Ortiz v. CitiMortgage, Inc.

• Decision Date: 20 June 2013
• Docket Number: Civil Action No. H–12–3580.
• Citation: 954 F.Supp.2d 581
• Parties: Mario Jose ORTIZ, Plaintiff, v. CITIMORTGAGE, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

954 F.Supp.2d 581

Mario Jose ORTIZ, Plaintiff,

v.CITIMORTGAGE, INC., Defendant.

Civil Action No. H–12–3580.

United States District Court,

S.D. Texas,

Houston Division.

June 20, 2013.

Alphonsus O. Ezeoke, Ezeoke & Ezeoke PC, Stafford, TX, for Plaintiff.

Robert T. Mowrey, Locke Lord LLP, Dallas, TX, John W. Rudinger, Locke Lord LLP, Houston, TX, for Defendant.

Order

GRAY H. MILLER, District Judge.

Pending before the court is a motion to dismiss filed by defendant, Citimortgage, Inc. (“CMI”). Dkt. 6. Plaintiff Mario Jose Ortiz has requested that the court deny the motion or, alternatively, grant him leave to amend. Dkt. 8. Having considered the motion, responsive briefing, and applicable law, the court is of the opinion that CMI's motion to dismiss (Dkt. 6) should be GRANTED IN PART AND DENIED IN PART.

I. Background

Ortiz purchased a home at 11102 Fallcrest Drive, Houston, Texas 77065, on July 11, 2003. Dkt. 1–4. ABN AMRO Mortgage Group, Inc., (“ABN”) provided financing for Ortiz's purchase under a mortgage note. Id. To secure his obligations under the note, Ortiz signed a deed of trust that irrevocably granted and conveyed title to the trustee, with power of sale. Id. In September 2011, Ortiz became ill and required surgery. Id. Ortiz explains that he could not make mortgage payments because, due to his medical condition, he was hospitalized for five weeks and, afterward, unemployed for eight months. Id. On December 13, 2011, Ortiz received a notice from CMI informing him that his loan was in default, and a payment of $8,128.92, inclusive of late charges and delinquency expenses, was necessary to cure the default. Id. The notice also stated that failure to cure the default by January 12, 2012, would result in acceleration of the mortgage note and possible sale of the property. Id. Ortiz obtained and mailed a cashier's check for the requisite amount on January 11, 2012. Id. Ortiz asserts that CMI acknowledged receipt of the check and reinstated the mortgage. Id.

Ortiz alleges that CMI sent a notice of foreclosure to Ortiz on August 9, 2012. Dkt. 1–4. It is unclear from the facts alleged in the complaint what triggered the notice. In the notice of foreclosure, CMI informed Ortiz that the foreclosure sale was scheduled for September 4, 2012. Dkt. 1–4, Ex. E. The foreclosure was then postponed because Ortiz submitted an application for a loan modification under the Home Affordable Modification Program (“HAMP”). Dkt. 1–4. HAMP is a program established by the U.S. Department of the Treasury, the Federal Housing Finance Agency, the Federal National Mortgage Association, and Freddie Mac, pursuant to the authority provided in the Emergency Economic Stabilization Act of 2008. 12 U.S.C. §§ 5201 et seq. Under HAMP, a lender cannot foreclose on a home during the application or the modification process. Id. On November 8, 2012, CMI informed Ortiz that his HAMP application was denied because CMI did not receive certain documents necessary for modification calculations. Dkt. 1–4. Ortiz alleges, however, that he sent all the required documents to CMI. Id. CMI posted Ortiz's home for foreclosure on November 6, 2012, two days before it informed him that his HAMP application was denied. Id.

Ortiz filed a lawsuit against CMI in the 133rd Judicial District Court of Harris County, Texas on November 28, 2012. Dkt. 1–4. In his original complaint, Ortiz asserts claims against CMI for “breach of contract constituting wrongful foreclosure” due to failure to properly notice the foreclosure, promissory estoppel, and interference with an existing contract. Dkt. 1–4. At the heart of most of Ortiz's claims is the affirmation that CMI lacked legal standing to foreclose on Ortiz's property because there is a gap in the chain of title from the original mortgagee, ABN, to CMI. Id. The petition seeks relief in the form of a temporary injunction and a declaratory judgment under Texas law stating that the foreclosure is null and void and unenforceable because CMI does not have standing to enforce the note and the Deed of Trust, and that CMI did not comply with the pre-foreclosure notice provisions in the Deed of Trust. Id.

