Case 4:13-cv-01092 Document 7 Filed in TXSD on 06/04/13 Page 1 of 9
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
BANK OF AMERICA N.A., et al.,
§ CIVIL ACTION NO. H-13-1092
MEMORANDUM AND ORDER
Louis Green seeks a temporary restraining order (TRO) in his suit against Bank of America
N.A., TXL Mortgage Corporation, and Mortgage Electronic Registration Systems (MERS). Green’s
home was sold at a foreclosure sale. He wants the court to stop the defendants’ eviction action.
(Docket Entry No. 5). Based on the pleadings, the motion, and the governing law, Green’s request
for a TRO is denied. The reasons are explained below.
In June 2009, Green took out a home loan from TXL. Green signed a Promissory Note and
Deed of Trust. MERS was named as nominee for TXL in the Deed of Trust. Green alleges that the
loan was transferred to Bank of America as trustee for a mortgage-backed trust. Green alleges that
the rules governing the trust are set out in a Pooling and Servicing Agreement (PSA). Green alleges
that, at some point, one of the defendants — Green does not say which one — foreclosed on the
Green sued the defendants in state court. He obtained a TRO to prevent the defendants from
evicting him, but that TRO has expired. The defendants timely removed the suit to this court. On
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June 3, 2013, Green again moved for a TRO to prevent the defendants from evicting him. Green
contends that he should not be evicted because the defendants’ foreclosure was illegal. He asserts
that the defendants lacked standing to foreclose and alleges claims for fraud in the concealment,
fraud in the inducement, intentional infliction of emotional distress, slander of title, to quiet title,
Real Estate Settlement Practices Act (RESPA) violations, and Truth in Lending Act (TILA)
violations. Green also alleges that the eviction would cause him irreparable injury because “having
no right to redeem the property from the sale, [Green] will forfeit the property since the sale took
place.” (Id. at 4).
To obtain a TRO, a plaintiff must establish: “(1) a substantial likelihood of success on the
merits, (2) a substantial threat of irreparable injury if the injunction is not issued, (3) that the
threatened injury if the injunction is denied outweighs any harm that will result if the injunction is
granted, and (4) that the grant of an injunction will not disserve the public interest.” Janvey v.
Alguire, 647 F.3d 585, 595 (5th Cir. 2011); Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir.
2008). A TRO is an “extraordinary remedy.” Planned Parenthood of Houston & S.E. Tex. v.
Sanchez, 403 F.3d 324, 329 (5th Cir. 2005) (internal quotation marks and citation omitted).
One problem with Green’s request for a TRO is that it appears to enjoin a state-court
proceeding. Green states in his TRO application that he is “subject to eviction action.” (Docket
Entry No. 5 at 1). To the extent that there was a forcible detainer proceeding and an eviction order,
this court lacks the ability to provide the requested relief. “‘The Anti–Injunction Act generally
prohibits federal courts from interfering with proceedings in state court.’” Health Net, Inc. v.
Wooley, 534 F.3d 487, 493 (5th Cir. 2008) (quoting Vines v. Univ. of La., 398 F.3d 700, 704 (5th
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Cir. 2005) (citing 28 U.S.C. § 2283)). The statute states that “[a] court of the United States may not
grant an injunction to stay proceedings in a State court except as expressly authorized by Act of
Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28
U.S.C. § 2283. The statute is strictly construed. There are three exceptions, but none apply here.
See Atl. Coast Line R.R. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 286–87 (1970); Health Net,
534 F.3d at 493; Vines, 398 F.3d at 704. In a recent unpublished opinion, the United States Court
of Appeals for the Fifth Circuit upheld a district court’s denial of a TRO to prevent an eviction
because “[t]he relief sought, in practical effect, would enjoin [the mortgage company] from
enforcing a valid extant judgment of a Texas court.” Knoles v. Wells Fargo Bank, N.A., 2013 WL
617010 (5th Cir. Feb. 19, 2013). That case — like this one — involved a Texas resident who sued
to prevent an eviction by a mortgage company that had previously foreclosed on his home.1
Green’s TRO request also fails because he has not shown a substantial likelihood of success.
