Morlock, L.L.C. v. JP Morgan Chase Bank, N.A. , 587 F. App'x 86 ( 2014 )

Case: 13-20602 Document: 00512774831 Page: 1 Date Filed: 09/19/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-20602 FILED
September 19, 2014
Lyle W. Cayce
MORLOCK, L.L.C., a Texas Limited Liability Company, Clerk
Plaintiff–Appellant,
v.
JP MORGAN CHASE BANK, N.A.,
Defendant–Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:12-CV-3648
Before STEWART, Chief Judge, OWEN, Circuit Judge, and MORGAN *,
District Judge.
PER CURIAM: **
Morlock, L.L.C. sued JP Morgan Chase Bank, N.A. (Chase), seeking to
enjoin foreclosure proceedings and to quiet title to a property Morlock
purchased in Houston, Texas. The district court dismissed the case, and we
affirm.
* District Judge of the Eastern District of Louisiana, sitting by designation.
**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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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: 13-20602 Document: 00512774831 Page: 2 Date Filed: 09/19/2014
No. 13-20602
I
In 2008, Marcos Rodriguez obtained a loan secured by a deed of trust on
the subject property. Under the deed of trust, Rodriguez was the borrower,
Universal American Mortgage Company, L.L.C. was the lender, and Mortgage
Electronic Registration Systems, Inc. (MERS) was the beneficiary and the
nominee for Universal American Mortgage. The deed of trust provided that
MERS has “the right to foreclose and sell the Property.” MERS assigned its
interest in the deed of trust to Chase.
The property was also subject to a recorded lien for assessments due to
a homeowners’ association. The lien was established by a Declaration of
Covenants, Conditions, and Restrictions (the Declaration). When Rodriguez
failed to pay assessments as they came due, the homeowners’ association
foreclosed on the property, and Morlock purchased the property at the
foreclosure sale. The Declaration provided that the homeowners’ association
lien was subordinate to first mortgages and any other mortgages recorded in
the official real property records.
Chase later posted the property for a trustee’s foreclosure sale pursuant
to the deed of trust. In response, Morlock filed a petition and application for a
temporary restraining order in Texas state court seeking to enjoin the
foreclosure sale and to quiet title to the property. Chase removed the case to
federal court based on diversity of citizenship and moved to dismiss for failure
to state a claim. Morlock’s response to the motion to dismiss included a request
for leave to amend its complaint. The district court denied Morlock’s request
for leave to amend and granted Chase’s motion to dismiss. Morlock appealed.
II
We review de novo a dismissal under Federal Rule of Civil Procedure
12(b)(6), accepting all well-pleaded facts as true and viewing those facts in the
2
Case: 13-20602 Document: 00512774831 Page: 3 Date Filed: 09/19/2014
No. 13-20602
light most favorable to the plaintiffs. 1 To survive a Rule 12(b)(6) motion to
dismiss, the plaintiff must plead enough facts to state a claim for relief that is
plausible on its face. 2
III
For essentially the reasons stated by the district court, we agree that
dismissal was warranted. Morlock concedes that when it purchased the
property at the homeowners’ association foreclosure sale, the deed of trust was
a superior lien on the property. This is indisputable, as the Declaration
provided that the homeowners’ association lien was subordinate to mortgage
liens. We may consider the deed of trust, the assignment of the deed of trust,
and the Declaration in deciding the motion to dismiss since they are relied
upon by Morlock and are matters of public record. 3
Morlock nonetheless argues that it has stated a plausible quiet title
claim under Texas law. According to Morlock, Chase could not foreclose
because it was not the holder or owner of the note. Morlock also contends that
the deed of trust could not be assigned to Chase without also assigning the
underlying note to Chase, and that any assignment of the deed of trust to
Chase needed to be signed by the original lender, Universal American
Mortgage.
1Doe ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th
Cir. 2012) (citing Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008)).
2 Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
3 Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) (“[I]t is clearly proper
in deciding a 12(b)(6) motion to take judicial notice of matters of public record.”); see also
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (“We note
approvingly . . . that various other circuits have specifically allowed that ‘[d]ocuments that a
defendant attaches to a motion to dismiss are considered part of the pleadings if they are
referred to in the plaintiff’s complaint and are central to her claim.’”).
3
Case: 13-20602 Document: 00512774831 Page: 4 Date Filed: 09/19/2014
No. 13-20602
This court rejected these arguments in Martins v. BAC Home Loans
Servicing, L.P. 4 In Martins, as here, MERS was the beneficiary and nominee
for the original lender with the power to foreclose under the deed of trust.
MERS assigned its rights in the deed of trust to a third party. 5 This court held
that the third party did not need to hold the note to foreclose and recognized
MERS’s authority to assign its rights in the deed of trust without also
assigning the underlying note. 6 The facts of this case are indistinguishable.
