IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF ARKANSAS WESTERN DIVISION ORDER

Transcription

1 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 1 of 9 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF ARKANSAS WESTERN DIVISION FELICIA D. TAYLOR PLAINTIFF v. CASE NO. 4:13CV00101 BSM MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., et al. DEFENDANTS ORDER Defendants corrected motion to dismiss [Doc. No. 22] is granted and this case is dismissed with prejudice. All pending motions are denied as moot. I. BACKGROUND This case arises from foreclosure proceedings initiated against Felicia Taylor s residence in Conway, Arkansas. Taylor bought the property in 2006 and executed an adjustable rate note and adjustable rate rider in favor of her lender, defendant Countrywide Home Loans Inc. ( Countrywide ). Compl. [Doc. No. 2], pgs (adjustable rate note), and pgs (adjustable rate rider). As security for the note and loan, Taylor executed a mortgage in favor of Countrywide, which names defendant Mortgage Electronic Registration Systems, Inc. ( MERS ) as the mortgagee acting solely as a nominee in favor of Countrywide and Countrywide s successors assigns. Id. at (mortgage). The mortgage was recorded on April 3, 2006, as Doc. No in the land records of Faulkner County, Arkansas. On September 30, 2010, MERS, acting in its capacity as nominee for Countrywide, the assignor, assigned the mortgage, note, and underlying debt to defendant U.S. Bank

2 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 2 of 9 National Association, as Trustee for J.P. Morgan Mortgage Acquisition Trust 2006-CW2 ( U.S. Bank ). Id. at 15. The assignment was recorded in the Faulkner County land records as Doc. No Id. at (assignment). Soon thereafter, Taylor filed for bankruptcy. Id. at 23. Defendant BAC Home Loans Servicing LP, as servicer of the note and mortgage, filed a Motion for Relief From Stay and Motion to Abandon Fee in Taylor s bankruptcy case. Id. The purpose of this motion was to institute non-judicial foreclosure proceedings against Taylor s residence. Id. A consent decree was entered on April 13, 2011, in which defendants MERS and Bank of America NA ( Bank of America ), as successor by merger to BAC Home Loans Servicing, agreed to review all pending foreclosures, implement loan modification procedures, and cease from hiring attorneys who file forged documents, and stop engaging in robo-signings (sic) and other false (sic) documents. Compl., 25. Although the allegations in Taylor s complaint do not provide any further detail as to the subsequent steps taken in the non-judicial foreclosure process, those details can be derived from the notice of foreclosure letter Taylor attached to her complaint. Id. at pgs That letter, which was mailed to Taylor on September 7, 2012, by defendant Bank of America, notifies her that she is in default on the note held by U.S. Bank, provides her with options to potentially avoid foreclosure, and advises her to contact Bank of America, the servicer of the note and mortgage as successor by merger to BAC Home Loans Servicing. Defendants have also submitted a notice of default that was mailed to Taylor by attorneys for U.S. Bank on November 21, 2012 and recorded in the Faulkner County land records as 2

3 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 3 of 9 Doc. No [Doc. No. 22-4]. The notice informs Taylor of U.S. Bank s intention to sell the property by auction at the Faulkner County courthouse on February 1, 2013, unless she takes immediate action to prevent foreclosure. On January 31, 2013, the day before the scheduled foreclosure auction, Taylor filed this action in Arkansas state court and obtained a temporary restraining order enjoining the foreclosure sale. [Doc. No. 1], pg. 69. Defendants then removed the case based on federal diversity jurisdiction. In the complaint, Taylor claims that defendants have no valid interest in the property and no right to foreclose. She seeks a declaratory judgment to that effect and an injunction preventing foreclosure. Taylor also alleges that defendants violated the Fair Debt Collection Practices Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, Arkansas securities laws, and the Arkansas Statutory Foreclosure Act. Defendants now move to dismiss. II. MOTION TO DISMISS STANDARD Dismissal is proper where the plaintiff s complaint fails to state a claim upon which relief can be granted. Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008) (citing Fed. R. Civ. P. 12(b)(6)). Accepting as true all of the factual allegations contained therein, the court must review the complaint to determine whether its allegations show that the pleader is entitled to relief. Id. The plaintiff need not prove specific facts in support of their allegations, but... must provide the grounds on which the claim rests, and...raise a right to relief above a speculative level. Id. (internal citations omitted). While detailed factual allegations are not required, the complaint must contain sufficient factual 3

