Jessup v. Progressive Funding , 35 F. Supp. 3d 25 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
BENNIE JESSUP, )
)
Plaintiff, )
)
v. ) Civil No. 13-cv-0248 (KBJ)
)
PROGRESSIVE FUNDING, et al., )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiff Bennie Jessup (“Jessup”) purchased property located at 1855 Channing
Street, NE in Washington, DC (the “Property”) with funds from a $271,200 residential
mortgage loan from Progressive Funding. (Compl. To Quiet Title, Ex. A to Notice of
Removal, ECF No. 1-1 (“Compl.”), ¶¶ 7-8.) At some point after Jessup defaulted and
foreclosure proceedings were initiated, Jessup filed a complaint for “quiet title” in the
Superior Court of the District of Columbia against Progressive Funding and U.S. Bank,
N.A., as trustee for Banc of America Funding Corporation Mortgage Pass-Through
Certificates Series 2006-G (“U.S. Bank,” and collectively, “Defendants”). Proceeding
pro se, Jessup alleges that Defendants do not have any lawful ownership or security
interest in the Property because Progressive Funding securitized the mortgage note that
Jessup executed to fund the purchase of the Property. (Id. ¶ 2.) Jessup also asserts that,
because she has not found any record of the assignment of the mortgage note and
associated deed of trust to U.S. Bank, “the Deed was NEVER assigned to or owned by
[U.S. Bank].” (Id. ¶ 13 (emphasis in original).)
U.S. Bank removed Jessup’s complaint to federal court (Notice of Removal, ECF
No. 1), and then, filed a motion to dismiss it. (See Def.’s Mem. in Supp. of Mot. to
Dismiss, ECF No. 4 at 4-16 (“Def.’s Mem.”).) 1 U.S. Bank argues that Jessup’s
complaint fails to state a claim upon which relief can be granted primarily because
Jessup has not pled facts sufficient to demonstrate that there is any actual conflict
between the parties with respect to ownership of the Property, nor has she established
superior title to the Property in a manner that would give rise to a viable quiet title
claim. (Id. at 4-6.) Because this Court agrees that Jessup’s complaint fails to allege
any actual controversy or plausible legal basis for recovery, and in any event, the
complaint was improperly filed because Jessup failed to satisfy a contractual condition
precedent, U.S. Bank’s motion is GRANTED and the case will be DISMISSED as to
both Defendants in its entirety and with prejudice. A separate order consistent with this
opinion will follow.
I. FACTUAL BACKGROUND
The complaint contains very little factual information, but what can be gleaned
about the relevant events is as follows.
Jessup purchased the Property on March 6, 2006, utilizing a $271,200 residential
mortgage loan that she had obtained from Progressive Funding. (Compl. ¶ 7.) To
secure the loan, Jessup signed an Adjustable Rate Note. (Id., Ex. A, ECF No. 1-1 at 8-
12 (“Note”).) The Note identifies Progressive Funding as the Lender and attaches a
1
U.S. Bank removed the matter pursuant to 28 U.S.C. § 1441(a), on the grounds that (1) there is
complete diversity of citizenship between Jessup as a citizen of the District of Columbia on one hand,
and Progressive Funding and U.S. Bank as citizens of states other than the District of Columbia on the
other, and (2) the amount in controversy exceeds $75,000 because the claims arise out of the $271,200
mortgage loan. (Notice of Removal, ECF No. 1, ¶¶ 7-11.)
2
Deed of Trust to secure Jessup’s obligation. (Compl. ¶ 8; id., Ex. A, ECF No. 1-1 at
36-61 (“Deed”).) In signing the Note, Jessup agreed to make monthly payments until
she had repaid all amounts due under the Note. (See Note ¶ 3.) In addition, the Note
expressly informs Jessup that Progressive Funding has the right to transfer the Note.
(See id. ¶ 1 (“I understand that the Lender may transfer this Note. The Lender or
anyone who takes this Note by transfer and who is entitled to receive payments under
this Note is called the Note Holder.”).) The Deed similarly names Progressive Funding
as the lender and also designates a local attorney as trustee. (See Deed at 1, 3.) By
signing the Deed, Jessup “irrevocably grant[ed] and convey[ed]” the Property, in trust
and with power of sale, to the trustee as security for her mortgage. (Id. at 3.) 2 The
express terms of the Deed allow Progressive Funding to sell the Note, together with the
Deed, without prior notice to Jessup. (Id. ¶ 20.) The Deed further bars Jessup from
commencing any litigation related to the Deed without providing the other party with
notice and a reasonable opportunity to cure. (Id.)
