliver alleges the Note and Deed of Trust were executed by a “fictitious entity, ” America's Wholesale Lender (“AWL”). (ECF No. 18-1 at 10). The Deed of Trust, dated January 30, 2007, states the Borrower is Ms. Dickerson, who is described as a single person, and the Lender is America's Wholesale Lender. (ECF No. 18-2 at 16). The Deed of Trust and Note are only executed by Ms. Dickerson. (Id. at 9, 30). The Deed of Trust was recorded February 2, 2007 in the Real Property Records of Tarrant County, Texas as Instrument Number D207039416. (Id. at 40).

         The Loan was modified on April 23, 2010 by Ms. Dickerson and BAC Home Servicing, L.P. (“BAC”). (ECF No. 18-1 at 6). Tolliver attached the loan modification agreement to the SAC. (ECF No. 18-2 at 54-59). The Home Affordable Modification Agreement referred to by Tolliver states the loan will become effective on May 1, 2010. (Id. at 55). The modification agreement was signed by Ms. Dickerson on April 23, 2010 and by Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for BAC, on May 10, 2010. (Id. at 59). Tolliver was not a signatory to the modification agreement.

         Tolliver also attached to the SAC a second loan modification agreement. (ECF No. 18-2 at 62-67). Ms. Dickerson and Bank of America, N.A. (“BANA”) executed the agreement. (Id.). This modification agreement reamortized the principal due under the Note, which was $410, 378.87(Id. at 63). The first new payment under the reamortization agreement was due on May 1, 2016. (Id.). Although Ms. Dickerson (Ms. Tolliver at the time) signed the reamortization agreement March 31, 2016, BANA did not sign the modification agreement until August 2, 2016. (Id. at 66-67).

         Initially, MERS, as beneficiary, held the Deed of Trust as nominee for AWL, the Lender. (Id. at 17). On August 17, 2017, MERS, as nominee for AWL and its successors and assigns, assigned the Deed of Trust to BoNYM, and the assignment was recorded on August 21, 2017 in the Real Property Records of Tarrant County, Texas as Instrument Number D217192643. (ECF No. 18-1 at 20; ECF No. 18-2 at 269-270) (the “Assignment”). The Assignment also is attached to the SAC and referred to by Tolliver. Thereafter, BANA, as servicer, executed on behalf of BoNYM an Appointment of Substitute Trustee on November 1, 2017, removing the original trustee and appointing new trustees. (Id. at 6; ECF No. 18-2 at 71-72). On November 21, 2017, the 231st Judicial District Court of Tarrant County, Texas appointed a receiver for the Property to forestall foreclosure during pendency of divorce proceedings mentioned below. (Id. at 7; ECF No. 18-2 at). Tolliver alleges that BoNYM first initiated foreclosure proceedings on December 5, 2017 and continued to do so through 2018, citing to Exhibit 9. (Id.). Exhibit 9 contains a Residential Contract for the Property that shows the Receiver as the Seller with a closing date of October 31, 2018. (ECF No. 18-2 at 77). A Notice of Substitute Trustee Sale shows a foreclosure sale of the Property scheduled on February 2, 2018. (Id. at 93-94).

         Eventually Ms. Dickerson moved out of the Property and filed for divorce in May 2017. (ECF No. 18-1 at 6). Tolliver and Ms. Dickerson entered into a Rule 11 Agreement awarding the Property to Tolliver, which was read into the record in their divorce proceedings on December 18, 2018. (Id.; ECF No. 18-2 at 96-126). Ms. Dickerson executed a Special Warranty Deed conveying the Property to Tolliver on March 9, 2018. (Id. at 7; ECF No. 18-2 at 128-131). The Special Warranty Deed states as consideration for its conveyance to Tolliver that he assumes the unpaid interest and principal under the note and agrees to indemnify and hold Ms. Dickerson harmless from payment of the note and performance under the Deed of Trust. (ECF No. 18-2 at 128). On April 18, 2018, Tolliver executed a Deed of Trust to Secure Assumption to affect the assumption of the Deed of Trust. (Id. at 7; ECF No. 18-2 at 133-140). However, BoNYM is not a signatory to the assumption agreement. (ECF No. 18-2 at 138).

         Presumably, Tolliver fell behind on his obligation to pay the Note because he initiated another loan modification process with BANA. (ECF No. 18-1 at 21). Initially, BANA refused to discuss a loan modification with Tolliver because he was not authorized. (Id.). Ms. Dickerson signed a third-party authorization on July 31, 2017. (Id.; ECF No. 18-2 at 276). Tolliver alleges he completed all of the loan modification documents and submitted them to BANA on May 4, 2018. (Id.; ECF No. 18-2 at 278-280).

