Court Opinion

ID: 3164781
Source: CourtListenerOpinion
Date Created: 2015-12-22 19:01:03.626918+00
Date Added: 2024-06-11T11:59:39.766354
License: Public Domain

Case: 15-40570      Document: 00513317512         Page: 1    Date Filed: 12/22/2015

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

                                    No. 15-40570                                FILED
                                  Summary Calendar                      December 22, 2015
                                                                           Lyle W. Cayce
                                                                                Clerk
SCOTT A. SCHER; RHONDA SEXTON,

              Plaintiffs - Appellants

v.

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee for Rali
2006QS14; ALLY FINANCIAL, INCORPORATED, formerly known as GMAC
Mortgage, L.L.C.; MORTGAGE ELECTRONIC REGISTRATION SERVICES,
INCORPORATED; OCWEN FINANCIAL CORPORATION,

              Defendants - Appellees

                   Appeal from the United States District Court
                        for the Eastern District of Texas
                             USDC No. 4:13-CV-203

Before WIENER, HIGGINSON, and COSTA, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:*
       Scott Scher and Rhonda Sexton borrowed money to purchase a home.
Scher became seriously ill and the couple was unable to make their mortgage
payments. Deutsche Bank foreclosed on the property, and Scher and Sexton,

       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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: 15-40570   Document: 00513317512     Page: 2   Date Filed: 12/22/2015

                                No. 15-40570
Appellants herein, sued. The district court granted the Defendants-Appellees’
several motions to dismiss. We AFFIRM.
                              BACKGROUND
      We take the allegations in Appellants’ complaint as true. See Lone Star
Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
We also consider the documents that Appellants attached to their complaint
and the documents that Appellees attached to their responsive pleadings that
were both central to and mentioned by the complaint. See id. These documents
include: a Deed of Trust, an Assignment of Deed of Trust, an Appointment of
Substitute Trustee, a Substitute Trustee’s Deed, and a Notice of Substitute
Trustee’s Sale. To the extent that the documents conflict with Appellants’
allegations, the documents control. See Bosarge v. Mississippi Bureau of
Narcotics, 796 F.3d 435, 440–41 (5th Cir. 2015).
      In the summer of 2006, Appellants Scott Scher and Rhonda Sexton
bought a home in Prosper, Texas.       To purchase their home, Appellants
borrowed $650,000 from Secure Mortgage Company, a lender, via a promissory
note. The note was secured by a Deed of Trust. The Deed of Trust names
Secure Mortgage as the lender and the Mortgage Electric Registration System
(“MERS”) as the beneficiary in the capacity as nominee for Secure Mortgage
and its assignees. The Deed of Trust was filed in the Collin County land
records.     In November 2006, Appellants were notified that GMAC, a
predecessor entity to Ally Financial, was designated as the servicer for their
loan. In the middle of 2010, Scher experienced significant health issues and
they fell behind on their house payments. A few months later, MERS, acting
as Secure Mortgage’s nominee, assigned the Appellants’ Deed of Trust to
Deutsche Bank. Ally moved to foreclose in April 2011. Due to alleged defects
in the notice requirements, however, the sale did not happen when initially
scheduled.    On April 5, the Appellants’ property was again posted for
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                                 No. 15-40570
foreclosure, this time on May 3, with Deutsche Bank conducting the sale.
Appellants had notice of this sale.     Deutsche Bank, through a substitute
trustee, foreclosed on the property, purchasing it on May 16, 2011.
      After foreclosing, Deutsche Bank sought to evict the Appellants, who
responded by filing suit against Deutsche Bank, MERS, and others in Texas
state court. Ten months later, Appellants filed a nonsuit. Appellants filed
their original complaint—a class action—in federal court in April 2013, and
their first amended complaint (also a class action) in July 2013. The amended
complaint alleges six causes of action against Deutsche Bank; Ally Financial;
Ocwen Financial; MERS; the law firm Bradley, Arant, Boult, Cummings, LLP;
and an individual attorney, Preston Neel: (1) suit to quiet title; (2) fraudulent
filings; (3) fraud; (4) wrongful foreclosure; (5) breach of contract; and (6)
declaratory relief. The Appellees moved to dismiss and the magistrate judge
recommended that their motions be granted. Over Appellants’ objections, the
district court adopted the magistrate’s findings and conclusions, dismissing all
of Appellants’ claims. Appellants moved the court to reconsider, or in the
alternative, to allow them to amend their complaint. The district court denied
the motion for reconsideration, and this appeal followed.
                                DISCUSSION
      Appellants challenge the district court’s dismissal of claims pertaining
to Deutsche Bank and MERS only.          We review de novo a district court’s
decision to grant a motion to dismiss. See Reece v. U.S. Bank Nat. Ass’n, 762
F.3d 422, 424 (5th Cir. 2014). Appellants assert six claims of reversible error
on appeal: (1) wrongful foreclosure and quiet title; (2) declaratory relief; (3)
fraudulent filings; (4) fraud; (5) the district court’s denial of the motion for
reconsideration; and (6) the district court’s denial of the motion to amend their
complaint. Having reviewed the briefs and the record, we AFFIRM.