Jessup’s complaint alleges that Progressive Funding securitized the Note on July
31, 2006, and that the securitization “extinguished Progressive’s rights as the ‘note
holder’” such that “Progressive is no longer entitled to payment under the subject
Note.” (Compl. ¶ 9; see also id. ¶ 10 (“[T]he securitization of Plaintiff’s Note
destroyed the Note because it was turned into a security registered with the SEC; the
Note no longer exists.”).) Jessup’s complaint also maintains that, while Progressive
Funding may have desired to assign any interest that it had in the Note and Deed to
2
A power of sale provision empowers the named trustee, upon default, to advertise and sell the
property at public auction without court involvement. “The District of Columbia is a non-judicial
foreclosure jurisdiction, which allows foreclosure pursuant to a power of sale provision contained in
any deed of trust.” See Carter v. Bank of Am., N.A., 888 F. Supp. 2d 1, 14 (D.D.C. 2012) (citation and
quotation marks omitted).
3
other entities, “there is no record of the Plaintiff’s Note and Deed being properly
indorsed and/or assigned together to the Trust [U.S. Bank] by the Trust closing date of
July 31, 2006.” (Id. ¶ 13.) “Therefore,” Jessup reasons, “the Deed was NEVER
assigned to or owned by the Trust.” (Id.) The complaint makes no mention of any
default regarding Jessup’s obligation to make payments under the Note, nor does it state
anything about foreclosure of the Property after the Note and Deed were executed.
According to facts stated in U.S. Bank’s Motion to Dismiss and its attachments,
Jessup’s Note was indeed securitized, and the Note and Deed lawfully changed hands at
least twice after they were executed. 3 Progressive Funding endorsed the Note and
assigned the Deed to Wells Fargo. (See Def.’s Mem., Ex. A, Assignment of Deed of
Trust, recorded in the land records of the District of Columbia as Instrument No.
2007090097, ECF No. 4-1 at 2-3; id., Ex. B, Adjustable Rate Note, ECF No. 4-1 at 5-11
(including endorsement attachment wherein Progressive Funding endorsed the Note to
Wells Fargo).) Wells Fargo subsequently endorsed and assigned the Note and Deed to
U.S. Bank. (See Def.’s Mem., Ex. C, Certificate of Assignment, recorded in the land
records of the District of Columbia as Instrument No. 2009056283, ECF No. 4-1 at 13-
14.) According to U.S. Bank’s motion, publicly-recorded D.C. land records further
3
U.S. Bank attaches three documents to its motion to dismiss: (1) the assignment of the Deed from
Progressive Funding to Wells Fargo Bank, N.A. (“Wells Fargo”) (Def.’s Mot., Ex. A, ECF No. 4-1 at 2-
3); (2) a copy of the Note, including an additional endorsement page that is missing from the copy
Jessup attaches to her complaint (id., Ex. B, ECF No. 4-1 at 5-11); and (3) a certificate assigning the
Deed and Note from Wells Fargo to U.S. Bank (id., Ex. C, ECF No. 4-1 at 13-14). The first and third
attachment are documents that were filed with the D.C. Recorder of Deeds and are therefore public
records. This means that this Court can take judicial notice of them without converting U.S. Bank’s
motion to dismiss into one for summary judgment. See Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052,
1059 (D.C. Cir. 2007). The Court further finds that the second document that U.S. Bank has attached
to its motion—the Note with the endorsement page—is incorporated by reference into the complaint,
given that Jessup challenges the sale, assignment, and transfer of the Note (see Compl. ¶ 2). See also
Busby v. Capital One, N.A., 932 F. Supp. 2d 114, 133-34 (D.D.C. 2013). Accordingly, the Court will
consider all of the documents U.S. Bank attaches to its motion to dismiss without converting the motion
into one for summary judgment.
