Opinion
CASE NO. 4:11-CV-83
05-09-2011
NICOLE HENRY v. CITIMORTGAGE, INC., ET AL.
Judge Schneider/Judge Mazzant REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Pending before the Court is CitiMortgage, Inc.'s Motion to Dismiss (Dkt. #8). The Court, having considered the relevant pleadings, finds that Defendant's Motion to Dismiss should be granted.
BACKGROUND
Plaintiff Nicole Henry filed this lawsuit in state court against CitiMortgage, Inc. ("CitiMortgage"), Merscorp, Inc. ("Merscorp") and Lavon Grand Heritage Homeowners Association, Inc. ("HOA"). On February 21, 2011, CitiMortgage removed this action to this Court. It does not appear that Merscorp or the HOA were ever served or made an appearance in state court. The Court gave Plaintiff an opportunity to file an amended complaint, but no new complaint was ever filed (Dkt. #7).
In the Notice of Removal, CitiMortgage asserts that the HOA, a Texas citizen, was fraudulently joined. Plaintiff never filed a motion to remand to challenge this assertion, and the HOA should be dismissed from this case without prejudice.
On or about May 18, 2007, Plaintiff purchased property located at 522 Lincoln Avenue, Lavon, Texas (the "Property"), and executed a Note payable to Universal American Mortgage Company, LLC ("Universal") in furtherance of a loan for the purchase of the Property. On or about the same day, a Deed of Trust to secure payment of the Note was executed by Plaintiff. Upon information and belief, the loan was ultimately assigned to Merscorp. CitiMortgage serves as the mortgage servicer representing Merscorp.
During the past three years, Plaintiff's monthly mortgage payment has been increasing yearly, making it more difficult for her to afford her mortgage. Within the past year, Plaintiff came to realize that she would need to reduce her monthly mortgage payments through loan modification, or sell the Property. Plaintiff first attempted to modify her loan through all modification programs available to her, including all federally sponsored programs and those programs offered by her mortgagee and/or mortgage servicer. During this time, Plaintiff asserts that she was repeatedly subjected to conflicting information from Defendant's agents, misled about the documentation she needed to send to determine her eligibility for loan modification, and frustrated by Defendant's dilatory conduct.
Plaintiff asserts that now CitiMortgage and the HOA seek to foreclose on the Property. Plaintiff has pleaded with Defendants to permit her enough time to sell the Property in order to avoid foreclosure. A foreclosure would subject Plaintiff to additional hardship and undue burden. Plaintiff asserts that she has obtained offers from would-be purchasers, yet Defendants have refused to accept any of them. Plaintiff contends that Defendants have been wholly uncooperative with her efforts to mitigate her plight, and had no other recourse than to seek judicial intervention.
Plaintiff asserts claims for violations of the Texas Property Code, breach of contract, unreasonable collection efforts, violations of the Texas Debt Collections Practices Act "(TDCPA") and the Texas Deceptive Trade Practice Act ("DTPA"), negligent misrepresentation, gross negligence, and a request for declaratory judgment.
On March 1, 2011, CitiMortgage filed its motion to dismiss (Dkt. #8). After Plaintiff failed to file a response, the Court entered an Order giving Plaintiff until April 4, 2011, to file a response or notify the Court that there was no opposition (Dkt. #9). The Court indicated that if no response was filed, the Court would assume that Plaintiff had no opposition to the granting of the motion. Plaintiff did not file a response. On May 5, 2011, CitiMortgage filed a reply (Dkt. #10)
Although Plaintiff failed to file a response, the Court will evacuate Defendant's motion against Plaintiff's state court petition and will not procedurally default Plaintiff for failure to file a response. The Court would note that Plaintiff was given an opportunity to file an amended complaint and chose to not file an amended complaint.
LEGAL STANDARD
Defendant moves for dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which authorizes certain defenses to be presented via pretrial motions. A Rule 12(b)(6) motion to dismiss argues that, irrespective of jurisdiction, the complaint fails to assert facts that give rise to legal liability of the defendant. The Federal Rules of Civil Procedure require that each claim in a complaint include "a short and plain statement . . . showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The claims must include enough factual allegations "to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570).
Rule 12(b)(6) provides that a party may move for dismissal of an action for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). The Court must accept as true all well-pleaded facts contained in the plaintiff's complaint and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In deciding a Rule 12(b)(6) motion, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). "The Supreme Court recently expounded upon the Twombly standard, explaining that '[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Gonzalez, 577 F.3d at 603 (quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (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." Id. "It follows, that 'where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'shown' - 'that the pleader is entitled to relief.'" Id.