The state court entered a temporary restraining order that prohibited CMI from interfering or excluding Ortiz from his home pending final judgment in this case. Dkt. 1–4. On November 29, 2012, CMI removed the case to this court, asserting that this court has diversity jurisdiction. Id. On January 18, 2013, CMI filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 6.

II. Legal Standard

To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “Factual allegations must ... 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).” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. While the allegations need not be overly detailed, a plaintiff's pleadings must still provide the grounds of his entitlement to relief, which “requires more than labels and conclusions,” and “a formulaic recitation of the elements of a cause of action will not do.” Id. at 545, 127 S.Ct. 1955;see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (“naked assertion[s]” devoid of “further factual enhancement,” along with “legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not entitled to the presumption of truth). “[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss.” Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir.1995).

Moreover, demonstrating the facial plausibility of a claim requires a plaintiff to establish “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. It is not enough that a plaintiff allege the mere possibility of misconduct; it is incumbent to “show[ ] that the [plaintiff] is entitled to relief.” Fed.R.Civ.P. 8(a)(2); see also Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. The court may dismiss a complaint under Rule 12(b)(6) if either the complaint fails to assert a cognizable legal theory or the facts asserted are insufficient to support relief under a cognizable legal theory. Stewart Glass & Mirror, Inc. v. U.S.A. Glas, Inc., 940 F.Supp. 1026, 1030 (E.D.Tex.1996).

III. Analysis

CMI asserts that Ortiz fails to assert a claim for which relief can be granted because (1) Ortiz lacks standing to challenge the assignment of the mortgage to CMI and CMI's ability to foreclose because Ortiz is neither a party nor a third party beneficiary of the loan assignment; (2) Ortiz's lack of standing further prevents Ortiz from challenging CMI's interest in the loan by an interference with an existing contract claim; (3) Ortiz does not adequately assert a claim for wrongful foreclosure due to improper notice because notice is irrelevant to the three elements of wrongful foreclosure; ¹ (4) the promissory estoppel claim is barred by the existence of a contract and by the statute of frauds; and (5) Ortiz does not plead substantive claims and thus, declaratory relief should be denied. Dkt. 6. Ortiz asserts claims for “breach of contract constituting wrongful foreclosure,” tortious interference with an existing contract, promissory estoppel, declaratory judgment, injunctive relief, and attorney's fees. Dkt. 1–4. Ortiz also argues that CMI must prove the transfer by which it acquired the note to have standing to foreclose. Id. In its motion to dismiss, CMI alleges that Ortiz is trying to delay eviction and fails to state any claims upon which relief can be granted. Dkt. 6. In response, Ortiz requests that the court deny CMI's motion to dismiss; alternatively, he moves for leave to file an amended petition. Dkt. 8.

A. Standing

Ortiz alleges that CMI does not have standing to foreclose on the note because CMI did not provide proof that the lien was appropriately transferred from ABN to CMI. Dkt. 1–4. Ortiz further asserts that the lien transfer was not filed in the Harris County property records, and thus, the transfer did not occur. Id. CMI asserts that Ortiz does not have standing to challenge the assignment of the lien because Ortiz is not a party to the loan assignment or any agreements between CMI and the original mortgagee. Dkt. 6. Ortiz responds that he is not requesting proof of the assignment, reminiscent of the discredited “show-me-the-note” theory; instead, he requests that CMI show its authority to foreclose. See Shelton v. Flagstar Bank, F.S.B., No. H–11–3805, 2012 WL 1231756 (S.D.Tex. Apr. 12, 2012) (discussing the differences between the “show-me-the-note” theory and showing authority to foreclose); Dkt. 8 (requesting proof of authority to foreclose).

Numerous courts in Texas have noted that “a non-party to the assignment of the lien ... lacks standing to contest [the lien].” Munoz v. HSBC Bank USA, N.A., No. H–12–0894, 2013 WL 265982, at *12 (S.D.Tex. Jan. 22, 2013) (Harmon, J.); Herrera v. Wells Fargo Bank, N.A., Civil Action No. H–13–68, 2013 WL 961511, at *8 (S.D.Tex. Mar. 12, 2013) (Harmon, J.) (determining that mortgage borrowers may not “contest assignment of the Note and Deed of Trust from the original lender to another.... To establish standing, a plaintiff must assert his own legal rights and interest and cannot rely on the legal right and interest of a third party.”) (collecting cases); DeFranceschi v. Wells Fargo Bank, N.A., 837 F.Supp.2d 616, 623 (S.D.Tex.2011) (same); Eskridge v. Fed. Home Loan Mortg. Corp., No. W–10–CA–285, 2011 WL 2163989, at *5 (W.D.Tex. Feb. 24, 2011) (same).

Other courts, however, have held that a...