Court Opinion

ID: 2717022
Source: CourtListenerOpinion
Date Created: 2014-08-09 05:00:32.251917+00
Date Added: 2024-06-11T12:39:08.606389
License: Public Domain

Case: 14-10176   Document: 00512727302     Page: 1   Date Filed: 08/08/2014

                      REVISED AUGUST 6, 2014

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT
                                                                   United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                               No. 14-10176                          August 5, 2014
                             Summary Calendar                        Lyle W. Cayce
                                                                          Clerk

JOE LOUIS REECE, Sui Juris in the interest of Joe Louis Reece Owner of
Property Located at 1912 Morrison Drive, Fort Worth, TX 76112,

                                           Plaintiff - Appellant
v.

U.S. BANK NATIONAL ASSOCIATION, as Trustee Successor in Interest to
Bank of America, National Association as Trustee, as Successor by Merger to
Lasalle Bank National Association,

                                           Defendant - Appellee

                Appeal from the United States District Court
                     for the Northern District of Texas

Before JOLLY, SMITH, and CLEMENT, Circuit Judges.
PER CURIAM:
      Joe Reece appeals the dismissal of his wrongful foreclosure suit involving
a promissory note and an associated Deed of Trust on property in Fort Worth,
Texas.   He contends that he sufficiently pled claims against U.S. Bank
National Association (“U.S. Bank”) to wit, that it lacked standing when it
foreclosed on his property, and that U.S. Bank’s counsel committed fraud by
inquiring about Reece’s willingness to settle before it evicted him from the
    Case: 14-10176    Document: 00512727302     Page: 2   Date Filed: 08/08/2014

                                 No. 14-10176
property. We hold that the district court properly granted U.S. Bank’s motion
to dismiss because Reece failed to assert a claim upon which relief can be
granted and accordingly we AFFIRM.
                                       I.
      In December 2004 Reece executed a promissory note on his home in Fort
Worth, Texas in the amount of $142,500.          The Note was secured by a
corresponding Deed of Trust naming Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the nominee and beneficiary under the Deed of
Trust. In February 2012 MERS assigned the Deed of Trust to U.S. Bank. The
assignment was duly recorded in the real property records of Tarrant County
where the property is located. Reece later defaulted on the Note and U.S. Bank
itself purchased the property at a foreclosure sale.
      Following its purchase of the property, U.S. Bank filed a forcible entry
and detainer action in Texas justice court seeking to evict Reece from the
property. The court entered an order granting the forcible eviction detainer.
Reece filed the present suit in Texas state court seeking an injunction staying
his eviction and challenging U.S. Bank’s standing to foreclose on the property.
U.S Bank’s first removal of the suit was remanded because the amount in
controversy was not met. After Reece filed an amendment to his complaint
with more specific allegations, U.S. Bank successfully removed the suit to
federal court.
      U.S. Bank filed a motion to dismiss for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). The district court granted the motion
after determining, first, that all of Reece’s claims relating to U.S. Bank’s
standing to foreclose failed as a matter of law, and, second, that Reece failed
to allege any actionable misrepresentation on the part of U.S. Bank. Reece
timely appealed the judgment dismissing his claims.

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     Case: 14-10176       Document: 00512727302          Page: 3     Date Filed: 08/08/2014

                                       No. 14-10176
                                              II.
       “We review a district court’s grant of a motion to dismiss de novo.” Haase
v. Countrywide Home Loans, Inc., 748 F.3d 624, 630 (5th Cir. 2014). To pass
muster under Rule 12(b)(6), Reece’s complaint must have contained “enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The first claim in Reece’s First Amended
Complaint generally alleges that U.S. Bank’s lawyers committed fraud by
making a statement to him in court inquiring as to whether he wished to settle
the case out of court. 1 To establish a claim of fraud under Texas law a plaintiff
must allege:
       (1) that 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.
In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001). Reece failed to
allege that the attorney for U.S. Bank made a representation that was either
material or false. As a result, the district court did not err when finding that
Reece failed to state a claim for common-law fraud under Texas law.
       The second claim alleges that the recorded security instruments
evidencing the securitization of his home loan “constitute[] a fraudulent claim
against real property because MERS never acquired a security interest in the
mortgaged properties, and therefore, the recordings denominating MERS as a
beneficiary of the security instruments are fraudulent.” We construe Reece’s
allegation to be a claim under § 12.002 of the Texas Civil Practice & Remedies

       1 As U.S. Bank points out in its reply brief, Reece never expressly asserted a claim for
fraud in his First Amended Complaint. Instead, he makes the general allegation in the
factual background section of that complaint.
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                                       No. 14-10176
Code which prohibits individuals from placing fraudulent liens on real or
personal property. We have previously addressed, in an unpublished case, a
fraudulent lien claim in the similar context of a home foreclosure. Golden v.
Wells Fargo Bank, N.A., 557 F. App’x 323, 327 (5th Cir. 2014). Reece, like the
homeowner in Golden, failed to plead facts sufficient to meet an element of a
claim under § 12.002, namely that the defendant “intended to cause the
plaintiff physical injury, financial injury, or mental anguish.” Id. at 326–27.
A bank’s usage of an assignment for business purposes “hardly equates to an
argument that [the bank] intended to inflict financial injury or mental
anguish.” Id. at 327. Additionally, Reece has failed to allege facts to show that
his property would not otherwise be subject to foreclosure absent the
assignment; thus, the district court did not err when it found that Reece failed
to state a claim under § 12.002 of the Texas Civil Practice & Remedies Code.
       Finally, Reece contends that U.S. Bank lacked standing to foreclose on
Reece’s property because MERS lacked the ability to assign the Deed of Trust
and, thus, U.S. Bank was not the proper party to foreclose on the home. Our
Court has expressly recognized that MERS may assign a deed of trust to a
third party and that such assignments confer the new assignee standing to
non-judicially foreclose on property associated with that particular deed of
trust. See Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253–55
(5th Cir. 2013). Reece’s argument is foreclosed by Fifth Circuit precedent. 2

       2  Reece also argues that the non-judicial foreclosure of his home was unlawful because
U.S. Bank was required to give the Internal Revenue Service notice of the sale. The district
court did not err in dismissing this claim in Reece’s First Amended Complaint because that
particular section of the Internal Revenue Code requiring notice be provided to the United
States only relates to situations where the property is subject to a federal tax lien. Reece
fails to allege any facts that suggest the property was burdened by such a lien.
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                               No. 14-10176
                                    III.
     For the foregoing reasons, the judgment of the district court dismissing
Reece’s First Amended Complaint under Rule 12(b)(6) is
                                                                 AFFIRMED.

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