United States District Court, N.D. Texas, Dallas Division
DAVID H. TRIEGER and JANET M. TRIEGER, Plaintiffs,
OCWEN LOAN SERVICING, LLC and U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE OF NRZ PASS-THROUGH TRUST IX, Defendants.
MEMORANDUM OPINION AND ORDER
Lindsay United States District Judge.
the court are Defendant U.S. Bank, N.A., as Trustee's
Motion to Dismiss Pursuant to Federal Rule of Civil Procedure
12(b)(6) (Doc. 9), filed February 1, 2019; Defendant Ocwen
Loan Servicing, LLC's Motion to Dismiss (Doc. 17), filed
February 28, 2019; Plaintiffs David H. Trieger and Janet M.
Trieger's Response to Defendant U.S. Bank, National
Association, as Trustee's Motion to Dismiss Pursuant to
Federal Rule of Civil Procedure 12(b)(6) (Doc. 21), filed
March 8, 2019; and Defendant U.S. Bank, N.A., as
Trustee's Brief in Support of its Motion to Dismiss
Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc.
22), filed March 22, 2019.
carefully considering the motions, briefs, record, and
applicable law, the court grants Defendant U.S. Bank, N.A.,
as Trustee's Motion to Dismiss Pursuant to Federal Rule
of Civil Procedure 12(b)(6) (Doc. 9) insofar as it seeks
dismissal of Plaintiffs' breach of contract claim and
denies the motion insofar as it seeks dismissal of
Plaintiffs' standing challenge, fraud claim, and alleged
violations of the Texas Property Code, Real Estate Settlement
Procedures Act (“RESPA”) and Texas Debt
Collection Act (“TDCA”); grants Defendant Ocwen
Loan Servicing, LLC's Motion to Dismiss (Doc. 17) insofar
as it seeks dismissal of Plaintiffs' breach of contract
claim and RESPA violation asserted against it and denies the
motion insofar as it seeks dismissal of Plaintiffs'
standing challenge, fraud claim, and alleged violations of
the Texas Property Code, RESPA, and TDCA; dismisses without
prejudice Plaintiffs' claims for breach of contract
against Defendants; dismisses with prejudice their RESPA
claim against Ocwen; and grants Plaintiffs' request to
amend their Petition with respect to their breach of contract
claim pursuant to the court's instructions as herein set
Factual and Procedural Background
September 8, 2004, David H. Trieger and Janet M. Trieger
(“Plaintiffs” or the “Triegers”)
obtained a Texas Home Equity loan and executed a Texas Home
Equity Note (the “Note”) in the amount of $80,
000, which was secured by a Texas Home Equity Security
Instrument (the “Deed of Trust” or
“Security Instrument”) in connection with the
property (the “Property”) located at 9648
Fallbrook Drive, Dallas, Texas, 75243. Pls.' Pet.,
Doc. 7-3 at 4-5, ¶ 11. The Note designates Homecomings
Financial Network, Inc. as the original lender. Def.'s
App., Doc. 11 at 12.
Triegers allege that, on or about November 13, 2012,
Homecomings Financial Network, Inc., by and through its
nominee Mortgage Electronic Registration Systems, Inc.
(“MERS”), executed and recorded an Assignment of
Deed of Trust wherein the Note and Deed of Trust
(collectively, the “Loan”) was assigned to
Deutsche Bank Trust Company Americas (“Deutsche
Bank”) as Trustee for RALI 2004-QS15 for the full
amount of the Loan, namely, $80, 000. Pls.' Pet., Doc.
7-3 at 5, ¶ 12. A copy of the Assignment of Deed of
Trust is attached to Plaintiffs' Original Verified
Petition (the “Petition”). Doc. 7-3 at 49. The
Triegers allege that, following this assignment, “there
are no other assignment(s) of the Plaintiffs' Loan that
have been recorded in the official real property records of
the Dallas County Clerk's office.” Id. at
5, ¶ 13. In other words, Plaintiffs contend that
Deutsche Bank is the only valid assignee of the Loan on
record in the Dallas County Clerk's office.
