Court Opinion

ID: 214213
Source: CourtListenerOpinion
Date Created: 2011-04-07 17:24:13+00
Date Added: 2024-06-11T17:28:19.242299
License: Public Domain

Case: 10-11010 Document: 00511438045 Page: 1 Date Filed: 04/07/2011

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

                                                 FILED
                                                                             April 7, 2011

                                     No. 10-11010                           Lyle W. Cayce
                                   Summary Calendar                              Clerk

VAL-COM ACQUISITIONS TRUST,

                                                   Plaintiff – Appellant
v.

CITIMORTGAGE, INCORPORATED,

                                                   Defendant – Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:10-CV-470

Before KING, BENAVIDES, and ELROD, Circuit Judges.
PER CURIAM:*
       Plaintiff–Appellant Val-Com Acquisitions Trust (“Val-Com”) appeals the
district court’s order dismissing its claim for declaratory relief against
Defendant–Appellee CitiMortgage, Inc. and denying Val-Com’s motion for leave
to amend its complaint. For the following reasons, we affirm the judgment of the
district court.

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
    Case: 10-11010 Document: 00511438045 Page: 2 Date Filed: 04/07/2011

                                       No. 10-11010

                                  I. BACKGROUND
      In January 2010, Adam J. Stanley deeded his interest in a residential
property in Azle, Texas to Val-Com.1 Val-Com took the property subject to an
existing Deed of Trust held by CitiMortgage, but did not assume the loan or
make any payments to CitiMortgage. On June 7, 2010, Val-Com and Stanley
filed an action in Texas state court alleging that CitiMortgage and its
predecessors in interest failed to provide required disclosures to Stanley and
failed to follow required procedures during the loan process, though the
complaint did not allege which disclosures were withheld or which procedures
were not followed. The plaintiffs claimed damages based on alleged violations
of the federal Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and the
regulations promulgated thereunder; the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. § 2601 et seq.; and a Texas statute regarding fraud in real
estate transactions, Tex. Bus. & Com. Code Ann. § 27.01. They also requested
declaratory and injunctive relief related to CitiMortgage’s intent to enforce its
security interest in the property through a non-judicial foreclosure sale.
      CitiMortgage removed the case to the District Court for the Northern
District of Texas, and the district court ordered the parties to appear personally
for a settlement conference. When Stanley did not appear, the court dismissed
him from the case as a sanction. Val-Com then filed a motion for leave to amend
its complaint. The proposed amended complaint recast Val-Com as assignee of
Stanley’s rights and added a claim for negligent misrepresentation, but it
otherwise contained allegations identical to those in the original complaint.
      The district court held a hearing on the motion, during which the court sua
sponte deemed CitiMortgage to have made a motion to dismiss the complaint for

      1
          Val-Com is an entity that purports to assist homeowners facing foreclosure.

                                              2
     Case: 10-11010 Document: 00511438045 Page: 3 Date Filed: 04/07/2011

                                   No. 10-11010

failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The
district   court   determined    that   the   TILA    claim    and   the   negligent
misrepresentation claim in the proposed amended complaint were barred by the
statute of limitations, and that the complaint failed to allege sufficient facts to
state a claim under RESPA or a real estate fraud claim under Texas state law.
The court thus dismissed Val-Com’s complaint in its entirety. The court also
denied Val-Com’s motion for leave to amend its complaint, finding that
amendment would be futile because the proposed amended complaint would also
be subject to immediate dismissal under Rule 12(b)(6).
                                II. DISCUSSION
      Val-Com first argues that the district court erred in dismissing its claim
for a declaratory judgment. In its complaint, Val-Com requested declarations
that CitiMortgage violated TILA and RESPA and that CitiMortgage could not
enforce its security interest in the property through a non-judicial foreclosure
sale due to alleged violations of TILA and RESPA. Although Val-Com protests
the dismissal of its claim for declaratory relief, it does not argue that the district
court erred in dismissing its claims for damages based on CitiMortgage’s alleged
violations of TILA and RESPA.
       We review de novo the district court’s dismissal of a claim under Rule
12(b)(6). In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).
“As a general rule, a district court may dismiss a complaint on its own for
failure to state a claim.” Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th
Cir. 2006). Val-Com does not dispute the fairness of the procedure the district
court employed or complain that it was deprived of notice of the court’s intention
or an opportunity to respond. See id. (“[D]istrict courts should not dismiss
claims sua sponte without prior notice and opportunity to respond.”).
      Val-Com contends that it has a continuing claim for declaratory relief
under the Texas Uniform Declaratory Judgments Act, Tex. Civ. Prac. & Rem.

                                          3
     Case: 10-11010 Document: 00511438045 Page: 4 Date Filed: 04/07/2011

                                     No. 10-11010

Code Ann. § 37.004, and cites Texas authority to support the continued vitality
of its declaratory judgment claim. We will assume without deciding that the
Texas act applies to an action removed to federal court, but see Utica Lloyd’s of
Tex. v. Mitchell, 138 F.3d 208, 210 (5th Cir. 1998), because applying either Texas
or federal law, the district court did not err in dismissing Val-Com’s claim for
declaratory relief.
          Both Texas and federal law require the existence of a justiciable case or
controversy in order to grant declaratory relief. Bauer v. Texas, 341 F.3d 352,
357–58 (5th Cir. 2003); Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex.
1995). In a declaratory judgment action, the parties litigate the underlying
claim, and the declaratory judgment is merely a form of relief that the court may
grant.      See Collin Cnty., Tex. v. Homeowners Ass’n for Values Essential to
Neighborhoods, (HAVEN), 915 F.2d 167, 171 (5th Cir. 1990). In its complaint,
Val-Com sought a declaration that CitiMortgage, or its predecessors in interest,
had violated TILA and RESPA. After the district court dismissed the TILA and
RESPA claims for failure to state a claim under Rule 12(b)(6), there was no
underlying claim for the court to adjudicate and the court could not declare a
violation of TILA or RESPA.             Val-Com also sought a declaration that
CitiMortgage could not proceed with a non-judicial foreclosure sale, but only
based on the alleged violations of TILA and RESPA. Val-Com alleged no other
facts contesting CitiMortgage’s authority to conduct a non-judicial foreclosure
sale. Once the district court had dismissed the underlying TILA and RESPA
claims, there were no claims for which the district court could grant declaratory
relief.
          Val-Com also argues that the district court erred in denying its motion for
leave to amend its complaint. In denying Val-Com’s motion, the district court
reasoned that the amendment was futile because Val-Com’s proposed amended
complaint would be subject to immediate dismissal under Rule 12(b)(6).

                                           4
     Case: 10-11010 Document: 00511438045 Page: 5 Date Filed: 04/07/2011

                                   No. 10-11010

Notably, Val-Com does not argue that its proposed amended complaint cures any
of the deficiencies the district court found to exist in its original complaint. Val-
Com instead argues that it moved to amend well before the deadline for filing
amendments and that CitiMortgage would not be prejudiced by the amendment,
arguments which do not address the basis for the district court’s denial of the
motion. Val-Com’s failure to identify any error in the district court’s analysis is
as if Val-Com had not briefed the issue at all. See Brinkmann v. Dallas Cnty.
Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir. 1987). We therefore find that
Val-Com has abandoned the issue and affirm the district court’s denial of Val-
Com’s motion for leave to amend its complaint.
                              III. CONCLUSION
      For the foregoing reasons, we AFFIRM the judgment of the district court.

                                         5