047111291192

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UNITED STATES DISTRICT COURTMIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

CASE NO.: 8:12-cv-02309-JDW-TBM

THE FIDELITY LAND TRUST COMPANY,LLC, AS TRUSTEE FOR FLORIDA LANDTRUST NO. 00160 DATED JANUARY 20, 2012,

Plaintiff,

v.

CENTEX HOME EQUITY COMPANY, LLC,N/K/A NATIONSTAR MORTGAGE LLC,

Defendant./

NATIONSTAR'S MOTION TO DISMISS1

I. INTRODUCTION

The Fidelity Land Trust Company, LLC's (Fidelity Land) action is merely a

subterfuge improperly attempting to absolve borrower Chad E. McIntyre from his

mortgage loan obligations. This case is an example of a disturbing new trend in Florida.

In an attempt to avoid foreclosure, borrowers deed their properties to a land trust (of

which they are the beneficiaries) for the purpose of bringing suit to quiet title and

invalidate their mortgages.2

1 "Nationstar" refers to Centex Home Equity Company, LLC, n/k/a Nationstar Mortgage LLC.

2 The Florida Attorney General filed a lawsuit against Fidelity Land on September 25, 2012, andobtained a temporary injunction one day later to halt this foreclosure-rescue scheme as an unfairand deceptive trade practice. The AG complaint and temporary injunctions, attached asEXHIBITS A and B, respectively, discuss additional legal authority in opposition to Fidelity

Case 8:12-cv-02309-JDW-TBM Document 4 Filed 10/11/12 Page 1 of 13 PageID 91

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The premise of this scam is the legally baseless notion that an unrecorded transfer

of the mortgage renders the mortgage unenforceable against subsequent purchasers, such

as the new trust owner. But, Fidelity Land admits it took title to the property long after

the mortgage was duly recorded in favor of Nationstar, and Fidelity Land alleges no

legally relevant facts to support that the mortgage is void. Having taken title with notice

of the recorded mortgage, Fidelity Land cannot quiet title to the property.

Fidelity Land asserts no cognizable legal theory in support of its frivolous claims

and should be dismissed with prejudice pursuant to FED. R. CIV. P. 12(b)(6), because no

amendment could fix these unsupportable causes of action.

II. BACKGROUND

Fidelity Land's supposed predecessor-in-interest, Chad E. McIntyre, executed a

mortgage in favor of Nationstar on December 13, 2005. [First Amended Complaint ¶ 3

& EX. A.] The mortgage secures a $197,863.00 promissory note originally payable to

Nationstar, encumbering the subject property located at 4619 Tailfeather Court, Land O

Lakes, Florida 34639. [Id.] The mortgage was recorded on December 23, 2005 in Book

6763, Page 768 of the Public Records of Pasco County, Florida. [Id.]

Fidelity Land purportedly took title to the property more than six years later by a

"Warranty Deed to Trustee" dated January 20, 2012 and recorded on February 9, 2012 in

Book 8655, Page 2159 of the Public Records. [Id. ¶¶ 5-6 & EX. B.]

Fidelity Land commenced this action in Pasco County, Florida Circuit Court on

March 5, 2012, originally suing Nationstar and additional defendants Mortgage

Land's claims, but consideration of the factual allegations and exhibits is not necessary forpurposes of this motion.


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Electronic Registration Systems, Inc. and HSBC Mortgage Corporation (USA) to cancel

a second mortgage. [Doc. 1, COMP. EX. A.] Fidelity Land voluntarily dismissed the

additional defendants on September 6, 2012, and filed a verified first amended complaint

on September 6, 2012, dropping its challenge to the second mortgage. [Id.]

Fidelity Land served Nationstar with the amended complaint and summons on

September 20, 2012. Nationstar timely removed this action to this Court based on

diversity jurisdiction on October 10, 2012. [Doc. 1.]

III. MEMORANDUM OF LAW

A. Legal Standard.

"To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to state a claim to relief that is plausible on its face." Lord

Abbett Mun. Income Fund, Inc. v. Tyson, 671 F.3d 1203, 1207 (11th Cir. 2012) (quoting

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "Plausibility is the key, as the well-pled

allegations must nudge the claim across the line from conceivable to plausible. And to

nudge the claim across the line, the complaint must contain more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will not do . . .

Threadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice." Jacobs v. Tempur-Pedic Int'l Inc., 626 F.3d 1327, 1332 (11th

Cir. 2010) (internal citations and quotation marks omitted).

On a motion to dismiss, "courts must consider the complaint in its entirety, as

well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to

dismiss, in particular, documents incorporated into the complaint by reference, and


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matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues &

Rights, Ltd., 551 U.S. 308, 322 (2007). The Court may therefore take judicial notice of

the deed and mortgage attached to the complaint, which are also public records.

B. Fidelity Land's Recorded Mortgage Admission Defeats Count I.

Count I of Fidelity Land's complaint seeks a declaratory judgment to extinguish

the recorded mortgage as an unrecorded interest under FLA. STAT. § 695.01(1). But,

Fidelity Land's own complaint admits the mortgage was recorded on December 23, 2005,

and even attaches a copy of the duly recorded mortgage. [First Amended Complaint ¶ 3

& EX. A.] Fidelity Land does not allege that a satisfaction or release of the mortgage has

been recorded in the public records, nor could it. Public records confirm that Nationstar

remains the current mortgagee of record, and that its mortgage lien, which it has had on

the property since December 23, 2005, has not been satisfied or released.

Fidelity Land took title to the property over six years after the recording of

Nationstar's mortgage, on January 20, 2012. [Id. ¶ 6 & EX. B.] Having willingly taken

title subject to the recorded mortgage, Fidelity Land is estopped from denying the

mortgage's validity. See FLA. STAT. § 695.01(1) ("No conveyance, transfer, or mortgage

of real property, or of any interest therein . . . shall be good and effectual in law or equity

against . . . subsequent purchasers for a valuable consideration and without notice, unless

the same be recorded according to law . . . .") (emphasis added); Eurovest, Ltd. v.

Segall, 528 So. 2d 482, 483 (Fla. 3d DCA 1988) ("A purchaser who takes title to property

subject to a mortgage without assuming any personal liability for repayment of the

underlying debt is also estopped from contesting the validity of the mortgage."); In re


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Trailer Park Acquisition, LLC, No. 11-2728-BKC-AJC, 2012 WL 3039348, at *4-5

(Bankr. S.D. Fla. July 25, 2012) (When "a purchaser of Florida real property purchases it

subject to recorded mortgage liens . . . the purchaser should not able to challenge that

which it willingly took subject to.").

In sum, Fidelity Land's argument that the recorded mortgage must be

extinguished as an unrecorded interest conflicts with its own complaint admissions.

Because Fidelity Land is estopped from denying the validity of the recorded mortgage as

a matter of law, it cannot plead a viable cause of action based on the mortgage's

invalidity. No amendment can change the fact that the mortgage was recorded in the

public records. The Court should dismiss Count I with prejudice.

C. Lack of Mortgage Assignment Cannot Discharge Mortgage.

Count II of Fidelity Land's complaint seeks a declaratory judgment to extinguish

the mortgage based on the absence of a recorded mortgage assignment under FLA. STAT.

§ 701.02, which merely provides that an unrecorded mortgage assignment is not valid

against subsequent purchasers of the mortgage without notice of the prior unrecorded

assignment. That provision does not apply to property purchasers on notice of the

mortgage lien, regardless of any assignments. In re Halabi, 184 F.3d 1335, 1338 & n.1

(11th Cir. 1999) ("Since, in the present case, the Trustee had constructive notice of a

mortgage by whomever held, he cannot assume the status of a bona fide purchaser

without notice.") (emphasis added) (citing Smith v. F.D.I.C., 61 F.3d 1552 (11th Cir.

1995) (purchaser at foreclosure sale under second mortgage could not benefit from the

protection of Florida recording statute where he had notice of first mortgage)).


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The Eleventh Circuit Court of Appeals' holding in Halabi was based in part on

former FLA. STAT. § 679.302(2), which expressly provided: "If a secured party assigns a

perfected security interest, no filing under this chapter is required in order to continue the

perfected status of the security interest against creditors of and transferees from the

original debtor." 184 F.3d at 1338 (citing FLA. STAT. § 679.302(2)).3 This provision

accords with subsection (4) of the same statute Fidelity Land relies on, which states that

"[t]he assignment of such a mortgage need not be recorded under this section for

purposes of attachment or perfection of a security interest in the mortgage under the

Uniform Commercial Code." FLA. STAT. § 701.02(4).

