Fowler v. U.S. Bank

• Decision Date: 04 March 2014
• Docket Number: Civil Action No. H–13–3241.
• Parties: Timothy FOWLER and Connie Fowler, Plaintiffs, v. U.S. BANK, NATIONAL ASSOCIATION, Successor Trustee to Bank of America, N.A., as Successor Trustee to Lasalle Bank, N.A. as Trustee for the Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset–Backed Certificates, Series 2007–FF1; Bank of America, N.A.; First Franklin, a Division of National City Bank; and KH Financial, L.P., Defendants.
• Court: U.S. District Court — Southern District of Texas

2 F.Supp.3d 965

Timothy FOWLER and Connie Fowler, Plaintiffs,

v.U.S. BANK, NATIONAL ASSOCIATION, Successor Trustee to Bank of America, N.A., as Successor Trustee to Lasalle Bank, N.A. as Trustee for the Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset–Backed Certificates, Series 2007–FF1; Bank of America, N.A.; First Franklin, a Division of National City Bank; and KH Financial, L.P., Defendants.

Civil Action No. H–13–3241.

United States District Court,

S.D. Texas,

Houston Division.

Signed March 4, 2014.

Robert Chamless Lane, Middagh & Lane, PLLC, Houston, TX, for Plaintiffs.

Jeffrey Ray Seewald, Matt D. Manning, McGlinchey Stafford, PLLC, Houston, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

SIM LAKE, District Judge.

Plaintiffs Timothy and Connie Fowler (“Plaintiffs”) brought this action against defendants U.S. Bank, National Association, Successor Trustee to Bank of America, N.A., as Successor Trustee to LaSalle Bank, N.A. as Trustee for the Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset–Backed Certificates, Series 2007–FF1 (“U.S. Bank”), Bank of America, N.A. (“Bank of America”) (collectively, “Defendants”), First Franklin Financial Corporation (“First Franklin”), and KH Financial LP (“KH”) in the 234th Judicial District Court of Harris County, Texas, where it was filed under Cause No. 2013–65260. Defendants U.S. Bank and Bank of America removed the action to this court.¹ Pending before the court is Defendants U.S. Bank, National Association, Successor Trustee and Bank of America, N.A.'s Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Motion to Dismiss”) (Docket Entry No. 6). For the reasons explained below, the Motion to Dismiss will be granted in part and denied in part.

I. Factual and Procedural Background

On November 1, 2006, Plaintiffs executed a promissory note and deed of trust in favor of First Franklin to finance the purchase of a home.² In order to obtain the mortgage loan Plaintiffs utilized the services of KH, a mortgage broker.³ The Deed of Trust identified First Franklin as the “Lender” and Mortgage Electronic Registration Systems (“MERS”) as the “nominee for Lender and Lender's successors and assigns” and “the beneficiary under this Security Instrument.” ⁴ MERS assigned the Deed of Trust to U.S. Bank on December 10, 2012.⁵ A foreclosure sale was scheduled for November 5, 2013.⁶

Plaintiffs filed their Original Petition in the 234th Judicial District Court of Harris County, Texas, on October 29, 2013.⁷ Defendants removed the case to this court on November 4, 2013.⁸ On November 12, 2013, Defendants filed their Motion to Dismiss.⁹ Plaintiffs responded on December 3, 2013.¹⁰ Defendants replied on December 23, 2013.¹¹

II. Applicable Law

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief may be granted tests the formal sufficiency of the pleadings and is “appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001). The court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in the plaintiff's favor. Id.

“When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.”

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S.Ct. 992, 997, 152 L.Ed.2d 1 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974)). To avoid dismissal a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). Plausibility requires “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). “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. “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. (quoting Twombly, 127 S.Ct. at 1966) (internal quotation marks omitted). The court will “ ‘not accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.’ ” Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir.2007) (quoting Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir.2005)). “[D]ismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief.” Torch Liquidating Trust ex rel. Bridge Assocs. L.L.C. v. Stockstill, 561 F.3d 377, 384 (5th Cir.2009).