4
reveal that Jessup defaulted on the mortgage and that U.S. Bank then initiated
foreclosure proceedings in 2009 and again in 2010. (See Def.’s Mem. at 2-3 (citing
Notice of Foreclosure Sale of Real Property or Condominium Unit dated May 21, 2009,
recorded in the land records of the District of Columbia as Instrument No. 2009053611;
Notice of Foreclosure Sale of Real Property or Condominium Unit dated March 3, 2010,
recorded in the land records of the District of Columbia as Instrument No.
2010018051).) 4
On January 31, 2013, Jessup filed the instant complaint in the Superior Court for
the District of Columbia, seeking a declaratory judgment establishing her ownership of
the Property and cancelling the Note and Deed. (Compl. ¶¶ 17-18.) As mentioned
above, she argues that securitization of her the Note “destroyed the Note because it was
turned into a security registered with the SEC,” which in turn rendered the Deed
invalid. (Id. ¶ 10.) Jessup further argues that U.S. Bank does not own the Deed
because a “Voluntary Liens Report” that she attaches to her complaint does not reflect
that Progressive Funding assigned the Note and Deed to U.S. Bank in conjunction with
the July 31, 2006, securitization. (Id. ¶ 13; id., Ex. C, ECF No. 1-1 at 13-22.)
After removing the complaint to this Court on February 26, 2013, U.S. Bank
filed a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). 5
U.S. Bank maintains that Jessup’s complaint fails to allege facts establishing that there
is any genuine controversy regarding Progressive Funding’s securitization and
4
Jessup does not address this representation in her opposition to U.S. Bank’s motion; consequently,
there appears to be no dispute regarding the default or the foreclosures. While it is unclear from the
record why two separate foreclosure proceedings were initiated, that question is irrelevant to the
resolution of this motion.
5
U.S. Bank is the only defendant that has noticed an appearance or filed a responsive pleading in this
matter. This is presumably because, according to the docket, Jessup has not effected service on
Progressive Funding to date.
5
assignment of the Note and Deed. (Def.’s Mem. at 4-5.) The bank argues further that
Jessup’s theories that securitization of the Note and Deed invalidated those documents,
or that prior holders improperly assigned the documents to U.S. Bank, are legally and
factually baseless. (Id. at 5-7.) U.S. Bank also asserts that the text of the relevant
documents doom Jessup’s complaint, both because the Note and Deed expressly permit
the transfers that Jessup now questions, and also because Jessup failed to plead facts
showing that she has satisfied the Deed’s pre-litigation notice requirement. (Id. at 7,
10-12.) In opposition to the motion, Jessup does not respond directly to any of U.S.
Bank’s arguments. Instead, she argues that “[t]he Complaint contains cognizable legal
theories, sufficient facts to support cognizable legal theories, and seeks remedies to
which Plaintiff is entitled.” (Pl.’s Opp’n to Mot. to Dismiss, ECF No. 6 (“Pl.’s Opp’n”),
at 2 (citations omitted).) Jessup also states that “Plaintiff can prove the facts that are
alleged in the claim during trial.” (Id.)
II. LEGAL STANDARD FOR A RULE 12(b)(6) MOTION TO DISMISS
Federal Rule of Civil Procedure 12(b)(6) provides that a party may move to
dismiss a complaint on the grounds that it “fail[s] to state a claim upon which relief can
be granted.” Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, a complaint
must comply with Rule 8, which requires “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). This requirement is
meant to “give the defendant fair notice of what the . . . claim is and the grounds upon
which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks and citation omitted).
