Johnson et al v. Saxon Mortgage Services, Inc. et al
MEMORANDUM OPINION re 80 Order on Motion for Summary Judgment, Order on Motion for Sanctions,. Signed by Neal B. Biggers on 11/03/2011. (llw)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
RONALD SPENCER JOHNSON
AND JESSICA JEAN JOHNSON
CIVIL ACTION NO. 2:10CV074-B-S
SAXON MORTGAGE SERVICES, INC., ET AL.
Presently before the court are the defendants’ motions for summary judgment and motion
for sanctions. The plaintiffs have not responded to the motions, and the response deadline has
passed. Upon due consideration of the motions, exhibits, and supporting and opposing authority,
the court is ready to rule.
Factual and Procedural Background
The plaintiffs, husband and wife Ronald and Jessica Johnson, filed this action on April
27, 2010, against defendants Saxon Mortgage Services, Inc. (“Saxon”), Mortgage Electronic
Registration Systems, Inc. (“MERS”), Deutsche Bank National Trust Company, individually and
as trustee under Novastar Mortgage Funding Trust, Series 2006-4 (“Deutsche Bank”), Novastar
Mortgage Funding Trust, Series 2006-4, Robert Coleman, and Floyd Healy. The plaintiffs assert
claims for breach of contract, wrongful foreclosure, breach of the duty of good faith and fair
dealing, negligence, gross negligence, and conversion, based on allegations that the defendants
foreclosed on the Johnsons’ home in Nesbit, Mississippi, without giving proper notice and
despite the fact that the Johnsons had met their payment obligations that they assumed under
their mortgage note.
The plaintiffs attached, as Exhibit B to their complaint, photocopies of checks and a list
of transactions which at the time they alleged proved their compliance with their payment
obligations from August 2006 through September 2009. The checks appear to have been the
subject of tampering. For instance, some checks contain two different check numbers; certain
check numbers are repeated, though the information on the checks varies; and correction fluid
appears to have been used to alter some of the checks. The plaintiffs now acknowledge that
someone has clearly tampered with the checks, though both deny any involvement with the
tampering. The plaintiffs allege that, after signing a “Release of Records” form, they received
these documents from Susan Mullins, a person they assert was an assistant manager at Trustmark
Bank’s Horn Lake, Mississippi, branch. Trustmark’s Rule 30(b)(6) representatives revealed the
following: first, that Trustmark has no record that a Susan Mullins has ever been employed by
the bank; second, that Trustmark does not employ any assistant managers in its Horn Lake
office; third, that Trustmark provides copies of cancelled checks to customers without requiring
any particular form; fourth, that Trustmark’s records do not indicate that the bank prepared the
“Release of Records” form produced by the plaintiffs; fifth, that it typically takes Trustmark a
week – not six weeks as indicated by Mrs. Johnson – to provide copies of cancelled checks to a
customer; sixth, that Trustmark can provide copies of cancelled checks dating back seven years –
thus, contradicting Mrs. Johnson’s assertion that the bank did not have copies of her checks from
2006 and 2007; and finally, that Trustmark did not prepare the documents in Exhibit B to the
The plaintiffs also initially asserted that they were in contact with Agent Theresa Ramsey
of the Federal Bureau of Investigation because Ramsey was investigating alleged criminal
activity in which Trustmark employees stole funds from the Johnsons’ account, covering the
theft by making it appear as though the stolen funds were paid to defendant Saxon Mortgage
Company. The plaintiffs stated in their depositions and in a July 14, 2010, letter to the
magistrate judge assigned to this case that a person purporting to be Agent Ramsey informed
Mrs. Johnson that she and her husband should attend the sentencing of the Trustmark employees
at the federal courthouse in Jackson, Mississippi, on December 8, 2010, and that afterwards, they
could negotiate a settlement over the funds stolen from their account. The plaintiffs even
provided a case number to the magistrate judge: #28:13-cr-00138-NBB-FRA.1 The plaintiffs
allege that they drove to Jackson to attend the hearing only to learn that no such hearing was on
the docket. The plaintiffs contend that, at that point, they drove to the FBI’s Jackson office,
where they met with Vicki Reed, an agency employee, and learned that someone must have been
impersonating Agent Ramsey. The plaintiffs apparently learned at this alleged meeting that the
real Agent Ramsey had no knowledge of the Johnsons, their claims, or any investigation into
wrongdoing on the part of Trustmark or its employees.
The plaintiffs have acknowledged that the only evidence they have that they made their
mortgage payments and were not in default at the time of the foreclosure is the testimony of Mrs.
Johnson that she recalls making the payments. The payment history on the plaintiffs’ loan from
Saxon and the plaintiffs’ bank statements from Trustmark reveal that the plaintiffs made only
two mortgage payments during 2008 – a payment to Saxon of $2600.00 on February 22 and
It is safe to say that no such case number exists in the United States District Court for the
Southern District of Mississippi – the federal court which has jurisdiction over Jackson. The first number
represents the division. The Southern District has five divisions – not twenty-eight. The second number
represents the year the case was filed. It is of course an impossibility, without employing the use of a
time machine, to file a case in 2013. The next portion of the number, “cr-00138," is at least theoretically
plausible. The number represents that the action is the 138th criminal case filed in that particular division
in that particular year. The first letters represent the district judge assigned to the case. “NBB” are the
initials of the undersigned Northern District judge. The final letters represent the magistrate judge
assigned to the case. No magistrate judge in the Southern or Northern Districts of Mississippi has the
initials “FRA,” though one Southern District magistrate comes close with the initials “LRA.”