When considering a motion to dismiss courts are generally “limited to the complaint, 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) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498–99 (5th Cir.2000)). In addition, “it is clearly proper in deciding a 12(b)(6) motion to take judicial notice of matters of public record.” 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)). When a party presents “matters outside the pleadings” with a Rule 12(b)(6) motion to dismiss, the court has “complete discretion” to either accept or exclude the evidence for purposes of the motion to dismiss. Isquith ex rel. Isquith v. Middle South Utilities, Inc., 847 F.2d 186, 194 n. 3 (5th Cir.1988). However, “[i]f ... matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56” and “all parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d).

Plaintiffs have attached copies of the Note, Deed of Trust, and other documents to their Original Petition. “A written document that is attached to a complaint as an exhibit is considered part of the complaint and may be considered in a 12(b)(6) dismissal proceeding.” Ferrer v. Chevron Corp., 484 F.3d at 780. Accordingly, the court may consider these documents without converting the motion to dismiss to a motion for summary judgment.

Attached to Defendants' Motion to Dismiss is a copy of an Assignment of Deed of Trust recorded in the Official Public Records of Real Property of Harris County, Texas, on December 18, 2012.¹² Because this document is a matter of public record of which the court may take judicial notice, the court concludes that it can be considered without converting the Motion to Dismiss to a motion for summary judgment. Also attached to Defendants' Motion to Dismiss are a Notice of Default from Bank of America to Plaintiffs dated March 13, 2013,¹³ and a Notice of Rescission of Acceleration of Loan Maturity.¹⁴ Because the Notice of Default is referenced in Plaintiffs' Original Petition ¹⁵ and central to Plaintiffs' claims, it can be considered without converting the Motion to Dismiss to a motion for summary judgment. The Notice of Rescission, however, is “outside the pleadings,” and the court will exclude it for purposes of the Motion to Dismiss. Isquith, 847 F.2d at 194 n. 3.

III. Analysis

Plaintiffs allege fifteen substantive causes of action in their Original Petition in addition to seeking declaratory and injunctive relief. ¹⁶ Defendants have moved to dismiss all of Plaintiffs' claims. ¹⁷ In their Response, Plaintiffs attempt to avoid dismissal by arguing that “[b]ecause this lawsuit was initially filed in Texas state court, the Texas state pleading standard should apply.” ¹⁸ However, “because pleading requirements are purely matters of federal law, the Court looks to the law of this Court and this Circuit for the controlling Rule 12(b)(6) and Rule 9(b) standards.” Berry v. Bryan Cave LLP, No. 3:08–CV–2035–B, 2010 WL 1904885, at *3 (N.D.Tex. May 11, 2010). “ ‘Even in cases removed from state court, the adequacy of pleadings is measured by the federal rules.’ ” Genella v. Renaissance Media, 115 Fed.Appx. 650, 652–53 (5th Cir.2004) (quoting Varney v. R.J. Reynolds Tobacco Co., 118 F.Supp.2d 63, 67 (D.Mass.2000)).

Defendants argue in their Reply that “Plaintiffs' Response fails to assert any opposition to Defendants' Motion to Dismiss” with regard to several claims and request that the court “grant Defendants' Motion to Dismiss those claims as unopposed.” ¹⁹ However, “ Rule 12 does not by its terms require an opposition; failure to oppose a 12(b)(6) motion is not in itself grounds for granting the motion.” Servicios Azucareros de Venezuela, C.A. v. John Deere Thibodeaux, Inc., 702 F.3d 794, 806 (5th Cir.2012). “Rather, a court assesses the legal sufficiency of the complaint.” Id. Accordingly, the court will look to the Original Petition to determine whether dismissal is warranted.

A. Claims that Fail for Factual Insufficiency

A majority of Plaintiffs' claims consist of allegations involving KH's conduct as broker in securing Plaintiffs' mortgage.²⁰Careful review of Plaintiffs' Original Petition reveals no factual allegations against U.S. Bank or Bank of America with regard to Plaintiffs' claims for negligent misrepresentation, breach of fiduciary duty, breach of agent-principal relationship and suit for accounting, violations of §§ 17.46(b)(9) and (24) of the Texas Deceptive Trade Practices Act (“DTPA”), violations of §§ 17.50(a)(3) of...