In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency of a complaint in the context of a Rule 12(b)(6) motion. First, the Court identifies conclusory allegations and proceeds to disregard them, for they are "not entitled to the assumption of truth." Iqbal, 129 S.Ct. at 1951. Second, the Court "consider[s] the factual allegations in [the complaint] to determine if they plausibly suggest an entitlement to relief." Id. "This standard 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary claims or elements." Morgan v. Hubert, 335 F. App'x 466, 469 (5th Cir. 2009). This evaluation will "be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950.
In determining whether to grant a motion to dismiss, a district court may generally not "go outside the complaint." Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir. 2003). When ruling on a motion to dismiss a pro se complaint, however, a district court is "required to look beyond the [plaintiff's] formal complaint and to consider as amendments to the complaint those materials subsequently filed." Howard v. King, 707 F.2d 215, 220 (5th Cir. 1983); Clark v. Huntleigh Corp., 119 F. App'x 666, 667 (5th Cir. 2005) (finding that because of plaintiff's pro se status, "precedent compels us to examine all of his complaint, including the attachments"); Fed. R. Civ. P. 8(e) ("Pleadings must be construed so as to do justice."). Furthermore, a district court may consider documents attached to a motion to dismiss if they are referred to in the plaintiff's complaint and are central to the plaintiff's claim. Scanlan, 343 F.3d at 536.
DISCUSSION AND ANALYSIS
Defendant asserts that Plaintiff filed this action in state court, the same day as the scheduled foreclosure sale, and the sale was canceled pursuant to a temporary restraining order issued in state court. Although the restraining order has expired, CitiMortgage has not taken any further steps to foreclose.
Texas Property Code Violations
Plaintiff's first claim is that there were alleged violations of the Texas Property Code. Specifically, Plaintiff asserts that the mortgagee and/or servicer does not have a valid and enforceable lien. Plaintiff asserts that Plaintiff has requested information to see if there is a valid and enforceable lien and that any foreclosure proceeding would violate the provision of the Texas Property Code.
Defendant correctly points out that Plaintiff's alleged Property Code claim is mere speculation and there are no facts that support a claim under the Property Code. Moreover, Plaintiff fails to point out what provisions of the Property Code are at issue. No facts have been alleged that show a violation of the unnamed sections of the Property Code, and any Property Code claims should be dismissed.
Moreover, following a wrongful foreclosure sale, a plaintiff seeking "to set aside a sale for wrongful foreclosure is limited to 'two alternative remedies. [He] may elect to: (1) set aside the void trustee's debt; or (2) recover damages in the amount of the value of the property less indebtedness.'" Rodriguez v. Ocwen Loan Servicing, Inc., No. 4:07-CV-4546, 2008 WL 239652 at *2 n. 9 (S.D. Tex. Jan. 29, 2008) (citing Diversified, Inc. v. Gibraltar Sav. Ass'n, 762 S.W.2d 620, 623 (Tex. App. - Houston [14th Dist.] 1988, writ denied)). Under a wrongful foreclosure cause of action for damages, "recovery is premised upon one's lack of possession of real property," therefore "individuals never losing possession of the property cannot recover [damages] on a theory of wrongful foreclosure." Baker v. Countrywide Home Loans, Inc., No. 3:08-CV-916, 2009 WL 1810336 at *4 (N.D. Tex. June 24, 2009) (citing Peterson v. Black, 980 S.W.2d 818, 823 (Tex. App. - San Antonio 1998, no pet.)). Defendant asserts that the face of the petition demonstrates that Plaintiff's Property was not sold at a foreclosure sale and that there is no allegation that a foreclosure took place. Since Plaintiff fails to assert that a foreclosure took place, a wrongful foreclosure claim is not plausible at this time.
Breach of Contract Claim
Plaintiff bases her breach of contract claim upon the Deed of Trust, and the sole basis for the claim is based upon a breach of the duty of good faith and fair dealing.
