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Berry v. Loancity

United States District Court, M.D. Louisiana

July 3, 2019

DARRELL BERRY, ET AL.
v.
LOANCITY, ET AL.

          RULING AND ORDER

          JOHN W. deGRAVELLES JUDGE UNITED STATES DISTRICT COURT

         This matter comes before the Court on Wells Fargo Bank, N.A.'s Motion to Dismiss (Doc. 4) filed by Wells Fargo Bank, N.A. (“Defendant” or “Wells Fargo”). Plaintiffs Darrell Berry and Constance Lafayette (collectively “Plaintiffs”) oppose the motion. (Doc. 19.) Defendant has not filed a reply. Oral argument is not necessary. The Court has carefully considered the law, facts in the record, and arguments and submissions of the parties and is prepared to rule. For the following reasons, Defendant's motion is granted, and Plaintiffs' claims against Defendant Wells Fargo are dismissed with prejudice.

         I. Relevant Factual Background

         Plaintiffs filed suit in state court on August 20, 2018, asserting a variety of claims against LoanCity, Wells Fargo, Federal Home Loan Mortgage Corporation (“Freddie Mac”), Freddie Mac Multiclass Certificates, Series 3113 Trust, Mortgage Electronic Registration System (“MERS”), and Does 1-100. (Plaintiffs' Original Complaint for Damages and Other Relief (“Petition” or “Pet.”) ¶¶ 4-11, Doc 1-2 at 51-52.) Specifically, Plaintiffs claims are for: (1) lack of standing/wrongful foreclosure; (2) unconscionable contract; (3) breach of contract against LoanCity/MERS; (4) breach of fiduciary duty; (5) quiet title; (6) slander of title; (7) injunctive relief; and (8) declaratory relief. (Id. ¶¶ 38-94, Doc. 1-2 at 56-62.) Defendants removed the case to federal court and now seek to dismiss Plaintiffs' claims for lack of standing and failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).[1]

         According to the Petition, on December 27, 2005, Plaintiffs executed a negotiable promissory note for real property located at 8338 Greenmoss Drive, Baton Rouge, Louisiana 70806. (Pet. ¶¶ 3, 27, Doc. 1-2 at 51, 55.) The promissory note was secured by a mortgage in the amount of $184, 000. (Id. ¶ 27, Doc. 1-2 at 55.) The “Original Lender” of the note and mortgage was LoanCity, and MERS served as nominee. (Id. ¶¶ 4, 9, Doc. 1-2 at 51-52.) The December 27, 2005 negotiable promissory note and mortgage were recorded on January 4, 2006. (Id. ¶ 28, Doc. 1-2 at 55.)

         Plaintiffs then allege, upon information and belief, that the promissory note was “sold, transferred, assigned and securitized into the Freddie Mac Multiclass Certificates, Series 3113 with an issue date of February 27, 2006.” (Id. ¶ 29, Doc. 1-2 at 56.) After this assignment, MERS did not record any assignment of the Deed of Trust in the Parish of East Baton Rouge Recorder's Office. (Id. ¶ 31, Doc. 1-2 at 56.) Then, on November 13, 2012, MERS, as nominee for LoanCity, attempted to assign the mortgage to Wells Fargo. (Id. ¶¶ 32-33, Doc. 1-2 at 56.) The November 13, 2012 assignment occurred about seven years after the loan originated.[2] (Id. ¶ 35, Doc. 1-2 at 56.)

         Plaintiffs assert that Defendant Wells Fargo lacks authority to enforce the mortgage due to an improper securitization and subsequent assignment. (Pet. ¶ 21, Doc. 1-2 at 54.) Plaintiffs believe that “Defendants participated in a transactional scheme whereby a purported Tangible Note is converted/exchanged for a Payment Intangible asset to provide an alternative investment offering via Special Deposit to certificate or bond holders[.]” (Id. ¶ 15, Doc. 1-2 at 53.) Ultimately, Plaintiffs believe that LoanCity “unlawfully purported to assign, transfer, or convey its interest in Plaintiffs' Note[, ]” and thus Wells Fargo does not have a colorable claim on the mortgage. (Id. ¶¶ 18, 22, Doc. 1-2 at 53, 55.)

