Case: 13-20367      Document: 00512613170         Page: 1    Date Filed: 04/30/2014




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                    No. 13–20367                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                            April 30, 2014
RIGBERTO SIGARAN; GLORIA SIGARAN,                                          Lyle W. Cayce
                                                                                Clerk
                                                 Plaintiffs–Appellants
v.

U.S. BANK NATIONAL ASSOCIATION,

                                                 Defendant–Appellee




                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:12-CV-3588


Before REAVLEY, JONES, and PRADO, Circuit Judges.
PER CURIAM:*
       After U.S. Bank National Association (“U.S. Bank”) instituted
foreclosure proceedings against Roberto Sigaran and Gloria Sigaran
(collectively “the Sigarans”), the Sigarans brought suit contesting the
foreclosure. The district court granted U.S. Bank’s motion to dismiss and
denied the Sigarans leave to amend their complaint. We affirm.




       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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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           I. FACTUAL AND PROCEDURAL BACKGROUND
      On April 5, 2006, the Sigarans borrowed $120,000 from Silverlakes
Mortgage (“Silverlakes”) for home improvements and executed a promissory
note and deed of trust. Silverlakes was the original lender of the note and the
mortgagee.    The deed of trust named Mortgage Electronic Registration
Systems, Inc. (“MERS”) as Silverlakes’s beneficiary and nominee. The deed of
trust specifically stated that MERS had the “right to foreclose and sell the
Property” and the right “to take any action required of [the] Lender.”
      The Sigarans’ loan was later sold to a federally approved securitization
trust, CSAB Mortgage-Backed Trust 2006-3 (“the Trust”). The Trust’s Pooling
and Servicing Agreement (“PSA”) named U.S. Bank as the Trustee. The PSA
also specified that the Trust’s closing date would be “[o]n or about October 30,
2006.” On August 30, 2008, MERS, as nominee for Silverlakes, assigned the
Sigarans’ note and deed of trust to U.S. Bank.
      When the Sigarans defaulted on their mortgage, U.S. Bank instituted
foreclosure proceedings. On October 26, 2012, the Sigarans filed suit in Texas
state court to contest the foreclosure. U.S. Bank removed the case to federal
district court and filed a motion to dismiss for failure to state a claim. The
district court granted the motion, dismissing the Sigarans’ claims with
prejudice and denying them leave to amend their complaint. The Sigarans
timely appealed.
                             II. JURISDICTION
      The district court had jurisdiction pursuant to 28 U.S.C. §§ 1331, 1332,
and 1367. Because this is a review of a final decision of the district court, this
Court has jurisdiction under 28 U.S.C. § 1291.
                       III. STANDARD OF REVIEW
      We review a district court’s grant of a motion to dismiss under Federal
Rule of Civil Procedure 12(b)(6) de novo. Priester v. JP Morgan Chase Bank,
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N.A., 

, 672 (5th Cir. 2013). We “accept[] all well-pleaded facts as
true and view[] those facts in the light most favorable to the plaintiff.” 

internal quotation marks omitted).
      This Court reviews the denial of leave to amend a complaint for abuse of
discretion. 

A court “should freely give leave [to amend]
when justice so requires.” Fed. R. Civ. P. 15(a)(2). But “that generous standard
is tempered by the necessary power of a district court to manage a case.”
Schiller v. Physicians Res. Grp. Inc., 

, 566 (5th Cir. 2003). When
determining whether to grant leave to amend, “the court may consider factors
such as ‘undue delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of the allowance of the amendment,
[and] futility of the amendment.’” 

(alteration in
original) (quoting Foman v. Davis, 

, 182 (1962)).
                              IV. DISCUSSION
      The Sigarans raise several issues on appeal. First, they argue that the
district court incorrectly dismissed their claims to quiet title, for trespass to
title, and for declaratory relief.   Second, they contest the district court’s
dismissal of their claims under the Texas Constitution. The Sigarans also
appeal the district court’s dismissal of their fraud, equitable estoppel, and
Truth in Lending Act (“TILA”) claims. Next, they claim the district court erred
in failing to convert U.S. Bank’s motion to dismiss into a motion for summary
judgment. Finally, the Sigarans argue the court erred in denying them leave
to amend their complaint. We address each issue in turn.
      A. Quiet Title, Trespass to Title, and Declaratory Relief
      The Sigarans claim the district court erred in two ways when it
dismissed their title claims: (1) the district court erred in finding the Sigarans
did not have standing to challenge the fact that the assignment of their loan
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                                 No. 13-20367
violated the PSA, and (2) the district court erred in finding U.S. Bank did not
need to hold the note in order to foreclose.
            1. Standing
      The Sigarans claim that the assignment of their loan to the Trust
violated the PSA. They point out that the PSA specified the Trust’s closing
date would be October 30, 2006, but that their loan was not assigned to U.S.
Bank until August 30, 2008. The Sigarans argue the district court erred in
finding that they do not have standing to challenge this alleged violation of the
PSA. Specifically, they ask this Court to apply New York law to the question
of standing and hold that they have standing to challenge the assignment of
their loan to the Trust because that assignment was void under New York law.
      We hold that under either New York or Texas law, the Sigarans do not
have the right to challenge this violation of the terms of the PSA. Our recent
decision in Reinagel v. Deutsche Bank National Trust Co., 

