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IN THE UNITED STATES DISTRIC~~~T~_ _ _ _ _ _-..., FOR THE NORTHERN DISTRICT F TEXAJSS. DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

FILED
MARIO A. SMITH AND MARILOU M. SMITH Plaintiffs, SEP 3 0 2011 CLERK, U.S By /( , ~ ..... CIVIL ACTION NO. 3:11-CV-02032-F
l

v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION AIKIA FANNIE MAE, BAC HOME LOANS SERVICING, L.P. FIKIA COUNTRYWIDE HOME LOANS SERVICING, L.P., MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., MERSCORP, INC., AND BARRETT DAFFIN FRAPPIER TURNER & ENGEL, L.L.P. Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS BEFORE THE COURT is Federal National Mortgage Association (improperly sued as Federal National Mortgage Association a/k/a Fannie Mae), Bank of America, N.A., as successor by merger to BAC Home Loans Servicing, LoP. (improperly sued as BAC Home Loans Servicing, LoP. f/k/a Countrywide Home Loans Servicing, LoP.), Mortgage Electronic Registration Systems, Inc., and MERSCORP, Inc. (collectively "Defendants")'s Motion to Dismiss (Doc. No.4). A Response in compliance with Northern District of Texas Rule 7.1(e) was due on September 12, 2011. When no Response was filed, the Court issued an Order to Show Cause on why the pending Motion should not be granted, or in the alternative, gave the

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parties leave to file an alternative briefing schedule. To date, no Response has been filed. The Court determines that the motion should be and hereby is GRANTED. 1
I. Facts and Procedural Background

This is a mortgage loan modification case. On or about June 6, 2007, Plaintiff Mario A. Smith obtained a loan in the amount of $152,250.00 from Aegis Wholesale Corporation ("Aegis") to purchase the subject property. Plaintiff Marilou M. Smith did not sign the promissory note. Plaintiffs signed a Deed of Trust naming MERS as the nominee for Aegis and its successors or assigns. The Deed of Trust states that "MERS is a beneficiary under the Security Interest." It was assigned to Bank of America. The Smiths filed their Original Petition in Texas state court on July 14, 2011, and Defendants removed this action to federal court on August 15, 2011 (Doc. No.1). The Smiths assert the following causes of action: quiet title; violations of the Texas Debt Collections Act; violations of the Texas Deceptive Trade Practices Act; negligence; and wrongful foreclosure. On August 22,2011, Defendants filed their Motion to Dismiss on all claims. (Doc. No. 38). To date, the Smiths have filed no Response nor have they made any communications to the Court as to when a Response would be forthcoming.
II. Standard of Review

To survive a Rule 12(b)(6) motion to dismiss, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The pleading standard Rule 8 announces does not require "detailed factual allegations," but it does demand more than an unadorned accusation devoid of factual support. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While a court must accept all of the plaintiffs allegations as true, it is not bound to accept as true

1 The

resolves Doc. No.4.

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"a legal conclusion couched as a factual allegation." Id at 1949-50 (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)).

A complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Twombly, 550 U.S. at 570. Where the facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has stopped short of showing that the pleader is plausibly entitled to relief. Fed. Rule Civ. P. 8(a)(2); Iqbal, 129 S. Ct. at 1950. The court may consider documents attached to or incorporated in the complaint in deciding a motion to dismiss. Telltabs, Inc. v. Makor Issues & Rights, Ltd, 551 U.S. 308, 322 (2007). The Smiths' failure to respond to Defendants' Motion to Dismiss leads the Court to believe that the Motion is unopposed. In an abundance of caution, however, the Court will address the arguments made in Defendants' motion and evaluate them against the 12(b)(6) standard articulated above.