6
“Although ‘detailed factual allegations’ are not necessary to withstand a Rule
12(b)(6) motion to dismiss for failure to state a claim, a plaintiff must furnish ‘more
than labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of
action.’” Busby, 932 F. Supp. 2d at 133 (quoting Twombly, 550 U.S. at 555). In other
words, the plaintiff must provide “more than an unadorned, the-defendant-unlawfully-
harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Mere
conclusory statements” of misconduct are not enough to make out a cause of action
against a defendant. Id. Rather, a complaint must contain sufficient factual allegations
that, if true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at
570. When deciding a Rule 12(b)(6) motion to dismiss, “[t]he court must view the
complaint in a light most favorable to the plaintiff and must accept as true all
reasonable factual inferences drawn from well-pleaded factual allegations.” Busby, 932
F. Supp. 2d at 134 (citation omitted). Although the court must accept as true the facts
in the complaint, it need not accept inferences a plaintiff draws if the facts set out in the
complaint do not support such inferences. Kowal v. MCI Commc’ns Corp., 16 F.3d
1271, 1276 (D.C. Cir. 1994). Nor is the court “bound to accept as true a legal
conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555 (citation
omitted). Significantly, the pleadings of pro se parties are to be “liberally construed,
and a pro se complaint, however inartfully pleaded, must be held to less stringent
standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89,
94 (2007) (per curiam) (internal quotation marks and citations omitted). “This benefit
is not, however, a license to ignore the Federal Rules of Civil Procedure.” Sturdza v.
U.A.E., 658 F. Supp. 2d 135, 137 (D.D.C. 2009) (citation omitted). Rather, “even
7
though a pro se complaint must be construed liberally, the complaint must still ‘present
a claim on which the Court can grant relief.’” Budik v. Dartmouth-Hitchcock Med. Ctr.,
937 F. Supp. 2d 5, 11 (D.D.C. 2013) (quoting Chandler v. Roche, 215 F. Supp. 2d 166,
168 (D.D.C. 2002)); see also Moore v. Motz, 437 F. Supp. 2d 88, 90 (D.D.C. 2006)
(noting that a court need not accept “[e]ven a pro se plaintiff’s inferences” if the facts
set out in the complaint do not support those inferences) (citation omitted); Crisafi v.
Holland, 655 F.2d 1305, 1308 (D.C. Cir. 1981) (same).
III. ANALYSIS
Jessup requests two things in the case. First, she seeks a court order declaring
that “the subject Deed of Trust [is] null and void [and] cancelling the Deed of Trust of
record.” (Compl. ¶ 18(d).) Second, she seeks a declaration “quieting title to the
property owned by Plaintiff against Defendants and all persons claiming under
Defendants.” (Id.) But, as noted above, a complaint only “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.” Iqbal, 556 U.S. at
678. And, as U.S. Bank persuasively argues, the complaint in this case falls woefully
short of this standard. To summarize what is explained further below, Jessup has not
alleged any facts that come anywhere close to establishing either that U.S. Bank or
Progressive Funding has engaged in any misconduct with respect to Jessup’s Note and
Deed. Furthermore, Jessup’s request for declaratory relief is clearly based on a series
of mistaken legal assumptions, such that even if the facts alleged in the complaint are
true, Jessup would not be entitled to the relief she seeks. Consequently, U.S. Bank’s
8
motion to dismiss must be granted, and this Court will also sua sponte dismiss the
claims against Progressive Funding.
A. Jessup’s Complaint Fails To State A Claim Upon Which Relief Can Be
Granted
1. Jessup’s Allegations Regarding The Securitization And Assignment
Of The Note
Jessup’s entire complaint turns on the undisputed fact that Progressive Funding
securitized her mortgage note to U.S. Bank on July 31, 2006. (Compl. ¶ 9.) From this
single fact, Jessup leaps to the legal conclusion that “an actual controversy has arisen
and now exists,” regarding her obligations under the Note and her rights to the
Property. (Id. ¶ 17.) But she points to no facts, or any law for that matter, that connect
securitization and assignment of the Note to this supposed “controversy,” nor has she
demonstrated any basis upon which this Court can award the relief she seeks.
That the complaint lacks any factual or legal basis is evident from the outset
insofar as Jessup has not identified any statute or contractual obligation that
Progressive Funding’s conduct in securitizing the Note, and the subsequent assignments
of the Note and Deed to Wells Fargo and then U.S. Bank, could allegedly have violated.
At a minimum, under Federal Rule of Civil Procedure 8, a plaintiff must not only allege
that the defendant committed some act that the plaintiff dislikes, but must also state
specifically the particular legal principle that gives rise to a reasonable inference that
the detested conduct was unlawful. See Ponder v. Chase Home Finance, LLC, 865 F.