Triegers contend that, on or about late 2012, they entered
into an agreement with the Dallas County taxing authorities
“to significantly reduce their property taxes because
they qualified for an over 65 homestead
exception.” Id. at 5, ¶ 15. They contend
that, during that same year, they suffered a significant
financial hardship that caused them to default on their
monthly payments towards the Loan. Id. at 6, ¶
16. They were also unable to pay the 2012 property taxes,
“but those taxes were already deferred as a result of
the homestead exemption agreement that was reached with the
Dallas County taxing authorities.” Id.
about early 2013, Plaintiffs contend that they received
notice from Defendant Ocwen Loan Servicing, LLC
(“Ocwen”) that “it had unilaterally, and
without any regard for the existing tax defer[ment] agreement
that Plaintiffs had made with Dallas County, paid the 2012
property taxes, ” and that, as a result, it had
established an escrow account, “which increased the
Plaintiffs' monthly loan payments from $495 per month to
an astronomical $1, 400 per month.” Id. at 6,
¶ 17. In response to this notice, Plaintiffs allege that
they called Ocwen to request that it cancel the escrow
account and allow them to resume making their regular monthly
payments of $495. Id., ¶ 18. Plaintiffs allege
that this request “fell upon completely deaf ears,
” and Ocwen continued its collection activities as
servicer for the loan mortgagee, Defendant U.S. Bank National
Association (“U.S. Bank”). Id.
Triegers subsequently filed for bankruptcy on June 26, 2013,
in the Northern District of Texas. Id. at 7, ¶
19. Their Chapter 13 bankruptcy plan was confirmed on or
about October 2, 2013, and they contend that, pursuant to the
plan, they made loan payments to Ocwen in the amount of $695
per month. Id. at 8, ¶ 21. On August 30, 2017,
the bankruptcy case was terminated. Ocwen subsequently
demanded monthly payments for both the regular monthly
payment on the Loan and the escrow account payments.
Id. at 8, ¶ 24.
27, 2018, U.S. Bank filed the Application for an Expedited
Order Under Rule 736 on a Home Equity Loan (the “736
Application”) in the 160th Judicial District Court of
Dallas County, Texas. Id. at 8, ¶ 25. In the
736 Application, U.S. Bank asserted that it was the current
mortgagee or mortgage owner of Plaintiffs' Loan, and it
requested an order authorizing it to initiate non-judicial
foreclosure proceedings on the Triegers' Property.
Id. at 8-9, ¶ 25. Plaintiffs contend that
“neither the  Application nor Affidavit attached
to the Application filed by Defendants Ocwen and U.S. Bank
include or provide a copy of any recorded assignment or
transfer of lien instrument of the Plaintiffs' Loan to
Defendant U.S. Bank, ” and it does not reflect that the
Note was endorsed to U.S. Bank. Id. at 9, ¶ 26.
The Triegers contend that the last recorded assignee of the
Loan on record is Deutsche Bank, as Trustee, and, therefore,
U.S. Bank is not the current mortgagee or owner of the Loan
and does not, accordingly, have the authority to initiate
foreclosure proceedings on the Property. Id.
further contend that, after the bankruptcy case terminated in
August 2017, Defendants never sent them a notice of default
and opportunity to cure detailing the exact amount owed to
cure the default and providing at least thirty days to cure
the default pursuant to paragraph 21 of the Deed of Trust and
§ 51.002(d) of the Texas Property Code. Id. at
9, ¶ 27. In light of Plaintiffs' position that U.S.
Bank never received a valid assignment authorizing them to
initiate foreclosure proceedings on the Property or direct
Ocwen to collect on the Loan, Plaintiffs assert the following
claims against Defendants: (1) breach of contract, (2) fraud,
(3) violations of the Real Estate Settlement Procedures Act
(“RESPA”), and (4) violations of the Texas Debt
Collection Act (“TDCA”). Plaintiffs originally
filed this action in the 134th Judicial District Court of
Dallas County, Texas, and Defendants removed the action to
federal court on February 1, 2019, based on diversity
jurisdiction. Defs.' Am. Notice of Removal, Doc. 7 at
1-2. On January 11, 2019, U.S. Bank filed a counterclaim
against the Triegers seeking a “judgment for judicial
foreclosure allowing it to enforce its lien against the
Property in accordance with the Security Instrument and
Section 51.002 of the Texas Property Code.” Def.'s
Original Countercl., Doc. 3 at 4.
February 1, 2019, U.S. Bank filed its Motion to Dismiss (Doc.
9), seeking to dismiss this action on two grounds. First,
U.S. Bank asserts that all claims in the Petition should be
dismissed against it because, pursuant to Federal Rule of
Civil Procedure 12(b)(6) (“Rule 12(b)(6)”), the
Triegers have failed to state a claim upon which relief can
be granted. U.S. Bank alternatively argues that
Plaintiffs' claims should be dismissed based on the
doctrine of judicial estoppel because they failed to disclose
the bases for their claims during the bankruptcy proceeding.
February 28, 2019, Ocwen filed its Motion to Dismiss (Doc.
