Morlock, L.L.C. v. Bank of New York Mellon Trust Co.

Case: 12-20832 Document: 00512332144 Page: 1 Date Filed: 08/05/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 5, 2013
No. 12-20832 Lyle W. Cayce
Summary Calendar Clerk
MORLOCK, L.L.C., a Texas Limited Liability Company,
Plaintiff - Appellant
v.
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., Trustee,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Texas, Houston
USDC No. 4:12-CV-1585
Before JOLLY, SMITH, and CLEMENT, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellant Morlock, L.L.C., a Texas limited liability corporation,
appeals the district court’s judgment granting Defendant-Appellee Bank of
New York Mellon’s (“BNYM”) renewed Rule 12(c) motion for judgment on the
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
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No. 12-20832
pleadings.1 For essentially the reasons given by the district court in its well-
reasoned opinion, we agree that Morlock has not plausibly stated a quiet title
claim under Texas law.
This case arises out of a foreclosure proceeding involving real property
located at 1958 August Drive, Houston, Texas, 77057. Borrowers Mingfeng Zhu
and Tsan Hung Timothy were the original purchasers of the 1958 August Drive
property in 2006, at which time they executed and delivered a Deed of Trust
to Franklin Bank, SSB, the original lender, in order to secure the necessary
loan. The Deed of Trust specified that Mortgage Electronic Registration
System (“MERS”), a separate corporate entity, was the beneficiary and
nominee for the lender and its successors.2 MERS subsequently assigned the
Deed of Trust to BNYM through an Assignment of Deed of Trust dated January
19, 2012, which transferred all beneficial interest under the Deed to BNYM.
BNYM subsequently posted the 1958 August Road property for sale as part of
a substitute trustee sale scheduled for April 3, 2012. Morlock, however, alleges
1
Morlock also challenges the district court’s denial of leave to amend the complaint.
Morlock, however, was ordered to amend its complaint by October 8, 2012, after BNYM provided
copies of the original Note and Deed of Trust. Morlock simply did not review the proffered
documents until late October or attempt to file an amended complaint until November 1, 2012.
The district court did not abuse its discretion in finding that Morlock has not made the requisite
showing of good cause necessary for Rule 16(b)(4) relief. Marathon Fin. Ins., Inc. v. Ford Motor
Co., 591 F.3d 458, 470 (5th Cir. 2009). We thus AFFIRM the district court’s denial of leave to
amend.
2
In relevant part, the original Deed of Trust states:
The beneficiary of this Security Instrument is MERS (solely as nominee for
Lender and Lender’s successors and assigns) and the successors and assigns of
MERS. . . . 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; and to
take any action required of Lender including, but not limited to, releasing and
canceling this Security Instrument.
2
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No. 12-20832
that it did not receive notice of the sale, despite having an ownership interest
in the property. As a result, Morlock filed its initial petition on April 2, 2012
in Texas state court, seeking to quiet its title in the property and to obtain a
temporary restraining order preventing the April 3 sale. BNYM removed the
case to federal district court, filing its answer to the petition and eventually the
renewed Rule 12(c) motion at issue here.3
We review the district court’s grant of a Rule 12(c) motion for judgment
on the pleadings de novo. Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir.
2008). “A motion for judgment on the pleadings . . . is subject to the same
standard as a motion to dismiss under Rule 12(b)(6).” Id. “To avoid dismissal,
a plaintiff must plead sufficient facts to state a claim for relief that is plausible
on its face,” accepting as true all well-pleaded facts. Gentilello v. Rege, 627 F.3d
540, 544 (5th Cir. 2010) (internal quotation marks and citation omitted). But,
“[w]e do not accept as true conclusory allegations, unwarranted factual
inferences, or legal conclusions.” Id. (citation omitted).
The district court properly found that Morlock’s petition failed to state
a quiet title claim cognizable under Texas law. In a Texas quiet title action,
“[t]he plaintiff must prove, as a matter of law, that he has a right of ownership
and that the adverse claim is a cloud on the title that equity will remove.”
Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App. 2012); see
also Humble Oil & Refining Co. v. Sun Oil Co., 191 F.2d 705, 719 (5th Cir. 1951)
(“It has been stated that an action to quiet title may be maintained by the
owner of land to determine any adverse claim of the defendant.” (emphasis
3
BNYM filed its initial Rule 12(c) motion on July 6, 2012. The district court then ordered
BNYM to produce copies of the original Note and Deed of Trust and for Morlock to file an
amended complaint based on those documents. BNYM provided the documents in September,
Morlock did not file an amended complaint by the October 8 deadline, and BNYM subsequently
filed its renewed Rule 12(c) motion on October 11.
3
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No. 12-20832
added)). Morlock’s petition fails at the most basic step; it has not shown—aside
from its mere assertion to the contrary—that Morlock possesses an ownership
interest in the real property at issue. Neither the original Note and Deed of
Trust contained in the record mention Morlock, nor does the assignment from
MERS to BNYM. Indeed, Morlock’s petition pleads the initial transaction
between the original borrowers and the lender, but the petition does not even
suggest how Morlock acquired an ownership interest in the property in the
light of the fact that it was not an original borrower. Although Morlock
eventually stated that its ownership interest was derived from a Trustee Deed
dated August 5, 2011,4 no copy of that deed was attached to any of the filings,
and the deed is not otherwise contained in the record. Morlock thus has not
shown that it has any interest in the property aside from its conclusory
statements. In order to plausibly state a claim for quiet title relief, Morlock
needed to demonstrate that it has an ownership interest in the 1958 August
Drive property.5
Because Morlock has not done so, the judgment of the district court
therefore is
AFFIRMED.
4
Both BNYM and the district court acknowledge Morlock’s claim to have attached the
August 2011 deed to its response to BNYM’s renewed motion for judgment on the pleadings, but
in fact the deed was not attached.
5
The district court further concluded that, assuming Morlock had sufficiently pled an
ownership interest, the Deed of Trust expressly provided MERS the authority to assign the Deed
to BNYM, thus foreclosing Morlock’s argument that BNYM’s interest in the property was invalid
or unenforceable. Although we need not address this argument because Morlock has not
demonstrated an ownership interest in the property, it is clear that the Deed of Trust supports
the district court’s alternate conclusion.
4