Supp. 2d 13, 21 (D.D.C. 2012) (complaint that did not specify which subsection of the
Code of Federal Regulations defendant’s conduct allegedly violated did not “provide
enough information to ‘raise a right to relief above the speculative level.’”) (quoting
9
Twombly, 550 U.S. at 555). Here, Jessup identifies no statute or common law right that
gives rise to her claim. Moreover, Jessup even fails to assert that there is any conflict
between the parties as a result of the securitization and subsequent assignments. For
example, there are no allegations in the complaint that Jessup defaulted on her mortgage
because she believed that she no longer had any obligation to pay it, and indeed, the
foreclosure is not even mentioned, much less asserted as a basis for Jessup’s bald
conclusion that a controversy now exists. In short, Jessup articulates nothing more than
theoretical harm, unsupported by law or fact, and as U.S. Bank argues, this is
manifestly insufficient to give rise to the conclusion that the complaint presents a
controversy for this Court to resolve. Cf. Ticor Title Ins. Co. v. FTC, 814 F.2d 731, 735
(D.C. Cir. 1987) (“Since the judicial power is limited to cases and controversies, federal
courts cannot decide purely abstract or theoretical claims, or render advisory
opinions.”) (citation omitted).
2. Jessup’s Assertion That The Deed Of Trust Is Invalid
Significantly, even if Jessup’s complaint was retooled to allege sufficiently that
there is an existing controversy between Jessup and Defendants, to the extent that
Jessup is seeking a Court order that invalidates the Deed, she has provided no valid
legal basis for doing so. Jessup’s request for such an order rests solely on her assertion
that “securitization of Plaintiff’s Note destroyed the Note” (Compl. ¶ 10), which in turn
rendered the Deed invalid (id. ¶ 11). Courts across the country have already uniformly
rejected this argument. See, e.g., Flores v. GMAC Mortgage, LLC, 12cv794, 2013 WL
2049388, at *2 (N.D. Cal. May 14, 2013) (“Courts have consistently rejected” the
theory that securitization of a note strips a holder of the ability to assign the deed of
10
trust); Boyter v. Wells Fargo Bank, N.A., No. 11cv03943, 2012 WL 1144281, at *5 (N.
D. Cal. Apr. 4, 2012) (dismissing wrongful foreclosure claim based on theory of invalid
assignment of the deed of trust due to securitization of the promissory note); Velez v.
The Bank of N.Y. Mellon, 10cv468, 2011 WL 572523, *4 (D. Haw. Feb. 15, 2011) (“The
court also rejects Plaintiff’s contention that securitization in general somehow gives
rise to a cause of action[.]”); Lane v. Vitek Real Estate Indus. Grp., 713 F. Supp. 2d
1092, 1099 (E. D. Cal. 2010) (“The argument that parties lose their interest in a loan
when it is assigned to a trust pool has also been rejected by many district courts.”);
Upperman v. Deutsche Bank Nat’l Trust Co., 10cv149, 2010 WL 1610414, at *3 (E. D.
Va. Apr. 16, 2010) (dismissing claims that were based on an “erroneous legal theory
that the securitization of a mortgage loan renders a note and corresponding security
interest unenforceable and unsecured”); Chavez v. Cal. Reconveyance Co., 10cv325,
2010 WL 2545006, at *2 (D. Nev. June 18, 2010) ( “The alleged securitization of
Plaintiffs’ loan did not invalidate the Deed of Trust[.]”).
Like plaintiffs in these other cases, Jessup points to no law establishing that
securitization of a loan somehow gives rise to any cause of action, let alone one that
would authorize this Court to invalidate the Note and Deed. See, e.g., Haskins v.
Moynihan, 10cv1000, 2010 WL 2691562, at *2 (D. Ariz. July 6, 2010) (denying a
request for injunctive relief based on claim of improper securitization where plaintiffs
failed to explain why securitization of their mortgage note entitled them to any form of
legal relief); Lariviere v. Bank of N.Y. as Tr., 09cv515, 2010 WL 2399583, at *4 (D.
