throbber
Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 1 of 18 PageID #: 271
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`Case No. 4:15cv518
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`§§
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`§§
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`§§
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`MARGARET SCHUSTER
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`Plaintiff,
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`VS.
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`IRWIN MORTGAGE
`CORPORATION, et al.
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`Defendants.
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`REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
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`Pending before the Court is Defendants Mortgage Electronic Registration Systems, Inc.
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`(“MERS”), CitiMortgage, Inc. (“CitiMortgage”), and Federal National Mortgage Association’s
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`(“Fannie Mae”) Motion to Dismiss (Dkt. 5). As set forth below, the Court finds that the motion
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`should be GRANTED.
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`BACKGROUND
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`This suit involves real property located at 10462 Bobbie Lane, Pilot Point, Texas 76258 (the
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`“Property”). On or about May 31, 2005, Lloyd D. Schuster executed a Texas Home Equity Note
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`(“Note”) originally payable to Defendant Irwin Mortgage Corporation (“Irwin”) for $219,000. Dkt.
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`4 at 24. Irwin endorsed the Note in blank. Lloyd D. Schuster and his spouse, Plaintiff Margaret
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`Schuster, also executed a Texas Home Equity Security Instrument granting a security interest in the
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`Property, listing MERS as the original beneficiary of the Deed of Trust solely as nominee for Irwin
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`and its successors and assigns (collectively “Deed of Trust”).
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`1
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 2 of 18 PageID #: 272
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`The Deed of Trust further provides that: “The Note or a partial interest in the Note (together
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`with this Security Instrument) can be sold one or more times without prior notice to Borrower.” Dkt.
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`4 at 36, ¶ 19. On June 30, 2011, MERS as nominee for Irwin and its successors and assigns formally
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`assigned the Deed of Trust to CitiMortgage. Dkt. 4 at 44-45.
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`In this suit, Plaintiff challenges the validity of the Assignment and contests Defendants’
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`interest in, and authority to foreclose on, the security instrument encumbering the Property.
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`Plaintiff’s Original Petition for Declaratory Judgment – which has not been amended since removal –
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`asserts the following claims: (1) breach of contract against Defendants Irwin, MERS, CitiMortgage,
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`and Fannie Mae; (2) quiet/try title action against Defendants Irwin, MERS, CitiMortgage, and Fannie
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`Mae; (3) “void assignment” claim against Defendants Irwin, MERS, CitiMortgage; and (4) fraud
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`against Defendants Irwin, MERS, CitiMortgage, and Fannie Mae. Dkt. 4. Plaintiff also seeks an
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`automatic stay of the foreclosure sale and declaratory relief against Defendants MERS,
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`CitiMortgage, and Fannie Mae to determine whether Defendants have filed forged and fraudulent
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`documents in the public records in violation of Texas Civil Practice and Remedy Code §12.002(a)
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`and a decree that Plaintiff owns the Property and is entitled to the quiet and peaceful possession of
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`the Property and that Defendants have no interest in it.
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`Defendants have argued that Plaintiff’s petition fails to state a claim. Plaintiff has filed a
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`response in opposition. Defendants argue that the Court should not consider Plaintiff’s response
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`because it was filed after the deadline and because it asserts facts outside of the petition. The Court
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`declines to strike the response as untimely. However, Plaintiff is cautioned that the Court is limited
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`to the facts stated in Plaintiff’s petition to determine whether she has stated a claim. Southwest Bell
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`2
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 3 of 18 PageID #: 273
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`Tel. LP v. City of Houston, 529 F.3d 257, 263 (5th Cir. 2008).1 The deadline to amend pleadings has
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`passed, and the motion is ripe for resolution.
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`STANDARD FOR MOTION TO DISMISS
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`Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a party may move for
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`dismissal of an action for failure to state a claim upon which relief can be granted. FED. R. CIV. P.
