DTND Sierra Investments LLC v. Bank of New York Mellon Trust Co.
958 F. Supp. 2d 738
W.D. Tex.2013Background
- In 2003 the Huntleys executed a promissory Note and Deed of Trust (referencing only the street address) to SouthTrust; JPMorgan later held the loan and assigned the Note and Deed of Trust to Bank of New York Mellon (BONY) in 2010.
- The HOA foreclosed and purchased the property in December 2004; Plaintiff purchased from the HOA in June 2011 and recorded a special warranty deed.
- BONY foreclosed on January 3, 2012 via substitute trustee and bought the property at the trustee’s sale; Plaintiff alleges BONY seeks possession from Plaintiff’s tenants.
- Plaintiff sued in state court (quiet title, declaratory relief, damages, temporary restraining order, TDCPA, trespass, injunctive relief), defendant removed based on diversity; some non-diverse defendants were found improperly joined and disregarded for jurisdiction.
- Plaintiff’s amended complaint argued (1) 2010 assignment invalid, (2) Deed of Trust was defectively recorded (no legal description) so lien was subordinate to the 2004 HOA foreclosure, (3) statute of limitations barred BONY’s foreclosure due to acceleration, (4) adverse possession, and (5) TDCPA, trespass, injunctive and declaratory relief.
- The court granted BONY’s Rule 12(b)(6) motion and dismissed all claims as inadequately pleaded and implausible on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to attack 2010 assignment | Assignment was unauthorized/fraudulent (Boughton lacked authority; notarization problems) | A third party cannot defeat an assignment unless the assignment is void (not merely voidable) | Court: Allegations, if true, show at most voidable conduct; Plaintiff lacks standing to void the assignment; claim fails |
| Sufficiency of Deed of Trust description / perfection before 2004 HOA foreclosure | Deed recorded in 2003 lacked a legal/metes-and-bounds description so lien was invalid and became junior to HOA foreclosure | A street address can be a sufficient description; Plaintiff pleaded no facts showing confusion or inability to identify the property | Court: Address-based description plausibly sufficient; Plaintiff failed to plead that the Deed was invalid when recorded, so lien not shown junior; claim fails |
| Statute of limitations / acceleration of the note | Note was accelerated more than 4 years before BONY’s 2012 foreclosure, so power of sale void under Tex. Civ. Prac. & Rem. Code §16.035 | Acceleration is optional and statute runs only when holder actually accelerates; BONY recorded notices of rescission restoring original terms | Court: Plaintiff did not plausibly plead an effective acceleration >4 years prior; rescissions undermine the theory; claim fails |
| Adverse possession | Plaintiff (and HOA) possessed the property openly and continuously for statutory period, divesting BONY’s rights | Foreclosure and subsequent possession were subject to the senior Deed of Trust; possession was not hostile to BONY’s lien | Court: Pleadings show possession consistent with, not hostile to, the Deed of Trust; adverse possession not plausibly alleged; claim fails |
| TDCPA (392.304) | BONY made misrepresentations in debt collection based on fraudulent assignment | TDCPA claim merely repackages an improper challenge to assignment; Plaintiff lacks standing to void assignment | Court: TDCPA claim fails because underlying assignment challenge is voidable (not void) and cannot be the basis to state a TDCPA violation |
| Trespass / injunctive / declaratory relief | BONY (and non-diverse Goodwin) engaged in self-help, entered property and pressured tenants; seeks injunctive/declaratory relief | BONY denies participation; injunctive relief requires likelihood of success on merits; declaratory relief is discretionary and depends on viable claims | Court: Trespass inadequately pleaded against BONY (Goodwin not a party); request for TRO improper in complaint and fails for lack of viable underlying claims; declaratory relief dismissed as redundant |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must state plausible claim beyond labels and conclusions)
- Reinagel v. Deutsche Bank Nat’l Trust Co., 722 F.3d 700 (5th Cir. 2013) (third-party may only challenge assignments that are void, not merely voidable)
- Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) (optional acceleration; limitations begin when holder actually accelerates)
- AIC Mgmt. v. Crews, 246 S.W.3d 640 (Tex. 2008) (property description must furnish means to identify land with reasonable certainty)
- Tex. Builders v. Keller, 928 S.W.2d 479 (Tex. 1996) (address may suffice as property description)