III. Arguments and Authorities

As a threshold matter, the Court must dismiss each of the Smiths's claims since they are premised on the erroneous theory that MERS could not be a beneficiary and could not lawfully assign its interest in the Loan to Bank of America. Several recent cases have held that MERS may execute such documents, see, e.g., Defranceschi v. Wells Fargo Bank, NA., No. 4:10-CV 455-Y, 2011 WL 3875338, at *4 (N.D. Tex., Aug. 31, 2011) (Means, J.); Wigginton v. Bank of
NY. Mellon, No. 3:10--CV-2128-G, 2011 WL 2669071, at *2 n. 2 (N.D. Tex. July 7, 2011)

(Fish, I); Allen v. Chase Home Fin., LLC, No. 4:11-CV-223, 2011 WL 2683192, at *3-4 (B.D. Tex. June 10,2011); Eskridge v. Fed Home Loan Mortg. Corp., No. W-IO-CA-285, 2011 WL

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2163989, at *5 (W.D. Tex. Feb. 24,2011) (Smith, J), and the Smiths have offered no evidence to the contrary. N or do the Smiths have standing to contest the assignment since they were not a party it. ld When a note is transferred from one mortgage to another, the interest in the subject deed of trust goes along with it. As the Eskridge court recently explained, As MERS is a beneficiary and nominee for both the originating lender and its successors and assigns by the express language in the Deed of Trust, the situation falls within an exception to the general rule that a party holding only the deed of trust cannot enforce the mortgage. See Comment e to the Restatement (3d) of Property (Mortgages) 5,4. Section 5,4 additionally notes that a "transfer of an obligation secured by a mortgage also transfers the mortgage unless the parties to the transfer agree otherwise." Plaintiff makes no allegations that the parties in this case agreed otherwise. Finally, while the Note may not specifically mention MERS, the Note and Deed of Trust must be read together in evaluating the terms ... thus, the Note and Deed of Trust are construed together as a single instrument. ld; see also Allen v. Chase Home Finance, LLe, No. 4:11-cv-233, 2011 WL 2683192, at *3-*4 (E.D. Tex. June 10, 2010) (Mazzant, J.). Here, the subject of the deed of trust in this lawsuit expressly provided that MERS held the deed of trust for the benefit of the original noteholder and its successor and assigns. Def.'s Mot. ~ 17.

1. Failure to State a Claim/or Quiet Title

The Smiths have stated a claim for quiet title insufficiently. They base their claim on a single statement that "their Property is rife with clouds and therefore is unmarketable." Pls.'s Orig. Pet. stand. Moreover, to quiet title in his favor, the plaintiff "must allege right, title, or ownership in himself or herself with sufficient certainty to enable the court to see he or she has a right of ownership that will warrant judicial interference." Wright v. Matthews, 26 S.W.3d 575, 578 (Tex. App.-Beaumont 2000, pet. denied). Here, the Smiths have not plead that they have superior
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16. This claim rests on the Smiths' theories regarding MERS, and therefore cannot

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title to the property over Defendants. On the contrary, they have pled little at all. The pleading rules are detailed and formal,and require a plaintiff to prevail on the superiority of his title, not on the weakness of a defendant's title. See Allen, 2011 WL 2683192, at *4. Accordingly, the Smiths' claim to quiet title must be dismissed.

2. Texas Debt Collection Act

A fundamental element of the Smiths' Texas Debt Collection Act (the "TDCA") claim is demonstrating a misrepresentation. Reynolds v. Sw. Bell Tel., L.P., No. 2-05-356-CV, 2006 WL 1791606, at *6-7 (Tex. App.-Fort Worth June 29, 2006, pet. denied). For a statement to constitute a misrepresentation under the IDCA, a defendant must have made a false or misleading assertion. The Smiths have not sufficiently alleged such an assertion, and accordingly, their TDCA claim must be dismissed. The Smiths have failed to show that Defendants have "us[ed] a deceptive means to collect a debt" or "threaten[ed] to take an action prohibited by law." Tex. Fin. Code 392.304(a)(l9) & 30 1(a)(8). Rather, Defendants have only attempted to pursue their lawful, contractual rights to non-judicial foreclosure, and the TDCP A "does not prevent a debt collector from . . . exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does not require court proceedings." Id. at 392.301(b)(3); see Broyles, 2011 WL 1428904, at *3 (rejecting TDCA claim in non-judicial foreclosure because "the Finance Code expressly allows a debt collector to threaten to exercise or exercise a contractual or statutory right"); Voth v. Fed. Nat'l Mortg. Ass'n, No. 3-10-CV-2116-G-BD, 2011 WL 1897759, at *4 (N.D. Tex. Apr. 22, 2011) ("Because BAC had a statutory right to foreclose on plaintiff's property and exercised that right in a procedurally correct manner, there is no violation of the TDCA or the DTPA."). Further, "[m]erely stating [a] defendant violated the TDCA,

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without more factual allegations, is a legal conclusion couched as a factual assertion ... [and] does not survive a motion to dismiss." McAllister, 2011 WL 2200672, at

* 9.