Green refers to the litany of conclusory claims and allegations in his complaint but does not allege
1 The Fifth Circuit explained:
In Texas, if a county court has ruled in a forcible detainer action
that one party is entitled to possession, a state district court in a
later suit regarding title does not have jurisdiction, prior to its final
decree, to “alter the status quo” by issuing “an injunction
restraining the enforcement” of the county court’s judgment.
Cuellar v. Martinez, 625 S.W.2d 3, 5 (Tex. Civ. App.—San
Antonio 1981, no writ.). Here, the county court ruled in a forcible
detainer action that Wells Fargo was entitled to possession despite
the claims brought by Knoles. When the United States District
Court refused to alter possession prior to a final decree, it was
giving the same deference to the county court judgment as would a
Texas district court.
Id. at *2.
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any facts or point to any evidence supporting those claims. Many of Green’s allegations fail as a
matter of law.
The basis for Green’s challenge to the assignments of his mortgage is difficult to understand.
To the extent that Green alleges that the assignments exist but that they were faulty, he likely lacks
the ability to challenge them. Texas courts have noted that “assignments are contracts that are only
enforceable by parties to the contract.” Hazzard v. Bank of Am. NA, 2012 WL 2339313, at *3 (S.D.
Tex. June 19, 2012) (citing Stine v. Stewart, 80 S.W.3d 586, 589 (Tex. 2002) (per curiam)). In Tri-
Cities Constr. Inc. v. Am. Nat’l Ins. Co., 523 S.W.2d 426 (Tex. Civ. App.—Houston [1st Dist.] 1975,
no writ.), the court distinguished between assignments that are void and those that are merely
voidable. Only the latter can be challenged by the obligor:
The law is settled that the obligors of a claim may defend the suit
brought thereon on any ground which renders the assignment void,
but may not defend on any ground which renders the assignment
voidable only, because the only interest or right which an obligor of
a claim has in the instrument of assignment is to insure himself that
he will not pay the same claim twice.
Id. at 430; see also Tyler v. Bank of America, N.A., 2013 WL 1821754, at *5 (W.D. Tex. Apr. 29,
2013) (holding that a mortgagor has standing to attack an assignment that is void but not one that
Green alleges that the trust is a New York asset-backed trust. New York law applies. Under
New York law “every sale, conveyance or other act of the trustee in contravention of the trust,
except as authorized by this article and by any other provision of law, is void.” N.Y. EST. POWERS
2 A void contract is “invalid or unlawful from its inception,” while a voidable contract
“is one where one or more of the parties have the power, by the manifestation of an election to
do so, to avoid the legal relations created by the contract.” 17A C.J.S. CONTRACTS § 169.
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& TRUSTS LAW § 7–2.4. Courts applying New York law have treated actions by trustees as
voidable. See Mooney v. Madden, 193 A.D.2d 933, 933–34 (N.Y. App. Div. 1993). Because
assignments made after the trust’s closing date are voidable, rather than void, Green likely lacks
authority to challenge the assignments of his mortgage.
Even assuming that Green has standing to challenge the assignments, he has not shown that
he is likely to succeed on the merits of that challenge. Although Green alleges that his mortgage is
part of a securitized trust, he does not state which one. Courts have noted that the documents
governing mortgage-backed trusts often do not require a chain of written mortgage assignments
when, as here, MERS has been named nominee for the mortgagee in a deed of trust. See, e.g.,
Sigaran v. U.S. Bank, 4:12-3588 (S.D. Tex. May 29, 2013); Colton v. U.S. Nat. Bank Ass’n, 2013
WL 1934560, at *4 (N.D. Tex. May 10, 2013) (“[I]t is reasonable that the PSA would not require
that a MERS-designated mortgage loan be assigned to U.S. Bank to evidence transfer of ownership
to the Trust. The purpose of MERS is to avoid the task of preparing and recording separate
assignments for each mortgage conveyance.”).