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                                   No. 15-40570
A. Wrongful Foreclosure and Quiet Title
      Appellants first argue that Deutsche Bank lacked the capacity to
foreclose on their property; thus, they contend that they are entitled to quiet
title. This argument is based on the premise that “at the time of foreclosure,
Deutsche was neither the holder of the note, the holder of the deed of trust, nor
the beneficiary of the deed of trust.” To the contrary—documents in evidence
establish Deutsche Bank’s authority to enforce the Deed of Trust:
      • The Deed of Trust names MERS as beneficiary in the capacity as
         nominee for Secure Mortgage and its assignees.
      • The Deed of Trust was filed in the Collin County land records in July
         2006.
      • On January 22, 2011, MERS assigned the Deed of Trust to Deutsche
         Bank.
      • This assignment was recorded in Collin County on February 8, 2011.
      • The Deed of Trust grants MERS and its assigns the right “to foreclose
         and sell the Property.”
The district court held that Appellants’ “challenges to the assignment of the
Deed of Trust are not enough to state a claim,” citing Wiley v. Deutsche Bank
Nat. Trust Co., 2013 WL 4779686, *2-3 (5th Cir. 2013). We agree.
      Appellants also argue that there are three defects in the notice
requirements that support their claim to quiet title: (1) a failure to send
Appellants a notice of default and opportunity to cure; (2) a failure to send
Appellants a notice of acceleration; and (3) a failure to include the substitute
trustee’s address in the notice of sale. These arguments are not persuasive.
The first two arguments pertain to the planned April foreclosure—but that sale
was postponed until May, and Appellants had notice of the May sale. The third
argument is contradicted by the plain terms of the Notice of Substitute

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                                 No. 15-40570
Trustee’s Sale, which lists the names of the Substitute Trustees and a “Return
to” address.
B. Declaratory Relief
      Appellants argue that Deutsche Bank could not foreclose under the
“split-the-note” theory. Our court has repeatedly rejected this argument. See
Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249, 253-56 (5th Cir.
2013). Here, the Deed of Trust was assigned to MERS, and then by MERS to
Deutsche Bank. It granted MERS and its assigns (Deutsche Bank) the right
“to foreclose and sell the Property.” Thus, MERS and Deutsche Bank did not
need to possess the note to foreclose. Id. at 255. Appellants’ reliance on state
court cases that our court in Martins recognized as the minority—and non-
prevailing—view is not persuasive.
C. Fraudulent Filings
      Appellants also argue that the district court erred in dismissing their
fraudulent filings claim under Chapter 12 of the Texas Civil Practice &
Remedies Code. The court held, in part, that “no facts [were] stated . . . that
would sufficiently state, with the specificity required under the Federal Rules
of Civil Procedure, any fraudulent filing,” and thus “[t]he claim should be
dismissed.” Appellants do not challenge that holding. Instead, they direct all
of their arguments toward an alternative ground the district court gave for its
dismissal of the fraudulent filings claims:     that, under Fifth Circuit law,
borrowers cannot make challenges to the type of assignments at issue here.
Because they have not addressed the district court’s alternative and sufficient
ground for dismissal—failure to plead fraud with specificity—Appellants’
waive their right to appeal the dismissal of their fraudulent filings claim. See
Capital Concepts Properties 85-1 v. Mut. First, Inc., 35 F.3d 170, 176 (5th Cir.
1994) (“issues not raised on appeal in the brief of the appellant may be
considered waived, and thus cannot be noticed or entertained by the Court of
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                                 No. 15-40570
Appeals” (citing Matter of Texas Mortgage Servs. Corp., 761 F.2d 1068, 1073
(5th Cir. 1985))).
D. Fraud
      Appellants next argue that the Appellees’ conduct, acts, and omissions
constituted fraud.    The district court dismissed this claim against the
remaining Appellees for several reasons, including a failure to allege the
damages necessary to satisfy the economic loss doctrine. The court stated that
“[b]ecause no extracontractual damages have been stated – indeed,
[Appellants] have not addressed the economic loss doctrine whatsoever in their
response to the motion to dismiss – [Appellants’] fraud claims should be
dismissed.” The Appellants failed to address this holding in their briefing to
this court, and therefore waive the issue. See Capital Concepts Properties, 35
F.3d at 176.
E. Denial of a Motion for Reconsideration
      Appellants argue that the district court committed reversible error by
denying their motion for reconsideration, but fail to brief this claim. We review
for abuse of discretion a district court’s decision to deny reconsideration. See
LeClerc v. Webb, 419 F.3d 405, 412 n.13 (5th Cir. 2005). In denying the motion
for reconsideration, the district court concluded that the Appellants did not put
forth any new evidence or show a change in the law. We agree.
F. Denial of a Request to Amend
      Finally, Appellants argue that the district court erred by denying their
request to amend their pleadings. Appellants filed an amended complaint
after several Appellees moved to dismiss the original complaint.           Thus,
Appellants challenge the denial of their second amended complaint. We review
this denial for an abuse of discretion. See Goldstein v. MCI WorldCom, 340
F.3d 238, 255 (5th Cir. 2003). The district court found that the Appellants did
not put forth any new information or show a change in the law. On appeal, the
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                                 No. 15-40570
Appellants do not indicate what additional information they would plead “to
provide sufficient detail in the Court’s eyes.” The district court did not abuse
its discretion by denying Appellants a second opportunity to amend.
                               CONCLUSION
      For the foregoing reasons, we AFFIRM.

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