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`12(b)(6). The Court must accept as true all well-pleaded facts contained in the plaintiff’s complaint
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`and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th
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`Cir. 1996). A claim will survive an attack under Rule 12(b)(6) if it “may be supported by showing
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`any set of facts consistent with the allegations in the complaint.” Bell Atlantic Corp. v. Twombly,
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`550 U.S. 544, 563, 127 S. Ct. 1955, 1969, 167 L. Ed.2d 929 (2007). In other words, a claim may
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`not be dismissed based solely on a court’s supposition that the pleader is unlikely “to find evidentiary
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`support for his allegations or prove his claim to the satisfaction of the factfinder.” Id. at 563 n.8.
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`Although detailed factual allegations are not required, a plaintiff must provide the grounds
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`of his entitlement to relief beyond mere “labels and conclusions,” and “a formulaic recitation of the
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`elements of a cause of action will not do.” Id. at 555. The complaint must be factually suggestive,
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`so as to “raise a right to relief above the speculative level” and into the “realm of plausible liability.”
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`Id. at 555, 557 n.5. “To survive a motion to dismiss, a complaint must contain sufficient factual
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`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
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`556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570,
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`1To the extent Plaintiff’s response contains allegations that do not pertain to this case, the
`Court has disregarded them. See, e.g., Dkt. 19 at 2-3 (referencing Property located in Aubrey
`rather than Pilot Point); Dkt. 19 at 6 (referencing “Defendants, Wells”).
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`3
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`

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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 4 of 18 PageID #: 274
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`127 S. Ct. 1955). For a claim to have facial plausibility, a plaintiff must plead facts that allow the
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`court to draw the reasonable inference that the defendant is liable for the alleged misconduct.
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`Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). Therefore, “where the well-pleaded facts do
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`not permit the court to infer more than the mere possibility of misconduct, the complaint has
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`alleged – but it has not shown – that the pleader is entitled to relief.” Id. (internal quotations
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`omitted).
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`Void Assignment
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`ANALYSIS
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`The Court first addresses Plaintiff’s “void assignment” claim as it forms the basis of much
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`of Plaintiff’s complaint. Plaintiff argues that the June 30, 2011 assignment of the underlying security
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`instrument was void because it was not recorded and because the individual executing it lacked
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`authority to do so on behalf of MERS. Defendants argue that the Court should dismiss this claim.
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`The Court agrees.
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`Primarily, as noted by Defendants, Texas does not recognize an independent cause of action
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`for a “void assignment.” The Court further agrees that, even if otherwise construed, Plaintiff has not
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`stated any claim in her challenge of the assignment.
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`The Deed of Trust, which names Plaintiff and her spouse as Borrowers and Irwin Mortgage
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`Corporation as Lender, provides:
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`TRANSFER OF RIGHTS IN THE PROPERTY
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`The beneficiary of this Security Instrument is MERS (solely as nominee for
`Lender and Lender’s successors and assigns) and the successors and assigns of
`MERS. This Security Instrument secures to Lender: (I) the repayment of the
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`4
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 5 of 18 PageID #: 275
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`Extension of Credit, and all extensions and modification of the Note and; (ii) the
`performance of Borrower’s covenants and agreements under this Security
`Instrument and the Note. For this purpose, Borrower irrevocably grants and
`conveys to Trustee, in trust, with power of sale, the following described
`Property....
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`Dkt. 4 at 27 (Exhibit C to Plaintiff’s Petition, emphasis added). Plaintiff’s petition also attaches the
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`June 30, 2011 Assignment of Deed of Trust naming CitiMortgage, Inc. as the Assignee. Dkt. 4 at
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`44 (Exhibit E to Plaintiff’s Petition).
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`Plaintiff does not challenge validity of the Deed of Trust and indeed relies on it in (and
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`attaches it to) her petition. According to the June 30, 2011 Assignment of Deed of Trust attached
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`to Plaintiff’s petition, MERS, as nominee for Irwin Mortgage Corporation, grants, assigns and
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`transfers over to CitiMortgage, Inc. all rights accrued and to accrue under the Deed of Trust to
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`Plaintiff’s Property. See Dkt. 4 at 44. The assignment is executed by Athena Salone Assistant
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`Secretary of MERS and, according to Plaintiff’s own Exhibit E, was recorded in the Denton County
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`records on July 22, 2011. See Dkt. 4 at 43.