Defendant first asserts that the breach of contract claim fails because the duty of good faith and fair dealing does not apply in the mortgage context. To the extent that Plaintiff is asserting a breach of contract claim based upon an alleged breach of duty of good faith and fair dealing, the Court agrees. In Texas, there is "no special relationship between a mortgagor and mortgagee." Collier v. Wells Fargo Home Mort., No. 7:04-CV-86, 2006 WL 1464170 at *8 (N.D. Tex. May 26, 2006) (citing UMLIC VP LLC v. T & M Sales and Envtl. Systems, Inc., 176 S.W.3d 595, 612 (Tex. App.- Corpus Christi 2005, pet. denied)). "Ordinarily, there is no such duty in lender/lendee relationships." Vogel v. Travelers Indem. Co., 966 S.W.2d 748, 753 (Tex. App.-San Antonio 1998, no pet.)(citing Federal Deposit Ins. Corp. v. Coleman, 795 S.W.2d 706, 709 (Tex. 1990); English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983)).
Plaintiff's petition asserts that there is a duty of good faith and fair dealing in contractual relationships under the UCC. "Because the Deed of Trust places a lien on real property, it is not governed by the UCC." See Vogel, 966 S.W.2d at 753 (citing Tex. Bus. & Comm. Code § 9.104(10); Long v. NCNB-Texas Nat'l Bank, 882 S.W.2d 861, 864 (Tex. App.-Corpus Christi 1994, no writ)).
Plaintiff has not presented the Court with any authority to support her view that there is a duty of good faith and fair dealing in the mortgage context. See Casterline v. Indy Mac/One West, No. C-10-210, 2011 WL 11183 *6 (S.D. Tex. Jan. 3, 2011); Smith v. National City Mortg, No. A-09-CV-881, 2010 WL 3338537 *12 (W.D. Tex. Aug. 23, 2010). Furthermore, Plaintiff fails to allege facts that would make such a claim plausible. Therefore, any breach of contract claim based upon a duty of good faith and fair dealing should be dismissed.
In order to establish a claim for breach of contract, a plaintiff must establish: (1) the existence of a valid, enforceable contract; (2) they performed or tendered performance; (3) defendant breached the contract; and (4) defendant's breach caused plaintiffs' damages. Valero Mktg. & Supply Co. v. Kalama Int'l, 51 S.W.3d 345, 351 (Tex. App.—Houston [1st Dist.] 2001, no pet.).
Plaintiff has not stated a plausible claim for breach of contract for any violation of the Deed of Trust. Plaintiff offers no facts on how Defendant breached the Deed of Trust. Therefore, the breach of contract claim should be dismissed.
Unreasonable Collection Efforts Claim
Under Texas law, "[u]nreasonable collection is an intentional tort." EMC Mortg. Corp. v. Jones, 252 S.W.3d 857, 868 (Tex. App.2008, no pet.). "[T]he elements are not clearly defined and the conduct deemed to constitute an unreasonable collection effort varies from case to case." Id. To recover on this claim, Plaintiffs must prove that Defendant's debt collection efforts "amount to a course of harassment that was willful, wanton, malicious, and intended to inflict mental anguish and bodily harm." Id. at 868-69(citations omitted); Steele v. Green Tree Servicing, LLC, No. 3:09-CV-0603, 2010 WL 3565415 *6 (N.D. Tex. Sept. 7, 2010). The reasonableness of conduct is judged on a case-by-case basis. B.F. Jackson, Inc. v. CoStar Realty Information, Inc., 4:08-CV-3244, 2009 WL 1812922 at *5 (S.D. Tex. May 20, 2009) (citing EMC Mortgage Corp., 252 S.W.3d at 868). Generally, "mental anguish damages alone will not establish a right of recovery; the plaintiff must suffer some physical or other actual damages in order to be entitled to relief." Id.
Defendant moves to dismiss Plaintiff's unreasonable collection efforts claim because Plaintiff fails to identify any conduct by Defendant that would amount to "a course of harassment."
Based upon Plaintiff's allegations, the Court finds that this claim is not plausible and the motion to dismiss should be granted. Plaintiff fails to allege facts that would demonstrate that CitiMortgage's conduct was willful, wanton, or malicious. Plaintiff was in default, and Plaintiff fails to assert any facts that demonstrate that CitiMortgage took actions that would be considered willful, wanton, or malicious. Therefore, this claim should be dismissed.
Texas Debt Collection Act Claim
Plaintiff asserts the following violations of the TDCPA: (1) threatening to take an action prohibited by law, Tex. Fin. Code § 392.301(a)(8); (2) collecting or attempting to collect interest or a charge, fee, or expense incidental to the obligation unless the interest or incidental charge, fee, or expense is expressly authorized by the agreement creating the obligation or legally chargeable to the consumer, Tex. Fin. Code § 393.303(a)(2); (3) misrepresenting the character, extent, or amount of a consumer debt, or misrepresenting the consumer debt's status in a judicial or governmental proceeding, Tex. Fin. Code § 392.304(a)(8); and (4) using any other false representation or deceptive means to collect a debt or obtain information concerning a consumer, Tex. Fin. Code § 392.304(a)(19).