The Halabi Court reasoned as follows:

We think this reading of the Fla. Stat. 701.02 accords with common sense.The recording requirement is not intended to protect one claiming under amortgagor—against whose property there is already a perfectedmortgage—with respect to subsequent assignments of the mortgage. Themortgagor has actual notice of the original mortgage, and anyone claimingunder the mortgagor has constructive notice if the mortgage is recorded.From the point of view of the mortgagor or someone standing in his shoes,a subsequent assignment of the mortgagee's interest—whether recorded ornot—does not change the nature of the interest of the mortgagor orsomeone claiming under him. Nor should a failure to record anysubsequent assignment afford the mortgagor or the trustee standing in hisshoes an opportunity to avoid the mortgage.

184 F.3d at 1338 (citations omitted).4

3 The Florida legislature amended Florida's Uniform Commercial Code in 2002, replacing thisprovision with FLA. STAT. § 679.3101(3) ("If a secured party assigns a perfected security interestor agricultural lien, a filing under this chapter is not required to continue the perfected status ofthe security interest against creditors of and transferees from the original debtor.").

4 See also Smith, 61 F.3d at 1557-59 & n.10 (declining to consider whether § 701.02(1) applied toproperty purchasers as later addressed by Halabi, but holding purchaser at foreclosure sale wasnot "without notice" of the mortgage assignee's interest within the meaning of § 701.02(1)


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This common-sense reading of the statute also comports with Florida's Uniform

Commercial Code, which confers standing to enforce a mortgage on any transferee of the

underlying promissory note, regardless of any recorded mortgage assignment. See

Harvey v. Deutsche Bank Nat'l Trust Co., 69 So. 3d 300, 304 (Fla. 4th DCA 2011) (per

curiam) ("[B]ecause the note at issue is payable to AHMAI, and indorsed in blank, and

because Deutsche possessed the original note . . . its standing may be established from its

status as the note holder, regardless of any recorded assignments…."); Riggs v. Aurora

Loan Servs., LLC, 36 So. 3d 932, 933 (Fla. 4th DCA 2010) ("The negotiation of the note

by its transfer of possession with a blank indorsement made [plaintiff] the 'holder' of the

note entitled to enforce it.") (citing FLA. STAT. §§ 673.2011(1), 673.3011(1));5 JPMorgan

Chase v. New Millennial, 6 So. 3d 681, 685-86 & n.3 (Fla. 2d DCA 2009) (reversing

summary judgment for foreclosure defendants, where summary judgment was based on

absence of assignment of mortgage to foreclosure plaintiff); Mortg. Elec. Registration

Sys., Inc. v. Revoredo, 955 So. 2d 33, 34 n.2 (Fla. 3d DCA 2007) (finding that mortgage

security follows the note) (citing 37 Fla. Jur. 2d Mortgages § 519 (2007)); Perry v.

Fairbanks Capital Corp., 888 So. 2d 725, 727 (Fla. 5th DCA 2004) ("A mortgage is the

because purchaser had implied actual notice of the mortgage assignee's interest by virtue of therecording of the mortgage in favor of original lender).

5 The "person entitled to enforce" such an instrument is the "holder of the instrument." FLA.STAT. § 673.3011(1). The UCC defines "bearer" as the person in possession of an instrument . . .indorsed in blank." FLA. STAT. § 671.201(5).; see also FLA. STAT. § 673.3021 ("Transfer of aninstrument, whether or not the transfer is a negotiation, vests in the transferee any right of thetransferor to enforce the instrument, including any right as a holder in due course."); Horvath v.Bank of New York, N.A., No. 1:09-cv-01129, 2010 WL 538039, at * 2 (E.D. Va. Jan. 29, 2010)(dismissing plaintiff's quiet title claim under Virginia's identical version of FLA. STAT. §673.3021, holding plaintiff "was not discharged from his obligation under the promissory notes atissue because of his original lenders' sale and assignment of the note") (citing VA. CODE ANN. §8.3A–203(b)).