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`Simply stated, the plain language of document signed by Plaintiff and her spouse on May 31,
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`2005 grants MERS and its assigns the power of sale. As the Fifth Circuit has noted, “[n]umerous
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`federal district courts have addressed [the] question, and each one to analyze Texas law has
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`concluded that Texas recognizes assignment of mortgages through MERS and its equivalents as
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`valid and enforceable....” Martins v. BAC Home Loans Serv., L.P., 722 F. 3d 249, 253 (5th Cir.
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`2013). See, e.g., Richardson v. CitiMortgage, Inc., 2010 WL 4818556, at *5 (E.D. Tex. 2010)
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`(rejecting the plaintiff’s attack on MERS, and noting that “[u]nder Texas law, where a deed of trust,
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`as here, expressly provides for MERS to have the power of sale, then MERS has the power of sale”)
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`5
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 6 of 18 PageID #: 276
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`(citing Athey v. MERS, 314 S.W.3d 161, 166 (Tex. App.– Eastland 2010)); Allen v. Chase Home
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`Finance, LLC, 2011 WL 2683192, at *3-4 (E.D. Tex. 2011); Anderson v. CitiMortgage, Inc., 2011
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`WL 1113494, at *1-2 (E.D. Tex. 2011); see also Santarose v. Aurora Bank FSB, 2010 WL 2232819,
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`at *5 (S.D. Tex. 2010) (rejecting the argument that MERS lacked standing to foreclose and was not
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`a real party in interest); Wiggington v. Bank of New York Mellon, 2011 WL 2669071, at *3 (N.D.
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`Tex. 2011). “Because the deed of trust specifically provided that MERS would have the power of
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`sale, MERS had the power of sale that was passed to [Defendant] upon MERS’s assignment.”
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`DeFranchesci v. Wells Fargo Bank, N.A., 2011 WL 3875338, at *4 (N.D. Tex. Aug. 31, 2011)
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`(quoting Richardson, 2010 WL 4818556, at *5). See also Adams v. Bank of America, N.A., 2011
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`WL 5080217, at *4 (E.D. Tex. 2011); McAllister v. BAC Home Loans Serv., LP, 2011 WL 2200672,
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`*5 (E.D. Tex. 2011); Eskridge v. Fed. Hom Loan Mortgage Corp., 2011 WL 2163989 (W.D. Tex.
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`2011); Schieroni v. Deutsche Bank National Trust Co., 2011 WL 3652194 (S.D. Tex. 2011).
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`“MERS may assign a deed of trust to a third party and that such assignments confer the new assignee
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`standing to non-judicially foreclose on property associated with that particular deed of trust.” Reece
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`v. U.S. Bank Nat. Ass’n, 762 F.3d 422, 425 (5th Cir. 2014) (citing Martins, 722 F.3d at 253–55).
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`No claim may be stated based on MERS’s authority to make the Assignment.
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`As to any challenge by Plaintiff regarding Salone’s authority to execute the Assignment, the
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`Fifth Circuit has rejected similar arguments regarding the lack of authority of a corporate
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`representative to execute any assignment. Reinagel v. Deutsche Bank Nat. Trust Co., 735 F.3d 220,
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`227 (5th Cir. 2013) (“a contract executed on behalf of a corporation by a person fraudulently
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`purporting to be a corporate officer is, like any other unauthorized contract, not void, but merely
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`6
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 7 of 18 PageID #: 277
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`voidable at the election of the defrauded principal....”). Plaintiff has not alleged any facts that would
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`make the assignment facially invalid, and, because Plaintiff was not an assignor, she cannot state a
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`claim based on any challenge to the Assignment. Golden v. Wells Fargo Bank, N.A., 557 Fed. App’x
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`323, 326 (5th Cir. 2014) (“Here, there is a facially valid assignment of the deed of trust from New
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`Century to Wells Fargo. New Century—as assignor—has not challenged the assignment.”);
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`Reinagel, 735 F.3d at 227 (“facially valid assignments cannot be challenged by want of authority
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`except by the defrauded assignor.”).
