Wilson v. Deutsche Bank Trust Co.

SUSAN LYNN WILSON (THOMAS), et al., Plaintiffs, v. DEUTSCHE BANK TRUST COMPANY AMERICAS, ASTRUSTEE FOR RESIDENTIAL ACCREDIT LOANS, INC.,MORTGAGE ASSET-BACKED PASSTHROUGH CERTIFICATES,SERIES 2006-QS5, et al., Defendants.

Civil Action No. 3:18-CV-0854-D

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

January 10, 2019

MEMORANDUM OPINION AND ORDER

In this removed action arising from an attempted foreclosure, defendants Deutsche Bank Trust Company Americas, as Trustee for Residential Accredit Loans, Inc., Mortgage Asset-backed Passthrough Certificates, Series 2006-QS5 ("Deutsche Bank") and Ocwen Loan Servicing, LLC ("Ocwen") move to dismiss the claims of pro se plaintiffs Susan Lynn Wilson (Thomas) and Tommy Thomas for failure to state a claim on which relief can be granted. For the reasons that follow, the court grants the motion and grants the Thomases leave to replead.

I

In 2006 the Thomases obtained a home equity loan from Wachovia Bank ("Wachovia") secured by the Thomases' residence located on Berkshire Lane in Dallas. They became delinquent on the loan in 2008. The following year, the Thomases' loan servicer, Homecomings Financial, invited the Thomases to apply for a loan modification. The Thomases applied, and a new loan servicer—GMAC Mortgage, LLC ("GMAC")—approved their application. Under the terms of the modification agreement, if the Thomases successfully made three on-time payments in an agreed-upon reduced amount, the reduced payment amount would become permanent. The Thomases allege that although they upheld their end of the bargain, GMAC did not: GMAC returned the third on-time payment, and Deutsche Bank (the assignee of the lien against the Thomases' residence) attempted to foreclose. Deutsche Bank nonsuited (i.e., voluntarily dismissed) the initial foreclosure action in 2013, but then initiated a new foreclosure in 2015. The first amended complaint¹ does not specify how the 2015 foreclosure action concluded, but defendants commenced the foreclosure process again in March 2017.

The present case is not the first time the Thomases have challenged defendants' power to foreclose. In 2015 they filed a lawsuit in Texas state district court attempting on statute-of-limitations grounds to block defendants from foreclosing. See Wilson v. Deutsche Bank Tr. Co. Ams., No. 3:15-CV-3536-N, at *1 (N.D. Tex. June 29, 2016) (Godbey, J.). Defendants removed the action to this court, and Judge Godbey dismissed the Thomases'claims. Id. at 6.

The Thomases filed the instant lawsuit—again in Texas state district court—after submitting loss mitigation applications to their current loan servicer, Ocwen, in September 2016 and March 2017. According to the Thomases, even though Ocwen acknowledged receipt of a completed application in April 2017, defendants continued to attempt to foreclose on the Thomases' residence. The Thomases seek damages and injunctive relief on a number of grounds. They allege that defendants lack authority to foreclose because the chain of title from Wachovia to Deutsche Bank is insufficiently proved and contains void transfers; the assignments in the chain of title are fraudulent under Tex. Civ. Prac. & Rem. Code Ann. § 12.002 (West 2017); and defendants have in various ways violated the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), Pub. L. No. 111-203, 124 Stat. 1376 (2010), the Gramm-Leach-Bliley Act ("GLBA"), Pub. L. No. 106-102, 113 Stat. 1338 (1999), and the Truth-in-Lending Act ("TILA"), Pub. L. No. 90-321, 82 Stat. 146 (1968). Defendants removed the case to this court, and now move to dismiss on the grounds of res judicata² and failure to state a claim on which relief can be granted.

II

Under Fed. R. Civ. P. 12(b)(6), the court evaluates the pleadings by "accept[ing] 'all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'" In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). To survive a motion to dismiss, the Thomases must allege enough facts "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "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." Id.; see also Twombly, 550 U.S. at 545 ("Factual allegations must be enough to raise a right to relief above the speculative level[.]"). "[W]here the well-pleaded facts donot permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Although "the pleading standard Rule 8 announces does not require 'detailed factual allegations,'" it demands more than "labels and conclusions." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). And "a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Twombly, 550 U.S. at 555).

