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    Sostenes Pena v. HSBC Bank USA, 4th Cir. (2015)

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    This case concerns a foreclosure action on a property owned by Sostones and Yolanda Pena. The Penas took out a mortgage loan from IndyMac Bank that was secured by a deed of trust on the property. IndyMac later assigned the beneficial interest under the deed of trust to HSBC through a series of assignments. After the Penas defaulted on the loan, HSBC initiated foreclosure proceedings. The Penas sued HSBC, arguing that the assignment of the deed of trust from IndyMac to HSBC was invalid. The district court dismissed the case, finding that the Penas lacked standing to challenge the assignment. The appellate court affirmed, stating that under Virginia law, those not in privity

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    Sostenes Pena v. HSBC Bank USA, 4th Cir. (2015)

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    This case concerns a foreclosure action on a property owned by Sostones and Yolanda Pena. The Penas took out a mortgage loan from IndyMac Bank that was secured by a deed of trust on the property. IndyMac later assigned the beneficial interest under the deed of trust to HSBC through a series of assignments. After the Penas defaulted on the loan, HSBC initiated foreclosure proceedings. The Penas sued HSBC, arguing that the assignment of the deed of trust from IndyMac to HSBC was invalid. The district court dismissed the case, finding that the Penas lacked standing to challenge the assignment. The appellate court affirmed, stating that under Virginia law, those not in privity

    Original Description:

    Filed: 2015-12-28 Precedential Status: Non-Precedential Docket: 14-2329

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    This case concerns a foreclosure action on a property owned by Sostones and Yolanda Pena. The Penas took out a mortgage loan from IndyMac Bank that was secured by a deed of trust on the property. IndyMac later assigned the beneficial interest under the deed of trust to HSBC through a series of assignments. After the Penas defaulted on the loan, HSBC initiated foreclosure proceedings. The Penas sued HSBC, arguing that the assignment of the deed of trust from IndyMac to HSBC was invalid. The district court dismissed the case, finding that the Penas lacked standing to challenge the assignment. The appellate court affirmed, stating that under Virginia law, those not in privity

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    46 views6 pages

    Sostenes Pena v. HSBC Bank USA, 4th Cir. (2015)

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    This case concerns a foreclosure action on a property owned by Sostones and Yolanda Pena. The Penas took out a mortgage loan from IndyMac Bank that was secured by a deed of trust on the property. IndyMac later assigned the beneficial interest under the deed of trust to HSBC through a series of assignments. After the Penas defaulted on the loan, HSBC initiated foreclosure proceedings. The Penas sued HSBC, arguing that the assignment of the deed of trust from IndyMac to HSBC was invalid. The district court dismissed the case, finding that the Penas lacked standing to challenge the assignment. The appellate court affirmed, stating that under Virginia law, those not in privity

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    of 6

    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

    PlaintiffsAppellants

    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.

    DefendantAppellee

    Trustee

    for

    Series

    Deutsche

    2007-OA2,

    HSBC

    Alt-A

    was

    the

    Bank

    USA,

    Securities

    beneficiary

    N.A.

    Mortgage
    of

    the

    (HSBC),
    Loan

    deed

    as

    Trust,

    of

    trust

    associated with the Penas loan, and purchased the property at


    the foreclosure sale.

    After the sale, the Penas sued HSBC,

    raising

    premised

    several

    claims

    on

    their

    assertion

    that

    the

    assignment of the deed of trust from the Penas original lender


    to HSBC was invalid.
    The district court granted HSBCs 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.
    391 (4th Cir. 2011).

    Aziz v. Alcolac, Inc., 658 F.3d 388,

    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.

    Meml 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

    obtained a loan from IndyMac Bank, F.S.B. (IndyMac).


    was secured by a deed of trust on the property.

    Penas

    The loan

    Instead of

    identifying itself as the trust beneficiary, IndyMac appointed a


    separate

    company

    Systems,

    Inc.

    called

    (MERS)

    Mortgage
    as

    the

    Electronic

    nominee

    for

    Registration
    IndyMac

    and

    IndyMacs successors and assigns, and MERS became the trust


    beneficiary.
    On

    July

    respectively,

    J.A. 31.
    27,
    MERS

    2010,

    July

    29,

    2010,

    executed

    and

    and

    recorded

    June
    three

    11,

    2013,

    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.
    appointed

    Surety

    Trustees,

    LLC

    J.A. 6366.
    (Surety

    HSBC, in turn,

    Trustees)

    as

    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

    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 MERSs assignment of
    the deed of trust to HSBC was invalid, and that HSBC therefore
    had

    no

    authority

    to

    appoint

    Surety

    Trustees

    as

    substitute

    trustee and no authority to instruct Surety Trustees to initiate


    foreclosure proceedings. 1
    motion

    to

    dismiss,

    held

    The district court, in granting HSBCs


    that

    the

    Penas

    lack

    standing

    challenge MERSs assignment of the deed of trust to HSBC.

    to
    We

    review de novo a district courts 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

    contract cannot attack the validity of the contract.

    of

    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

    Specifically, 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
    courts dismissal of that claim on appeal.

    that,

    under

    Virginia

    law,

    [o]ne

    must

    be

    party

    to,

    beneficiary of, a contract to sue on that contract). 2


    the

    Penas

    claim

    that

    they

    were

    in

    fact

    parties

    or

    Nor do
    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

    724 S.E.2d 196, 200 (Va. 2012).


    in

    their

    precedent

    first
    to

    amended

    foreclosure

    v.

    PHH

    Mortgage

    Corp.,

    And indeed, the Penas do allege

    complaint
    were

    that

    not

    several

    satisfied.

    conditions
    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.

    Federal 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)).

    J.A. 2324.
    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.
    contains

    several

    letters

    that

    notice.

    See J.A. 11222.

    provided

    In fact, the record


    the

    Penas

    with

    such

    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

    standing to raise.

    to

    HSBC--a

    challenge

    that

    they

    have

    no

    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

    courts

    order

    dismissing the Penas complaint is


    AFFIRMED.

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