DTND Sierra Invs. LLC v. Bank of N.Y. Mellon Trust Co.

• Decision Date: 26 July 2013
• Docket Number: Civil Action No. SA–12–CV–1014–XR.
• Parties: DTND SIERRA INVESTMENTS LLC, Plaintiff, v. The BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Defendant.
• Court: U.S. District Court — Western District of Texas

958 F.Supp.2d 738

DTND SIERRA INVESTMENTS LLC, Plaintiff,

v.The BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Defendant.

Civil Action No. SA–12–CV–1014–XR.

United States District Court,

W.D. Texas,

San Antonio Division.

July 26, 2013.

Brian J. Trenz, David P. Schafer, Ronnie Terry Funari, Law Offices of David Schafer PLLC, San Antonio, TX, for Plaintiff.

Graham Webster Gerhardt, Grant A. Premo, Keith S. Anderson, Bradley Arant Boult Cummings, LLP, Birmingham, AL, for Defendant.

ORDER

XAVIER RODRIGUEZ, District Judge.

On this day the Court considered Defendant Bank of New York Mellon Trust Company National Association's (“BONY”) motion to dismiss (Doc. No. 11). For the following reasons, the Court GRANTS the motion.

I.

A. Factual Background¹

On or about April 4, 2003, Lee and Patricia Huntley executed a promissory note (the “Note”) to procure a loan for the purchase of 1802 Three Forks, San Antonio, Texas 78258 (the “Property”). The Note was made payable to SouthTrust Mortgage Corporation. At the same time, the Huntleys executed a deed of trust (“the Deed of Trust”), granting a lien on the Property. The Property was described in the Deed of Trust by reference to its street address only. SouthTrust Mortgage Corporation's interest in the Note and Deed of Trust was thereafter assigned to JPMorgan Chase Bank, as Trustee (“JPMorgan”) on or about April 5, 2003.

Based upon “information and belief,” Plaintiff alleges that on or about January 1, 2004, the Huntleys defaulted on their obligations under the Deed of Trust.² Around the same time, the Huntleys also defaulted on the payment of Property assessments imposed by the 281 East HomeownersAssociation (the “HOA”). On December 7, 2004, the HOA conducted a foreclosure sale of the Property. At this sale, the HOA purchased the Property. Subsequently, on July 19, 2005, a certified copy of the Deed of Trust was filed with the property description that was omitted from the recording in 2003.

On or about June 28, 2010, JPMorgan assigned its interest in the Note and Deed of Trust to Defendant. On June 30, 2011, Plaintiff purchased the Property from the HOA and recorded the special warranty deed. Thereafter, on January 3, 2012, Defendant foreclosed on the Property with Deborah Martin acting as substitute trustee. Defendant purchased the Property at the substitute trustee's sale. As a result, Plaintiff alleges that Defendant “currently seeks to wrest possession of the Property from Plaintiff's tenants.”

B. Procedural Background

Plaintiff filed its original “Suit to Remove Cloud and Quiet Title, Petition for Declaratory Relief and Damages, and Application for Temporary Restraining Order” in Bexar County District Court on October 1, 2012. In that petition, Plaintiff sought to declare invalid the Substitute Trustee's Deed and asserted claims against Defendants BONY, Cathy Goodwin, Patricia Huntley, and Lee Huntley.

Defendant removed the case to this Court on October 23, 2012, asserting diversity jurisdiction because Plaintiff is a citizen of Texas and BONY is a citizen of California. Although Cathy Goodwin and the Huntleys are also citizens of Texas, this Court concluded that because these Defendants were improperly joined at the time of removal, their citizenship is disregarded for determining whether removal was proper.³ Accordingly, this Court had diversity jurisdiction at the time of removal and this was not destroyed by Plaintiff's post-removal amendment to its complaint with regard to Cathy Goodwin.⁴ Further, because Cathy Goodwin and the Huntleys were ruled to be improperly joined, these Defendants were effectively dismissed from the action. Akerblom v. Ezra Holdings Ltd., 509 Fed.Appx. 340, 347–48 (5th Cir.2013) (per curiam).⁵

Along with its notice of removal, Defendant filed a motion to dismiss Plaintiff's original complaint on October 23, 2012. Plaintiff then filed an Amended Complaint on November 14, 2012 and in response Defendant filed the instant motion to dismiss. In Plaintiff's amended complaint, Plaintiff asserts that it seeks to “invalidate the lien and Substitute Trustee's Deed filed on February 9, 2012 and quiet Plaintiff's title” because Defendant's lien was not perfected prior to the HOA foreclosure, Defendant's claims to the Property under the Deed of Trust are barred by the statute of limitations, and Plaintiff has obtained the Property through adverse possession. Plaintiff also seeks declaratory and injunctive relief and asserts a violation of the Texas Debt Collection Practices Act.

