Michael Bynane v. The Bank of New York Mellon, et
2017 U.S. App. LEXIS 14309
| 5th Cir. | 2017Background
- In 2006 Bynane executed a mortgage note secured by a deed of trust registering MERS as nominee; MERS later assigned the deed to The Bank of New York Mellon (BONYM) as trustee for a securitization trust.
- After default, BONYM accelerated, obtained foreclosure authority, and the property sold at substitute-trustee sale in March 2015 to David Guzman; Bynane sued in state court and the case was removed to federal court.
- Bynane filed a second state-court action after voluntarily dismissing the first; defendants removed again on diversity grounds and moved to dismiss for failure to state a claim. The district court dismissed Bynane’s claims and denied leave to amend; Bynane appealed.
- Threshold jurisdictional dispute: whether diversity is determined by the trustee’s citizenship (BONYM) or by the trust’s certificateholders/shareholders following Americold.
- Substantive disputes on appeal included (1) whether the MERS→BONYM assignment was void for lack of authority or forgery, and (2) whether promissory estoppel and proposed Texas Constitution §50(a)(6) claims could be plead/amended.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trustee or trust-members control diversity analysis (BONYM’s citizenship vs trust shareholders) | Look to trust shareholders (Americold governs) | Trustee sued in its own name; Navarro controls so trustee citizenship governs | Held for defendants: BONYM’s citizenship controls because it was sued as trustee and had "real and substantial" control over trust assets |
| Whether a post-sale transfer (Guzman→Julian) destroys diversity by making a non-diverse real party in interest | Guzman sold to Julian (Tex. citizen) before removal; look through Guzman to Julian so diversity failed | Guzman was a named defendant and not merely an agent; court need not consider nonparties’ citizenship | Held for defendants: court need not "look through" a named party to a nonparty purchaser; Guzman was a citizen of Indiana for diversity purposes |
| Whether the MERS→BONYM assignment is void for unauthorized signature or forgery | Assignment is void because the signing assistant secretary lacked authority or her signature was forged | Unauthorized signing is at most voidable; forgery allegation was conclusory and fails Rule 9(b) particularity | Held for defendants: authorization claim is only voidable (not a defense); forgery insufficiently pled; claims dependent on void assignment dismissed |
| Whether promissory estoppel and amendment to plead §50(a)(6) claims should have been allowed | BANA promised to consider modification and not foreclose; Wood changed Texas law so §50(a)(6) claims now viable; leave to amend should be allowed | Promissory estoppel failed statute-of-frauds requirements; proposed §50(a)(6) claims would be futile and prior voluntary dismissal suggested dilatory motive | Held for defendants: promissory estoppel dismissed for failure to allege a written modification satisfying statute of frauds and denial of leave to replead/ amend was not an abuse of discretion (futility and undue delay); §50(a)(6) amendment waived on appeal and would be futile under district court reasoning |
Key Cases Cited
- Americold Realty Tr. v. Conagra Foods, Inc., 136 S. Ct. 1012 (2016) (trust sued in its own name takes citizenship of its members; trustee-sued-in-name rule coexists with Navarro)
- Navarro Sav. Ass’n v. Lee, 446 U.S. 458 (1980) (when trustee is sued in own name and controls trust assets, trustee’s citizenship governs diversity)
- Wachovia Bank v. Schmidt, 546 U.S. 303 (2006) (national bank citizenship determined by main office)
- Reinagal v. Deutsche Bank Nat’l Tr. Co., 735 F.3d 220 (5th Cir. 2013) (under Texas law, unauthorized corporate acts render contracts voidable, not void)
- Sullivan v. Leor Energy, LLC, 600 F.3d 542 (5th Cir. 2010) (Rule 12(b)(6) de novo review standard)
- Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013) (Texas statute of frauds applies to loan modifications; promissory estoppel exception requires a prepared writing satisfying the statute of frauds)