III

In their reply brief, defendants contend that the Thomases have failed to respond to a number of defendants' arguments for dismissal, and therefore have conceded them. They cite the proposition that "[w]hen a party fails to pursue a claim or defense beyond the party's initial complaint, the claim is deemed abandoned or waived." Roberts v. Overby-Seawell Co., 2018 WL 1457306, at *11 (N.D. Tex. Mar. 23, 2018) (Lindsay, J.) (citing Black v. Panola Sch. Dist., 461 F.3d 584, 588 n.1 (5th Cir. 2006); Keenan v. Tejeda, 290 F.3d 252, 262 (5th Cir. 2002)). The court expresses no opinion on whether, when plaintiffs completely fail to address any of the arguments for dismissal of one of their claims, they have abandoned that claim. But contrary to defendants' characterization, the Thomases at least attempt to address each of the issues identified in the "Statement of Issues to be Decided" section of defendants' motion to dismiss. Compare Ds. Mot. Dism. 1-2, with Ps. Resp. 9-13. The fact that the Thomases do not always respond thoroughly or effectively does not evince an intentto abandon any claims—particularly given the Thomases' status as pro se litigants. Cf. Theriault v. Silber, 579 F.2d 302, 303 (5th Cir. 1978) (per curiam) ("[T]his court and others have recognized that those unskilled in the law should not be held to strict standards of pleading."). The court will not dismiss any of the Thomases' claims on the ground that they have waived them due to insufficient briefing.

IV

The court next considers the sufficiency of the Thomases' allegations on the merits.

A

The Thomases have not plausibly pleaded that defendants lack authority to foreclose on the Thomases' residence. The question turns on the validity of two assignments of the Thomases' note and deed of trust: one in 2008 from Mortgage Electronic Registration Systems, Inc. ("MERS") as "nominee" for Wachovia to Deutsche Bank "as trustee"; and one in 2012 from Deutsche Bank "as trustee, by Residential Funding Company, LLC, FKA Residential Funding Corporation, attorney-in-fact" to Deutsche Bank "as trustee for RALI 2006-QS5." See 1st Am. Compl. Ex. B (capitalization omitted).

The Thomases allege that the 2008 assignment is void for several reasons. First, citing Deutsche Bank National Trust Co. v. Burke, 286 F.Supp.3d 802 (S.D. Tex. 2017), they contend that the 2008 assignment is void because MERS executed the assignment document in its capacity as "nominee" rather than as "beneficiary." 1st Am. Compl. ¶ 6. But the Fifth Circuit recently reversed the magistrate judge's opinion in Burke, rejecting the argument that this semantic difference has any impact on MERS's authority to convey the note and deedof trust. See Deutsche Bank Nat'l Tr. Co. v. Burke, 902 F.3d 548, 549-50 (5th Cir. 2018) (per curiam). This court, applying Fifth Circuit precedent, rejects this argument as well.

The Thomases also allege that the 2008 assignment is fraudulent, and therefore void, because it was "robo-signe[d]" by MERS employee Jeffrey Stephan ("Stephan"). 1st Am. Compl. ¶ 6. But where there is a "signed, notarized assignment document that has also been recorded by the county clerk," the assignee can foreclose even if the assigning document was robo-signed. See Wood v. Bank of Am., 2015 WL 2378958, at *7 (N.D. Tex. Apr. 23, 2015) (Cureton, J.) (citing Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 252 (5th Cir. 2013)), rec. adopted, 2015 WL 2383330, at *1 (N.D. Tex. May 18, 2015) (O'Connor, J.). The Thomases themselves have submitted a notarized, recorded assignment document as an attachment to the first amended complaint. See 1st Am. Compl. Ex. B; see also Hawk v. Deutsche Bank Nat'l Tr. Co., 2015 WL 8164779, at *1 n.1 (N.D. Tex. Dec. 8, 2015) (Fitzwater, J.) (explaining that court may generally consider documents attached to complaint in deciding Rule 12(b)(6) motion). Therefore, the Thomases' robo-signing argument fails.

In addition to the allegations in the first amended complaint, the Thomases argue in their response brief that, because the 2008 assignment document does not include a MERS identification number ("MIN")—as required by a checklist taken from the "MERS Registry System Handbook"—Stephan lacked authority to execute the document, rendering it invalid. Ps. Resp. 3. Assuming arguendo that the court can consider this contention (and the evidence in support of it) as presented, the court is not persuaded. The court has found no instance of any federal court...