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`The Assignment gives Defendant Citibank the right to foreclose on the Property. See
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`L’Amoreaux v. Wells Fargo Bank, N.A., 755 F.3d 748, 750 (5th Cir. 2014) (“Thus, the district court
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`properly dismissed the claims against MERS because MERS was acting within its rights under the
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`Deed of Trust when it assigned its interest to Wells Fargo. Similarly, the district court properly
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`dismissed the claims against Wells Fargo because, as the holder of the Deed of Trust, Wells Fargo
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`had authority to foreclose on the L’Amoreauxes’ property.”); Wiley v. Deutsche Bank Nat. Trust Co.,
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`2013 WL 4779686, 2 -3 (5th Cir. 2013) (“In this case, the deed of trust unquestionably names MERS
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`as its beneficiary; MERS transferred the deed of trust to Deutsche Bank and recorded that transfer.
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`The Wileys’ claim that a transferee in Deutsche Bank’s position does not have the power to foreclose
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`is incorrect as a matter of Texas law.”); Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., 2013 WL
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`2422778, 2 (5th Cir. 2013) (finding that no quiet title claim had been stated where the plaintiff did
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`not challenge the validity of the Deed of Trust or suggest its interest was superior to the Deed of
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`Trust but merely questioned the validity of the assignment of the Deed of Trust by MERS); Turner
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`v. AmericaHomeKey Inc., 514 Fed. App’x 513, 516-517 (5th Cir. 2013) (affirming dismissal of quiet
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`7
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 8 of 18 PageID #: 278
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`title action where record contained documentation of transfer of deed of trust to MERS and the
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`plaintiff failed to state any facts regarding strength of his title to the property). These allegations do
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`not give rise to any plausible relief.
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`Plaintiff also argues that the security instrument was separated from the Note, somehow
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`invalidating them. See Dkt. 19 at 8. The Fifth Circuit has consistently rejected any challenges to
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`foreclosure based on a claim that the foreclosing party did not hold the note. Martins v. BAC Home
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`Loans Serv., L.P., 722 F. 3d 249, 255 (5th Cir. 2013) (“The split-the-note’ theory is therefore
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`inapplicable under Texas law where the foreclosing party is a mortgage servicer and the mortgage
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`has been properly assigned.”); Casterline v. OneWest Bank, F.S.B., 537 Fed. App’x 314, 317 (5th
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`Cir. 2013) (“MERS had the authority to transfer the Security Instrument together with the power to
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`foreclose to another party, including OneWest.”); Wigginton v. Bank of New York Mellon, 488 Fed.
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`App’x 868, 870 (5th Cir. 2012) (affirming dismissal of breach of contract and other claims that
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`Texas law rejects split-the-note theory); Hall v. BAC Home Loans Serv., L.P., 2013 WL 5515144,
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`3 (5th Cir. 2013) (the plaintiff’s “characterization of Texas law is incorrect—it simply was not
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`necessary for BAC to possess the note to foreclose.”); Epstein v. U.S. Bank Nat. Ass’n, 2013 WL
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`5340766, 3 (5th Cir. 2013).
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`As one court explains:
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`Texas law differentiates between enforcement of a promissory note and
`foreclosure. Foreclosure enforces the deed of trust, not the underlying note. It is an
`independent action against the collateral and may be conducted without judicial
`supervision. Enforcement of the promissory note, on the other hand, is a personal
`action against the signatory and requires a judicial proceeding.
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`Wells v. BAC Home Loans Serv., L.P., 2011 WL 2163987, 2 (W.D. Tex. 2011) (citing Slaughter v.
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`8
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 9 of 18 PageID #: 279
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`Qualls, 139 Tex. 340, 346, 162 S.W.2d 671, 675 (1942). See also Aguero v. Ramirez, 70 S.W.3d
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`372, 375 (Tex. App. – Corpus Christi 2002, pet. denied). TEX. PROP. CODE ANN. § 51.002; Tierra
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`Sol Joint Venture v. City of El Paso, 311 S.W.3d 492, 499 (Tex. App. – El Paso 2009, pet. denied);
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`TEX. BUS. & COM. CODE § 3.401(a); TrueStar Petroleum Corp. v. Eagle Oil & Gas Corp., 323
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`S.W.3d 316, 319 (Tex. App. – Dallas 2010, no pet.)). Plaintiff has stated no claim based on her
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`challenge of the validity of the Assignment or Deed of Trust and her “Count IV: Void Assignment”
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`should therefore be dismissed.