Chase, like the third party in Martins, could foreclose without holding the note,
and MERS had the power to assign its rights in the deed of trust to Chase.
Moreover, Morlock lacks standing to challenge the authority of the person who
signed the assignment on MERS’s behalf. 7 Accordingly, Morlock has not stated
a plausible quiet title claim since Chase did not lack authority to foreclose and
Chase’s claim is not otherwise invalid, unenforceable, or unlawful. 8
The district court also did not abuse its discretion in denying leave to
amend the complaint. 9 In requesting leave to amend, Morlock stated that it
4 722 F.3d 249 (5th Cir. 2013).
5 Martins, 722 F.3d at 252, 255.
6 Id. at 255-56.
7 Reinagel v. Deutsche Bank Nat’l Trust Co., 735 F.3d 220, 226 (5th Cir. 2013) (holding
that someone who is not a party to an assignment lacks standing to challenge the validity of
the assignment based on the alleged lack of authority of the agent executing the assignment,
since an unauthorized contract is voidable, not void).
8 See Hahn v. Love, 321 S.W.3d 517, 531 (Tex. App.—Houston [1st Dist.] 2009, pet.
denied) (“An action to remove a cloud from title exists ‘to enable the holder of the feeblest
equity to remove from his way to legal title any unlawful hindrance having the appearance
of better right.’”); see also U.S. Nat’l Bank Ass’n v. Johnson, No. 01-10-00837-CV, 2011 WL
6938507, at *3 (Tex. App.—Houston [1st Dist.] Dec. 30, 2011, no pet.) (“[T]he elements of the
cause of action to quiet title are that the plaintiff must show (1) an interest in a specific
property, (2) title to the property is affected by a claim by the defendant, and (3) the claim,
although facially valid, is invalid or unenforceable.”).
9Wilson v. Bruks-Klockner, Inc., 602 F.3d 363, 368 (5th Cir. 2010) (“In general, we
review a district court’s denial of leave to amend for abuse of discretion.”).
4
Case: 13-20602 Document: 00512774831 Page: 5 Date Filed: 09/19/2014
No. 13-20602
would add more specific factual allegations but never explained how such facts
could change the legal effect of the documents submitted by Chase. Thus, as
the district court concluded, leave to amend would have been futile. 10
As a final matter, Morlock has previously raised the same arguments it
made here in other appeals with nearly identical facts, and this court has
rejected those arguments. 11 In a recent case, this court issued a warning to
Morlock “that frivolous, repetitive, or otherwise abusive filings in the future
will invite the imposition of sanctions, including dismissal, monetary
sanctions, and/or restrictions on its ability to file pleadings in this court and
other courts subject to this court’s jurisdiction.” 12 Although this appeal was
filed before we issued the warning, Morlock should have withdrawn this appeal
after receiving the warning.
Because of Morlock’s unwillingness to heed our warning, we hereby
impose a $100.00 sanction on Morlock, payable to Chase. We also order that
Morlock be barred from filing any further appeals in this court until (1) the
sanctions awarded by this court are fully paid, and (2) a district court certifies
any appeal as having some arguable merit. 13
10See Rogers v. Boatright, 709 F.3d 403, 411 (5th Cir. 2013) (holding that the district
court did not err in denying leave to amend as futile when the plaintiff had “not shown on
appeal that he could have alleged in an amended complaint any additional facts that would
have precluded the district court from reaching its conclusion”).
11Morlock, L.L.C. v. Bank of Am., N.A., No. 13-20603, 2014 WL 2751142, at *1-2 (5th
Cir. June 18, 2014); Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., No. 12-20623, 2013 WL
2422778, at *1-2 (5th Cir. June 4, 2013); Morlock, L.L.C. v. MetLife Home Loans, L.L.C., 539
F. App’x 631, 632-33 (5th Cir. 2013). This court has dismissed similar cases pursued by
Morlock for different reasons. E.g., Morlock, L.L.C. v. Bank of N.Y. Mellon Trust Co., 537 F.
App’x 583, 585 (5th Cir. 2013) (dismissing case because Morlock never explained why it had
any ownership interest in the property at all); Morlock, L.L.C. v. Bank of N.Y. Mellon, No.
12-20677 (5th Cir. Dec. 5, 2012) (dismissing case for failure to file appellant brief and record
excerpts).
12 Bank of Am., 2014 WL 2751142, at *2.
13 See Smith v. McCleod, 946 F.2d 417, 418 (5th Cir. 1991).
5
Case: 13-20602 Document: 00512774831 Page: 6 Date Filed: 09/19/2014
No. 13-20602
* * *
The judgment of the district court is AFFIRMED and sanctions are
ISSUED.
6