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security for the payment of the negotiable promissory note, 'and is a mere incident of and

ancillary to such note.'"); Am. Bank of the South v. Rothenberg, 598 So. 2d 289, 291 (Fla.

5th DCA 1992) (subsequent mortgage assignee could not prevail over holder of original

promissory note).

Fidelity Land's own complaint attaches a copy of the duly recorded mortgage,

which Fidelity Land admits secures a promissory note. [First Amended Complaint ¶ 3 &

EX. A.] Fidelity Land does not and cannot allege in good faith that it purchased the

property without knowledge of the mortgage. Because Fidelity Land knowingly and

willingly took title subject to the recorded mortgage, it is estopped from denying its

validity, regardless of the absence of any recorded assignments of the mortgage.6

Regardless, the mortgage-assignment statute is "applicable only to (and enforceable by)

competing creditors or subsequent bona fide purchasers of the mortgagee," In re Halabi,

184 F. 3d at 1338, so the absence of a recorded mortgage assignment cannot invalidate

the mortgage or prevent its enforcement against the mortgagors and their assigns.

Because Count II is helplessly flawed, the Court should dismiss it with prejudice.

D. FLA. STAT. § 48.23 Does Not Apply.

Count III of Fidelity Land's complaint seeks a declaration that, pursuant to FLA.

STAT. § 48.23, any party who was not named in this lawsuit and did not intervene within

30 days of the recording of the notice of lis pendens be forever barred from enforcing the

recorded mortgage against Fidelity Land. This count does not apply to Nationstar, since

6 The borrowers' transfer of the property to Fidelity Land would not have even occurred in theabsence of a valid mortgage, since the transfer was designed for the very purpose of bringing thislawsuit as part of Fidelity Land's foreclosure-rescue scam. [See EX. A.]


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Nationstar is a named defendant. Nor can it apply to any other party claiming an interest

in the mortgage, since the mortgage is recorded.

FLA. STAT. § 48.23 only bars enforcement of liens "unrecorded at the time of

recording the notice [of lis pendens] . . . if [the] proceedings are prosecuted to a judicial

sale of the property described in the notice." FLA. STAT. § 48.23(1)(d); see also Dowdy v.

Charter Financial Group, Inc., 122 F. Supp. 2d 1347, 1350 (M.D. Fla. 2000) ("Florida's

lis pendens statute is designed to serve two major purposes. First, a recorded lis pendens

acts to give notice to future purchasers or encumbrancers that a suit is pending which

could affect title in a given piece of property. Second, the filing of a lis pendens is

designed to protect a plaintiff from intervening liens that could impair or extinguish that

plaintiff's claimed property rights.") (citations omitted); Adhin v. First Horizon Home

Loans, 44 So. 3d 1245, 1253 (Fla. 5th DCA 2010) ("[S]ection 48.23(1)(b) . . . bars

enforcement against the property by the holder of the unrecorded interest . . . provided

that the litigation proceeds to final judgment and judicial sale.") (citations omitted).

Fidelity Land cannot bar enforcement of the mortgage as an unrecorded lien under

FLA. STAT. § 48.23 because it admits the mortgage is recorded. [First Amended

Complaint ¶ 3 & EX. A.] Because it already took title to the property subject to the

recorded mortgage, Fidelity Land cannot claim protection under FLA. STAT. § 48.23 as a

party taking title through a judicial sale. No judicial sale ever happened, nor does

Fidelity Land request a judicial sale in its complaint.


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E. Fidelity Land Cannot Quiet Title to the Property.

Fidelity Land's final count is to quiet title to the property, which requires it to

allege facts supporting: (1) title in the plaintiff to the property in controversy; and (2) that

a cloud of title exists. Stark v. Frayer, 67 So. 2d 237, 239 (Fla. 1953); Atl. Beach Imp.

Corp. v. Hall, 197 So. 464 (Fla. 1940). To properly allege that a cloud of title exists, a

plaintiff must plead: (1) "the matter which constitutes the alleged cloud" and (2) "facts . .

. which give the claim apparent validity as well as those which show its invalidity."

