Fasil Kebede v. Suntrust Mortgage, Inc. , 612 F. App'x 839 ( 2015 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0622n.06
FILED
No. 15-5127 Sep 02, 2015
DEBORAH S. HUNT, Clerk
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FASIL KEBEDE, )
)
Plaintiff-Appellant, )
) On Appeal from the United
v. ) States District Court for the
) Western District of Tennessee
SUNTRUST MORTGAGE, INC., )
)
Defendant-Appellee. )
)
_________________________________/ )
Before: GUY, MOORE, and KETHLEDGE, Circuit Judges.
RALPH B. GUY, JR., Circuit Judge. Plaintiff, Fasil Kebede, sued defendant,
SunTrust Mortgage, Inc., alleging wrongful foreclosure, slander of title, and seeking to
quiet title to his Tennessee home. The District Court dismissed plaintiff’s complaint
under FED. R. CIV. P. 12(b)(6) for failure to state a claim. We affirm.
I.
In exchange for a mortgage loan, plaintiff executed a promissory note with
Oakland Deposit Bank and a deed of trust in favor of Mortgage Electronic Registration
Systems, Inc. (“MERS”). Oakland transferred its servicing rights to defendant, as did
MERS the deed of trust. Plaintiff defaulted on his mortgage, and defendant initiated
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Kebede v. SunTrust Mortg., Inc.
foreclosure proceedings. Plaintiff filed a complaint, resulting in a temporary restraining
order prohibiting auction of the home. The District Court issued a protective order
limiting discovery to matters addressing whether defendant was a proper party, which
defendant disputed as to certain claims. The District Court granted defendant’s motion to
dismiss plaintiff’s second amended complaint in a written opinion.
II.
We review the District Court’s order limiting discovery for an abuse of discretion.
Dortch v. Fowler, 588 F.3d 396, 400 (6th Cir. 2009). Reversal is appropriate only where
there is “a mistake that affects substantial rights and amounts to more than harmless
error.” Id. (quoting Pressman v. Franklin Nat’l Bank, 384 F.3d 182, 187 (6th Cir. 2004)).
We review de novo the District Court’s dismissal of plaintiff’s complaint for
failure to state a claim, and “construe the complaint in the light most favorable to the
plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the
plaintiff.” Handy-Clay v. City of Memphis, Tenn., 695 F.3d 531, 538 (6th Cir. 2012).
III.
A. Discovery Order
Plaintiff faults the District Court’s denial of his motion to compel discovery,
arguing that defendant’s interrogatory responses were evasive or unresponsive. Although
defendant’s responses may not have been as thorough as plaintiff might have liked, they
fell squarely within the limited discovery order issued by the District Court, which “has
broad discretion in regulating discovery[.]” Likas v. Life Ins. Co. of N. Am., 222 F. App’x
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Kebede v. SunTrust Mortg., Inc.
481, 485 (6th Cir. 2007). The promissory note, deed of trust, and related assignment
documents defendant provided to plaintiff were sufficient for plaintiff and the District
Court to assess whether defendant was a proper party. The District Court did not abuse
its discretion in declining to compel further discovery.
B. Wrongful Foreclosure
Plaintiff asserts that defendant lacked the right to foreclose on his home because
the deed of trust it received from MERS did not include the right to foreclose. Plaintiff is
mistaken. The deed of trust provides:
Borrower understands and agrees that MERS holds only legal title to the
interests granted by Borrower in this Security Instrument, but, if necessary
to comply with law or custom, MERS (as nominee for Lender and Lender’s
successors and assigns) has the right: to exercise any or all of those
interests, including, but not limited to, the right to foreclose and sell the
Property . . . .
Tennessee is a title theory state, wherein “[t]he holder of legal title under a mortgage,
such as a trustee, can foreclose on the property in the event of a default.” Dauenhauer v.
Bank of N.Y. Mellon, 562 F. App’x 473, 476 n.1 (citing Malone v. Bank of N.Y. Mellon,
No. 3:13-cv-00518, 2013 WL 4508709, at *4 (M.D. Tenn. Aug. 23, 2013)). The deed of
trust provided MERS title to the property, and explicitly afforded MERS the right to
foreclose. MERS’s assignment of the deed of trust therefore transferred its right to
foreclose to defendant. See TENN. CODE ANN. § 47-3-203(b) (“Transfer of an instrument
. . . vests in the transferee any right of the transferor to enforce the instrument . . . .”).
The District Court thus properly dismissed plaintiff’s complaint for failure to state a
claim.
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Kebede v. SunTrust Mortg., Inc.
C. Slander of Title
Plaintiff argues that the District Court erred in failing to infer malice in his slander
of title claim. To establish slander of title, plaintiff must show that (1) he has an interest
in the property, (2) defendant published false statements about title to the property, (3)
with malice, and (4) the false statements were a proximate cause of his pecuniary loss.
Dauenhauer, 562 F. App’x at 483. Plaintiff has not alleged – and no evidence suggests –
that defendant published false statements regarding title to the property, any of which
caused plaintiff a pecuniary loss. Nor is there any basis for an inference of malice in
defendant’s reasonable belief that the deed of trust authorized it to foreclose on plaintiff’s
property. The District Court properly dismissed plaintiff’s slander of title claim.
D. Quiet Title
Plaintiff lastly contends that the District Court erred in requiring that he hold title
to the property to bring an action to quiet title, asserting that an arguable interest in the
property is enough. However, to quiet title, “the complainant must show that he himself
has the title, or else he has no right to have a cloud removed from that to which he has no
title in himself.” Hoyal v. Bryson, 53 Tenn. 139, 141 (1871). Tennessee being a title
theory state, title resides with the mortgagor until the mortgagee satisfies his mortgage
debt, which plaintiff has not. Thompson v. Bank of Am., N.A., 773 F.3d 741, 750 (6th Cir.
2014). Accordingly, the District Court did not err in requiring plaintiff to show title to
the property to bring a quiet title action.
AFFIRMED.