U.S. Bank, N.A. v. Smith (In re Smith)
| Decision Date | 13 January 2015 |
| Docket Number | Adversary No. 13–03198.,Bankruptcy No. 12–34955. |
| Citation | 524 B.R. 125 |
| Parties | In re Stephanie G. SMITH, Debtor(s). U.S. Bank, N.A., as Trustee, Plaintiff(s), v. Stephanie G. Smith, et al, Defendant(s). |
| Court | U.S. Bankruptcy Court — Southern District of Texas |
OPINION TEXT STARTS HERE
H. Gray Burks, IV, ShapiroSchwartz LLP, Houston, TX, for Plaintiff(s).
Eloise A. Guzman, Guzman Law Firm, Houston, TX, Richard A. McKinney, Higier Allen & Lautin, P.C., Addison, TX, for Defendant(s).
U.S. Bank and GMAC filed a motion to dismiss Green Tree and Bank of New York's counterclaims for failure to state a claim upon which relief may be granted. (ECF No. 43). The counterclaims for trespass to try title and note discharged by payment under the Texas UCC are dismissed. Green Tree and Bank of New York have sufficiently stated a claim for negligence and a common law claim for note discharged by tender of payment. Accordingly, the motion is granted in part, and denied in part.
On August 26, 1999, Stephanie Smith, purchased real property and executed a promissory note (“Original Note”) for $71,910.00 secured by a deed of trust (“Original Deed of Trust”). (ECF No. 18 at 5). The first lien mortgage was recorded in the Harris County real property records on September 14, 1999. ( Id.). The Original Note and Original Deed of Trust were assigned to U.S. Bank. ( Id.). GMAC Mortgage, LLC is the current mortgage servicer. The Original Deed of Trust has not been released.
On April 23, 2007, Smith executed a Home Equity Note (“Second Note”) and Deed of Trust (“Second Deed of Trust”) in an attempt to refinance her mortgage. (ECF No. 18 at 5). The Second Deed of Trust was recorded on April 30, 2007. A portion of the proceeds of the Second Note was designated to pay off and satisfy the Original Note and Deed of Trust.
The original lender on the Second Note was The CIT Group/Consumer Finance, Inc. The Second Note and Deed of Trust have been assigned to Bank of New York. Green Tree Servicing, LLC is the current servicer on the Second Note.
On March 12, 2007, Country Title LLC, the company closing the home equity loan, received a payoff statement for the Original Note. It reflected that the amount due as of March 12, 2007 was $71,504.66 with a per diem of $23.78. (ECF No. 42–1 at 1). The payoff statement contained the following relevant terms: (i) “Add a late charge of $38.61, if received after March 16th;” (ii) “If funds are sent via wire, please add a wire fee of $5.00;” (iii) “This quote is only valid up to 30 days after issue date or up to the PENDING COSTS G/T date is specified above”; and (iv) “Balances owed will change if a payment becomes due, is late, is paid, is reversed or if a disbursement for taxes or insurance is made on your behalf.” ( Id.).
The home equity loan closed on or about April 23, 2007 at Country Title. (ECF No. 42 at 3). On April 27, 2007, Country Title transferred $72,000.08 of the loan proceeds to Homecomings Financial, the prior mortgage servicer, in an attempt to pay off the Original Note. Homecomings rejected the payment and returned the funds. On two additional dates, July 16, 2007 and August 3, 2007, Country Title transferred funds to Homecomings. The funds were again returned on each these two occasions.
On April 3, 2007, Smith had made her monthly $1,312.95 mortgage payment on the Original Note. (ECF No. 42–1 at 6).
BONY and Green Tree contend that if Smith's April 3 payment is added to the amount that was sent by Country Title on April 27, 2007, then the amount sent by Country Title was sufficient to pay off the Original Note. (ECF No. 44 at 4).
GMAC and U.S. Bank do not dispute that (i) on April 27, 2007, Country Title transferred $72,000.08 to the credit account of Homecomings, (ii) that Smith made the April 3, 2007 mortgage payment, and (iii) Country Title made two additional attempts to transfer the funds to Homecomings. However, U.S. Bank maintains that the funds were rightfully returned on all three occasions because (i) the funds were short of a full payoff and (ii) the wire transfer had the wrong account number. (ECF No. 18 at 6–7). None of the parties have identified which party has the loan proceeds that were set aside to pay off the Original Note.
On July 2, 2012, Smith filed a chapter 13 bankruptcy petition. (Case No. 12–34955, ECF No. 1).
U.S. Bank and GMAC filed a proof of claim asserting a first lien, purchase money mortgage on Smith's principal residence in the total secured amount of $116,471.73, including a pre-petition arrearage claim of $54,934.48. (ECF No. 18 at 4).