Stark, 67 So. 2d at 239. "If the suit is brought to quiet and establish a title as against an

unknown cloud . . . then the facts which show the apparent existence of a potential cloud

should be alleged." McDaniel v. McElvy, 108 So. 820, 830 (Fla. 1926).

Count IV seeks an order quieting title on the same grounds alleged in Counts I, II,

and III, so it should be dismissed with prejudice for the same reasons discussed in

Sections B, C, & D, above.

Fidelity Land also fails to allege facts to support the existence of a cloud of title.

Fidelity Land instead admits the borrowers gave the mortgage to secure a promissory

note and that the mortgage was duly recorded in favor of Nationstar. [First Amended

Complaint ¶ 3 & EX. A.] Fidelity Land merely pleads wholly unsupported legal

conclusions that the mortgage is somehow void, which conflict with well-established

Florida law and need not be accepted as true on a motion to dismiss. See Coach Serv.

Inc. v. 777 Lucky Accessories Inc., 752 F. Supp. 2d 1271, 1274 (S.D. Fla. 2010) ("Here

Lucky merely lists legal conclusions, and therefore, cannot be taken as true.").


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Because there is no cloud on title—Fidelity Land admits the mortgage was

recorded before it took title—Count IV must be dismissed with prejudice.

F. Fidelity Land Cannot Quiet Title Against Unnamed Defendants.

In each of its four counts, Fidelity Land seeks either a declaratory judgment or a

judgment quieting title not only against Nationstar, but against any other person or entity

claiming an interest in the subject mortgage. But, Florida law does not permit

enforcement of declaratory judgments or judgments quieting title against unnamed

parties. See FLA. STAT. § 86.091 ("When declaratory relief is sought, all persons may be

made parties who have or claim any interest which would be affected by the declaration.

No declaration shall prejudice the rights of persons not parties to the proceedings."); FLA.

STAT. § 65.041 ("Real estate; removing clouds; defendants.—No person not a party to the

action is bound by any judgment rendered adverse to his or her interest . . . .").

Fidelity Land's entire foreclosure-rescue scam rests on its ability to sneak through

default judgments against mortgagees of record, hoping the current mortgagee of record

has no interest in the loan and will not notify its assignee in time to avoid a default

judgment. Even if Fidelity Land could assert valid legal claims, this scheme is

fundamentally flawed because it improperly seeks judgments quieting title against

unidentified third parties who have purportedly failed to record mortgage assignments.

Florida law simply does not provide a mechanism for a property purchaser who takes title

subject to a prior recorded mortgage securing an unpaid debt to cancel the mortgage.

Any such cancellation, by default judgment or otherwise, could not be effective against

unnamed defendants.


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IV. CONCLUSION

Fidelity Land's complaint is completely frivolous for the reasons discussed above.

Nationstar respectfully requests that the Court: (i) dismiss the complaint in its entirety

with prejudice; (ii) award Nationstar its attorneys' fees and costs as allowed by law; and

(iii) grant Nationstar such other relief as the Court deems just and proper.

Respectfully submitted,

AKERMAN SENTERFITT

/s/ Joseph S. TroendleJustin E. HekkanenFlorida Bar No. [email protected] S. TroendleFlorida Bar No. [email protected] North Laura Street, Suite 3100Jacksonville, FL 33202(904) 798-3700 (ph) / (904) 798-3730 (fax)

—and—

William P. HellerFlorida Bar No. [email protected] East Las Olas Blvd., Suite 1600Fort Lauderdale, FL 33301(954) 759-8945 (ph) / (954) 463-2224 (fax)

Counsel for Nationstar


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CERTIFICATE OF SERVICE

I hereby certify that on October 11th, 2012, I electronically filed the foregoingwith the Clerk of the Court by using the CM/ECF system. I also certify that theforegoing document is being served this day on all counsel of record or pro se partiesidentified below, either via transmission of Notices of Electronic Filing generated byCM/ECF or in some other authorized manner for those counsel or parties who are notauthorized to receive electronically Notices of Electronic Filing.

Peter J. Bowers, Esq.Peter J. Bowers PA2234 North Federal Highway #419Boca Raton, FL 33431-7710Telephone: 954-278-3282E-mail: [email protected] for Plaintiff

/s/Joseph S. TroendleAttorney


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047111291192