Kan v. ONEWEST BANK, FSB
823 F. Supp. 2d 464
W.D. Tex.2011Background
- Kan, a California resident, is in default on Texas real-property loans and faces foreclosure in the Western District of Texas (diversity removal).
- Kan allegedly executed a series of dubious recordings (Modification of Deed of Trust to $0,0; Substitute of Trustee; Full Reconveyance; Recission) and conveyed property to a trust (D.T.S.A.) to evade creditors.
- Kan sent notices asserting these recordings were effective after nonresponse, signaling a scheme similar to his prior case in this Court.
- Kan asserts a show-me-the-note theory and challenges OneWest Bank, N.A./OneWest Bank, FSB's authority to foreclose, while offering boilerplate causes of action.
- The court grants in part and denies in part OneWest’s Rule 12(b)(6) motion, dismisses seven claims with prejudice, dismisses four remaining claims without prejudice, and conditionally awards TDCA-attorney’s fees; it retains jurisdiction on fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kan states a plausible claim under Rule 12(b)(6). | Kan argues OneWest lacks authority to foreclose. | OneWest shows it is authorized under the deed of trust. | No plausible claim; claims fail under Iqbal/Twombly. |
| Whether the four remaining claims state a claim. | Kan's remaining claims should survive. | Claims rely on speculative note-holding; failed as a matter of law. | Dismissed without prejudice. |
| Whether Kan’s TDCA claim was brought in bad faith; attorney’s fees appropriate. | TDCA claim has merit; fees not warranted. | TDCA claim filed in bad faith/harassment; fees warranted. | TDCA claim deemed bad-faith/harassment; fees conditionally awarded. |
| Whether foreclosing mortgage servicer must produce the original note. | Production of the note is required to foreclose. | Foreclosure can proceed without original note; service rights suffice. | Foreclosure may proceed without original note; no production required. |
| Whether dismissal should be with prejudice for the asserted claims. | Dismissing without prejudice undermines rights. | Dismissing with prejudice appropriate for certain claims. | Seven claims dismissed with prejudice; others without prejudice. |
Key Cases Cited
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (plausibility required; facts must show viable claim)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (facilitate plausible claims; not mere speculation)
- Conley v. Gibson, 355 U.S. 41 (U.S. 1957) (fair notice in Rule 8; pleading must be adequate)
- Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163 (U.S. 1993) (limits on pleading and summary judgment paradigms)
- Papasan v. Allain, 478 U.S. 265 (U.S. 1986) (courts accept well-pled facts; reject conclusory assertions)
- Slaughter v. Quails, 162 S.W.2d 671 (Tex. 1942) (foreclosure enforcement via deed of trust; lien scope)