Cinderella Golden v. Wells Fargo Bank, N.A. , 557 F. App'x 323 ( 2014 )

Case: 13-50158 Document: 00512538926 Page: 1 Date Filed: 02/20/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 13-50158 February 20, 2014
Lyle W. Cayce
CINDERELLA GOLDEN; ERNEST GOLDEN, Clerk
Plaintiffs-Appellants
v.
WELLS FARGO BANK, N.A.,
Defendant-Appellee
Appeal from the United States District Court
for the Western District of Texas
No. 5:11-CV-948
Before HIGGINBOTHAM, JONES, and ELROD, Circuit Judges.
PER CURIAM:*
Plaintiffs-Appellants Cinderella and Ernest Golden (the “Goldens”) filed
several state-law claims against Defendant-Appellee Wells Fargo, N.A. (“Wells
Fargo”) seeking to enjoin Wells Fargo from foreclosing on their property. The
Goldens alleged that the assignment of the deed of trust purporting to give
Wells Fargo the right to foreclose was “robo-signed” and is therefore void. The
Goldens also asserted a claim under Section 12.002 of the Texas Civil Practice
and Remedies Code, which generally prohibits the use of fraudulent documents
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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No. 13-50158
to establish a lien or claim against property, and a breach of contract claim.
The district court granted Wells Fargo’s motion to dismiss. We AFFIRM.
I.
In May 1991, the Goldens purchased real property located at 10906 Wells
Spring Circle, San Antonio, Texas. In April 2006, the Goldens refinanced an
existing home-equity loan, obtaining a new loan from New Century Mortgage
Company (“New Century”). In exchange for the loan, Plaintiffs executed a
promissory note and a deed of trust encumbering the Wells Spring Circle
property. The note was then securitized with other loans and placed into the
Asset Backed-Pass Through Trust, Series 2006-NC2. As alleged in the
complaint, the Pooling and Servicing Agreement (“PSA”) that governed the
trust provided that no loans could be transferred in or out of the trust after
July 5, 2006. New Century subsequently filed for bankruptcy.
On January 29, 2010, Tom Croft (“Croft”) executed a document assigning
the deed of trust and note to Wells Fargo Bank, N.A. (“Wells Fargo”). Croft
purported to act on behalf of Carrington Mortgage Services as “attorney in fact
for New Century Mortgage Corporation.” Croft acknowledged his signature
before a notary public, and the document was eventually filed in Bexar County,
Texas. The validity of this assigning document is the crux of the instant
appeal.
A few days later, on February 10, 2010, Wells Fargo filed an application
in Texas state court for a judicial order authorizing foreclosure pursuant to
Article XVI, § 50(a)(6)(D) of the Texas Constitution. Wells Fargo asserted that
the Goldens had defaulted on their note payments and that it was authorized
to sell the property under Texas law. Attached to the application was an
affidavit from Croft, who again acted on behalf of Carrington Mortgage
Services but this time as “attorney in fact for Wells Fargo Bank, N.A.” In his
affidavit, Croft named Wells Fargo as the owner and holder of the note, as
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secured by the deed of trust. It appears from the record that the state court
granted the order.
In October 2011, the Goldens filed suit in Texas state court to
temporarily enjoin foreclosure on their property and for damages under state
law. The state court granted the Goldens’ request for a temporary restraining
order, and Wells Fargo subsequently removed the suit on diversity grounds to
federal court.
The Goldens filed an amended complaint, in which they expounded on
their “robo-signing” claim and asserted a number of state-law causes of action.
As a factual basis for these claims, the Goldens alleged that as part of its
bankruptcy filing, New Century repudiated its agreement with Mortgage
Electronic Registration Systems (“MERS”) on March 19, 2009, and that as a
result no one had authority to sign on behalf of New Century after that date.