         Tolliver describes at length about his woes in executing a new loan modification with BANA and eventually NewRez LLC fka New Penn Financial, LLC dba Shellpoint Mortgage Servicing (“Shellpoint”). On May 11, 2018, an unnamed BANA representative told him his loan modification had been approved and to expect a loan modification package. (ECF No. 18-1 at 21). However, he never received the package. (Id.). Instead, on May 21, 2018, he was notified by BAC that a new loan servicer, Shellpoint, was appointed. (Id.). Tolliver recalls an exchange between him and an undisclosed Shellpoint representative on May 23, 2018. The Shellpoint representative told Tolliver that Ms. Dickerson and the receiver stated he would not be getting a loan modification, but that he would still assume the Note. (Id.). Tolliver informed the Shellpoint representative that the statement was not true. (Id.). The same representative told Tolliver that Shellpoint had not received the records concerning the Loan from BANA and that it could take thirty days to be transferred to Shellpoint. (Id.).

         Tolliver's SAC describes numerous discussions and communications with Shellpoint representatives and specialists between June 15, 2018 and August 9, 2018, all concerning the loan modification application. (See generally Id. at 22-24). On August 9, 2018, Shellpoint informed Tolliver his email address was not authorized on the account. (Id. at 24). Tolliver alleges that BoNYM and Shellpoint knew he was authorized, citing to a letter signed by Ms. Dickerson and dated May 31, 2018. (Id. at 24; ECF No. 18-2 at 321). The letter is directed to Shellpoint and appears to refer to Tolliver and Ms. Dickerson's divorce proceedings. (ECF No. 18-2 at 321). However, the letter does not refer to any authorized email address. (Id.). Tolliver continued his efforts to communicate with Shellpoint, but each time, Shellpoint refused to discuss the loan because he was not authorized on the account. (ECF No. 18-1 at 25). On September 10, 2018, Tolliver emailed BoNYM's counsel concerning his authorization and any alleged revocation of authorization by Ms. Dickerson. (Id.). BoNYM's counsel responded, stating Tolliver could not be considered for an assumption and modification of the note because the state court placed the Property in receivership, ordered it to be sold, and denied him the option of retaining the Property through a refinance or modification. (Id. at 26; ECF No. 18-2 at 327-28). Counsel also provided a reason for BoNYM's refusal to modify the loan referring to Tolliver's failure to submit a complete loan modification application. (Id.).

         Tolliver also makes allegations attacking (1) the Deed of Trust's execution and Assignment to BoNYM, arguing AWL did not exist at the time the Note and Deed of Trust were executed; (2) the negotiation of the note, arguing its endorsement was not proper; and (3) the securitization and pooling of the Note. (ECF No. 18-1 at 7-20). However, most of the SAC contains recitation to case law, describes the merger of Countrywide Home Loans, Inc. (“Countrywide”) into BANA, and describes the mortgage securitization process. (Id. at 4-5, 10-20). Tolliver also alleges that BoNYM has been dual-tracking his loan by foreclosing on the Property while he attempted to modify and assume the Note. (Id. at 20).

         Tolliver filed the current action, in part, to forestall BoNYM's foreclosure proceeding. (ECF No. 1-2 at 9). He was successful in obtaining a temporary restraining order (“TRO”) in the state court, enjoining the foreclosure sale on December 10, 2018. (ECF No. 1-8 at 3). Tolliver amended his petition in response to the Court's Order to Replead on January 24, 2019. In the first amended complaint (“FAC”), Tolliver added two new claims for violation of 12 C.F.R § 1024.41, and civil conspiracy. (ECF No. 7 at 10, 12).

         BoNYM filed the instant motion to dismiss the FAC on February 11, 2019. (ECF No. 8). After the Court granted Tolliver an extension, he filed a Motion for Leave to Amend and Supplement Complaint and for Joinder of Additional Defendants, on March 18, 2019, with a proposed Second Amended Complaint (“SAC”) attached. (ECF No. 18). In the SAC he added a claim under 24 C.F.R. § 203.604, and contrary to BoNYM's assertion, the SAC did not abandon his wrongful foreclosure claim. (ECF No. 18-2 at 33-34). Additionally, Tolliver seeks joinder of CWABS, Inc.; CWABS Asset Backed Certificates Trust 2007-3; NewRez LLC fka New Penn Financial, LLC dba Shellpoint Mortgage Servicing; Bank of America, N.A., successor by merger to BAC, Countrywide, and AWL as necessary parties to the suit. (ECF No. 18).

         On March 21, 2019, Tolliver filed a response brief to BoNYM's Motion to Dismiss, which supports his motion for leave to amend and objects to BoNYM's use of documents outside of the pleadings. (ECF No. 21). The parties timely filed their replies. The motions are now ripe for decision.


         I. Federal Rule of Civil Procedure 15(a)

         Rule 15(a)(1) of the Federal Rules of Civil Procedure provides: A party may amend its pleading once as a matter of course within:

(A) 21 days after serving it, or
(B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.