Section 392.304(a)(8) of the Texas Finance Code states that, "in debt collection or obtaining information concerning a consumer, a debt collector may not use a fraudulent, deceptive, or misleading representation that misrepresent[s] the character, extent, or amount of a consumer debt." Tex. Fin. Code § 392.304(a)(8). For a statement to constitute a misrepresentation under the TDCA, Defendant must have made a false or misleading assertion. Reynolds v. Sw. Bell Tel., L.P., No. 2-05-356-CV, 2006 WL 1791606 *7 (Tex. App.-Fort Worth June 29, 2006, pet. denied). A collection notice or balance statement misstating the amount owed on a debt constitutes a misleading assertion regarding the amount of that debt under the TDCA. See Baker v. Countrywide Home Loans, Inc., 3-08-cv-0916, 2009 WL 1810336 *7 (N.D. Tex. June 24, 2009); see also Steele v. Green Tree Servicing, LLC, No. 3:09-cv-0603, 2010 WL 3565415 *5, n.6 (N.D. Tex. Sept. 7, 2010). The TDCA does not prevent a debt collector from "exercising or threatening to exercise a statutory or contractual right of seizure, repossession, or sale that does not require court proceedings." Tex. Fin. Code § 392.301(b)(3); see Sweet v. Wachovia Bank and Trust Company, No. Civ.A. 3:03-CV-1212-R, 2004 WL 1238180 *3 (N.D. Tex. Feb.26, 2004).
Plaintiff asserts that CitiMortgage misrepresented the amounts owed on the loan, wrongfully accelerated and posted the Property for foreclosure, imposed wrongful charges, and failed to properly credit her payments. CitiMortgage moves to dismiss Plaintiff's TDCPA claims, asserting that there are no facts that would support a claim under these provisions. The Court agrees. Plaintiff offers only conclusions that recite the elements of the TDCPA provision and fails to provide any facts that support these allegations. Furthermore, Plaintiff fails to allege any facts that would establish a causal link between the conduct leading to the alleged violations and the actual damages that Plaintiff asserts. Merely stating Defendant violated the TDCPA, without more factual allegations, is a legal conclusion couched as a factual assertion, which does not survive a motion to dismiss. Plaintiff provides no allegations that Defendant did anything but exercise its right under the Deed of Trust to foreclose.
Texas Deceptive Trade Practices Act Claim
Plaintiff alleges that Defendants violated the DTPA. CitiMortgage moves to dismiss the DTPA claim because this claim is based upon and rests upon Plaintiff's TDCPA claim. CitiMortgage asserts that the DTPA claim should be dismissed because there is no factual basis for Plaintiff's TDCPA claim. The Court agrees.
CitiMortgage also moves to dismiss this claim because Plaintiff is not a consumer under the DTPA. To recover under the DTPA, Plaintiff must show: (1) the plaintiff is a consumer; (2) the defendant can be sued under the DTPA; (3) the defendant violated a specific provision of the DTPA; and (4) the defendant's violation is a producing cause of the plaintiff's damages. Tex. Bus. & Com. Code Ann. §§ 17.41-17.63; Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996). To qualify as a consumer, a plaintiff must (1) seek or acquire goods or services and (2) the goods or services purchased or leased must form the basis of the complaint. Modelist v. Deutsche Bank Nat. Trust Co., No. H-05-1180, 2006 WL 2792196, *7 (S.D. Tex. 2006) (citing Sherman Simon Enters., Inc. v. Lorac Serv. Corp., 724 S.W.2d 13, 14 (Tex. 1987)). Whether a plaintiff is a consumer under the DTPA is a question of law. Id. (citing Holland Mortgage & Inv. Corp. v. Bone, 751 S.W.2d 515, 517 (Tex. App.-Houston [1st Dist.] 1987, writ ref'd n.r.e.)).