Me. May 7, 2010) (“In the final analysis [plaintiffs’] complaint against these three
defendants is nothing more than a twenty-seven page hodge podge of conclusory
11
allegations about the process of securitizing subprime mortgages and reselling them to
investors. Many people in this country are dissatisfied and upset by that process, but it
does not mean that [plaintiffs] have stated legally cognizable claims against these
defendants in their amended complaint.”), report and recommendation adopted, 2010
WL 2399556 (D. Me. June 11, 2010). And this Court sees no reason to depart from the
reasoned judgment and collective wisdom of the many prior jurists who have considered
this issue. Accordingly, this Court concludes that Jessup’s argument that she is entitled
to a declaratory judgment invalidating the Note and Deed on the basis of the
securitization of those instruments is legally baseless.
3. Waiver Of Right To Challenge Transfer Of Note And Deed
Finally, even if the securitization and assignment of Jessup’s Note and Deed
without notice to her could be considered wrongful, and even if Jessup was legally
entitled to avenge that alleged wrong by filing a civil action for a declaratory judgment
invalidating the Note and Deed, Jessup has clearly waived the right to challenge the
securitization and assignment at issue in this case. Both the Note and the Deed, which
Jessup signed when she obtained the $271,000 mortgage from Progressive Funding,
expressly authorize Progressive Funding to transfer the executed instruments to another
party. (See Note ¶ 1 (“I understand that the Lender may transfer this note.”); Deed ¶ 20
(“The Note or a partial interest in the Note (together with this Security Instrument) can
be sold one or more times without prior notice to Borrower.”).) Consequently, Jessup
cannot now be heard to complain that the Note and Deed were reformulated and
transferred from Progressive Funding to Wells Fargo to U.S. Bank, nor can she
reasonably maintain that, as a result of these actions, the Note and Deed have been
12
rendered invalid. See Flores, 2013 WL 2049388, at *3 (dismissing claims arising from
allegedly improper securitization and sale of note in part because note and deed of trust
authorized sale without notice to borrower).
B. The Complaint Fails To Allege Facts That Permit An Inference That
Title To The Property Is In Doubt
Jessup not only seeks to have the Note and Deed rendered null and void, she also
asks this Court to issue an order declaring her the rightful owner of the Property,
notwithstanding the competing property interests of the entity that now holds the Note
and Deed (U.S. Bank). It is well established that courts may hear a common law action
to quiet title in order to prove title, secure title, “or to remove obstacles which hinder
its enjoyment.” In re Tyree, 493 A.2d 314, 317 (D.C. 1985) (quoting Sharon v. Tucker,
144 U.S. 533, 544 (1892)). However, Jessup’s request for a declaration quieting title in
her favor is fatally flawed for at least three reasons. First, because her claim for quite
title stems from her mistaken belief that the Note and Deed are invalid and thus any
claim the U.S. Bank has to the Property was extinguished. (The Court has already
rejected this argument, see supra Part III.A., and will not revisit it here). Second,
Jessup maintains that U.S. Bank has no interest in the Property because the Note and
Deed were never properly assigned to it, but this proposition defies both fact and law.
Finally, the Court concludes that Jessup’s request for a declaration quieting title in her
favor fails because she pleads no facts demonstrating that she has superior title to the
Property.
1. Jessup’s Argument That The Deed Was Never Properly Assigned
Jessup attaches to her complaint a document entitled “Voluntary Liens Report,”
which contains no mention of the assignment of the Note and Deed to U.S. Bank.
13
(Compl. ¶ 13; id., Ex. C, ECF No. 1-1 at 13-22.) The complaint says nothing about the
genesis of this report, the scope of the information it contains, or how Plaintiff obtained
this document. 6 Nevertheless, Jessup argues that this report conclusively establishes
that U.S. Bank never recorded the assignment, which in turn renders the assignment
invalid. (Compl. ¶ 13.) Even when the Court credits the complaint’s allegation that the
assignment does not appear on the Voluntary Liens Report, however, the Court need
not—and does not—accept the unsupported inference that Jessup draws from this fact;
namely, that the assignment was in fact never recorded and, as a result, the assignment
is therefore legally invalid. See Kowal, 16 F.3d at 1276. To the contrary, the relevant
public records indisputably establish that the D.C. Recorder of Deeds recorded both
Progressive Funding’s assignment of the Note and Deed to Wells Fargo, and Wells
Fargo’s subsequent assignment of the Note and Deed to U.S. Bank. (See Def.’s Mem.,
Ex. A, Assignment of Deed of Trust, ECF No. 4-1 at 2-3; id, Ex. C, Certificate of
Assignment, ECF No. 4-1 at 13-14.)