         II. Relevant Standard

         A. Rule 12(b)(1) Standard

Concerning the standard for Rule 12(b)(1) motions, the Fifth Circuit has explained:
Motions filed under Rule 12(b)(1) . . . allow a party to challenge the subject matter jurisdiction of the district court to hear a case. Fed.R.Civ.P. 12(b)(1). Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996).
The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. McDaniel v. United States, 899 F.Supp. 305, 307 (E.D. Tex. 1995). Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist. Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980).
When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits. Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977) (per curiam). . . .
In examining a Rule 12(b)(1) motion, the district court is empowered to consider matters of fact which may be in dispute. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981). Ultimately, a motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle plaintiff to relief. Home Builders Ass'n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir.1998).

Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).

         B. Rule 12(b)(6) Standard

         In Johnson v. City of Shelby, Miss., 574 U.S. 10, 135 S.Ct. 346, 190 L.Ed.2d 309 (2014), the Supreme Court explained that “[f]ederal pleading rules call for a ‘short and plain statement of the claim showing that the pleader is entitled to relief,' Fed.R.Civ.P. 8(a)(2); they do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Id., 135 S.Ct. at 346-47 (citation omitted).

Interpreting Rule 8(a), the Fifth Circuit has explained:
The complaint (1) on its face (2) must contain enough factual matter (taken as true) (3) to raise a reasonable hope or expectation (4) that discovery will reveal relevant evidence of each element of a claim. “Asking for [such] plausible grounds to infer [the element of a claim] does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal [that the elements of the claim existed].”

Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (emphasis in Lormand)).

Applying the above case law, the Western District of Louisiana has stated:
Therefore, while the court is not to give the “assumption of truth” to conclusions, factual allegations remain so entitled. Once those factual allegations are identified, drawing on the court's judicial experience and common sense, the analysis is whether those facts, which need not be detailed or specific, allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” [Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)]; Twombly, [550] U.S. at 556, 127 S.Ct. at 1965. This analysis is not substantively different from that set forth in Lormand, supra, nor does this jurisprudence foreclose the option that discovery must be undertaken in order to raise relevant information to support an element of the claim. The standard, under the specific language of Fed.R.Civ.P. 8(a)(2), remains that the defendant be given adequate notice of the claim and the grounds upon which it is based. The standard is met by the “reasonable inference” the court must make that, with or without discovery, the facts set forth a plausible claim for relief under a particular theory of law provided that there is a “reasonable expectation” that “discovery will reveal relevant evidence of each element of the claim.” Lormand, 565 F.3d at 257; Twombly, [550] U.S. at 556, 127 S.Ct. at 1965.

Diamond Servs. Corp. v. Oceanografia, S.A. De C.V., 2011 WL 938785, at *3 (W.D. La. Feb. 9, 2011) (citation omitted).

         More recently, in Thompson v. City of Waco, Tex., 764 F.3d 500 (5th Cir. 2014), the Fifth Circuit summarized the standard for a Rule 12(b)(6) motion:

We accept all well-pleaded facts as true and view all facts in the light most favorable to the plaintiff . . . To survive dismissal, a plaintiff must plead enough facts to state a claim for relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Our task, then, is to determine whether the plaintiff state a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success.

Id. at 502-03 (citations and internal quotations omitted).

         C. Pro Se Litigants

         As an initial matter, the Court acknowledges that the Petition was filed pro se. (Pet., Doc. 1-2 at 51, 63.) Pleadings filed pro se are held to less stringent standards than those drafted by lawyers. Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). Further, a court must liberally construe a pro se complaint, taking all well-pleaded allegations as true. Johnson v. Atkins, 999 F.2d 99, 100 (5th Cir. 1993) (per curiam).

         Nevertheless, Plaintiffs are advised that, “a pro se litigant is not exempt . . . from compliance with the relevant rules of procedural and substantive law.” NCO Financial Systems, Inc. v. Harper-Horsley, No. 07-4247, 2008 WL 2277843, at *3 (E.D. La. May 29, 2008). As such, a pro se plaintiff's complaint “must set forth facts giving rise to a claim on which relief may be granted.” Johnson, 999 F.2d at 100.

         III. Discussion

         A. Parties' Arguments and ...


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