II.

A. Legal Standard for Deciding a Motion to Dismiss

“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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “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. While detailed factual allegations are not necessary, a plaintiff must provide “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, 127 S.Ct. 1955. However, a complaint can survive a motion to dismiss even if actual proof of the facts alleged is “improbable.” Id. at 556, 127 S.Ct. 1955. Although the court must take all of the factual allegations in the complaint as true, the court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (internal quotation marks omitted).

B. Documents That May Be Considered

The Supreme Court has held that in deciding a motion to dismiss, a court may consider documents incorporated into the complaint by reference. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). The court may also consider any documents attached to the complaint and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint. Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir.2010); see also Sullivan v. Leor Energy, LLC, 600 F.3d 542, 546 (5th Cir.2010) (quoting Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir.2003)) (holding that while the court generally must not go outside the pleadings, the court may consider documents attached to a motion to dismiss that are referred to in the plaintiff's complaint and are central to the plaintiff's claim.). In attaching documents to a motion to dismiss that are referred to in the plaintiff's complaint and are central to her claim, “the defendant merely assists the plaintiff in establishing the basis of the suit, and the court in making the elementary determination of whether a claim has been stated.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 499 (5th Cir.2000). Whether the plaintiff has objected to the court's consideration of documents external to the complaint may be a factor that can be taken into account in determining whether to consider the documents. Scanlan, 343 F.3d at 536 (citing Collins, 224 F.3d at 498–99) (“The fact that the plaintiffs did not object to, or appeal, the district court's consideration of [documents attached to a motion to dismiss] was central to [the Fifth Circuit's] approval of that practice.”). The district court may also take judicial notice of matters of public record. Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir.2011).

In this case, Defendant attached several documents to its motion to dismiss, including a copy of the Deed of Trust and the assignment document from JPMorgan to Defendant executed in 2010. Each of these documents is central to Plaintiff's claims and is referenced throughout the original petition. The Court also takes judicial notice of the Deed of Trust and the assignment document because they have been recorded and are therefore matters of public record. Other matters of public record of which the Court takes judicial notice include: (1) the Substitute Trustee's Deed executed February 3, 2010; and (2) two notices of acceleration rescission executed on May 7, 2009, and June 1, 2010 respectively.

III.

A. Plaintiff's Claim to Quiet Title

1. Legal Standard for Establishing a Claim to Quiet Title

“The principal issue in a suit to quiet title is as to the existence of a cloud that equity will remove.” Wright v. Matthews, 26 S.W.3d 575, 578 (Tex.App.-Beaumont 2000, pet. denied) (quoting Bell v. Ott, 606 S.W.2d 942, 952 (Tex.Civ.App.-Waco 1980, writ ref'd n.r.e.)). “A cloud on title exists when an outstanding claim or encumbrance is shown, which on its face, if valid, would affect or impair the title of the owner of the property.” Angell v. Bailey, 225 S.W.3d 834, 838 n. 6 (Tex.App.-El Paso 2007, no pet.). “Any deed, contract, judgment or other instrument not void on its face that purports to convey an interest in or make any charge upon the land of a true owner, the invalidity of which would require proof, is a cloud upon the legal title of the owner.” Hahn v. Love, 321 S.W.3d 517, 531 (Tex.App.-Houston [1st Dist.] 2009, pet. denied) (quoting Johnson v. Williams, No. 01–05–00445–CV, 2006 WL 1653656, at *4 (Tex.App.-Houston [1st Dist.] June 15, 2006, pet. denied) (mem.op.)).

“The effect of a suit to quiet title is to declare invalid or ineffective the defendant's claim to title.” Gordon v. W. Houston Trees, Ltd., 352 S.W.3d 32, 42 (Tex.App.-Houston [1st Dist.] 2011, no pet.). “In other words, the purpose of a suit to quiet title is to invalidate the defendant's claim to title.”...