(5th
Cir. 2013), discussed whether borrowers, like the Sigarans, have standing
under Texas law to challenge assignments that violated the PSA because they
occurred after the PSA’s closing date. In Reinagel, the borrowers argued that
the assignment of their mortgage to a Deutsche Bank-governed trust violated
the terms of the trust’s PSA because the assignment took place after the closing
date specified in the PSA. 

We reasoned that, under Texas law, the
borrowers “[had] no right to enforce [the PSA’s] terms unless they [were] its
intended third-party beneficiaries.” 

they had no right to enforce
the PSA unless it clearly appeared that the parties to the PSA intended for the
borrowers to benefit from the contract. 

that the borrowers
had “fail[ed] to state any facts indicating that the parties to the PSA intended
that benefit.” Further, even if the borrowers were third-party beneficiaries,
that status would only give them the right to sue for breach of the PSA; it would
not automatically render the assignments void. 

borrowers in
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Reinagel, the Sigarans cannot enforce the terms of the PSA unless they are
third-party beneficiaries. The Sigarans have not argued that they are third-
party beneficiaries, nor have they presented any facts that lead this Court to
believe the parties to the PSA intended any benefit to the Sigarans. In fact,
the Sigarans do not even address our decision in Reinagel. Thus, we hold that
the Sigarans lack standing to challenge the assignment of their loan to the PSA
under Texas law. See also Farkas v. GMAC Mortg., L.L.C., 

, 342
(5th Cir. 2013) (per curiam).
       Further, even if we were to apply New York law, the Sigarans still would
not have standing to challenge the assignment of their loan to the Trust. In
order for the Sigarans to challenge the assignment of their loan, the
assignment must be void, not merely voidable. “New York law provides that
‘every sale, conveyance or other act of the trustee in contravention of the trust,
except as authorized by this article and by any other provision of law, is void.’”
N.Y. Est. Powers & Trusts Law § 7–2.4. But, as the district court correctly
noted, New York courts have “treated ultra vires actions by trustees as voidable
and capable of ratification.” See, e.g., Mooney v. Madden, 

, 933–
34 (N.Y. App. Div. 1993) (“A trustee may bind the trust to an otherwise invalid
act or agreement which is outside the scope of the trustee’s power when the
beneficiary or beneficiaries consent or ratify the trustee’s ultra vires act or
agreement.”).      The assignment of the Sigarans’ loan after the closing date
makes that assignment voidable, not void, and thus the Sigarans lack standing
to challenge the assignment under New York law. 1




       1The Sigarans also assert that the assignment of their loan to the Trust violated the
PSA’s terms because there was “no record of assignments to either the sponsor or depositor
as required by the [PSA].” We first note that the PSA does not appear to contain this
requirement. Further, even if this series of assignments were required under the PSA, the
Sigarans would still lack standing to challenge the alleged violation of the PSA.
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                                  No. 13-20367
            2. Split the Note
      The Sigarans next argue that the district court erred when it did not
apply the “split-the-note” theory that they urged before the district court.
Applying the split-the-note theory to this case, they contend that, when MERS
transferred their loan to U.S. Bank, the note and deed of trust were split. Thus,
they argue, U.S. Bank held only the deed of trust, not the note, and so U.S.
Bank could not properly foreclose. The Sigarans claim the law regarding
whether the split-the-note theory applies is “not settled and that there is a
substantial body of case law that supports the [theory].”
      We disagree. In fact, this Court recently discussed the split-the-note
theory in a published opinion, Martins v. BAC Home Loans Servicing, L.P., 

(5th Cir. 2013), which addressed facts nearly identical to those in this
case. In Martins, MERS assigned the borrower’s mortgage to a trust, and when
the borrower defaulted on the loan, the trustee instituted foreclosure
proceedings. 

The borrower then argued that the trustee could not
“foreclose because it was assigned only the mortgage, and not the note itself,
by MERS.” 

We observed that “Texas courts have repeatedly
discussed the dual nature of a note and deed of trust” and that those courts
have also “recognized that the note and the deed-of-trust lien afford distinct
remedies on separate obligations.” 