BONY and Green Tree filed a proof of claim asserting a first lien home equity mortgage on Smith's principal residence in the total amount of $88,776.12, including a pre-petition arrearage of $5,917.01. (Id.).
Smith objected to U.S. Bank's proof of claim alleging that she refinanced the Original Note in 2007, with the Second Note. She asserted that the Original Note was paid in full. Smith did not object to Green Tree's proof of claim. (ECF No. 18 at 4). On Schedule A, the real property's value is listed at $111,646.00. (Case No. 12–34955, ECF No. 1 at 6).
On December 20, 2013, U.S. Bank filed its amended complaint to determine the validity and priority of its lien and objection to the claim and lien priority of Green Tree 1 and BONY. (ECF No. 18).
On July 10, 2014, BONY and Green Tree filed a counterclaim against U.S. Bank and GMAC. (ECF No. 42). On July 31, 2014, U.S. Bank filed a motion to dismiss Green Tree's counterclaims. (ECF No. 43). On August 20, 2014, Green Tree filed a response to the motion to dismiss. (ECF No. 44). Finally, on September 14, 2014, U.S. Bank filed a reply to Green Tree's response. (ECF No. 46).
The Court reviews motions under Rule 12(b)(6) by “accepting all well-pleaded facts as true and viewing those facts in the light most favorable to the plaintiffs.” Stokes v. Gann, 498 F.3d 483, 484 (5th Cir.2007) (per curiam). However, the Court “will not strain to find inferences favorable to the plaintiff.” Southland Sec. Corp. v. INSpire Ins. Solutions Inc., 365 F.3d 353, 361 (5th Cir.2004) (internal quotations omitted).
To avoid dismissal for failure to state a claim, a plaintiff must meet Fed.R.Civ.P. 8(a)(2)'s pleading requirements. Rule 8(a)(2) requires a plaintiff to plead “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). In Ashcroft v. Iqbal, the Supreme Court held that Rule 8(a)(2) requires that “the well-pleaded facts” must “permit the court to infer more than the mere possibility of misconduct.” 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Rule 8(a)(2)). “Only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “[A] complaint does not need detailed factual allegations, but must provide the plaintiff's grounds for entitlement to relief—including factual allegations that when assumed to be true raise a right to relief above the speculative level.” Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir.2009) ().
Green Tree asserts four substantive claims against U.S. Bank: (i) trespass to try title, (ii) note discharged by payment under the Texas UCC, (iii) common law claim for discharge by tender of payment, and (iv) negligence. (ECF No. 42). Green Tree also requests determination of the validity and priority of liens and declaratory judgment as forms of relief for its substantive claims.
In its motion to dismiss, U.S. Bank argues that (i) Green Tree has not plead sufficient facts to support each of its substantive claims and (ii) that each claim is barred by the applicable statute of limitations. (ECF No. 43). The Court will first address whether Green Tree pleads sufficient facts to support each of its four claims.
Green Tree's complaint fails to allege facts to support its claim for trespass to try title and “note discharged by payment” claim under the Texas UCC. Green Tree has alleged sufficient facts to support its negligence claim and common law claim for discharge by tender of payment.
Green Tree's trespass to try title claim fails because it does not allege that U.S. Bank unlawfully entered upon and dispossessed Green Tree of the property.
“A trespass to try title action is the method of determining title to lands, tenements, or other real property.” Tex. Prop.Code. § 22.001(a).
Under Texas law, a trespass to try title claim is different from a suit to remove cloud or quiet title. See Katz v. Rodriguez, 563 S.W.2d 627, 629 (Tex.Civ.App.1977) (citing Standard Oil Co. v. Marshall, 265 F.2d 46 (5th Cir.1959) ( ).
“Trespass to try title is an action to recover the possession of land unlawfully withheld from an owner who has a right of immediate possession.” Katz v. Rodriguez, 563 S.W.2d 627, 629 (Tex.Civ.App.1977).
“To state a claim for trespass to try title, the plaintiff must allege that the defendant unlawfully entered upon and dispossessed him of such premises, stating the date, and withholds from him the possession thereof.” Serna v. U.S. Bank, N.A., No. CIV.A. H–13–2559, 2014 WL 108732, at *2 (S.D.Tex. Jan. 9, 2014) (quoting Martinez v. CitiMortgage, Inc., CIV.A. H–13–0727, 2013 WL 2322999, at *2 . In Serna, the District Court granted defendant's motion to dismiss a claim for trespass to try title where defendant never withheld possession of the property from plaintiff. Id.; see also Hurd v. BAC Home Loans...
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