Priester v. Long Beach Mortg. Co.

JOHN PRIESTER, JR. and BETTIE PRIESTER v. LONG BEACH MORTGAGE COMPANY, et al.

Civil Action No. 4:16-CV-449

United States District Court EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

September 18, 2018

Judge Mazzant

MEMORANDUM OPINION AND ORDER AND FINDINGS OF FACT AND CONCLUSIONS OF LAW

On March 5, 2018, the parties appeared before the Court for a trial of this case, at which time the Court heard evidence and argument of counsel. Upon a review of the record, the Court concludes that it erroneously denied summary judgment as to Defendants' judicial foreclosure counterclaim. As such, the Court reconsiders its Order on the summary judgment in this case.¹ However, even if the Court did not reconsider, after considering the evidence submitted at trial, the Court finds that Defendants are entitled to judicial foreclosure. As such, after the Court details its reconsideration of its prior Order, the Court alternatively considers the evidence submitted during trial.

RECONSIDERATION

I. BACKGROUND

This case arises out of a dispute regarding payments on a Home Equity Loan encumbering the property located at 1406 Oakwood Drive, Allen, Texas, 75013 (the "Property"). On June 6, 2016, Plaintiffs John and Bettie Priester (the "Priesters") initiated a lawsuit against DefendantsDeutsche Bank National Trust Company, as Trustee, in Trust for Registered Holders of Long Beach Mortgage Loan Trust 2006-1, Asset-Backed Certificates, Series 2006-1 and Select Portfolio Servicing, Inc. ("SPS"). The case was removed to the Eastern District of Texas on June 27, 2016 (Dkt. #1). On November 3, 2017, Defendants submitted a motion for summary judgment against Plaintiffs' affirmative claims and also in support of Defendants' counterclaims for judicial foreclosure and subrogation (Dkt. #143). Plaintiffs filed their response on November 22, 2017 (Dkt. #148). On November 30, 2017, Defendants filed a reply (Dkt. #152) and Plaintiffs filed a sur-reply on December 4, 2017 (Dkt. #155). On January 23, 2018, the Magistrate Judge entered an Order and Report and Recommendation ("the Report") on, among other motions, Defendants' motion for summary judgment, recommending the Court grant the requested relief except for Defendants' request for summary judgment on its counterclaim for judicial foreclosure (Dkt. #168). Both Plaintiffs and Defendants filed objections to the Report (Dkt. #185; Dkt. #183). Responses were likewise filed to both sets of objections (Dkt. #187; Dkt. #186). The Court overruled the objections and adopted the Report on February 28, 2018 (Dkt. #194).

II. LEGAL STANDARD

A. Reconsideration

"Federal Rule of Civil Procedure 54(b) provides that, in a case involving multiple claims or parties, 'any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities or fewer than all the parties . . . may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.'" Blundell v. Home Quality Care Home Health Care, Inc., No. 3:17-cv-1990-L-BN, 2018 WL 276154, at *4 (N.D. Tex. Jan. 3, 2018) (quoting FED. R. CIV. P. 54(b)). "Under Rule 54(b), 'the trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even inthe absence of new evidence or an intervening change in or clarification of the substantive law.'" Austin v. Kroger Tex., L.P., 864 F.3d 326, 336 (5th Cir. 2017) (quoting Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 185 (5th Cir. 1990), abrogated on other grounds, Little v. Liquid Air Corp., 37 F.3d 1069, 1075 n.14 (5th Cir. 1994)).

B. Motion for Summary Judgment

The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment is proper under Rule 56(a) of the Federal Rules of Civil Procedure "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute about a material fact is genuine when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). Substantive law identifies which facts are material. Id. The trial court "must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment." Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981).