4 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 4 of 9 matter to state a plausible claim for relief on its face. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (citing to Fed. R. Civ. P. 8(a)(2) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A claim has facial plausability when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Determining whether a complaint states a plausible claim is context-specific, requiring the reviewing court to draw on its experience and common sense. Id., at In addressing a motion to dismiss, the court may consider the pleadings themselves, materials embraced by the pleadings, exhibits attached to the pleadings, and matters of public record. Illig v. Union Elec. Co., 652 F.3d 971, 976 (8th Cir. 2011). III. DISCUSSION Defendants motion to dismiss is granted. A. Claims for Declaratory and Injunctive Relief Taylor does not appear to contest that she defaulted on her loan. Instead, she argues that U.S. Bank has no right to foreclose on her property because the assignment executed by MERS, as nominee for Countrywide, was invalid under Mortgage Electronic Registration System v. Southwest Homes of Arkansas, 301 S.W. 3d 1 (Ark. 2009). Taylor relies on that case for the proposition that MERS cannot be a mortgagee in the State of Arkansas. Compl., 10. Notwithstanding whether Taylor even has standing to challenge the validity of the assignment to U.S. Bank, her argument fails because it misunderstands the holding of 4

5 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 5 of 9 Southwest Homes. In that case, the Arkansas Supreme Court recognized that MERS acts as an agent to preserve the rights of lenders, known as MERS members, who pay MERS an annual fee to register and track their security instruments through the MERS electronic registry system. Southwest Homes, 301 S.W.3d at 3-4. The Arkansas Supreme Court held that due to the existence of this agent-principal relationship, MERS s authority to act to preserve a lender s rights under a registered security instrument is limited to the scope of authority conferred on MERS by that principal-lender. Id. ( We specifically reject the notion that MERS may act on its own, independent of the direction of the specific lender who holds the repayment interest in the security instrument at the time MERS purports to act. ). Citing Southwest Homes, this district rejected an argument very similar to that raised by Taylor in Coley v. Accredited Home Lenders, Inc., 2011 WL *2-3 (E.D. Ark. 2011). The plaintiffs in Coley sought to enjoin foreclosure of their residence, arguing that the mortgage which named MERS the mortgagee as nominee for the plaintiffs lender was improperly assigned by MERS to HSBC, the party attempting to foreclose. Coley, 2011 WL at *2. The assignment was upheld as valid because it was determined that MERS had authority from plaintiffs lender to assign the mortgage and note. Id. This authority was grounded in language in the security agreement which granted MERS the right: to exercise any or all of [plaintiffs lender s] interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and cancelling this Security Instrument. Id. at *3. It was concluded that [because] the exhibits attached to the complaint indicate that MERS acted within its role as 5

6 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 6 of 9 agent when it transferred the note and mortgage from its principal to HSBC[,] [...] HSBC was within its rights in attempting to collect on the mortgage, and the claims against it must be dismissed. Id. at *4. The mortgage agreement attached to Taylor s complaint contains identical language to that in Coley, stating: Borrower [Taylor] understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but if necessary to comply with law or custom, MERS (as nominee for Lender [Countrywide] and Lender s successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and cancelling this Security Instrument. Compl., pg. 25 (emphasis added). As found in Coley, this language evidences the authority of MERS, as agent for Countrywide, to assign the mortgage and note to U.S. Bank. This authority is further revealed by the assignment itself, which expressly indicates it is executed by MERS as Nominee for Countrywide, the assignor. Compl., pg. 43. Because MERS properly acted within its scope as agent and nominee for Countrywide when it assigned the note and mortgage to U.S. Bank, the assignment is valid under Southwest Homes. Taylor therefore has failed to state a plausible basis to support her claim for a declaration that defendants have no rights in the property and for an injunction preventing foreclosure. Those claims are dismissed for failure to state a claim on which relief can be granted. B. Statutory Claims Taylor s remaining claims consist of blanket and conclusory allegations that all of the defendants violated an array of federal and Arkansas lending and real estate laws. First, 6