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`Quiet/Try Title
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`Plaintiff also asserts a quiet/try title claim, stating that Defendants claim title to the Property
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`based on fraudulent assignments and that she therefore has superior title. “[A] suit to quiet title is
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`an equitable action that involves clearing a title of an invalid charge against the title.” Cruz v.
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`CitiMortgage, Inc., 2012 WL 1836095, 4 (N.D. Tex. 2012) (citing Longoria v. Lasater, 292 S.W.3d
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`156, 165 n. 7 (Tex. App.– San Antonio 2009, pet. denied)) (quoting A.I. C. Mgt. v. Crews, 2005 WL
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`267667, at *3 n. 8 (Tex. App.– Houston [1st Dist.] 2005), rev’d on other grounds, 246 S.W.3d 640
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`(Tex. 2008)) (emphasis in original)).
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`In a suit to quiet title, a plaintiff “must allege right, title, or ownership in himself or herself
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`with sufficient certainty to enable the court to see he or she has a right of ownership that will warrant
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`judicial interference.” Wright v. Matthews, 26 S.W.3d 575, 578 (Tex. App. – Beaumont 2000, pet.
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`denied). A plaintiff in a quiet title action must recover on the strength of her own title, not the
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`weaknesses of the defendant’s. Turner v. AmericaHomeKey Inc., 514 Fed. App’x 513, 516 (5th Cir.
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`2013) (citing Humble Oil & Ref. Co. v. Sun Oil Co., 191 F.2d 705, 716 (5th Cir.1951) and Fricks
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`9
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 10 of 18 PageID #: 280
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`v. Hancock, 45 S.W.3d 322, 327 (Tex. App. – Corpus Christi 2001, no pet.)) (affirming dismissal
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`of quiet title action where the plaintiff based action of weakness of defendants’ title rather than
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`strength of his own). See also Hahn v. Love, 321 S.W.3d 517, 531 (Tex. App. – Houston [1 Dist.]
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`2009, pet. denied) (internal citations omitted) (“[i]n a suit to remove a cloud from his title, the
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`plaintiff has the burden of supplying the proof necessary to establish his superior equity and right
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`to relief.”).
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`In this case, for the reasons fully set forth above regarding her challenges to the Assignment,
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`Plaintiff has not adequately stated her superiority as to the Property. Her quiet title claim should be
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`dismissed for failure to state a claim. Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., 2013 WL
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`2422778, 2 (5th Cir. 2013) (finding that no quiet title claim had been stated where the plaintiff did
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`not challenge the validity of the Deed of Trust or suggest its interest was superior to the Deed of
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`Trust but merely questioned the validity of the assignment of the Deed of Trust by MERS); Turner
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`v. AmericaHomeKey Inc., 514 Fed. App’x 513, 516-517 (5th Cir. 2013) (affirming dismissal of quiet
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`title action where record contained documentation of transfer of deed of trust to MERS and plaintiff
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`failed to state any facts regarding strength of his title to the property).
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`To the extent Plaintiff now seeks to characterize her title claim as a “slander of title” claim
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`as stated in her response, it also fails.2 As to a claim of slander of title, one Texas Court has
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`explained:
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`2Plaintiff’s response also references a “Trust Agreement.” See Dkt. 19 at 8-9. No facts
`are stated that would show she is a party to it and it cannot form a basis for any claim here.
`Golden, 557 Fed. App’x at 326 (“plaintiffs who are not a party to the PSA ‘have no right to
`enforce its terms unless they are its intended third-party beneficiaries.’”) (citing Reinagel, 735
`F.3d at 228).
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`10
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 11 of 18 PageID #: 281
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`“Slander of title” is defined as a false and malicious statement made in
`disparagement of a person’s title to property which causes special damages. The
`requisite elements include the uttering and publishing of disparaging words that
`were false and malicious, that special damages were sustained, and that the
`injured party possessed an interest in the property disparaged. Further, the
`complaining party must demonstrate the loss of a specific sale.
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`Elijah Ragira/VIP Lodging Group, Inc. v. VIP Lodging Group, Inc., 301 S.W.3d 747, 758 -759 (Tex.