Fed. R. Civ. P. 15(a)(1). Rule 15(a) favors of amendment and requires that leave be granted “freely.” Chitimacha Tribe of La. v. Harry L. Laws Co., Inc., 690 F.2d 1157, 1162 (5th Cir. 1982). A court's discretion to grant leave is severely limited by the bias of Rule 15(a) favoring amendment. Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 598 (5th Cir. 1981). Leave to amend “should not be denied ‘unless there is a substantial reason to do so.'” Jacobsen v. Osbourne, 133 F.3d 315, 318 (5th Cir. 1998) (quoting Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir. 1994)). A reason is substantial if the proposed amendment would cause undue delay or prejudice to the non-movant, if it is motivated by bad faith or dilatory motives, if there have been repeated failures to cure deficiencies with prior amendment, or if the amendment is futile. Foman v. Davis, 371 U.S. 178, 182 (1962); see also Martin's Herend Imports, Inc. v. Diamond & Gem Trading, 195 F.3d 765, 770 (5th Cir. 1999); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993). In the Rule 15 context, an amendment is futile if it “would fail to state a claim for relief upon which relief could be granted.” Stripling v. Jordan Production Co., LLC, 234 F.3d 863, 873 (5th Cir. 2000). And, if the proposed amendment is futile, a district court may deny leave to amend even when a plaintiff is entitled to amend as a matter of course. United States v. Gonzalez, 592 F.3d 675, 681 (5th Cir. 2009) (citations omitted).

         II. Federal Rule of Civil Procedure 12(b)(6)

         Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. The Rules require that each complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief . . . .” Fed.R.Civ.P. 8(a). A complaint must include sufficient factual allegations “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering a Rule 12(b)(6) motion, courts “take all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff . . . and ask whether the pleadings contain ‘enough facts to state a claim to relief that is plausible on its face.'” Yumilicious Franchise, L.L.C. v. Barrie, 819 F.3d 170, 174 (5th Cir. 2016) (citing Twombly, 550 U.S. at 547). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

         In ruling on a motion to dismiss, 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).

         There exists a “well-established policy that the plaintiff be given every opportunity to state a claim.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (citing Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977)). It is federal policy to decide cases on the merits rather than technicalities, and thus when possible the Fifth Circuit has recommended that suits be dismissed without prejudice on Rule 12 motions. Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002); Hines v. Wainwright, 539 F.2d 433, 434 (5th Cir. 1976) (vacating and remanding a Rule 12(c) dismissal with instructions to the district court to dismiss without, instead of with, prejudice). As a result, courts generally allow plaintiffs at least one opportunity to amend following a Rule 12 dismissal on the pleadings. Great Plains Tr. Co., 313 F.3d at 329; see In re Online Travel Co. (OTC) Hotel Booking Antitrust Litig., 997 F.Supp.2d 526, 548-49 (N.D. Tex. 2014) (Boyle, J.) (dismissing for failure to state a claim without prejudice, as dismissing with prejudice would be “too harsh a sanction”). Nonetheless, courts may appropriately dismiss an action with prejudice if a court finds that the plaintiff has alleged its best case. Jones v. Greninger, 188 F.3d 322, 327 (5th Cir. 1999).


         Before analyzing Tolliver's claims, the undersigned must discuss whether he should be allowed to amend his complaint as a matter of course.

         I. Proposed Second Amended Complaint

         BoNYM contends that because Tolliver has already amended his complaint once, he may only amend his complaint with its written consent or leave of court. (ECF No. 26 at 7). Tolliver did not respond to the argument.

         After BoNYM removed the case to this Court and consistent with the undersigned's practice of requiring litigants in removed cases to replead to comply with the federal pleading standard, the Court entered an order requiring the parties to replead. (ECF No. 5). Tolliver eventually complied with the order on January 24, 2019 after being granted an extension. (ECF No. 7). Ordinarily, a party may amend a pleading only once as a matter of course. See Fed. R. Civ. P. 15(a). Because Tolliver repleaded in response to the Court's Order to replead and not in response to a motion to dismiss or the undersigned's recommendation discussing deficiencies in his petition, the undersigned will not view Toliver's FAC as a pleading amended as a matter of course. Accordingly, Tolliver still had an opportunity to replead in response to BoNYM's motion to dismiss as a matter of course under Rule 15(a)(1).

         BoNYM filed its Motion to Dismiss on February 11, 2019. (ECF No. 8). Consistent with Rule 15(a)(1)(B), Tolliver had until March 4, 2019 to file an amended complaint as a matter of course. Tolliver received two extension of his response deadline, the last of which was unopposed by BoNYM, setting his new deadline to March 18, 2019. (ECF Nos. 13, 16). ...

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