7 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 7 of 9 Taylor alleges that defendants failed to comply with the Fair Debt Collection Practices Act and the Arkansas Statutory Foreclosure Act, Ark. Code Ann , et seq. Taylor, however, does not identify any specific provision that was violated or any specific act of a defendant that would support a violation of either of those acts. Compl., 35. While understanding that Taylor is proceeding pro se, these broad, conclusory allegations fail to support a plausible claim for relief. Second, Taylor alleges that defendants violated the Truth in Lending Act (TILA) by: (1) failing to validate and otherwise make a full accounting and required disclosures as to the true finance charges and fees; (2) improperly retaining funds belonging to Taylor in amounts to be determined; and (3) failing to disclose the ownership status of the loan. Compl., 37. Taylor seeks rescission of the loan and return of all funds she has paid to defendants. These allegations and claims are essentially the same as those made in Whatley v. Reconstrust Co. NA, 2010 WL *4 (E.D. Ark. Nov. 23, 2010), and are dismissed for the same reasons stated there. Namely, Taylor s allegations fail to support a plausible claim for relief under TILA because: The Complaint fails to cite specific statutory requirements or allege specific conduct of individual Defendants violating these requirements. Plaintiff does not specify what required disclosures Defendants have failed to provide or which Defendants were required to provide them. Plaintiff does not specify which funds have been improperly retained by which Defendants. Plaintiff does not identify the authority requiring Defendants to disclose the status of the ownership of the loan. As a result, it does not set forth a cognizable legal theory and cannot survive Defendant's motion to dismiss. Id. Furthermore, Taylor s claims for damages and rescission under TILA are time-barred. 7

8 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 8 of 9 Those claims are subject to 1-year and 3-year limitations periods, respectively, which run from the date of the consummation of the transaction. Id. Taylor consummated the secured loan transaction with Countrywide when she signed the loan and mortgage documents dated March 17, Compl., 3, and pgs. 23 and 45. Her complaint was filed almost six years later on January 31, 2006, and therefore, both the damages and rescission claims are time barred. Third, Taylor alleges defendants violated the Real Estate Settlement Procedures Act ( RESPA ) because they placed loans for the purpose of unlawfully increasing and otherwise obtaining yield spread fees, excess charges and amounts in excess of what would have been lawfully earned. Compl., 39. Like her other statutory claims, Taylor fails to allege any specific action or fact relating to a particular defendant and fails to specify which statutory provisions were violated. Taylor also claims that defendants failed to comply with RESPA because the defendants who were servicers of the mortgage loan documents did not provide timely notice that the mortgage and note were transferred, as required by 12 U.S.C. Section 2605(b). This claim fails because Taylor does not allege that this alleged notice violation proximately caused her any damages and a plaintiff who alleges a breach of 2605 without alleging damages fails to state a cause of action. McWilliams v. Chase Home Finance, LLC, 2010 WL *4 (E.D. Mo. May 4, 2010). Finally, Taylor alleges defendants violated Arkansas securities laws, Ark. Code. Ann through , by fraudulent sales of previously sold and securitized [...] notes when in fact they are not selling them, merely transferring the collection rights 8

9 Case 4:13-cv BSM Document 42 Filed 08/14/13 Page 9 of 9 under the servicing agreement. Compl., 32. Again, Taylor fails to specify the statutory provisions that have been violated or any actions or facts relating to a particular defendant that would support a violation. Like the other statutory claims, this claim is dismissed for failure to state a claim upon which relief can be granted. IV. CONCLUSION For the reasons stated above, defendants corrected motion to dismiss [Doc. No. 22] is granted and this case is dismissed with prejudice. All pending motions are denied as moot. IT IS SO ORDERED this 14th day of August UNITED STATES DISTRICT JUDGE 9