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`App. – El Paso 2009, no pet.) (internal citations omitted). Plaintiff has not stated any false
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`statements by Defendants or stated how they acted with malice. See Storm Assoc., Inc. v. Texaco,
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`Inc., 645 S.W.2d 579, 588 -589 (Tex. App. – San Antonio 1982), aff’d, 645 S.W.2d 579 (Tex. 1985)
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`(“A claim of title does not constitute malice where the claim is made under color of title or upon
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`reasonable belief that parties have title to the property acquired.”). The facts alleged – and the
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`documents she attaches to her petition – do not state an invalid assignment. And, critically, Plaintiff
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`has not alleged any facts to show the loss of any specific sale, which must be present to support a
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`slander of title action. Elijah Ragira/VIP Lodging Group, Inc., 301 S.W.3d at 758 -759. Plaintiff’s
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`“Count III: Quiet/Try Title” claim should therefore be dismissed.
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`Breach of Contract
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`Defendant argues that Plaintiff fails to state a claim for breach of contract. In asserting a
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`breach of contract claim under Texas law, a plaintiff must state: (1) the existence of a valid contract;
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`(2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant;
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`and (4) damages to the plaintiff resulting from the breach. See Lewis v. Bank of America NA, 343
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`F.3d 540, 544-45 (5th Cir. 2003). “[A] party to a contract may not bring a suit for the contract’s
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`breach if that party, itself, is in default.” Ybarra v. Wells Fargo Bank, N.A., 575 F. App’x 471, 474
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`(5th Cir. 2014) (citing Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990)).
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`11
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`

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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 12 of 18 PageID #: 282
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`As to breach, Plaintiff appears to argue that Defendants have breached Section 23 of the Deed
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`of Trust which provides:
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`23.
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`Release. Within a reasonable time after termination and full payment of the Extension of
`Credit, Lender shall cancel and return the Note to the owner of the Property and give the
`owner, in recordable form, a release of lien securing the Extension of Credit or a copy of an
`endorsement of the Note and assignment of the lien to a lender that is refinancing the
`Extension of Credit, Owner shall pay only recordation costs. OWNER’S ACCEPTANCE
`OF SUCH RELEASE, OR ENDORSEMENT AND ASSIGNMENT, SHALL
`EXTINGUISH ALL OF LENDER’S OBLIGATION UNDER SECTION, 50(a)(6)
`ARTICLE XVI OF THE TEXAS CONSTITUTION.
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`Dkt. 4 at 38. In her petition, Plaintiff claims that pursuant to this provision, Irwin was required to
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`release the security instrument upon payment by CitiMortage, and CitiMortage was required to
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`release the security instrument upon payment by Fannie Mae and that such is a breach of the contract
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`that has caused her damage because she cannot establish clear title to the Property. Dkt. 4 at 10.
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`As previously discussed, Plaintiff has not stated facts that would show any sort of cloud on
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`the title to the Property. Moreover, Plaintiff’s petition does not allege any facts to show that she and
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`her husband paid off the Note or how they otherwise performed under the contract. Instead, she
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`appears to base her breach of contract claim on an allegation that, because the original lender sold
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`the loan, all sums owing were paid and Defendants were obligated to release her obligations under
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`the loan agreement. Such an allegation is not sufficient to state a breach of contract claim and has
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`been consistently rejected by courts in this Circuit. Rice v. JPMorgan Chase Bank, Nat. Ass’n, 2015
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`WL 4112287, at *2-3 (S.D. Tex. 2015); Allen v. Washington Mut. Bank, 2015 WL 4395141, at *5-6
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`(W.D. Tex. 2015); Mason v. Fremont Inv. & Loan, 2015 WL 6549173, at *3 (N.D. Tex. 2015)
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`report and recommendation adopted, 2015 WL 6560542 (N.D. Tex. 2015). Indeed, Plaintiff’s
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`briefing does not cite to any authority to support the proposition that “a lender must decrease the
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`12
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`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 13 of 18 PageID #: 283
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`borrower's loan balance by the amount received from third-party transactions, likely because no court
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`has accepted this novel theory.” Shaver v. Barrett Daffin Frappier Turner & Engel, L.L.P., 593 Fed.
