IIN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

OCWEN LOAN SERVICING, LLC, §

§

Plaintiff, §

v. § Civil Action No: 3:14-CV-03413-N-BK

§

FINDINGS, CONCLUSIONS, AND RECOMMENDATION

This case has been referred to the magistrate judge for pretrial management. Doc. 52.

Now before the Court is Defendant First United Bank & Trust Company’s Motion to Dismiss

Plaintiff’s First Amended Complaint Pursuant to Rule 12(b)(6), Doc. 60, and Motion for More

Definite Statement Subject to Its Motion to Dismiss, Doc. 61. For the reasons that follow, the

Motion to Dismiss should be GRANTED IN PART and the Motion for More Definite Statement

should be DENIED.

A. Procedural History

This case concerns real property and improvements located at 1202 Louise Lane, Ennis,

Texas (the “Property”). In its Amended Complaint, Plaintiff alleges that Defendant Mohamad

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Hashemi allegedly fell behind on his payments on the Note and, in May 2011, attempted

to sell the Property to Defendants Shelby and Brianna Lytle (the “Lytles”). Doc. 68 at 5.

Plaintiff alleges that as part of that transaction, a purported release (the “Release”) of the Deed of

Trust lien was executed and filed by Defendant First United Bank & Trust (“First United”) either

fraudulently or mistakenly. Doc. 68 at 5. The Lytles then executed a promissory note in favor of

Defendant Guild Mortgage and a deed of trust to secure that note was recorded. Doc. 68 at 5.

Plaintiff asserts that although the Release states that First United was the successor to Farmers,

Farmers already had transferred its interest in the Property by the time First United executed the

Hashemi continued to make his loan payments on the Note for some time, but his loan

with Plaintiff went into default starting with the August 2013 payment. Plaintiff then brought

this action to declare the Release void, to declare its Deed of Trust to be the superior lien on the

Property, and to obtain an order for foreclosure. Doc. 68 at 6-7. Plaintiff also asserts, inter alia,

causes of action for trespass to try title against all Defendants and negligence as to First United

and seeks an award of attorneys’ fees. Doc. 68 at 8-9. First United now moves to dismiss

Doc. 61.

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standard relies on liberal discovery rules and summary judgment motions to define disputed facts

and issues and to dispose of unmeritorious claims.” Id.

Rule 12(e) of the Federal Rules of Civil Procedure allows a party to move for a more

definite statement of a complaint when it is “so vague or ambiguous that the party cannot

reasonably prepare a response.” FED.R.CIV.P. 12(e); Mitchell v. E-Z Way Towers, Inc., 269 F.2d

126, 130 (5th Cir. 1959). Motions for more definite statements are generally disfavored and are

only deemed appropriate when the complaint is ambiguous or does not contain sufficient

information to allow a responsive pleading to be framed. Beanal v. Freeport-McMoran, Inc.,

A plaintiff fails to state a claim for relief under Rule 12(b)(6) when the complaint does

not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). A plaintiff’s complaint should “contain either direct

allegations on every material point necessary to sustain a recovery . . . or contain allegations

from which an inference may fairly be drawn that evidence on these material points will be

introduced at trial.” Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995)

documents properly attached to the complaint or incorporated into the complaint by reference,

and matters of which a court may take judicial notice. Randall D. Wolcott, M.D., P.A. v.

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Property or that First United is in possession of the Property. Doc. 60 at 3. Plaintiff responds

that it has sufficiently alleged the elements of a trespass to try title claim in that it is attempting

to confirm that its Deed of Trust remains intact on the Property because First United’s Release of

the lien was void. Doc. 64 at 6.

A trespass to try title action is the remedy for parties to resolve competing claims to real

property. See TEX. PROP. CODE § 22.001. Such an action “is a procedure by which rival claims

to title or right of possession may be adjudicated.” Yoast v. Yoast, 649 S.W.2d 289, 292 (Tex.

1983). To prevail on a trespass to try title claim, a party must: (1) prove a regular chain of

title by limitations; or (4) prove title by prior possession coupled with proof that possession was

not abandoned. TEX. PROP. CODE § 22.001; see also Martin v. Amerman, 133 S.W.3d 262, 265

(Tex. 2004).

Texas follows the lien theory, not the title theory of mortgages. Taylor v. Brennan, 621

S.W.2d 592, 593 (Tex. 1981). As such, the lien under a deed of trust is merely a security for the

debt, and the deed of trust conveys neither the title nor the possessory right of the mortgagor in

property and does not convey title to the property and, therefore, the mortgagee or trustee is not

the owner of the property.”). Thus, in order for a mortgagee to sustain an action for trespass to

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entitled to possession); Katz v. Rodriguez, 563 S.W.2d 627, 629 (Tex. Civ. App. 1977) (holding

that a trespass to try title is an action to recover the possession of land unlawfully withheld from

an owner who has a right of immediate possession); Hume v. Le Compte, 142 S.W. 934, 935

(Tex. Civ. App. 1911) (“a mortgagee cannot sustain an action of trespass to try title based on his

mortgage, because neither the title to the land nor the right of possession is in him.”).

Accordingly, to sustain a cause of action in this case, Plaintiff must allege that (1) it had a

possessory interest in the Property, presumably through foreclosure; and (2) First United

unlawfully withheld the Property from possession. Because neither of these eventualities has

As such, First United’s Motion to Dismiss should be GRANTED as to this claim.

