Vihn Truong’s Shell Sham Entities Keeps Foreclosure Defense Scheme Alive for Over 7 Years

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, Defendant U.S. Bank National Association as Trustee1 (“US Bank” or “Defendant”) respectfully moves to dismiss Plaintiff Valifornia Inc.’s (“Plaintiff”) May 1, 2024 Original Petition (“Compl.” or “Complaint”).

Plaintiff’s allegations lack any factual or legal basis and cannot support a plausible claim for relief.

The Court should, therefore, grant U.S. Bank’s motion and dismiss the Complaint in its entirety, with prejudice.

I.                   INTRODUCTION

This lawsuit is nothing more than a transparent attempt by Plaintiff, a junior lienholder, to prevent a lawful foreclosure on the property located at 818 Kings Forest Lane in Richmond, Texas 77469 (“Property”).

On September 25, 2006, Carol E. Reed took a loan against the equity in her home and executed a Texas Home Equity Adjustable Rate Note (“Note”) in the original principal amount

1 See Complaint, ¶ 9. U.S. Bank, N.A., is the Successor Trustee to LaSalle Bank National Association, on Behalf of the Holders of Bear Stearns Asset Backed Securities I Trust 2006-HE10, Asset-Backed Certificates, Series 2006- HE10.

of $528,000.00 in favor of Encore Credit Corp. d/b/a ECC Credit Corporation of Texas.

To secure her payment obligations on the Note, on the same day, Ms. Reed executed a Texas Home Equity Security Instrument (First Lien) (“Security Instrument,” and collectively with the Note, the “Loan”) encumbering the Property.2

On or around February 13, 2023, Plaintiff purchased a junior lien held by Suniverse, LLC, which Plaintiff concedes is “subject to the existing mortgage on the Property.”

Compl. ¶ 12.

On May 1, 2024, days before the scheduled foreclosure sale, Plaintiff commenced the instant action by filing the Complaint in state court, alleging that it was not provided a notice of sale.

Compl. ¶ 13.

A foreclosure sale did not occur.

In the Complaint, Plaintiff asserts claims for violation of the Texas Property Code and seeks declaratory and injunctive relief, enjoining U.S. Bank from proceeding with the May 7, 2024 foreclosure sale.

See Compl.

Plaintiff, however, fails to allege sufficient facts to state a plausible claim for relief, and thus, the Court should dismiss the Complaint with prejudice, as explained more fully below.

II.                ARGUMENT AND AUTHORITIES

A.                 Applicable Legal Standard.

Pursuant to Rule 12(b)(6), the Court should dismiss outright a complaint that fails “to state a claim upon which relief can be granted.”3

In deciding a motion to dismiss, a court accepts all well-pleaded facts as true and views them in the light most favorable to the claimant,4 but not

2 A true and correct copy of the Security Instrument is attached hereto as Exhibit A.

The Court can take judicial notice of the Security Instrument because the Security Instrument was filed and recorded in the Official Public Records of Fort Bend County, Texas on October 3, 2006 as Instrument Number 2006123768.

See Funk v. Stryker, 631 F.3d 777, 783 (5th Cir. 2011).

3 Fed. R. Civ. P. 12(b)(6).

4 See Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008).

conclusory allegations or legal conclusions masquerading as facts.

Such will not suffice to prevent a motion to dismiss.5 A complaint must offer more than an “unadorned, the-defendant-unlawfully-harmed-me accusation.”6 It must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.”7

While not a “probability requirement,” the plausibility standard announced in Twombly and Iqbal requires “more than a sheer possibility that a defendant has acted unlawfully.”8

“Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’”9

Moreover, when a successful defense based on res judicata appears on the face of the pleadings and matters the court may judicially notice, dismissal under Rule 12(b)(6) is appropriate.10

As discussed below, Plaintiff’s Complaint fails to meet these standards.

B.                 Plaintiff Does Not State a Plausible Claim for Violation of the Texas Property Code.

The crux of Plaintiff’s Complaint is the faulty theory that it was entitled to notice pursuant to Texas Property Code.