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`App'x 265, 272 (5th Cir. 2014) (collecting cases). And, to the extent Plaintiff is in default on her
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`obligations to make payments due and owing, she cannot assert a claim for breach of contract arising
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`out of the Deed of Trust. Vera v. Bank of Am., N.A., 569 F. App’x. 349, 352 (5th Cir. 2014) (citing
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`Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453, 465 (5th Cir. 2003)). Plaintiff’s
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`references to matters of presentment under the UCC in other portions of her petition are equally
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`unavailing. Therefore, Plaintiff fails to state a breach of contract claim that is plausible on its face,
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`and Plaintiff’s “Count II: Breach of Contract” should be dismissed with prejudice.
`
`Fraud
`
`Next, the Court turns to Plaintiff’s fraud claim. To assert a claim of fraud under Texas law,
`
`a plaintiff must allege that: (1) a material representation was made; (2) the representation was false;
`
`(3) when the representation was made, the speaker knew it was false or made it recklessly without
`
`any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with
`
`the intent that the other party should act upon it; (5) the party acted in reliance on the representation;
`
`and (6) the party thereby suffered injury. Flaherty & Crumrine Preferred Income Fund, Inc., 565
`
`F.3d 200, 212 (5th Cir. 2009) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d
`
`573, 577 (Tex. 2001)). Further, to state a claim for fraud in federal court, a plaintiff must state with
`
`particularity the circumstances constituting fraud or mistake. FED. R. CIV. P. 9(b). “At a minimum,
`
`Rule 9(b) requires that a plaintiff set forth the ‘who, what, when, where, and how’ of the alleged
`
`fraud.” U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir.
`
`13
`
`

`
`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 14 of 18 PageID #: 284
`
`1997); see also Carroll v. Fort James Corp., 470 F.3d 1171, 1174 (5th Cir. 2006) (“In cases
`
`concerning fraudulent misrepresentation and omission of facts, Rule 9(b) typically requires the
`
`claimant to plead the type of facts omitted, the place in which the omissions should have appeared,
`
`and the way in which the omitted facts made the representations misleading.”) (citing United States
`
`ex rel. Riley v. St. Luke’s Episcopal Hospital, 355 F.3d 370, 381 (5th Cir. 2004) (citing 2 James W.
`
`Moore, et al., Moore’s Federal Practice § 9.03[1][b] at 9-18 through 9-19 (3d ed. 2003))).
`
`In her petition, Plaintiff alleges the following:
`
`Plaintiff asserts that the Defendant 1) made a representation to Plaintiff by entering
`an agreement with Plaintiff, i.e. the Home Equity Note and Security Instrument; 2)
`Defendants’ representations regarding release are a material aspect of the agreement;
`3) IRWIN’s representations were false because they in fact did not execute a release
`upon payment of all sums by CITI and later CTI [sic] upon payment of all sums by
`FNMA; 4) when the Defendants made the representations, as indicated by
`Defendants’ behavior in not performing their duties as defined by the Security
`Instrument and Home Equity Note, it did so recklessly and without knowledge of the,
`truth of the representation; 5) Defendants made the representations with the intent
`that Plaintiff act on them and induced them to make payments to Defendants; 6)
`Plaintiff relied on the representations and accepted making payments to the
`Defendants on the loan; 7) the representations caused the Plaintiff injury due to
`Defendants’ failure to comply with its representations, thus it has prevented Plaintiff
`from obtaining clear and marketable title to the Property.
`
`Dkt. 4 at 14.
`
`Plaintiff also bases her fraud claim on an argument that Defendants knew or should have
`
`known that the Assignment was fraudulent because Salone was not authorized to execute it. Dkt.
`
`4 at 14. Plaintiff also argues that the Assignment “contained fraudulent statements therefore void
`
`[sic].” Dkt. 19 at 9.
`
`14
`
`

`
`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 15 of 18 PageID #: 285
`
`The Court first notes that any fraud claim based on any purported representations made at
`
`the time the loan documents were executed in 2005 are barred by the four-year statute of limitations.