They alleged that there is no evidence in the bankruptcy file that Croft or
Carrington Mortgage Services possessed authority to act on behalf of New
Century and that, in fact, Carrington Mortgage Services was one of Wells
Fargo’s loan servicers. Finally, the Goldens alleged that the assignment
violated the PSA, which prohibited the transfer of securitized notes in or out
of the trust after July 5, 2006. The Goldens did not allege that they are party
to the PSA.
Wells Fargo filed a motion to dismiss, arguing that the assignment was
valid and established its ability to foreclose and that the Goldens had failed to
allege facts sufficient to support their state-law claims. The district court
dismissed the suit, and the Goldens timely appealed.
II.
This court reviews “a district court’s dismissal under Rule 12(b)(6) de
novo, accepting all well-pleaded facts as true and viewing those facts in the
light most favorable to the plaintiffs.” Doe ex rel. Magee v. Covington Cnty.
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Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th Cir. 2012) (en banc) (internal
quotation marks and citation omitted). To avoid dismissal under Rule 12(b)(6),
plaintiffs must plead “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); see also
Ashcroft v. Iqbal, 556 U.S. 662 (2009). “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.” Iqbal,
556 U.S. at 678.
Texas law governs this diversity case. See, e.g., Bayle v. Allstate Ins.
Co., 615 F.3d 350, 355 (5th Cir. 2010). Absent a final decision by the Texas
Supreme Court on an issue, the court makes an “‘Erie guess’ as to how the
Texas Supreme Court would rule.” Am. Int’l. Specialty Lines Ins. Co. v.
Rentech Steel LLC, 620 F.3d 558, 564 (5th Cir. 2010).
III.
The Goldens make four arguments on appeal. In their first two
arguments, the Goldens assert that the allegations in their amended
complaint, taken as true, establish that Wells Fargo lacks the right to foreclose.
The Goldens also dispute the district court’s dismissal of their claims under
the Texas Civil Practice and Remedies Code and for breach of contract. We
address each argument in turn.
This court’s recent decision in Reinagel v. Deutsche Bank Nat’l Trust Co.,
735 F.3d 220 (5th Cir. 2013), forecloses the Goldens’ first two arguments. With
respect to their first argument, the Goldens assert that Wells Fargo lacked the
right to foreclose under the deed of trust because Croft did not have the
authority to execute the assignment. In Reinagel, however, we held that
“under Texas law, facially valid assignments cannot be challenged by want of
authority except by the defrauded assignor.” Reinagel, 735 F.3d at 228. Here,
there is a facially valid assignment of the deed of trust from New Century to
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Wells Fargo. New Century—as assignor—has not challenged the assignment.
With respect to their second argument, the Goldens contend that the
assignment occurred after the deadline for transferring notes set forth in the
PSA and was therefore void. In Reinagel, however, we held that plaintiffs who
are not a party to the PSA “have no right to enforce its terms unless they are
its intended third-party beneficiaries.” Id. The Goldens did not allege that
they are party or even third-party beneficiaries to the PSA. Thus, their second
argument also fails under Reinagel.
Next, the Goldens argue that they stated a viable claim for relief under
Section 12.002 of the Texas Civil Practice and Remedies Code. A claim under
Section 12.002(a) has three elements:
[T]he defendant (1) made, presented, or used a document with
knowledge that it was a “fraudulent lien or claim against real or
personal property or an interest in real or personal property,”
(2) intended that the document be given legal effect, and
(3) intended to cause the plaintiff physical injury, financial injury,
or mental anguish.
Henning v. OneWest Bank FSB, 405 S.W.3d 950, 964 (Tex. App.—Dallas 2013,
no pet.) (quoting Tex. Civ. Prac. & Rem. Code § 12.002(a)). 1 Wells Fargo does
1 The relevant portion of the statute provides in full:
A person may not make, present, or use a document or other record
with:
(1) knowledge that the document or other record is a fraudulent court
record or a fraudulent lien or claim against real or personal property or an
interest in real or personal property;
(2) intent that the document or other record be given the same legal
effect as a court record or document of a court created by or established under
the constitution or laws of this state or the United States or another entity
listed in Section 37.01, Penal Code, evidencing a valid lien or claim against real
or personal property or an interest in real or personal property; and
(3) intent to cause another person to suffer:
(A) physical injury;
(B) financial injury; or
(C) mental anguish or emotional distress.
