Michael v. IndyMac Bank, FSB, CIVIL ACTION NO. 3:12cv347-DPJ-FKB

CourtUnited States District Courts. 5th Circuit. Southern District of Mississippi
Writing for the CourtDaniel P. Jordan III
Decision Date06 November 2012
Docket NumberCIVIL ACTION NO. 3:12cv347-DPJ-FKB




Dated: November 6, 2012


This pro se diversity case is before the Court on the Rule 12(b)(6) Motion of Defendants Deutsche Bank National Trust Company, Mortgage Electronic Registration System ("MERS"), and Residential Asset Securitization Trust, Series 2007-A5, Pass-Through Series 2007-E (collectively "Defendants") [21].1 In their Amended Complaint, Plaintiffs seek a declaration that none of the Defendants have any security interest in their home because the purported transfers of their note were illegal under Mississippi law. In effect, they ask the Court to award them free and clear title to their home, despite never alleging that they have paid the $630,000 debt. Because "such windfalls are the province of the sweepstakes, not of the federal courts," Defendants' Motion to Dismiss will be granted. Wiggington v. Bank of N.Y. Mellon, No. 12-10136, 2012 WL 4053793, at *3 (5th Cir. Sept. 14, 2012).

I. Factual Allegations and Procedural History

On March 1, 2007, Plaintiffs Michael and Amanda Greene borrowed $630,000 to purchase a home in Madison, Mississippi. They executed a fixed rate note to repay the funds to Home Loan Center, Inc., and a deed of trust in favor of Home Loan Center securing the note. The note explains that it may be transferred: "I understand that the Lender may transfer this Note.

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The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the 'Note Holder.'" Mot. to Dismiss [21] Ex. A, Note at 1. The back side of the final page of the note contains two endorsements: Home Loan Center endorsed the note "Pay to the Order of Indymac Bank, FSB," and Indymac Bank endorsed the note in blank. Id. at 4. The deed of trust named MERS as the beneficiary "as a nominee for Lender and Lender's successors and assigns" and explained that "[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower." Mot. to Dismiss [21] Ex. B, Deed of Trust at 1, 10.

Plaintiffs allege that the note was sold several times, including to defendants Deutsche Bank and Residential Asset Securitization Trust, but that the deed of trust was not effectively transferred or assigned to any other party. As a result, Plaintiffs claim, "the security interest in Plaintiffs' property known as the Deed of Trust and or [sic] mortgage was terminated . . . ." Amended Compl. [4] ¶ 21. Based on this assertion, Plaintiffs raise four counts in their May 22, 2012 Amended Complaint: wrongful foreclosure, fraud, quiet title, and declaratory relief. Defendants moved for dismissal under Rule 12(b)(6), Plaintiffs responded in opposition, and Defendants filed a rebuttal.2

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II. Standard

In considering a motion under Rule 12(b)(6), the "court accepts 'all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'" Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To overcome a Rule 12(b)(6) motion, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. "Factual allegations 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. at 555 (citations and footnote omitted). "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." Iqbal, 556 U.S. at 678.

The Supreme Court's examination of the issue in Iqbal provides a framework for examining the sufficiency of a complaint. First, the district court may "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679. Second, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id.

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Ordinarily, a court decides a motion to dismiss for failure to state a claim looking only at the face of the complaint; if "matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment." Fed. R. Civ. P. 12(d); see In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2011). Documents attached to a motion to dismiss that are "referred to in the plaintiff's complaint and . . . central to [his] claim," however, are considered part of the pleadings for purposes of a motion under Rule 12(b)(6). Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). In this case, Defendants attached to the motion to dismiss the note, deed of trust, and the Pooling and Servicing Agreement under which the note and deed were transferred to Deutsche Bank in 2007. Mot. to Dismiss [21] Ex. A-C. Because these documents are "referred to in the plaintiff[s'] complaint and . . . central to [their] claim," the Court may consider them in ruling on Defendants' motion.

III. Analysis

All four of Plaintiffs' claims rest on the same flawed theory—that their note became unsecured when allegedly split from the deed of trust during post-closing transfers. Under Plaintiffs' reasoning, they believe they have won "a free house" as a result of the transfer of their note from one lender to another. Wiggington, 2012 WL 4053793 (affirming dismissal of similar split-note case under Texas law).

The Greenes are not the first homeowners to attempt to nullify their debt in this way, but as this Court has already noted, the theory finds no support in Mississippi law and has been "repeatedly discredited." Emmons v. Capital One, N.A., No. 1:11cv99-RHW, 2012 WL 773288, at *4 (S.D. Miss. Mar. 6, 2012) (dismissing claim and collecting cases); see also Kirby v. Bank of

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Am., N.A., 2:09cv182-DCB-JMR, 2012 WL 1067944, at *3 (S.D. Miss. Mar. 29, 2012) (addressing the plaintiffs' argument that separating the note and the deed "makes any subsequent transfers of the Note or the Deed void under Mississippi law" and noting that "[t]his once-novel theory of mortgage law has been consistently rejected by courts which have considered its merit") (collecting cases); Lindsey v. Bates, 42 Miss. 397, 1869 WL 3765, at *2 (Miss. 1869) ("[T]he assignment of the note carries with it the mortgage, which is a mere incident to the debt, and the assignee of the note is entitled to resort to the mortgage and all other securities, which were given for the purpose of assuring its payment, as its incidents.") (cited in Kirby, 2012 WL 1067944, at *4). Plaintiffs have offered no helpful authority to support their claim, and the Court sees no need to rehash the legal analysis provided in these earlier cases. As applied to each of their four causes of action, Plaintiffs' claims...

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