Court Opinion

ID: 2731505
Source: CourtListenerOpinion
Date Created: 2014-09-10 05:00:37.607319+00
Date Added: 2024-06-11T10:01:25.248540
License: Public Domain

Case: 14-20122   Document: 00512762679   Page: 1   Date Filed: 09/09/2014

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT

                                                             United States Court of Appeals
                                                                      Fifth Circuit

                            No. 14-20122                            FILED
                          Summary Calendar                   September 9, 2014
                                                               Lyle W. Cayce
                                                                    Clerk

CHARLES B. VAN DUZER; CANDACE B. VAN DUZER,

                                      Plaintiffs−Appellants,

versus

U.S. BANK NATIONAL ASSOCIATION,
Individually and as Trustee for RASC 2006-KS5;
MERSCORP HOLDINGS, INCORPORATED;
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,
INCORPORATED;
UNKNOWN CLAIMANTS,

                                      Defendants−Appellees.

              Appeal from the United States District Court
                   for the Southern District of Texas
                        USDC No. 4:13-CV-1398
     Case: 14-20122      Document: 00512762679         Page: 2    Date Filed: 09/09/2014

                                      No. 14-20122
Before SMITH, WIENER, and ELROD, Circuit Judges.
PER CURIAM:*

       Charles and Candace Van Duzer sued U.S. Bank National Association
(“U.S. Bank”), both individually and as trustee for RASC 2006-KS5; Merscorp
Holdings, Inc. (“Merscorp”); and Mortgage Electronic Registration Systems,
Inc. (“MERS”), alleging causes of action related to the origination, subsequent
assignment, and attempted foreclosure of a home equity loan. The district
court, in a commendably thorough fifty-four-page opinion, granted defendants’
motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of
Civil Procedure. Finding no error, we affirm.

                                             I.
       In 2006, the Van Duzers took out a home equity loan from Homecomings
Financial Network, Inc. (“Homecomings”).              MERS, as nominee for Home-
comings, sought a judicial foreclosure of the Van Duzers’ property after they
had defaulted on their loan payments. In 2010, the Van Duzers sued MERS,
Homecomings, and two other defendants (the “2010 Defendants”) to prevent a
judicial foreclosure. Ultimately, the state court granted summary judgment
for the 2010 Defendants in 2011. Homecomings assigned its interest in the
Van Duzer home to U.S. Bank in 2012. In 2013, U.S. Bank sought a judicial
foreclosure, prompting the Van Duzers to file this latest suit.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 14-20122
                                        II.
                                        A.
      The district court granted the defendants’ motion for judgment on the
pleadings under Rule 12(c) as to all claims. “We review a district court’s ruling
on a Rule 12(c) motion for judgment on the pleadings de novo, using the same
standard applicable to a Rule 12(b)(6) motion to dismiss. To avoid dismissal, a
plaintiff must plead sufficient facts to state a claim for relief that is plausible
on its face.” Johnson v. Teva Pharm. USA, Inc., 2014 WL 3397786 (5th Cir.
July 11, 2014) (internal quotation marks omitted).

                                        B.
      The district court noted that the earlier state court lawsuit—which
resulted in a summary judgment for the 2010 Defendants—centered on the
initial lending transaction between the Van Duzers and Homecomings (U.S.
Bank’s predecessor-in-interest). There the Van Duzers challenged the role of
MERS as “nominee” and “beneficiary” under the original instrument, Home-
coming’s role as lender, the validity and enforceability of the original instru-
ment, the representations made by the 2010 Defendants as to the initial trans-
action, and the right of the 2010 Defendants to foreclose. Applying Texas law
on res judicata, the district court concluded that the Van Duzers’ claims were
barred to the extent they were based on circumstances and events surrounding
the initial transaction. The district court’s correct analysis was based on well-
established Texas law.

                                        C.
      The Van Duzers did not limit their new lawsuit to the initial transaction,
however. They also challenge the validity of the assignment from MERS (the
nominee of Homecomings) to U.S. Bank. They press five theories: (1) The
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                                  No. 14-20122
defendants do not possess the original note; (2) the note was rendered unse-
cured by the bifurcation of the note and the security instrument; (3) the
inclusion of the note in a securitized trust rendered the security instrument
unenforceable; (4) the assignment was a “forgery;” and (5) MERS did not have
authority to execute the assignment.
      The Van Duzers’ brief makes no mention of the third and fourth theories,
so they are waived. See United States v. Scroggins, 599 F.3d 433, 446–47 (5th
Cir. 2010). As to the other counts, the district court concluded that “Plaintiffs’
contention that Defendants must produce the original Note in order to foreclose
has no merit under Texas law.” It cited Martins v. BAC Home Loans Servicing,
L.P., 722 F.3d 249, 254 (5th Cir. 2013), in which we unequivocally rejected the
“show-me-the-note” theory, holding that assignments through MERS are valid
under Texas law.
      The district court rejected the Van Duzer’s second theory as to bifurca-
tion because, again under Texas law as elucidated in Martins, “the beneficiary
of the lien can be different from the holder of the note” and “[t]he party to
foreclose need not possess the note itself.” See Wiley v. Deutsche Bank Nat’l
Trust Co., 539 F. App’x 533, 536–37 (5th Cir. 2013). Martins also answers the
Van Duzers’ claims relating to MERS’s authority to execute the assignment.
There, we held that MERS “qualifies as a mortgagee” under Texas law, and we
have repeatedly upheld MERS’ assignment of mortgages to other entities.
Martins, 722 F.3d at 255; see also Khan v. Wells Fargo Bank, N.A., No. H-12-
1116, 2014 WL 200492, at *9 (S.D. Tex. Jan. 17, 2014).
      The district court was correct to reject the first, second, and fifth theories
challenging the MERS assignment. We therefore affirm its determination as
to the validity of the assignment from MERS to U.S. Bank, and we need not
address whether it was also correct that, under Reinagel v. Deutsche Bank
Nat’l Trust Co., 735 F.3d 220, 228 (5th Cir. 2013), the Van Duzers would
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additionally be barred by Texas law from challenging the assignment in the
first instance.