2. Declaratory Judgment and Foreclosure

First United next argues that it has no ownership interest in the Property and claims no

lien on the Property, thus Plaintiff has not pled facts to suggest that First United is an interested

party as to Plaintiff’s foreclosure and declaratory judgment claims. Doc. 60 at 3. Plaintiff

responds that there is a recorded instrument signed by First United that purports to affect

judgment should be entered. Doc. 64 at 6.

A declaratory judgment to the effect that First United has no legal interest in the Property

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395, 401 (1975) (holding that an “actual controversy must be extant at all stages of review, not

merely at the time the complaint is filed.”) (internal quotations omitted). Accordingly, the

motion to dismiss should be GRANTED in this regard. Further, to the extent Plaintiff is suing

First United for foreclosure, the motion to dismiss should be GRANTED as to that claim as well

because First United is not a mortgagor on the Note that would be liable in a foreclosure

proceeding.

3. Negligence

First United next asserts that Plaintiff has failed to state a negligence claim against it

Plaintiff responds that the duty of care arose from section 12.002 of the Texas Civil Practice and

Remedies Code, which obligates parties not to make, present, or use a fraudulent lien or claim

against real property. Doc. 64 at 7.

As an initial matter, a claim for negligence is separate and apart from a claim under

section 12.002, which provides a statutory remedy and damages. See L’Amoreaux v. Wells

Fargo Bank, N.A., 755 F.3d 748, 751 (5th Cir. 2014) (noting difference). To state a claim for

breach of that duty, and damages proximately caused by the breach.” D. Houston, Inc. v. Lowe,

92 S.W.3d 450, 454 (Tex. 2002).

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for the court to decide from the facts surrounding the occurrence in question.” Siegler, 899

S.W.2d at 197. “The burden is on a plaintiff to prove the existence and violation of a legal duty

owed by the defendant.” Ranger Conveying & Supply Co. v. Davis, 254 S.W.3d 471, 478 (Tex.

App.—Houston [1st Dist.] 2007). Foreseeability of the risk is the dominant consideration

together with the likelihood of injury and the burden of imposing a duty of care. City of Waco v.

Kirwan, 298 S.W.2d 618, 624 (Tex. 2009).

Plaintiff alleges that First United acted negligently in executing and recording the Release

of the lien on the Property. As Plaintiff correctly observes, the purpose of recording the release

property can be acquired free from any encumbrances. Doc. 64 at 7. If a bank mistakenly

creates and/or records a release of lien when a different bank holds a lien on the property, it is

reasonably foreseeable that both the bank that actually holds the lien as well as any subsequent

purchaser of the property will be injured.

In an analogous case, a Texas court held that a cause of action for negligent

misrepresentation existed for the purchaser of a house against the surveyor who negligently

v. Larson, 700 S.W.2d 231, 233-34 (Tex. App.—Dallas 1985). The surveyor’s error ultimately

resulted in the home having to be demolished due to its encroachment on adjoining property. Id.

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that a pilot’s former employer owed him a duty to exercise reasonable care in supplying his

personnel records to his subsequent employer). Accordingly, the motion to dismiss should be

DENIED as to Plaintiff’s negligence claim.

4. Attorneys’ Fees

Finally, First United argues that Plaintiff has not alleged any facts or statutory authority

to support its claim for attorneys’ fees. Doc. 60 at 4. Plaintiff responds that attorneys’ fees may

be warranted against First United depending on the outcome of discovery to determine who

signed the Release. Doc. 64 at 7. If it was Defendant, then Plaintiff asserts that attorneys’ fees

70.

Section 27.01(e) provides that if fraud or a false representation is involved in a real estate

transaction, any person who violates the provisions of that section shall be liable to the person

defrauded for reasonable and necessary attorneys’ fees. TEX. BUS. & COMM. CODE § 27.01(e).

For the reasons stated by Plaintiff and because the claim was sufficient pled under Rule 8(a),

dismissal of this claim is not warranted at this stage. Swierkiewicz, 534 U.S. at 512.

D. Conclusion

For the foregoing reasons, the Court should GRANT First United’s Motion to Dismiss as

to Plaintiff’s trespass to try title, declaratory judgment, and foreclosure claims. However,

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against First United and cannot, as a matter of law, bring a cause of action as to the remaining

claims. See McConathy v. Dr. Pepper/Seven Up Corp., 131 F.3d 558, 561-62 (5th Cir. 1998)

(noting that dismissal with prejudice is appropriate if it appears that no relief can be granted

under any set of facts that could be proven consistent with the plaintiff’s allegations).

SO RECOMMENDED on January 15, 2016.

A copy of this report and recommendation shall be served on all parties in the manner

provided by law. Any party who objects to any part of this report and recommendation must file

specific written objections within 14 days after being served with a copy. See 28 U.S.C.

§ 636(b)(1); FED. R. CIV. P. 72(b). In order to be specific, an objection must identify the specific

finding or recommendation to which objection is made, state the basis for the objection, and

specify the place in the magistrate judge’s report and recommendation where the disputed

determination is found. An objection that merely incorporates by reference or refers to the

briefing before the magistrate judge is not specific. Failure to file specific written objections will

bar the aggrieved party from appealing the factual findings and legal conclusions of the