Court Opinion

ID: 3165749
Source: CourtListenerOpinion
Date Created: 2015-12-28 20:01:08.355537+00
Date Added: 2024-06-11T12:12:27.251840
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 14-2329

SOSTENES PENA; YOLANDA PENA,

                Plaintiffs – Appellants,

          v.

HSBC BANK USA, National Association as Trustee for Deutsche
Alt-A Securities Mortgage Loan Trust, Series 2007-OA2;
SURETY TRUSTEES, LLC,

                Defendants – Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (1:14-cv-01018-JCC-JFA)

Submitted:   November 4, 2015             Decided:   December 28, 2015

Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Christopher E. Brown, TUCKER & ASSOCIATES PLLC, Vienna,
Virginia, for Appellants. John C. Lynch, Maryia Y. Jones,
Jennifer E. Bowen, TROUTMAN SANDERS LLP, Virginia Beach,
Virginia, for Appellees.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

     This      case   concerns        the   efforts      of      Plaintiffs–Appellants

Sostones and Yolanda Pena to retain possession of their real

estate    in    Loudoun    County,      Virginia,       after      they   defaulted     on

their mortgage loan and the property was sold at a foreclosure

sale.     Defendant–Appellee            HSBC     Bank    USA,      N.A.   (“HSBC”),     as

Trustee     for    Deutsche      Alt-A      Securities        Mortgage    Loan      Trust,

Series    2007-OA2,       was    the    beneficiary         of    the   deed   of   trust

associated with the Penas’ loan, and purchased the property at

the foreclosure sale.                After the sale, the Penas sued HSBC,

raising    several    claims         premised    on     their     assertion    that    the

assignment of the deed of trust from the Penas’ original lender

to HSBC was invalid.

     The district court granted HSBC’s motion to dismiss the

Penas’ complaint for failure to state a claim, holding that the

Penas    lack     standing      to    challenge       the     assignment.        For   the

reasons that follow, we affirm.

                                            I.

     Because this case arises at the motion-to-dismiss stage, we

“assum[e] all well-pleaded, nonconclusory factual allegations in

the complaint to be true.”              Aziz v. Alcolac, Inc., 658 F.3d 388,

391 (4th Cir. 2011).             In addition to the complaint itself, we

may consider “documents attached to the complaint, . . . as well

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as those attached to the motion to dismiss, so long as they are

integral to the complaint and authentic.”                      Philips v. Pitt Cty.

Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).                            We may also

“take judicial notice of matters of public record.”                        Id.

      The Penas’ complaint and the associated documents reveal

the following facts: The Penas purchased the property at issue

on   February     5,    2007.         To    finance    their   purchase,      the    Penas

obtained a loan from IndyMac Bank, F.S.B. (“IndyMac”).                           The loan

was secured by a deed of trust on the property.                               Instead of

identifying itself as the trust beneficiary, IndyMac appointed a

separate    company           called        Mortgage     Electronic        Registration

Systems,    Inc.       (“MERS”)        as     the     “nominee”      for   IndyMac       and

IndyMac’s “successors and assigns,” and MERS became the trust

beneficiary.      J.A. 31.

      On   July    27,        2010,    July    29,     2010,   and    June    11,    2013,

respectively,          MERS     executed        and     recorded      three      separate

documents, each entitled “Assignment of Deed of Trust.”                               Each

document purported to assign to HSBC “all beneficial interest”

under the Penas’ deed of trust.                      J.A. 63–66.       HSBC, in turn,

appointed    Surety           Trustees,       LLC     (“Surety     Trustees”)       as    a

substitute trustee in place of Trust Title Company, which had

been named trustee in the original deed of trust.                             After the

Penas defaulted on their loan, HSBC instructed Surety Trustees

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to initiate foreclosure proceedings.                 At the foreclosure sale,

HSBC purchased the property.

                                         II.

