Smith v. Bank of Am., N.A.

• Decision Date: 03 September 2013
• Docket Number: Case No. 13-0333-CV-W-ODS
• Parties: JAMES SMITH and AIMEE SMITH, Plaintiffs, v. BANK OF AMERICA, N.A., et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

JAMES SMITH and AIMEE SMITH, Plaintiffs,
v.
BANK OF AMERICA, N.A., et al., Defendants.

Case No. 13-0333-CV-W-ODS

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

DATE: September 3, 2013

ORDER AND OPINION GRANTING MOTIONS TO DISMISS AND DISMISSING ALL CLAIMS ASSERTED AGAINST BANK OF AMERICA, N.A., MERSCORP HOLDINGS, INC., AND SELECT PORTFOLIO SERVICING INC.

Pending are two motions to dismiss: one filed jointly by Bank of America, N.A. ("BANA") and MERSCORP Holdings, Inc. ("MERSCORP Holdings"), and the other filed by Select Portfolio Servicing, Inc. ("Select Portfolio"). Both motions (Doc. # 17 and Doc. # 19) are granted.

I. BACKGROUND

Ascertaining the Complaint's allegations is rather difficult: the Complaint is filled with legal conclusions, rarely distinguishes between the Defendants, and occasionally uses the terms "Plaintiffs" and "Defendants" interchangeably. The Court has been able to piece together the following:

Plaintiffs executed a note on January 20, 2006, in the amount of $110,700; the money was borrowed from MILA, Inc. d/b/a Mortgage Investment Lending Associates, Inc. ("MILA"). MILA is not a party to this suit. The loan was secured by a Deed of Trust granting a lien on Plaintiffs' house; the Record is not clear, but it appears the mortgage was used to finance Plaintiffs' purchase of the property. The original Trustee was Assured Quality Title; the Trustee is not a defendant in this suit. The Deed of Trust identifies Mortgage Electronic Registration Systems, Inc., or "MERS" as both (1) a nominee for the lender and its assigns and (2) the beneficiary under the instrument.

Page 2

The Deed of Trust further provides that "Borrower understands and agrees that MERS holds only legal title to the interest granted by Borrower in this Security Instrument, but, . . . MERS (as nominee for Lender and Lender's successors and assigns) has" certain rights, "including but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender . . . ."¹ MERS is not named as a defendant (although its parent corporation, MERSCORP Holdings, Inc., is).

Plaintiffs (and, to be fair, Defendants) do not explain the moving Defendants' (particularly BANA's and Select Portfolio's) roles in this matter. Plaintiffs allege that at some point after closing, the Note was assigned to Specialty Underwriting and Residential Financial Trust, which appointed BANA as loan servicer, Complaint, ¶ 6(f), and that Select Portfolio "now claims to be mortgage servicer for the Trust as of March 8, 2013." Complaint, ¶ 6(f)(1). At some point, Plaintiffs' loan was pooled with other mortgages to support mortgage-backed securities; Plaintiffs intimate this act somehow broke the chain of title, but this legal conclusion is not supported with facts (or, for that matter, an explanation of any kind). Plaintiffs conclude BANA "is the Master Servicer . . . and therefore, is acting on behalf of the Trust, which is not the holder of said promissory note." Complaint, ¶ 9(b). This reference to "the trust" appears to be a reference to the trust supporting the mortgage-backed securities and not the Deed of Trust.

The Court infers that someone is trying to foreclose on the property, given that Plaintiffs also offer the following legal conclusion: "Defendants have no interest of any kind, nor authority to act on any owner's behalf in the bringing of foreclosure. Defendants have no standing to move forward in this matter." Complaint, 9(a). In addition, Plaintiffs' request for relief includes a request for a declaration "that the foreclosure which was initiated be deemed and declared illegal and void and that further proceedings in connection with the foreclosure be enjoined . . . ." To justify this relief,² Plaintiffs allege the following causes of action:

Page 3

Count I	Predatory Lending
Count II	Servicer Fraud
Count III	Violations of the Home Ownership Equity Protection Act
Count IV	Violations of the Real Estate Settlement Procedures Act
Count V	Breach of Fiduciary Duty
Count VI	Identity Theft
Count VII	Violations of the Racketeer Influenced and Corrupt Organizations Act
Count VIII	Quiet Title

II. DISCUSSION

The liberal pleading standard created by the Federal Rules of Civil Procedure requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Fed. R. Civ. P. 8(a)(2)). "Specific facts are not necessary; the statement need only 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Id. (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In ruling on a motion to dismiss, the Court "must accept as true all of the complaint's factual allegations and view them in the light most favorable to the Plaintiff[ ]." Stodghill v. Wellston School Dist., 512 F.3d 472, 476 (8^th Cir. 2008).

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. 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. 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. 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.

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).

Page 4

In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When 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. at 1950.

The Court is limited to a review of the Complaint; the only items outside the Complaint that may be considered are (1) exhibits attached to the Complaint, and (2) materials necessarily embraced by the Complaint. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003). This permits the Court to consider the Note and Deed of Trust, which are both attached to, and fairly embraced by, the Complaint.

The Complaint is deficient because it utilizes legal conclusions in lieu of factual allegations. While the moving Defendants have not specifically phrased their arguments in this manner, the Court makes this point because it forms the underlying basis for most of the flaws they have posited. As explained above, Iqbal and Twombley require the Court to ignore legal conclusions when evaluating the Complaint's sufficiency - but that is practically all the Complaint offers. To the extent facts are alleged, they do not state a claim that is plausible on its face. Cf. Badrawi v. Wells Fargo Home Mortg., Inc., 718 F.3d 756, 758 (8^th Cir. 2013) (citing Twombley). Plaintiffs seem to allege a wide-ranging conspiracy involving every lender, bank, or other participant connected to the mortgage loan industry to make inappropriate loans to borrowers in order to generate mortgages that could be pooled and enable the marketing of mortgage-backed securities. The magnitude of a single conspiracy encompassing so many actors is not plausible on a face, and simply alleging it to be true - without more - is not sufficient. And without this allegation, there is little to connect these Defendants to the claims Plaintiffs have asserted. For instance, (1) Count I is premised on the original lender's failure to make certain disclosures, but Plaintiffs offer no explanation as to how anyone other than the original lender could be liable for such failings, (2) Count III is premised on the original lender's failure to make certain disclosures, but Plaintiffs offer no reason why any other Defendant should be liable, and (3) Count V asserts one or more breaches of fiduciary duty, but does not

Page 5

explain who the alleged fiduciary was (or why they are a fiduciary). These are just a few examples. In the main, the Complaint asserts a multitude of grievances, but insufficiently pleads a basis for making these Defendants answer for them.

A. Failure to Assert Basis for Liability as to MERSCORP Holdings

The preceding discussion segues to MERSCORP Holdings' first argument: the Complaint is devoid of any allegations against it. Mortgage Electronic Registration Systems, Inc., is mentioned in the Complaint...