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Timber Point Properties III, LLC v. Bank of America, N.A.

United States District Court, W.D. Missouri, Southern Division

December 10, 2014

BANK OF AMERICA, N.A., et al., Defendants.


GREG KAYS, Chief District Judge.

This lawsuit is a dispute over who has the superior claim to a lot and house in Branson, Missouri. Plaintiff Timber Point Properties III, LLC ("Timber Point") owned real property that was sold in a foreclosure orchestrated by non-party U.S. Bank, N.A. ("U.S. Bank") and Defendants Bank of America, N.A. ("Bank of America"), Millsap & Singer, P.C., and Millsap & Singer, LLC (collectively, "the Millsap entities").

In a previous order, the Court granted Timber Point's motion for leave to amend its complaint. However, the Court noted that it would later sua sponte evaluate the newly filed complaint under Federal Rule of Civil Procedure 12(b)(6) both to move this litigation along and to give due consideration to the arguments in Defendants' previously filed motions to dismiss that were dismissed as moot when the Court allowed Timber Point to amend its complaint.

For the reasons stated below, Counts I, II, III, IV, and V of the complaint are sua sponte DISMISSED in whole or in part as described below.

Standard of Review

After defendants in an action have been served, the court may determine on its own motion whether the complaint states claims upon which relief can be granted. See Boyd v. Smith, 945 F.2d 1041, 1042-43 (8th Cir. 1991) (recognizing such a power in the district courts). The court's inquiry is the same as if a defendant had moved under Rule 12(b)(6) to dismiss the complaint.

A complaint must meet two conditions to survive a Rule 12(b)(6) motion. First, it must "contain sufficient factual matter, accepted as true, to state a claim to relief." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although the complaint need not make detailed factual allegations, "a plaintiff's obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

Second, the complaint must state a claim for relief that is plausible. Iqbal, 556 U.S. at 678. A claim is plausible when "the court may draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The plaintiff need not demonstrate the claim is probable, only that it is more than just possible. Id. Determining the plausibility of a claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

In resolving a motion to dismiss, the court generally looks only at the complaint, which it construes liberally. Smithrud v. City of St. Paul, 746 F.3d 391, 395 (8th Cir. 2014). However, the court may consider materials that are part of the public record or that are "necessarily embraced by the pleadings." Id.

When a court dismisses a complaint under Rule 12(b)(6), the dismissal should ordinarily be without prejudice. Michaelis v. Neb. State Bar Ass'n, 717 F.2d 437, 438-39 (8th Cir. 1983). However, where a litigant has been given "ample opportunities" to properly plead its claims, and where the pleading's deficiencies "cannot be cured by re-pleading, because [the claims fail] as a matter of law, " dismissal with prejudice may be appropriate. Rickmyer v. Browne, 995 F.Supp.2d 989, 1019 (D. Minn. 2014). A court may dismiss a claim with prejudice even if its inquiry was sua sponte. See, e.g., Mountain Home Flight Serv., Inc. v. Baxter Cnty., Ark., 758 F.3d 1038, 1042 (8th Cir. 2014).


Applying the above standard, the Court finds the following facts to be true:

In December 2006, Ryan McKinney ("McKinney") purchased real property in Branson, Missouri ("the Property"). McKinney executed a promissory note ("the Note") with lender First Franklin, a Division of National City Bank ("First Franklin").[1] The Note was secured by a deed of trust ("the Deed of Trust") on the Property, which named Lincoln-Evans Land Title Company as the trustee, McKinney as the borrower, and the Mortgage Electronic Registration Systems, Inc. ("MERS") as the nominee for the beneficiary, First Franklin, and First Franklin's "successors and assigns" (Doc. 108-2, at 2). First Franklin recorded the Deed of Trust.

Over the next few years, parties to the Deed of Trust were substituted. In 2011, MERS assigned First Franklin's interest to holders of the Merrill Lynch First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-FF2 (the "Series 2007-FF2 Trust"). U.S. Bank was the trustee for the Series 2007-FF2 Trust. Timber Point maintains this trust does not actually exist. Regardless, the Series 2007-FF2 Trust appointed Millsap & Singer, P.C. successor trustee in March 2013. (Defendant Millsap & Singer, LLC is Millsap & Singer, P.C.'s counsel.) Bank of America has consistently claimed in this litigation that it was assigned the Note in 2012, but Timber Point alleges that never happened.

In May 2013, Dan and Alicia White ("the Whites") obtained a judgment lien against the Property. The Whites are the constituent members of Timber Point. To satisfy the Whites' judgment debt and execute the Whites' lien, McKinney conveyed the Property to Timber Point by quitclaim deed in July 2013.

In October 2013, the Millsap entities notified Timber Point that Bank of America owned the Note and would sell the Property in foreclosure to recover that debt. The next month, Millsap & Singer, P.C. non-judicially foreclosed on the Property, which was purchased by U.S. Bank on behalf of the Series 2007-FF2 Trust. After Timber Point refused to vacate the Property, Millsap & Singer, LLC instituted an unlawful detainer action in Missouri state court to oust Timber Point. See U.S. Bank Nat'l Ass'n v. McKinney, No. 14AF-AC00010 (Mo. Cir. Ct. filed Jan. 6, 2014).[2]

Timber Point then sued in this Court to regain full title to the Property, contesting the process that led to the foreclosure. In its most recent Order (Doc. 107), the Court ordered the Clerk to docket Timber Point's Third Amended Complaint. The Court promised to promptly assess the Third ...

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