Specifically, Plaintiff alleges that the Texas Property Code requires a mortgagee to (1) notify the mortgagor by mail that the deed of trust is in default and give him/her at least 20 days to cure; and (2) give the mortgagor at least 21 days’ notice of the sale. Compl. ¶ 21. Thus, Plaintiff maintains that the scheduled May 7, 2024 foreclosure sale violated § 51.002 of the Texas Property Code.

(i)                 No Private Cause of Action

5 Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir. 2002).

6Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(citations omitted).

7 Id. (quoting Twombly, 550 U.S. at 570).

8 Id. (quoting Twombly, 550 U.S. at 557).

9 Id.

10 See Crear v. JPMorgan Chase Bank, N.A., 491 F. Supp. 3d 207, 213 (N.D. Tex. 2020) (collecting cases).

Regardless of whether Plaintiff has alleged facts that would raise a reasonable inference that U.S. Bank violated the Texas Property Code, Plaintiff cannot sustain its Texas Property Code claims because it does not and cannot identify any section of the Texas Property Code that creates a private cause of action or a remedy for a violation of § 51.002.11

On this basis alone, the Court should dismiss Plaintiff’s claims.

(ii)              Plaintiff is Not Entitled to Notices

Even if there was a private cause of action under Section 51.002, Plaintiff is not entitled to such notices.

Under Section 51.002 of the Texas Property Code, the notice of sale must be posted at the courthouse, filed with the county clerk’s office, and served on each debtor obligated to pay the debt.12

“There is no requirement that personal notice [of a foreclosure sale] be given to persons who were not parties to the deed of trust.”13

Thus, even if a mortgagee such as U.S. Bank knew of a purchaser’s interest in the property, it is under no obligation to provide foreclosure notices to a purchaser who is not also a party to the relevant loan document.14

Such is the case here.

Plaintiff is not a party to the Security Instrument, and no provision of the Security Instrument requires U.S. Bank to provide personal notice of the foreclosure sale to Plaintiff-who is only the purchaser of a junior lien.15

Therefore, Plaintiff is not entitled to foreclosure notices as a matter of law.

11 See Compl.; see Rucker v. Bank of Am., N.A., 806 F.3d 828, FN 2 (5th Cir. 2015) (courts conclude that Texas Property Code §51.002(d) does not intend an independent private cause of action).

12 Tex. Prop. Code § 51.002(b).

13 Am. Sav. & Loan Ass’n of Houston v. Musick, 531 S.W.2d 581, 588 (Tex. 1975);

see also, e.g., 402 Loan Star Prop., LLC v. Bank of Am., N.A., No. 03-13-00322-CV, 2014 WL 4058715, at *2 (Tex. App.—Austin Aug. 12, 2014, no pet.)(mem. op.)

(holding that a property owner who is not a party to the deed of trust is not entitled to notice of a senior lien foreclosure sale);

DTND Sierra Invs. LLC v. Bank of Am., N.A., 871 F. Supp. 2d 567-577-79 (W.D. Tex. 2012)(same).

14 Rodriguez v. Ocwen Loan Servicing, LLC, 306 F. App’x 854, 856 (5th Cir. 2009).

15 See Compl.; Ex. A.

(iii)            Claim is Not Ripe

Moreover, although a foreclosure sale was scheduled, the sale was not completed due to the filing of this lawsuit.

Thus, even if Plaintiff had standing to assert a claim for violation of the Texas Property Code, Plaintiff’s claims are not ripe, and Defendant cannot be held liable for statutory violations under § 51.002.16

Thus, Plaintiff’s claims for violations of the Texas Property Code fail as a matter of law, regardless of Plaintiff’s plead facts, and the Court should dismiss them with prejudice.

C.                 Plaintiff Does Not State a Plausible Claim for Agency and Respondeat Superior.

Plaintiff does not and cannot state a cognizable claim for agency and respondeat superior because agency and respondeat superior are doctrines of liability and are not properly plead as separate causes of action.17

The Court should, therefore, dismiss Plaintiff’s claim for agency and respondeat superior in its entirety, with prejudice, for failure to state a cognizable claim for relief.