9), arguing that Plaintiffs' claims should be dismissed
pursuant to Rule 12(b)(6) for reasons similar to those
advanced by U.S. Bank in its motion. Ocwen additionally joins
U.S. Bank in its argument that Plaintiffs' claims should
be barred by judicial estoppel and incorporates it into
Ocwen's motion by reference. Def.'s Mot. to Dismiss,
Doc. 17 at 14, ¶ 28. As Defendants set forth several
identical arguments in their respective motions, the court
will consider both parties' arguments and briefs in its
Rule 12(b)(6) - Failure to State a Claim
defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure, a plaintiff must plead
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007); Reliable
Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir.
2008); Guidry v. American Pub. Life Ins. Co., 512
F.3d 177, 180 (5th Cir. 2007). A claim meets the plausibility
test “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. 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.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal citations omitted). While a complaint need not
contain detailed factual allegations, it must set forth
“more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555 (citation
omitted). The “[f]actual allegations of [a complaint]
must be enough to raise a right to relief above the
speculative level . . . on the assumption that all the
allegations in the complaint are true (even if doubtful in
fact).” Id. (quotation marks, citations, and
footnote omitted). When the allegations of the pleading do
not allow the court to infer more than the mere possibility
of wrongdoing, they fall short of showing that the pleader is
entitled to relief. Iqbal, 556 U.S. at 679.
reviewing a Rule 12(b)(6) motion, the court must accept all
well-pleaded facts in the complaint as true and view them in
the light most favorable to the plaintiff. Sonnier v.
State Farm Mutual Auto. Ins. Co., 509 F.3d 673, 675 (5th
Cir. 2007); Martin K. Eby Constr. Co. v. Dallas Area
Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004);
Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
In ruling on such a motion, the court cannot look beyond the
pleadings. Id.; Spivey v. Robertson, 197
F.3d 772, 774 (5th Cir. 1999). The pleadings include the
complaint and any documents attached to it. Collins v.
Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th
Cir. 2000). Likewise, “‘[d]ocuments that a
defendant attaches to a motion to dismiss are considered part
of the pleadings if they are referred to in the
plaintiff's complaint and are central to [the
plaintiff's] claims.'” Id. (quoting
Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987
F.2d 429, 431 (7th Cir. 1993)). In this regard, a document
that is part of the record but not referred to in a
plaintiff's complaint and not attached to a motion to
dismiss may not be considered by the court in ruling on a
12(b)(6) motion. Gines v. D.R. Horton, Inc., 699
F.3d 812, 820 & n.9 (5th Cir. 2012) (citation omitted).
Further, it is well-established and ‘“clearly
proper in deciding a 12(b)(6) motion [that a court may] take
judicial notice of matters of public record.”'
Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir.
2011) (quoting Norris v. Hearst Trust, 500 F.3d 454,
461 n.9 (5th Cir. 2007) (citing Cinel v. Connick, 15
F.3d 1338, 1343 n.6 (5th Cir. 1994)).
ultimate question in a Rule 12(b)(6) motion is whether the
complaint states a valid claim when it is viewed in the light
most favorable to the plaintiff. Great Plains Trust Co.
v. Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th
Cir. 2002). While well-pleaded facts of a complaint are to be
accepted as true, legal conclusions are not “entitled
to the assumption of truth.” Iqbal, 556 U.S.
at 679 (citation omitted). Further, a court is not to strain
to find inferences favorable to the plaintiff and is not to
accept conclusory allegations, unwarranted deductions, or
legal conclusions. R2 Invs. LDC v. Phillips, 401
F.3d 638, 642 (5th Cir. 2005) (citations omitted). The court
does not evaluate the plaintiff's likelihood of success;
instead, it only determines whether the plaintiff has pleaded
a legally cognizable claim. United States ex rel. Riley
v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376
(5th Cir. 2004). Stated another way, when a court deals with
a Rule 12(b)(6) motion, its task is to test the sufficiency
of the allegations contained in the pleadings to determine
whether they are adequate enough to state a claim upon which
relief can be granted. Mann v. Adams Realty Co., 556
F.2d 288, 293 (5th Cir. 1977); Doe v. Hillsboro Indep.
Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996),
rev'd on other grounds, 113 F.3d 1412 (5th Cir.
1997) (en banc). Accordingly, denial of a 12(b)(6) motion has
no bearing on whether a plaintiff ultimately establishes the
necessary proof to prevail on a claim that withstands a
12(b)(6) challenge. Adams, 556 F.2d at 293.
Breach of Contract Claim
cast as a breach of contract claim, Plaintiffs assert in the
Petition (Doc. 7-3) three separate issues: (1) breach of the
Deed of Trust; (2) a violation of § 51.002(e) of the
Texas Property Code; and (3) a lack of standing challenge.
The court will address each issue in turn.
court first addresses Plaintiffs' standing argument.
Plaintiffs assert that Defendants lack standing to enforce