In evaluating whether Plaintiff is a consumer, the Court must look to the object of the transaction. Tex. Bus. & Com. Code Ann. § 17.45; La Sara Grain Co. v. First Nat'l Bank of Mercedes, 673 S.W.2d 558, 567 (Tex. 1984). In La Sara Grain Company, the Texas Supreme Court held that a lender may be subject to a DTPA claim if the borrower's "objective" was the purchase or lease of a good or service. La Sara Grain Co., 673 S.W.2d at 567. However, a person whose objective is merely to borrow money is not a consumer because the lending of money does not involve either the purchase or lease of a good or service. Riverside Nat'l Bank v. Lewis, 603, S.W.2d 169, 173 (Tex. 1980).
In the present case, it is undisputed that Plaintiff's claims arise out of a loan and do not involve the purchase or lease of either goods or services. Plaintiff did not seek to purchase or lease any goods or services from Defendants. Therefore, Plaintiff is not a "consumer" with respect to the home loan. Therefore, Plaintiff's DTPA claim should be dismissed.
Negligent Misrepresentation Claim
In order to demonstrate a claim for negligent misrepresentation, Plaintiff must show: (1) the defendant made a representation in the course of its business, or in a transaction in which it had a pecuniary interest; (2) the defendant supplied "false information" for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffered pecuniary loss by justifiably relying on the representations. Horizon Shipbuilding, Inc. v. BLyn II Holding, LLC, 324 S.W.3d 840, 850 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (citing Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n.24 (Tex. 2002)). Notably, as to the second element of supplying false information, "the misrepresentation at issue must be one of existing fact." BCY Water Supply Corp. v. Residential Invs., Inc., 170 S.W.3d 596, 603 (Tex. App.—Tyler 2005, pet. denied). "A promise to do or refrain from doing an act in the future is not actionable because it does not concern an existing fact." Id.
Promises of future conduct are insufficient to support a claim for negligent misrepresentation. New York Life Ins. Co. v. Miller, 114 S.W.3d 114, 125 (Tex. App.—Austin 2003, no pet.). To be actionable, Defendant's statements must pertain to an existing fact. Id.
Plaintiff asserts that CitiMortgage misrepresented the correct amount owed on the loan and failed to verify the validity of the debt. Defendant contends that Plaintiff failed to allege any facts demonstrating that her reliance on the alleged misrepresentation was to her detriment.
"[W]hen a written contract exists, it is more difficult for a party to show reliance on subsequent oral representations." Beal Bank, S.S.B. v. Schleider, 124 S.W.3d 640, 651 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). Generally, "negligent misrepresentation is a cause of action recognized in lieu of a breach of contract claim, not usually available where a contract was actually in force between the parties." Airborne Freight Corp. Inc. v. C.R. Lee Enters., Inc., 847 S.W.2d 289, 295 (Tex. App.—El Paso 1992, writ denied); see Scherer v. Angell, 253 S.W.3d 777, 781 (Tex. App.—Amarillo 2007, no. pet) (explaining that "there must be an independent injury, other than breach of contract, to support a negligent misrepresentation finding.").
Plaintiff fails to allege any facts that would support a negligent misrepresentation claim. CitiMortgage is correct that there are no facts that would make this claim plausible because there are no facts that Plaintiff relied upon any alleged misrepresentation to her detriment. Therefore, this claim should be dismissed.
Gross Negligence Claim
In order to establish gross negligence, a plaintiff must prove the following elements: (1) when viewed objectively from the defendant's standpoint, the act or omission complained of must involve an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and (2) the defendant must have actual, subjective awareness of the risk involved, but nevertheless proceed in conscious indifference to the rights, safety, or welfare of others. Lee Lewis Constr., Inc. v. Harrisson, 70 S.W.3d 778, 785 (Tex. 2001).
"The threshold inquiry regarding a gross negligence claim is whether a legal duty existed." RT Realty, L.P. v. Texas Utilities Electric Co., 181 S.W.3d 905, 914 (Tex. App.—Dallas 2006, no pet.) "The Texas Supreme Court has declined to impose an implied duty of good faith and fair dealing in every contract, though it has recognized that such a duty may arise as a result of 'a special relationship between the parties governed or created by a contract.'" UMLIC VP LLC v. T & M Sales & Envtl. Sys., Inc., 176 S.W.3d 595, 612 (Tex. App.—Corpus Christi 2005, pet. denied) (quoting Arnold v. Nat'l Cnty. Mut. Fire Ins., 725 S.W.2d 165, 167 (Tex. 1987)). "Special relationships" include those relationships marked by shared trust or an imbalance in bargaining power. Id. "[A]bsent a 'special relationship,' any duty to act in good faith is contractual in nature and its breach does not amount to an independent tort." Id.