Green also contends that the holder of his Promissory Note was not the beneficiary of the
Deed of Trust. Green has not provided copies of either the Note or Deed of Trust and does not state
who the Note holder is or why his allegations are relevant to the defendants’ authority to foreclose.
Additionally, “Texas differentiates between enforcement of a note and foreclosure — the latter
enforces a deed of trust, rather than the underlying note, and can be accomplished without judicial
supervision.” Martins v. BAC Home Loans Servicing, L.P., 2013 WL 1777487, at *2 (5th Cir. Apr.
26, 2013). The defendants need not hold the Note in order to exercise authority to foreclose. It is
sufficient that “the mortgage was assigned by MERS, which had been given such power, including
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the power to foreclose, by the deed of trust.” Id.3 Green has not demonstrated that he is likely to
succeed on his arguments that the defendants lacked authority to foreclose on his home.
Green alleges that the defendants committed fraud by concealing incentives that were paid
to third-parties, credit-enhancement agreements, acquisition provisions, material terms of the loan
transaction, and that Green’s mortgage loan had changed hands. Green also alleges that the
defendants committed fraud by misrepresenting that they were entitled to exercise the Deed of
Trust’s power-of-sale provision and that they were the “holders” or beneficiaries of the Note and
Deed of Trust. The elements of the claim under Texas law are “(1) a [material] misrepresentation
that (2) the speaker knew to be false or made recklessly (3) with the intention to induce the
plaintiff’s reliance, followed by (4) actual and justifiable reliance (5) causing injury.” Rio Grande
Royalty Co., Inc. v. Energy Transfer Partners, L.P., 620 F.3d 465, 468 (5th Cir. 2010). Rule 9(b)
requires a complaint asserting a fraud claim to “state with particularity the circumstances
constituting the fraud.” FED. R. CIV. P. 9(b). Green’s fraud allegations have no factual or
evidentiary support and are unlikely to survive a motion to dismiss under Federal Rules 12(b)(6) and
9(b). Green does not state in either his complaint or TRO application what incentives any of the
defendants paid to third-parties, why these incentives were fraudulent, how he was harmed by these
incentive payments, or how he relied on them. Green similarly fails to explain what terms of the
3 Several courts applying Texas law have held that “a transfer of an obligation secured
by a note also transfers the note.” DeFranceschi v. Wells Fargo Bank, N.A., 837 F. Supp. 2d
616, 623 (N.D. Tex. 2011); see also Bierwirth v. BAC Home Loans Servicing, L.P., 2012 WL
3793190, at *4 (Tex. App.—Austin Aug. 30, 2012) (“Although [the mortgagor’s] note
containing the express right to transfer did not identify MERS, [the mortgagor’s] deed of trust
did identify MERS, and because the note and deed of trust must be read together when
evaluating their provisions, MERS had the authority to assign the note and the deed of trust.”).
Under this view, MERS’s authority to assign the deed of trust also made it competent to assign
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loan transaction were not disclosed and how he relied on this nondisclosure to his detriment.
Green’s fraud claims arising out of the defendants’ alleged misrepresentation that they were holders
of the Note and had authority to foreclose fail for the reasons stated above. Green has not shown
that he is likely to succeed on the merits of his fraud claims.