The Smiths have

failed to allege the elements of their TDCA claim, and as such, their claims for relief must be dismissed.

3. Texas Deceptive Trade Practices Act

The Smiths's allegations that Defendants violated the Texas Deceptive Trade Practice Act must fail as a matter of law because the Smiths are not "consumers" under the DTPA. See

Hansberger v. EMC Mortg. Corp., 2009 WL 2264996, at *2 (Tex. App.-San Antonio 2009,
review denied). To qualify as a consumer under the DTPA, one must seek or acquire goods or services by purchase or lease. Tex. Bus. & Com. Code 17.45(4). Borrowing money does not constitute the acquisition of a good or service. See Broyles v. Chase Home Fin., No. 3:10 CV2256-G, 2011 WL 1428904, at *4 (N.D. Tex. Apr. 13,2011) (Fish, J.) ("subsequent actions related to mortgage accounts-for example, extensions of further credit or modifications of the originalloan-do not satisfy the 'good or services' element of the DTPA"); Cavil v. Trendmaker

Homes, Inc., No. G-I0-304, 2010 WL 5464238, at *4 (S.D. Tex. Dec. 29, 2010) (Froeschner, J.)
("a mortgage or modification of a mortgage is not a good or service under the DTPA."). Therefore, because the Smiths cannot claim consumer status, they cannot maintain a DTPA action.

4. Negligence
The Smiths' negligence claims must fail as a matter of law because they have failed to allege that Defendants breached any duty to them. There is "no special relationship between a mortgagor and mortgagee." Collier v. Wells Fargo Home Mort., No. 7:04-CV-86, 2006 WL 1464170, at *8 (N.D. Tex. May 26, 2006) (Kinkeade, J.) (citing UMLIC VP LLC v. T & M Sales

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and Envtl. Systems, Inc., 176 S.W.3d 595, 612 (Tex. App.-Corpus Christi 2005, pet. denied.

"Absent a 'special relationship,' any duty to act in good faith is contractual in nature and its breach does not amount to an independent tort." UMLIC, 176 S.W.3d at 612 (citations omitted). Thus, no duty of care exists that would support a claim of negligence. Any duty to act in good faith stems from the Deed of Trust. Since the Smiths have failed to claim a duty, their negligence allegation cannot survive a motion to dismiss.

5. Wrongful Foreclosure
In their Original Petition, the Smiths allege that Bank of America wrongfully foreclosed on their property because "it was acting on an unsecured interest; that the property was sold for a price not commensurate with its fair market value; and that there was a causal nexus between these two circumstances." Orig. Pet.
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25. In Texas, the elements of a wrongful foreclosure claim

are (I) a defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the defect and the grossly inadequate selling price. Biggers v. BAC
Home Loans Servicing, LP, 767 F. Supp. 2d 725, 729 (N.D Tex. 2011) (Fitzwater, J.). Because

the Smiths' allegations that the sales price on the property was grossly inadequate and that there was a casual nexus between their perceived "defect" in the foreclosure and the alleged inadequate sale price are conclusory, these statements do not satisfy the requirement of Iqbal, and accordingly, the Smiths' claims for wrongful foreclosure must be dismissed.

6. Declaratory Relief
Declaratory relief is a procedural device for granting a remedy. Sid Richardson Carbon &
Gasoline Co. v. Interenergy Res., Ltd, 99 F.3d 746, 752 n.3 (5th Cir. 1996). "[I]t does not create

any substantive rights or causes of action." Id. In other words, the Smiths' request for declaratory

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relief cannot stand alone. Since no substantive claims on which to grant declaratory relief remain, the request for declaratory relief must fail.
IV. Conclusion

For the foregoing reasons, Defendant's Motion to Dismiss is GRANTED.

IT IS SO ORDERED.
SIGNED this

~1J;day of September, 2011.