                                       III.
      Aside from challenging the validity of the assignment to U.S. Bank, the
complaint alleges fifteen causes of action, including (1) civil RICO; (2) conspir-
acy; (3) common-law fraud and injurious falsehood; (4) slander/defamation of
title and quiet title; (5) fraud by misrepresentation; (6) fraud by omission;
(7) conspiracy to commit fraud by the creation, operation, and use of the MERS
system; (8) conspiracy to commit wrongful foreclosure by the creation, opera-
tion, and use of the MERS System; (9) unjust enrichment; (10) forgery;
(11) laches; (12) a claim under the Federal Truth in Lending Act; (13) infliction
of emotional distress (“IIED”); (14) breach of fiduciary duty or quasi-fiduciary
duty; and (15) violations of the Real Estate Settlement Procedures Act. These
counts largely consist of baseless attacks on the MERS system, which has been
upheld in this circuit on numerous occasions, as noted. In painstaking detail,
the district court explained why the defendants were entitled to judgment on
the pleadings under Rule 12(c). On appeal, the Van Duzers challenge the judg-
ment on a number of grounds (some less opaque than others) that we address
in turn.

                                        A.
      The Van Duzers attack the Texas foreclosure statutes as unconstitu-
tional under the Due Process Clause of the Fourteenth Amendment. As the
defendants correctly point out, however, the Van Duzers never presented this
claim to the district court, so we do not consider it. See, e.g., Marco Ltd. P’ship
v. Wellons, Inc., 588 F.3d 864, 877 (5th Cir. 2009). The same is true for their
equal-protection argument related to access to the district court’s electronic
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                                 No. 14-20122
filing system.

                                      B.
      The Van Duzers claim they were wrongfully denied discovery. As we
stated in a case concerning limitations on the scope of discovery before sum-
mary judgment, “[i]t hardly bears repeating that control of discovery is com-
mitted to the sound discretion of the trial court and its discovery rulings will
be reversed only where they are arbitrary or clearly unreasonable.” William-
son v. U.S. Dep’t of Agric., 815 F.2d 368, 382 (5th Cir. 1987). Here, where the
dispositive motion was for judgment on the pleadings and thus was confined to
the pleadings and a limited class of documents, discovery would have been a
meaningless expense on the defendants. The district court did not err where
it denied the Van Duzers’ request for discovery before their pleadings were held
to survive Rule 12 motions.

                                      C.
      The Van Duzers theorize that the district court improperly considered
the defendant’s motion as one for judgment on the pleadings, rather than for
summary judgment under Rule 56, because the court considered documents
outside the pleadings in making its decision. This notion is without merit. The
only documents the court considered were those attached to the complaint and
public documents from the Van Duzers’ bankruptcy proceeding. The latter
documents are of a kind that must always be considered in disposition of a res
judicata defense in a Rule 12(c) motion. At any rate, we have already approved
the consideration of both documents attached to the complaint and publicly
available documents at the Rule 12 stage. See, e.g., Funk v. Stryker Corp., 631
F.3d 777 (5th Cir. 2011) (as to publicly available documents); Lone Star Fund V
(U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (as to
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                                  No. 14-20122
documents attached to the complaint). And so, the district court did not err in
considering those classes of documents.

                                        D.
      The Van Duzers specifically challenge the dismissal of their “Slander of
Title” claim—one of the few counts for which they provide a specific argument
on appeal. The district court granted the Rule 12(c) motion on the Slander of
Title claim because, inter alia, the Van Duzers had failed to allege a necessary
element for such a claim under Texas law. Specifically, they did not allege “the
loss of a specific sale.” See Williams v. Jennings, 755 S.W.2d 874, 879 (Tex.
App.—Houston [14th Dist.] 1988, writ denied). In their brief, the Van Duzers
do not contend that this element is not required in Texas law, nor do they aver
that they alleged a “loss of a specific sale.” There is no error.

                                        E.
      The Van Duzers question the dismissal of their IIED claim. The district
court granted the Rule 12(c) motion because the Van Duzers failed to plead
factual allegations about which reasonable minds could differ in determining
whether the defendants’ conduct was “extreme or outrageous.”             The Van
Duzers also plead no facts indicating that they have suffered severe emotional
distress, and their brief is as conclusional as their pleadings. We therefore
affirm the dismissal of the IIED claim.

                                        F.
      The Van Duzers say that the district court abused its discretion in declin-
ing to allow them to amend their complaint. The record shows, however, that
the court allowed them to amend “to address [the] pending motion [for
judgment on the pleadings].” They did not take up the opportunity to amend
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                                    No. 14-20122
at that time; they also never sought leave to amend before the district court.
Moreover, their brief provides no explanation of how any amendment would
have cured the deficiencies of their complaint. We therefore find no error. 1
      The judgment is AFFIRMED.

      1  The remaining two arguments in the Van Duzers’ brief essentially challenge the
summary judgment in favor of the 2010 Defendants. Of course, that case is not before us,
and it does not appear that the Van Duzers ever appealed.
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