      In their complaint, the Penas seek various types of relief

from the foreclosure sale, asserting that MERS’s assignment of

the deed of trust to HSBC was invalid, and that HSBC therefore

had   no   authority     to   appoint    Surety      Trustees   as   a     substitute

trustee and no authority to instruct Surety Trustees to initiate

foreclosure proceedings. 1           The district court, in granting HSBC’s

motion     to   dismiss,      held    that     the   Penas    lack       standing   to

challenge MERS’s assignment of the deed of trust to HSBC.                           We

review de novo a district court’s decision to grant a motion to

dismiss for failure to state a claim.                Aziz, 658 F.3d at 391.

      On appeal, the Penas do not dispute the basic principle of

Virginia    law   that    “generally,        one   who   is   not   in    privity   of

contract cannot attack the validity of the contract.”                       Wells v.

Shoosmith, 428 S.E.2d 909, 913 (Va. 1993); see Mich. Mut. Ins.

Co. v. Smoot, 129 F. Supp. 2d 912, 920 (E.D. Va. 2000) (stating

      1Specifically, in Count I, the Penas seek rescission of the
foreclosure sale; in Count II, they request removal of a cloud
on title; and in Count III, they seek damages for slander of
title.    The Penas also asserted a breach-of-contract claim
against HSBC in Count IV, but they do not contest the district
court’s dismissal of that claim on appeal.

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that,     under      Virginia   law,    “[o]ne     must       be    a   party   to,      or    a

beneficiary of, a contract to sue on that contract”). 2                               Nor do

the     Penas     claim    that     they   were     in        fact      parties    to,        or

beneficiaries of, the assignment of the deed of trust from MERS

to HSBC.

      Instead, the Penas argue that their complaint seeks only to

enforce the conditions precedent to foreclosure contained in the

deed of trust (to which they are a party), and point out that

under Virginia law, “[b]orrowers may sue to enforce conditions

precedent       to     foreclosure,”       Mathews       v.    PHH      Mortgage      Corp.,

724 S.E.2d 196, 200 (Va. 2012).                And indeed, the Penas do allege

in    their     first     amended      complaint     that          “several     conditions

precedent”        to    foreclosure     “were     not     satisfied.”             J.A.    23.

Specifically, the Penas allege that

      -    The lender . . . did not declare a default, nor
           give notice thereof
      -    The Lender did not accelerate the Note, nor give
           notice thereof
      -    The Lender did not appoint the substitute trustee
      -    The Lender did not advise the borrower in the
           notice of the right to cure . . . that she had the
           right to file a court action and raise any defense
      -    Lender provided no notice of the sale as required
           by the contract and Virginia law.

      2Federal prudential standing doctrine likewise contains a
“general prohibition on a litigant's raising another person's
legal rights.” CGM, LLC v. BellSouth Telecomm., Inc., 664 F.3d
46, 52 (4th Cir. 2011) (quoting Allen v. Wright, 468 U.S. 737,
751 (1984)).

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J.A. 23–24.

     The Penas’ briefing on appeal makes clear, however, that

they are not alleging that they never received notice of their

default and of the impending foreclosure.                  In fact, the record

contains   several    letters      that       provided   the   Penas   with    such

notice.    See J.A. 112–22.          The Penas’ only contention is that

they were provided such notice by the wrong entity: the deed of

trust requires that notice be provided by the Lender (or its

agents), and according to the Penas, HSBC is not the Lender.                     Of

course, the Penas’ assertion that HSBC is not the Lender is

entirely dependent on their challenge to the validity of the

assignment    from   MERS    to   HSBC--a      challenge   that   they    have   no

standing to raise.          Thus, even though the Penas’ complaint is

styled as a suit to enforce the deed of trust, it is clear that,

at bottom, their suit seeks only to challenge a contract to

which they are neither parties nor beneficiaries.                  Virginia law

provides no avenue for such a challenge.

                                      III.

     For   the   foregoing        reasons,      the   district    court’s     order

dismissing the Penas’ complaint is

                                                                         AFFIRMED.

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