Green alleges that the defendants intentionally inflicted emotional distress on him by
misrepresenting that they were entitled to exercise the Deed of Trust’s power-of-sale provision and
by falsely claiming that they had a right to foreclose on Green’s property, despite lacking any
interest in that property. To prevail in a suit for intentional infliction of emotional distress in Texas,
a plaintiff must show: (1) intentional or reckless conduct; (2) that is extreme or outrageous; (3) that
caused emotional distress; and (4) that was severe in nature. Burden v. General Dynamics Corp.,
60 F.3d 213, 218 (5th Cir. 1995). Green has not made any nonconclusory allegations that the
defendants engaged in intentional conduct that was extreme or outrageous. Green has not shown
that he is likely to succeed on the merits of his intentional infliction of emotional distress claim.
Green alleges that the defendants violated the TILA by failing to provide him with accurate
material disclosures and by “not taking into account the intent of the State Legislature in approving
this statute which was to fully inform home buyers of the pros and cons of adjustable-rate mortgages
in a language (both written and spoken) that they can understand and comprehend; and advise them
to compare similar loan products with other lenders.” (Docket Entry No. 1-1 at 34). Green further
alleges that the TILA “requires the lender to offer other loan products that might be more
advantageous for the borrower under the same qualifying matrix.” (Id.). The TILA defines
disclosures that must be made in certain consumer-credit transactions, including disclosure of the
consumer’s right to rescind up to three business days following consummation of the transaction,
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delivery of a notice of right to rescind, or delivery of all material disclosures, whichever occurs last.
See 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(a)(3) & (b). There is no right of rescission with respect
to “residential mortgage transactions.” See 15 U.S.C. § 1635(e)(1); 12 C.F.R. § 226.23(f)(1);
Perkins v. Cent. Mortg. Co, 422 F.Supp.2d 487, 489 (E.D. Pa. 2006) (explaining that the right of
rescission does not apply to residential mortgage transactions). A “residential mortgage transaction”
means “a transaction in which a mortgage . . . is created or retained against the consumer’s dwelling
to finance the acquisition or initial construction of such dwelling.” 15 U.S.C. § 1602(w). Green has
not made any nonconclusory allegations suggesting that he has a valid TILA claim. Green’s TRO
request and complaint do not state which material disclosures required by TILA the defendants
failed to provide. Additionally, even if the defendants violated TILA, Green has not provided any
basis for seeking recision of his mortgage agreement as would be necessary in order to provide this
court with a basis for enjoining his eviction. His loan was a “residential mortgage transaction” that
is not eligible for recision under § 1635(e)(1) of TILA. Green has not shown that he is likely to
succeed on the merits of his claim for rescission under TILA.
Green alleges that the defendants violated RESPA. He alleges that the payments between
the defendants “were misleading and designed to create a windfall.” (Docket Entry No. 1-1 at 35).
RESPA provides that “[n]o person shall give and no person shall accept any fee, kickback, or thing
of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or
a part of a real estate settlement service involving a federally related mortgage loan shall be referred
to any person.” 12 U.S.C. § 2607(a). RESPA also prohibits any person from giving or accepting
“any portion, split, or percentage of any charge made or received for the rendering of a real estate
settlement service in connection with a transaction involving a federally related mortgage loan other
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than for services actually performed.” 12 U.S.C. § 2607(b). Green fails to make any nonconclusory
allegations suggesting that any of the defendants paid kickbacks or unearned fees. Green’s RESPA
claims are also likely time-barred. RESPA claims based on Section 8 are subject to a one-year
statute of limitations when brought by private plaintiffs. 12 U.S.C. § 2614. Green did not file suit
until several years after he signed his 2009 mortgage. See Snow v. First Am. Title Ins. Co., 332 F.3d
356, 359 & n. 3 (5th Cir. 2003) (affirming dismissal of plaintiffs’ RESPA claims as time-barred and
explaining that the statute of limitations begins to run when the violation is alleged to have
occurred). Green has not shown that he is likely to succeed on his RESPA claims.
Because Green has not alleged a sufficient basis for a TRO, it must be denied.
The application for a TRO, (Docket Entry No. 5), is denied.
SIGNED on June 4, 2013, at Houston, Texas.
Lee H. Rosenthal
United States District Judge