`
`TEX. CIV. PRAC. & REM. CODE §16.004(a)(4). And, even if the limitations period could be tolled
`
`for some reason as to any other alleged misrepresentation, Plaintiff cannot establish the
`
`misrepresentation element necessary for fraud and has not stated any misrepresentation sufficient
`
`under Rule 9(b)’s pleading standards. As to Plaintiff’s claim that Irwin made a false representation,
`
`“because they [sic] in fact did not execute a release upon payment of all sums by CITI and later CTI
`
`[sic] upon payment of all sums by FNMA,” Dkt. 4 at 14, the who, what, where, when of the
`
`representation has not been sufficiently stated.
`
`As to any claim based on the 2011 Assignment, the Court has already found that no facts
`
`have been stated that would make it invalid or fraudulent. Even assuming it meets the heightened
`
`pleading standard required for fraud, no fraud claim can be stated based on the Assignment. Plaintiff
`
`has not alleged how she relied on the Assignment or any other claimed misrepresentations sufficient
`
`to sustain a fraud claim. As discussed above, no claim can be stated based on an argument that
`
`Plaintiff has been released of her payment obligation as a result of the Assignment.
`
`The Court briefly addresses Plaintiff’s claim that Defendants have filed forged and fraudulent
`
`documents in the public records in violation of Texas Civil Practice and Remedy Code §12.002(a).
`
`To establish a violation of Texas Civil Practice and Remedies Code Section 12.002, which prohibits
`
`the filing of false liens against another’s property, a plaintiff must show that “defendant made,
`
`presented, or used a document with: (1) knowledge that document was a fraudulent lien; (2) intent
`
`that document be given the same legal effect as a court record evidencing a valid lien; and (3) intent
`
`15
`
`

`
`Case 4:15-cv-00518-RC-DDB Document 22 Filed 02/05/16 Page 16 of 18 PageID #: 286
`
`to cause another person to suffer financial injury.” Vanderbilt Mortg. and Finance, Inc. v. Flores,
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`692 F.3d 358, 376-77 (5th Cir. 2012).
`
`Not only has Plaintiff failed to show how the Assignment here is fraudulent, Plaintiff has
`
`failed to plead any facts that would show that Defendants intended to cause her physical injury,
`
`financial injury, or mental anguish, or any facts that would show that the Property would not
`
`otherwise have been subject to foreclosure absent the Assignment. She is not entitled to any
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`declaratory relief under § 12.002 of the Texas Civil Practice & Remedies Code. Reece v. U.S. Bank
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`Nat. Ass’n, 762 F.3d 422, 424 (5th Cir. 2014).3
`
`Plaintiff’s “Count IV: Fraud” should therefore be dismissed for failure to state a claim.
`
`Injunctive and Declaratory Relief
`
`Finally, Plaintiff seeks a stay order to prevent a foreclosure sale as well as a declaration that
`
`she owns the subject property. Because Plaintiff has failed to state any facts entitling her to any
`
`relief, she is not entitled to declaratory or injunctive relief. See California Prods., Inc. v. Puretex
`
`3This Court makes this finding without reaching whether the Assignment at issue would
`fall within the purview of Section 12.002(a). The Court notes that “[c]ourts interpreting Section
`12.002(a) have held that, in order to state a claim, the plaintiff must allege the challenged
`instrument purported to create a lien or claim against real property.” Perdomo v. Fed. Nat.
`Mortgage Ass’n, 2013 WL 1123629, at *5 (N.D. Tex. 2013) (citing Marsh v. JPMorgan Chase
`Bank, N.A., 888 F. Supp.2d 805, 2012 WL 3756276, at *7 (W.D. Tex. 2012)). Federal district
`courts in cases like Plaintiff’s have found that, because an assignment merely transfers an
`existing deed of trust from one entity to another, it does not create a lien or claim against real
`property as contemplated by the statute. Akins v. Wells Fargo Bank, N.A. 2013 WL 4735581, 3
`(E.D. Tex. 2013) (Schell, J.); Jaimes v. Federal Nat. Mortg. Ass’n, 930 F. Supp.2d 692, 697
`(W.D. Tex. 2013) (“both the plain language and legislative history

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