What is more, even if U.S. Bank’s recording of the assignment of the Note and
Deed were somehow ineffective, that would not entitle Jessup to a declaration quieting
title to the Property in her favor, for two independent reasons. First, Jessup has not
pled facts showing that she is either a party to, or an intended beneficiary of, the
assignment agreement. Accordingly, Jessup has not established that she has standing to
challenge the validity of any assignment of the Note and Deed. See, e.g., Ward v. Sec.
Atl. Mortg. Elec. Registration Sys., 858 F. Supp. 2d 561, 568 (E.D.N.C. 2012)
(plaintiffs did not have standing to declare an assignment void where they failed to
6
A disclaimer at the end of the document indicates that a company called “HomeInfoMax” created this
report. (Voluntary Liens Report at 10.)
14
allege they were parties to the assignment or intended beneficiaries) (citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560 (1992)); Wolf v. Fannie Mae, 830 F. Supp. 2d
153, 162 (W.D. Va. 2011) (finding that the borrower had no standing to challenge the
validity of an assignment where “she was not a party to the assignment, and the
assignment did not affect her underlying obligation to make timely payments”), aff’d,
512 F. App’x 336 (4th Cir. 2013) (per curiam). Second, and equally significant, under
District of Columbia law, an assignment of a note and deed is valid even if the assignee
never records the assignment. See, e.g., Duffy v. Bank of Am., N.A., 13cv696, 2014 WL
340711, at *3 (D.D.C. Jan. 30, 2014) (“There is no requirement that an assignment of a
note be recorded to be valid.”); Robinson v. Deutsche Bank Nat. Trust Co., 932 F. Supp.
2d 95, 104 (D.D.C. 2013) (“District of Columbia law does not require an assignment of
a note or deed of trust to be recorded in order for the transfer to be valid.”). As D.C.’s
highest court recently explained,
[g]enerally speaking, the recordation process is designed to
protect a property interest against subsequent bona fide
purchasers, the risk a property holder takes by failure to
record. It is not generally intended to otherwise affect
property rights, which include the right of holders to
foreclose on security interests.
Rose v. Wells Fargo Bank, N.A., 73 A.3d 1047, 1052 (D.C. 2013) (citations omitted).
Because (1) Jessup has not shown, and indeed cannot establish, that the
assignment in this matter was not recorded, and (2) even so, failure to record does not
invalidate an assignment under D.C. law, Jessup has not and cannot state a cause of
action to invalidate the Note and Deed and to obtain clear title to the Property on the
ground that U.S. Bank failed to record the assignment of the Note and Deed. See Diaby
v. Bierman, 795 F. Supp. 2d 108, 112 (D.D.C. 2011) (dismissing action for quiet title
15
alleging failure to record because “a failure to record an assignment does not give rise
to a cause of action”) (citing D.C. Code § 42-801); see also Leake v. Prensky, 798 F.
Supp. 2d 254, 257 (D.D.C. 2011) (concluding that a bank could enforce a note’s
foreclosure provision, even though it did not record the note’s assignment, because
“[t]he D.C. Code provides that ‘[t]ransfer of an instrument . . . vests in the transferee
any right of the transferor to enforce the instrument,’ and under D.C. law the Note’s
transfer carries with it the security for its payment.” (citing D.C. Code § 28:3-203(b)).
Put another way, even if it is true that U.S. Bank did not record Wells Fargo’s
assignment of Jessup’s Note and Deed with the D.C. Recorder of Deeds, the bank did
not forfeit any rights to collect under the Note or any interest in the Property.