The party seeking summary judgment bears the initial burden of informing the court of its motion and identifying "depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials" that demonstrate the absence of a genuine issue of material fact. FED. R. CIV. P. 56(c)(1)(A); Celotex, 477 U.S. at 323. If the movant bears the burden of proof on a claim or defense for which it is moving for summary judgment, it must come forward with evidence that establishes "beyond peradventure all of the essential elements of the claim or defense." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge the burden by showing that there is an absenceof evidence to support the nonmovant's case. Celotex, 477 U.S. at 325; Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant must "respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial." Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). A nonmovant must present affirmative evidence to defeat a properly supported motion for summary judgment. Anderson, 477 U.S. at 257. Mere denials of material facts, unsworn allegations, or arguments and assertions in briefs or legal memoranda will not suffice to carry this burden. Rather, the Court requires "significant probative evidence" from the nonmovant to dismiss a request for summary judgment. In re Mun. Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982) (quoting Ferguson v. Nat'l Broad. Co., 584 F.2d 111, 114 (5th Cir. 1978)). The Court must consider all of the evidence but "refrain from making any credibility determinations or weighing the evidence." Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).

III. ANALYSIS

Defendants moved for summary judgment on its counterclaim for judicial foreclosure. Defendants argued that they met all of the elements for judicial foreclosure and that Plaintiffs should be estopped from arguing that the Loan does not comply with the Texas Constitution. In support of their arguments, Defendants submitted evidence of the elements of foreclosure, including: the Texas Home Equity Fixed/Adjustable Rate Note (the "Note") (Dkt. #143, Exhibit 2), the Texas Home Equity Security Instrument (the "Security Instrument") (Dkt. #143, Exhibit 3), the Texas Home Equity Affidavit and Agreement (the "Affidavit") (Dkt. #143, Exhibit 4), Notice of Intent to Accelerate and Demand for Payment from Chase Bank (Dkt. #143, Exhibit 5), Notice of Default and Intent to Accelerate from SPS (Dkt. #143, Exhibit 9), Notice ofMaturity/Acceleration of Texas Non-Recourse Loan (Dkt. #143, Exhibit 10), and SPS Payment History (Dkt. #143, Exhibit 11).

Plaintiffs responded that Defendants cannot foreclose on the Property because the Loan, which consists of the Note and the Security Instrument, did not comply with the requirements of the Texas Constitution. Specifically, Plaintiffs contend that the Loan was closed in the Plaintiffs' home rather than at the office of the lender, an attorney at law, or a title company in violation of § 50(a)(6)(N) and Plaintiffs were not provided the notice prescribed in § 50(g) at least twelve days before the Loan closing took place on November 25, 2005.² As noted in the Report, "Plaintiffs have not submitted any independent evidence in opposition to Defendants' Motion for Summary Judgment." (Dkt. #168 at p. 19). However, attached to Plaintiffs' Complaint (Dkt. #101) and also in the summary judgment record as an attachment to Plaintiffs' state court petition, which was an exhibit to Defendants' motion, are two letters. The first, a letter from Mosser Law, PLLC, Plaintiffs' counsel, to Long Beach Mortgage Company, which stated that the Loan did not comply with the applicable provisions of the Texas Constitution (Dkt. #143, Exhibit 14; Dkt. #101, Exhibit 2). The second, a letter from Mosser Law, PLLC, to Chase Fulfillment Center referring Chase to the first letter sent to Long Beach Mortgage Company (Dkt. #143 Exhibit 14; Dkt. #101, Exhibit 3). With that evidence, the Court looks to Defendants' claim for foreclosure.

"To foreclose under a security instrument in Texas with a power of sale, the lender must demonstrate that: (1) a debt exists; (2) the debt is secured by a lien created under Art. XVI, § 50(a)(6) of the Texas Constitution; (3) plaintiffs are in default under the note and securityinstrument; and (4) plaintiffs received notices of default and acceleration." Portillo v. DLJ Mortg. Capital, Inc., No. H-13-3679, 2015 WL 729918, at *2 (S.D. Tex. Feb. 19, 2015) (citing TEX. PROP. CODE § 51.002; Boren v. U.S. Nat. Bank Ass'n, No. H-13-2160, 2014 WL 5486100, at *3 (S.D. Tex. Oct. 29, 2014)). The Report correctly concluded that the summary judgment "evidence establish[ed] the default, requisite notice of acceleration, and the outstanding balance of the Loan." (Dkt. #168 at p. 29).

However, the Report recommended, and the Court initially adopted the conclusion, that the motion for summary judgment should be denied as to foreclosure because it concluded that Defendants did not "present any evidence to dispute Plaintiffs' allegations that the Loan failed to comply with Section 50(a)...