In Texas, there is "no special relationship between a mortgagor and mortgagee." Collier v. Wells Fargo Home Mortg., No. 7:04-CV-086-K, 2006 WL 1464170, at *8 (N.D. Tex. May 26, 2006) (citing cases). Here, any duty of good faith is ultimately based upon the parties' contractual obligations. Plaintiff alleges no facts indicating that Defendant's contractual obligations required it to act consistent with a duty of good faith. Without such an obligation, no duty of care arises that would support an independent claim for gross negligence. Accordingly, Plaintiff's claim for gross negligence should be dismissed.
Accounting
Plaintiff also asserts a claim for an accounting. Defendant moves to dismiss this claim, asserting that Plaintiff does not explain why she is entitled to an accounting, let alone allege any facts to support her requests. The Court agrees. Moreover, an accounting is an equitable remedy and not an independent cause of action. Plaintiff has no cause of action that allows for an accounting, and this equitable relief should be dismissed. Likewise, Plaintiff's claim for attorney's fees should also be dismissed because there is no claim that survives that would allow for such an award.
Declaratory Judgment
When a declaratory judgment action filed in state court is removed to federal court, that action is, in effect, converted into one brought under the federal Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202. The federal Declaratory Judgment Act states "[i]n a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. Federal courts have broad discretion to grant or refuse declaratory judgment. Torch, Inc. v. LeBlanc, 947 F.2d 193, 194 (5th Cir. 1991). "Since its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). The Declaratory Judgment Act is "an authorization, not a command." Public Affairs Assocs., Inc. v. Rickover, 369 U.S. 111, 112 (1962). It gives federal courts the competence to declare rights, but does not impose a duty to do so. Id.
The Declaratory Judgment Act is a procedural device that creates no substantive rights and requires the existence of a justiciable controversy. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-241 (1937); Lowe v. Ingalls Shipbuilding, 723 F.2d 1173, 1179 (5th Cir. 1984). Thus, the Act provides no relief unless there is a justiciable controversy between the parties. The Fifth Circuit stated as follows:
In order to demonstrate that a case or controversy exists to meet the Article III standing requirement when a plaintiff is seeking injunctive or declaratory relief, a plaintiff must allege facts from which it appears there is a substantial likelihood that he will suffer injury in the future. Based on the facts alleged, there must be a substantial and continuing controversy between two adverse parties. The plaintiff must allege facts from which the continuation of the dispute may be reasonably inferred. Additionally, the continuing controversy may not be conjectural, hypothetical, or contingent; it must be real and immediate, and create a definite, rather than speculative threat of future injury.Bauer v. Texas, 341 F.3d 352, 358 (5th Cir. 2003) (citations and quotations omitted).
Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief ... if unaccompanied by any continuing, present adverse effects. To obtain equitable relief for past wrongs, a plaintiff must demonstrate either continuing harm or a real and immediate threat of repeated injury in the future. Similar reasoning has been applied to suits for declaratory judgments.
As Plaintiff has alleged no facts that would lead to the conclusion that a present controversy exists between her and Defendants, Plaintiff does not have a right to relief under the Declaratory Judgment Act.
Quiet Title and Trespass to Try Title Claims
CitiMortgage asserts that any claim to quiet title would be improper because there has been no foreclosure. The Court agrees, and these claims should be dismissed.
RECOMMENDATION
Based upon the findings discussed above, the Court RECOMMENDS that CitiMortgage, Inc.'s Motion to Dismiss (Dkt. #8) be GRANTED with prejudice and the entire case should be DISMISSED.
The Court also recommends that Merscorp, Inc. and Lavon Grand Heritage Homeowners Association, Inc. should be DISMISSED without prejudice.
Within fourteen (14) days after service of the magistrate judge's report, any party may serve and file written objections to the findings and recommendations of the magistrate judge. 28 U.S.C. § 636(b)(1)(C).
Failure to file written objections to the proposed findings and recommendations contained in this report within fourteen days after service shall bar an aggrieved party from de novo review by the district court of the proposed findings and recommendations and from appellate review of factual findings accepted or adopted by the district court except on grounds of plain error or manifest injustice. Thomas v. Arn, 474 U.S. 140, 148 (1985); Rodriguez v. Bowen, 857 F.2d 275, 276-77 (5th Cir. 1988).
SIGNED this 9th day of May, 2011.
/s/_________
AMOS L. MAZZANT
UNITED STATES MAGISTRATE JUDGE