D.                 Because Plaintiff’s Substantive Claims Fail as a Matter of Law, Plaintiff’s Requests for Declaratory and Injunctive Relief, Attorney’s Fees, and Damages Must Be Denied.

In the Complaint, Plaintiff also seeks a temporary and a permanent injunction and declaratory relief.18

Plaintiff seeks a determination of the rights of the parties and an injunction that enjoins U.S. Bank from foreclosing, taking possession of Property, interfering with its right to enjoyment of the Property.19

16 See Ayers v. Aurora Loan Servs., LLC, 787 F. Supp.2d 451, 454 (E.D. Tex. 2011) (“absent a sale, Plaintiff cannot state a claim under [the statutory notice provisions of § 51.002] of the Property Code”);

Kew v. Bank of Am., N.A., Case No. H-11-2824, 2012 WL 1414978, at *6 (S.D. Tex. Apr. 23, 2023)(collecting cases).

17 See Kenneally v. Gulfside Supply, Inc., No. A-10-CA-289-LY, 2010 WL 3220672, *2 (W.D. Tex. Aug. 13, 2010).

18 Compl.; Prayer.

19 Id.

Injunctive and declaratory relief are forms of relief that depend on the success of underlying claims.20

Because all of Plaintiff’s underlying claims fail as a matter of law, the Court should deny Plaintiff’s requests for declaratory and injunctive relief as a matter of law.

Plaintiff also requests “reasonable and necessary attorney’s fees incurred by or on behalf of Plaintiff,” as well as “exemplary damages.”21

Like its request for an injunction, Plaintiff is not entitled to attorney’s fees or damages because all of its claims fail.22

III.             CONCLUSION

For the reasons stated herein, Defendant U.S. Bank respectfully requests that the court grant its motion and dismiss the Complaint in its entirety, pursuant to Fed. R. Civ. P. 12(b)(6).

Respectfully submitted,

By:      /s/ Kathryn B. Davis

Matt D. Manning
State Bar No. 24070210
mmanning@mcglinchey.com

Kathryn B. Davis
State Bar No. 24050364
kdavis@mcglinchey.com

McGlinchey Stafford, PLLC
1001 McKinney, Suite 1500
Houston, Texas 77002
Telephone : (713) 520-1900
Facsimile: (713) 520-1025

ATTORNEYS FOR DEFENDANT
U.S. BANK NATIONAL ASSOCIATION

20 See Collin Cty. v. Homeowners Ass’n for Values Essential to Neighborhoods, 915 F.2d 167, 170-171 (5th Cir. 1998)(declaratory relief);

see Marsh v. JPMorgan Chase Bank, N.A., 888 F. Supp. 2d 805, 815 (W.D. Tex. 2012)

(dismissing claims for injunctive and declaratory relief where the plaintiffs failed to state viable, antecedent claims).

21 Compl. ¶ 24-26.

22 See Gipson v. Deutsche Bank Nat’l Tr. Co., 2015 WL 11120538, at *27 (N.D. Tex. Oct. 27, 2015) (citations omitted)

(“In any event, he is not entitled to attorney’s fees because he has failed to plead any viable causes of action.”);

Everhart v. CitiMortgage, Inc., 2013 WL 264436, at *10 (S.D. Tex. Jan. 22, 2013) (citations omitted)

(“Last, because Plaintiffs have not pled any viable causes of action, their request for exemplary damages and attorney’s fees should be dismissed. The Court agrees.”).

CERTIFICATE OF SERVICE

I certify that on July 22, 2024, a true and correct copy of the foregoing was served pursuant to the FEDERAL RULES OF CIVIL PROCEDURE as follows:

Via CM/ECF and/or EMAIL

ROBERT C. VILT
Email: clay@viltlaw.com Vilt Law, P.C.
5177 Richmond Avenue, Suite 1142
Houston, Texas 77056

Attorneys for Plaintiff
/s/ Kathryn B. Davis

Kathryn B. Davis