2. Jessup’s Nonexistent Allegations Regarding Superior Title to the
Property
Successful quiet title actions require a plaintiff to establish that she has superior
title to the property. See 74 C.J.S. Quieting Title § 77 (2014) (“[T]he plaintiff has the
burden of showing a title or right superior to that of the defendant as a prima facie
case[,]” which means that “the plaintiff [must] at least prove a title better than that of
the defendant, which, if not overcome by the defendant, is sufficient.”). Jessup’s
complaint contains no allegation that she has superior title to the property, let alone any
facts that would support such an allegation. Indeed, Jessup acknowledges that she
executed the Deed (Compl. ¶ 8), and in the Deed Jessup “irrevocably grant[ed] and
convey[ed]” the Property, in trust and with power of sale, to the named trustee as
security for her mortgage. (Deed at 3.) Jessup alleges no facts showing that this
conveyance was invalid in the first instance, or that she has satisfied her obligations
under the Note and Deed such that her mortgage is discharged. See Diaby, 795 F. Supp.
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2d at 112 (dismissing action for quiet title where plaintiff failed “to identify any facts
alleged in his complaint that could give rise to a right to [a quiet title declaration].”)
Moreover, the record evidence establishes that Jessup has defaulted on her obligation to
make mortgage payments, and thus likely has forfeited any right to redeem the deed to
her property, which undercuts any suggestion that she has a property interest superior to
that of U.S. Bank.
C. Compliance With the Deed’s Pre-Litigation Notice Provision
Finally, even when one sets aside the meritless nature of the claims Jessup makes
here, the Court is hard-pressed to see how Jessup can maintain any action at all—
meritorious or not—given that the Deed contains a clear condition precedent to bringing
a legal challenge to Progressive Funding’s assignment, and Jessup failed to satisfy this
condition prior to filing the instant complaint. (See Def.’s Mem. at 10-12.) Paragraph
20 of the Deed lays out what Jessup must do before she can initiate this or any similar
litigation relating to the Deed. It provides:
Neither Borrower nor Lender may commence, join, or be
joined to any judicial action (as either an individual litigant
or the member of a class) that arises from the other party’s
actions pursuant to this Security Instrument or that alleges
that the other party has breached any provision of, or any
duty owed by reason of, this Security Instrument, until such
Borrower or Lender has notified the other party (with such
notice given in compliance with the requirements of Section
15) of such alleged breach and afforded the other party
hereto a reasonable period after the giving of such notice to
take corrective action.
(Deed ¶ 20.) Paragraph 15 further mandates that any such notice be in writing. (Id.
¶ 15.) The claims that Jessup asserts in this case arise directly from the transfer of the
Note and Deed pursuant to the terms of those documents, and therefore fall squarely
within the scope of ¶ 20. Jessup has neither alleged in the complaint that she satisfied
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this provision, nor addressed this point in opposing U.S. Bank’s motion to dismiss.
Absent such an allegation, she cannot proceed with her complaint. See Kerns v. United
States, 12cv490, 2012 WL 5877479 (E.D. Va. Nov. 20, 2012) (finding that identical
language barred plaintiff’s suit where he failed to plead any facts showing he had
complied with the notice provision).
IV. CONCLUSION
Jessup’s complaint is predicated on insufficient factual allegations offered to
support untenable legal theories. Moreover, and in any event, this action cannot be
maintained absent proof that Jessup has provided the requisite pre-litigation notice.
Consequently, this Court will grant Defendant U.S. Bank’s motion to dismiss and will
dismiss Jessup’s claims against U.S. Bank with prejudice. See Firestone v. Firestone,
76 F.3d 1205, 1209 (D.C. Cir. 1996) (a trial court can dismiss an action with prejudice
if it “determines that the allegation of other facts consistent with the challenged
pleading could not possibly cure the deficiency.”) (internal quotation marks and citation
omitted). Furthermore, because Jessup’s claims against Progressive Funding are
predicated on the same facts and legal arguments as her claims against U.S. Bank, and it
is “patently obvious” that Jessup cannot prevail on her claims against Progressive
Funding either, the Court will sua sponte dismiss her complaint against Progressive
Funding as well. See Baker v. U.S. Parole Comm’n, 916 F.2d 725, 726-27 (D.C. Cir.
1990) (affirming trial court’s sua sponte dismissal of complaint where “plaintiff has not
advanced a shred of a valid claim” and noting that allowing the case to proceed “can
only lead to a waste of judicial resources.”). Accordingly, as stated in the
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accompanying order, U.S. Bank’s motion to dismiss is GRANTED, and the complaint
is DISMISSED with prejudice in its entirety as to both Defendants.
Date: March 28, 2014 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
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