(citations omitted). This Court
then held that where “the assignment explicitly included the power to foreclose
by the deed of trust,” MERS and the trustee “did not need to possess the note
to foreclose.” 

same facts are present here, we hold that the
district court was correct that U.S. Bank “need not hold the note in order to
exercise its authority to foreclose.”
      B. Texas Constitutional Claims
      The Sigarans next argue that the district court erred in finding that their
claims under section 50(a)(6) of the Texas Constitution were time-barred. They
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                                  No. 13-20367
contend that their constitutional claims “are cast primarily as defenses” to U.S.
Bank’s foreclosure action. Because the statute of limitations does not apply to
defenses in Texas, they argue the district court erred in dismissing their Texas
constitutional claims.
      The problem with these arguments, as the district court correctly noted,
is that this Court has previously held the four-year residual statute of
limitations applies to constitutional infirmities under section 50(a)(6) of the
Texas Constitution. See 

–74. Like the Sigarans, the
borrowers in Priester, in an attempt to avoid foreclosure, sought a declaratory
judgment that the lien against their home was void because it was executed in
violation of section 50(a)(6) of the Texas Constitution. 

We
“conclude[d] that a [four-year] limitations period applies to constitutional
infirmities under Section 50(a)(6),” 

and we also held that the claim
accrues at the time the loan is made, 

      Here, the Sigarans’ loan was made on April 5, 2006, yet they did not
bring suit against U.S. Bank until October 26, 2012, more than six years after
their claim accrued. And despite the Sigarans’ argument that their claims
under the Texas Constitution are primarily defenses, their complaint
specifically seeks affirmative relief: “[a] declaration that [U.S. Bank’s] claim of
right to foreclose is invalid and unenforceable.” Thus, the four-year statute of
limitations bars their claim.
      C. Fraud, Equitable Estoppel, and TILA Claims
      The Sigarans also argue that the district court erred in dismissing their
fraud, equitable estoppel, and TILA claims, and they seek to incorporate by
reference all the arguments made in their opposition to U.S. Bank’s motion to
dismiss. Under the Federal Rules of Appellate Procedure and our precedent,
however, appellants are required to brief arguments in order to preserve them.
See Fed. R. App. P. 28(a)(8)(A) (“The appellant’s brief must contain . . . the
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argument, which must contain: appellant’s contentions and the reasons for
them, with citations to the authorities and parts of the record on which the
appellant relies . . . .”); see also Yohey v. Collins, 

, 224–25 (5th Cir.
1993). Like the appellant in Yohey, the Sigarans “[have] abandoned these
arguments by failing to argue them in the body of [their] brief.” See 

–25.
      D. Converting the Motion to Dismiss to a Motion for Summary
         Judgment
      The Sigarans further contend that the district court erred when it failed
to convert U.S. Bank’s motion to dismiss into a motion for summary judgment.
They point out that U.S. Bank attached two documents to its motion to
dismiss—the Sigarans’ Texas Home Equity Affidavit and Agreement and their
Acknowledgement as to Fair Market Value of the Homestead Property. The
Sigarans argue that “when documents outside the pleadings have been
submitted in connection with a motion to dismiss and discovery would be
appropriate to resolve the issues raised in that motion, it is appropriate to
allow discovery before converting the motion into one for summary judgment.”
      The district court, however, did not rely on those documents in making
its ruling.   The additional documents were relevant to the merits of the
Sigarans’ claims under the Texas Constitution, but the district court did not
reach the merits of those claims and instead dismissed them as barred under
the statute of limitations. 

Part IV(B). The mere presence of those
documents in the record, absent any indication that the district court relied on
them, does not convert the motion to dismiss into a motion for summary
judgment. See Davis v. Bayless, 

, 372 n.3 (5th Cir. 1995) (citation
omitted). Thus, the district court did not err in failing to convert U.S. Bank’s
motion to dismiss into a motion for summary judgment.


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                                  No. 13-20367
      E. Denying Leave to Amend
      Finally, the Sigarans argue that the district court erred in denying them
leave to amend their complaint. They note that they specifically asked for
leave to amend in their response to U.S. Bank’s motion to dismiss and that
they had never previously amended their complaint. While the Sigarans are
correct that leave to amend should be “freely given,” see Foman, 

,
182, the district court still retains the discretion to deny leave to amend. A
district court acts within that discretion when it denies leave to amend because
any amendment would be futile. See 

complaint is futile when
“the proposed amendment . . . could not survive a motion to dismiss,” Rio
Grande Royalty Co. v. Energy Transfer Partners, L.P., 

, 468 (5th
Cir. 2010), or when “the theory presented in the amendment lacks legal
foundation,” Jamieson v. Shaw, 

, 1208 (5th Cir. 1985).
      Here, all of the Sigarans’ claims are either foreclosed by precedent, time-
barred, or waived. They have never explained—either before this Court or the
district court—how they could amend their complaint to avoid these problems.
In fact, their briefing merely asks this Court to ignore the precedent that
forecloses many of their claims. Because any amendment would be futile, we
hold the district court did not abuse its discretion in denying the Sigarans leave
to amend their complaint.
                              V. CONCLUSION
      For the foregoing reasons, we AFFIRM the judgment of the district court.




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