Pena v. HSBC Bank USA, National Ass'n Ex Rel. Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA2 , 633 F. App'x 580 ( 2015 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2329
SOSTENES PENA; YOLANDA PENA,
Plaintiffs – Appellants,
v.
HSBC BANK USA, National Association as Trustee for Deutsche
Alt-A Securities Mortgage Loan Trust, Series 2007-OA2;
SURETY TRUSTEES, LLC,
Defendants – Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (1:14-cv-01018-JCC-JFA)
Submitted: November 4, 2015 Decided: December 28, 2015
Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Christopher E. Brown, TUCKER & ASSOCIATES PLLC, Vienna,
Virginia, for Appellants. John C. Lynch, Maryia Y. Jones,
Jennifer E. Bowen, TROUTMAN SANDERS LLP, Virginia Beach,
Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
This case concerns the efforts of Plaintiffs–Appellants
Sostones and Yolanda Pena to retain possession of their real
estate in Loudoun County, Virginia, after they defaulted on
their mortgage loan and the property was sold at a foreclosure
sale. Defendant–Appellee HSBC Bank USA, N.A. (“HSBC”), as
Trustee for Deutsche Alt-A Securities Mortgage Loan Trust,
Series 2007-OA2, was the beneficiary of the deed of trust
associated with the Penas’ loan, and purchased the property at
the foreclosure sale. After the sale, the Penas sued HSBC,
raising several claims premised on their assertion that the
assignment of the deed of trust from the Penas’ original lender
to HSBC was invalid.
The district court granted HSBC’s motion to dismiss the
Penas’ complaint for failure to state a claim, holding that the
Penas lack standing to challenge the assignment. For the
reasons that follow, we affirm.
I.
Because this case arises at the motion-to-dismiss stage, we
“assum[e] all well-pleaded, nonconclusory factual allegations in
the complaint to be true.” Aziz v. Alcolac, Inc., 658 F.3d 388,
391 (4th Cir. 2011). In addition to the complaint itself, we
may consider “documents attached to the complaint, . . . as well
2
as those attached to the motion to dismiss, so long as they are
integral to the complaint and authentic.” Philips v. Pitt Cty.
Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009). We may also
“take judicial notice of matters of public record.” Id.The Penas’ complaint and the associated documents reveal
the following facts: The Penas purchased the property at issue
on February 5, 2007. To finance their purchase, the Penas
obtained a loan from IndyMac Bank, F.S.B. (“IndyMac”). The loan
was secured by a deed of trust on the property. Instead of
identifying itself as the trust beneficiary, IndyMac appointed a
separate company called Mortgage Electronic Registration
Systems, Inc. (“MERS”) as the “nominee” for IndyMac and
IndyMac’s “successors and assigns,” and MERS became the trust
beneficiary. J.A. 31.
On July 27, 2010, July 29, 2010, and June 11, 2013,
respectively, MERS executed and recorded three separate
documents, each entitled “Assignment of Deed of Trust.” Each
document purported to assign to HSBC “all beneficial interest”
under the Penas’ deed of trust. J.A. 63–66. HSBC, in turn,
appointed Surety Trustees, LLC (“Surety Trustees”) as a
substitute trustee in place of Trust Title Company, which had
been named trustee in the original deed of trust. After the
Penas defaulted on their loan, HSBC instructed Surety Trustees
3
to initiate foreclosure proceedings. At the foreclosure sale,
HSBC purchased the property.
II.
In their complaint, the Penas seek various types of relief
from the foreclosure sale, asserting that MERS’s assignment of
the deed of trust to HSBC was invalid, and that HSBC therefore
had no authority to appoint Surety Trustees as a substitute
trustee and no authority to instruct Surety Trustees to initiate
foreclosure proceedings. 1 The district court, in granting HSBC’s
motion to dismiss, held that the Penas lack standing to
challenge MERS’s assignment of the deed of trust to HSBC. We
review de novo a district court’s decision to grant a motion to
dismiss for failure to state a claim. Aziz, 658 F.3d at 391.
On appeal, the Penas do not dispute the basic principle of
Virginia law that “generally, one who is not in privity of
contract cannot attack the validity of the contract.” Wells v.
Shoosmith, 428 S.E.2d 909, 913 (Va. 1993); see Mich. Mut. Ins.
Co. v. Smoot, 129 F. Supp. 2d 912, 920 (E.D. Va. 2000) (stating
1Specifically, in Count I, the Penas seek rescission of the
foreclosure sale; in Count II, they request removal of a cloud
on title; and in Count III, they seek damages for slander of
title. The Penas also asserted a breach-of-contract claim
against HSBC in Count IV, but they do not contest the district
court’s dismissal of that claim on appeal.
4
that, under Virginia law, “[o]ne must be a party to, or a
beneficiary of, a contract to sue on that contract”). 2 Nor do
the Penas claim that they were in fact parties to, or
beneficiaries of, the assignment of the deed of trust from MERS
to HSBC.
Instead, the Penas argue that their complaint seeks only to
enforce the conditions precedent to foreclosure contained in the
deed of trust (to which they are a party), and point out that
under Virginia law, “[b]orrowers may sue to enforce conditions
precedent to foreclosure,” Mathews v. PHH Mortgage Corp.,
724 S.E.2d 196, 200 (Va. 2012). And indeed, the Penas do allege
in their first amended complaint that “several conditions
precedent” to foreclosure “were not satisfied.” J.A. 23.
Specifically, the Penas allege that
- The lender . . . did not declare a default, nor
give notice thereof
- The Lender did not accelerate the Note, nor give
notice thereof
- The Lender did not appoint the substitute trustee
- The Lender did not advise the borrower in the
notice of the right to cure . . . that she had the
right to file a court action and raise any defense
- Lender provided no notice of the sale as required
by the contract and Virginia law.
2Federal prudential standing doctrine likewise contains a
“general prohibition on a litigant's raising another person's
legal rights.” CGM, LLC v. BellSouth Telecomm., Inc., 664 F.3d
46, 52 (4th Cir. 2011) (quoting Allen v. Wright, 468 U.S. 737,
751 (1984)).
5
J.A. 23–24.
The Penas’ briefing on appeal makes clear, however, that
they are not alleging that they never received notice of their
default and of the impending foreclosure. In fact, the record
contains several letters that provided the Penas with such
notice. See J.A. 112–22. The Penas’ only contention is that
they were provided such notice by the wrong entity: the deed of
trust requires that notice be provided by the Lender (or its
agents), and according to the Penas, HSBC is not the Lender. Of
course, the Penas’ assertion that HSBC is not the Lender is
entirely dependent on their challenge to the validity of the
assignment from MERS to HSBC--a challenge that they have no
standing to raise. Thus, even though the Penas’ complaint is
styled as a suit to enforce the deed of trust, it is clear that,
at bottom, their suit seeks only to challenge a contract to
which they are neither parties nor beneficiaries. Virginia law
provides no avenue for such a challenge.
III.
For the foregoing reasons, the district court’s order
dismissing the Penas’ complaint is
AFFIRMED.
6