Tex. Civ. Prac. & Rem. Code § 12.002(a).
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not dispute that the Goldens properly alleged the second element. The parties
also agree that the relevant “document” is the assigning document that was
used to assign the deed of trust to Wells Fargo. Therefore, the Goldens’ Section
12.002 claim turns on whether they adequately pleaded that Wells Fargo knew
the assigning document was a “fraudulent lien or claim” as defined in Section
12.002 and intended to cause them injury. The district court held, without
stating its analysis, that the Goldens’ complaint “cites no basis for inferring”
either of these two elements.
Assuming, without deciding, that a document assigning a deed of trust
constitutes a “lien or claim” under Section 12.002 2, the Goldens’ claim fails
because they did not to adequately plead the statute’s third, or “injury,”
element. Instead, they allege only is that Wells Fargo used the assigning
document “for the express purpose of closing an [sic] link in the chain of title
so that [it] could proceed to foreclose.” Wells Fargo’s use of the assignment for
business purposes hardly equates to an argument that it intended to inflict
financial injury or mental anguish. The Goldens have not alleged any facts
showing that their property would not be subject to foreclosure, even absent
the assignment of the deed of trust to Wells Fargo. Therefore, they have failed
to state a claim under Section 12.002.
2 Neither this court nor any Texas appellate court has yet determined whether a
document assigning a deed of trust constitutes a “lien or claim” under Section 12.002, and
there is currently a split in authority among the federal district courts in this circuit that
have considered the issue. A majority of federal district courts have held that a document
assigning a deed of trust does not qualify as a “lien or claim” under Section 12.002. See, e.g.,
Perdomo v. Fed. Nat’l Mortg. Ass’n, No. 3:11-CV-734-M, 2013 WL 1123629, at *5 (N.D. Tex.
Mar. 18, 2013) (unpublished) (explaining that the plaintiff must allege the challenged
instrument purported to create a lien or claim against real property in order to state a claim
under the statute). A minority of courts, however, have concluded that the text of the statute
prohibits not only the use of fraudulent liens or claims against real property, “but also claims
against ‘an interest in real . . . property.’” Howard v. JP Morgan Chase NA, No. SA-12-CV-
440-DAE, 2013 WL 1694659, at *12 (W.D. Tex. Apr. 18, 2013) (unpublished) (quoting Tex.
Civ. Prac. & Rem. Code § 12.002(a)).
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Finally, the Goldens contend that Wells Fargo breached the terms of the
note when it did not credit them for payments allegedly received from
insurance and credit default swaps. In Texas, performance or tendered
performance by the plaintiff is an essential element of a breach of contract
claim. Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009) (listing
elements). Moreover, “a party to a contract who is himself in default cannot
maintain a suit for its breach.” Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex.
1990) (quoting Gulf Pipe Line Co. v. Nearen, 138 S.W.2d 1065, 1068 (Tex.
Comm’n App. 1940). The Goldens’ claim fails as a matter of law because they
do not allege that they performed their obligations under the note, nor do they
challenge the district court’s statement that “[the Goldens] admit that they
have failed to perform under the loan contract—they have defaulted on their
mortgage payments.” Rather, they inconclusively state that “without proper
crediting, it is unclear if the Golden[s’] mortgage is past due.” To the extent
Wells Fargo received payments from a credit default swap in connection with
the Goldens’ note, however, such payments would be contingent upon proof
that the Goldens were in fact in default. Thus, the Goldens’ breach of contract
claim is premised upon their own prior default and was properly dismissed
under Texas law.
IV.
For the foregoing reasons, the dismissal of this case is AFFIRMED.
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