Court Opinion

ID: 2983003
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:46:32.008325+00
Date Added: 2024-06-11T18:01:02.442297
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                       File Name: 15a0622n.06
                                                                                 FILED
                                       No. 15-5127                            Sep 02, 2015
                                                                          DEBORAH S. HUNT, Clerk
                      UNITED STATES COURT OF APPEALS
                           FOR THE SIXTH CIRCUIT

FASIL KEBEDE,                                     )
                                                  )
       Plaintiff-Appellant,                       )
                                                  )    On Appeal from the United
v.                                                )    States District Court for the
                                                  )    Western District of Tennessee
SUNTRUST MORTGAGE, INC.,                          )
                                                  )
       Defendant-Appellee.                        )
                                                  )
_________________________________/                )

Before: GUY, MOORE, and KETHLEDGE, Circuit Judges.

       RALPH B. GUY, JR., Circuit Judge. Plaintiff, Fasil Kebede, sued defendant,

SunTrust Mortgage, Inc., alleging wrongful foreclosure, slander of title, and seeking to

quiet title to his Tennessee home. The District Court dismissed plaintiff’s complaint

under FED. R. CIV. P. 12(b)(6) for failure to state a claim. We affirm.

                                             I.

       In exchange for a mortgage loan, plaintiff executed a promissory note with

Oakland Deposit Bank and a deed of trust in favor of Mortgage Electronic Registration

Systems, Inc. (“MERS”). Oakland transferred its servicing rights to defendant, as did

MERS the deed of trust. Plaintiff defaulted on his mortgage, and defendant initiated
Case No. 15-5127                                                                         2
Kebede v. SunTrust Mortg., Inc.

foreclosure proceedings. Plaintiff filed a complaint, resulting in a temporary restraining

order prohibiting auction of the home. The District Court issued a protective order

limiting discovery to matters addressing whether defendant was a proper party, which

defendant disputed as to certain claims. The District Court granted defendant’s motion to

dismiss plaintiff’s second amended complaint in a written opinion.

                                             II.

       We review the District Court’s order limiting discovery for an abuse of discretion.

Dortch v. Fowler, 588 F.3d 396, 400 (6th Cir. 2009). Reversal is appropriate only where

there is “a mistake that affects substantial rights and amounts to more than harmless

error.” Id. (quoting Pressman v. Franklin Nat’l Bank, 384 F.3d 182, 187 (6th Cir. 2004)).

       We review de novo the District Court’s dismissal of plaintiff’s complaint for

failure to state a claim, and “construe the complaint in the light most favorable to the

plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the

plaintiff.” Handy-Clay v. City of Memphis, Tenn., 695 F.3d 531, 538 (6th Cir. 2012).

                                            III.

       A. Discovery Order

       Plaintiff faults the District Court’s denial of his motion to compel discovery,

arguing that defendant’s interrogatory responses were evasive or unresponsive. Although

defendant’s responses may not have been as thorough as plaintiff might have liked, they

fell squarely within the limited discovery order issued by the District Court, which “has

broad discretion in regulating discovery[.]” Likas v. Life Ins. Co. of N. Am., 222 F. App’x
Case No. 15-5127                                                                          3
Kebede v. SunTrust Mortg., Inc.

481, 485 (6th Cir. 2007). The promissory note, deed of trust, and related assignment

documents defendant provided to plaintiff were sufficient for plaintiff and the District

Court to assess whether defendant was a proper party. The District Court did not abuse

its discretion in declining to compel further discovery.

         B. Wrongful Foreclosure

         Plaintiff asserts that defendant lacked the right to foreclose on his home because

the deed of trust it received from MERS did not include the right to foreclose. Plaintiff is

mistaken. The deed of trust provides:

         Borrower 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 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 . . . .

Tennessee is a title theory state, wherein “[t]he holder of legal title under a mortgage,

such as a trustee, can foreclose on the property in the event of a default.” Dauenhauer v.

Bank of N.Y. Mellon, 562 F. App’x 473, 476 n.1 (citing Malone v. Bank of N.Y. Mellon,

No. 3:13-cv-00518, 2013 WL 4508709, at *4 (M.D. Tenn. Aug. 23, 2013)). The deed of

trust provided MERS title to the property, and explicitly afforded MERS the right to

foreclose. MERS’s assignment of the deed of trust therefore transferred its right to

foreclose to defendant. See TENN. CODE ANN. § 47-3-203(b) (“Transfer of an instrument

. . . vests in the transferee any right of the transferor to enforce the instrument . . . .”).

The District Court thus properly dismissed plaintiff’s complaint for failure to state a

claim.
Case No. 15-5127                                                                           4
Kebede v. SunTrust Mortg., Inc.

       C. Slander of Title

       Plaintiff argues that the District Court erred in failing to infer malice in his slander

of title claim. To establish slander of title, plaintiff must show that (1) he has an interest

in the property, (2) defendant published false statements about title to the property, (3)

with malice, and (4) the false statements were a proximate cause of his pecuniary loss.

Dauenhauer, 562 F. App’x at 483. Plaintiff has not alleged – and no evidence suggests –

that defendant published false statements regarding title to the property, any of which

caused plaintiff a pecuniary loss. Nor is there any basis for an inference of malice in

defendant’s reasonable belief that the deed of trust authorized it to foreclose on plaintiff’s

property. The District Court properly dismissed plaintiff’s slander of title claim.

       D. Quiet Title

       Plaintiff lastly contends that the District Court erred in requiring that he hold title

to the property to bring an action to quiet title, asserting that an arguable interest in the

property is enough. However, to quiet title, “the complainant must show that he himself

has the title, or else he has no right to have a cloud removed from that to which he has no

title in himself.” Hoyal v. Bryson, 53 Tenn. 139, 141 (1871). Tennessee being a title

theory state, title resides with the mortgagor until the mortgagee satisfies his mortgage

debt, which plaintiff has not. Thompson v. Bank of Am., N.A., 773 F.3d 741, 750 (6th Cir.

2014). Accordingly, the District Court did not err in requiring plaintiff to show title to

the property to bring a quiet title action.

       AFFIRMED.