$4500.00 on June 2. The plaintiffs were in default on their mortgage in the amount of $9,197.30
by August 7, 2008. On that date, Saxon asserts that it sent the plaintiffs by certified, first class
mail a notice of default and intent to accelerate, advising that the plaintiffs must cure their
default within thirty days, or Saxon would accelerate the loan and foreclose. Saxon originally
initiated foreclosure proceedings in April 2008 but halted the proceedings due to the plaintiffs’
attempt to cure their default through a repayment plan. The first and only payment under this
repayment plan was the $4500.00 payment made on June 2, 2008, which Mrs. Johnson denies
The plaintiffs assert that they never received the notice of default and were not aware of
the foreclosure until January 12, 2009, when they received an eviction notice. Saxon, through its
foreclosure counsel, defendants Floyd Healy and Robert S. Coleman, Jr., asserts that it properly
noticed the foreclosure sale and sold the property to defendant Deutsche Bank on November 12,
2008, for $140,082.92.
Three weeks after the foreclosure sale, on December 3, 2008, the property caught fire
twice in the same day. The second fire resulted in a complete loss. Authorities interviewed the
plaintiffs, and the plaintiffs acknowledge that Mrs. Johnson took and failed a computer voice
stress analyzer test. No criminal charges have been brought in regard to the incident. The
plaintiffs’ insurance carrier, State Farm, denied proceeds because the plaintiffs no longer owned
the property at the time of the fire. State Farm did, however, pay the plaintiffs $1500.00 per
month for rent for ten months after the fire.
The plaintiffs assert that despite the November 2008 foreclosure sale, the total property
loss on December 3, 2008, and the January 2009 eviction notice, they continued to make their
monthly mortgage payments to Saxon through September 2009. These alleged payments,
however, are not reflected in the records of Saxon or Trustmark.
The plaintiffs filed the present action on April 27, 2010, through their counsel at the time.
Upon reviewing the documents the plaintiffs attached to the complaint as Exhibit B, i.e., the
alleged evidence of mortgage payments, defense counsel asserts that she noted the
aforementioned discrepancies among the checks and further alleges that the endorsement on the
back of the checks does not resemble the actual Saxon endorsement. Defense counsel then
subpoenaed the plaintiffs’ bank records from Trustmark and provided those records to the
plaintiffs through their counsel on June 16, 2010. The bank records, which are now part of the
record before the court, do not comport with the documents in the complaint’s Exhibit B. The
plaintiffs’ lawyers moved to withdraw and were permitted to withdraw by order of this court on
June 25, 2010. The defendants requested that the plaintiffs voluntarily dismiss their case. The
plaintiffs refused and now proceed pro se.
All defendants have moved for summary judgment and for Rule 11 sanctions.2 The
plaintiffs have responded to none of the motions, and the response deadlines have passed. The
court will, nevertheless, address the merits of the defendants’ motions.3
Defendants Coleman and Healy moved for summary judgment separately from the corporate
defendants but subsequently joined the latter’s motion, as well as the motion for sanctions.
The court will not grant a dispositive motion on the ground that it is unopposed but must instead
examine the merits of the motions. See L. U. Civ. R. 7(b)(2)(E); Hetzel v. Bethlehem Steel Corp., 50 F.3d
360, 362 (5th Cir. 1995) (noting the court’s disapproval of the practice of granting summary judgment
motions as unopposed) (citing Hibernia Nat’l Bank v. Administracion Cent. Sociedad Anonima, 776 F.2d
1277, 1279 (5th Cir. 1985) (“A motion for summary judgment cannot be granted simply because there is
no opposition, even if failure to oppose violated a local rule.”)).
Standard of Review
A party is entitled to summary judgment “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c). On a motion for summary judgment, the movant has the initial
burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986). If the movant makes such a showing, the burden then shifts to the nonmovant to “go beyond the pleadings and by . . . affidavits, or by the ‘depositions, answers to
interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine
issue for trial.’” Id. at 324 (quoting Fed. R. Civ. P. 56(c), (e)). Before finding that no genuine
issue for trial exists, the court must first be satisfied that no rational trier of fact could find for the
non-movant. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
“[T]he issue of fact must be ‘genuine.’ When the moving party has carried its burden
under Rule 56(c), its opponent must do more than simply show that there is some metaphysical
doubt as to the material facts.” Id. at 586. “Unsubstantiated assertions, improbable inferences,
and unsupported speculation are not sufficient to defeat a motion for summary judgment.”
Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003). Further, self-serving
“affidavit or deposition testimony setting forth ultimate or conclusory facts and conclusions of
law are insufficient to defeat a motion for summary judgment.” Clark v. America’s Favorite
Chicken Co., 110 F.3d 295, 297 (5th Cir. 1997).
The court must render summary judgment in favor of the moving party if “there is no
legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.”
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 135 (2000). The Supreme Court
has cautioned, however, that the ruling court must not encroach upon the functions of the jury.
The Court stated in Reeves as follows:
[T]he court must review all of the evidence in the record, drawing all reasonable
inferences in favor of the nonmoving party, but making no credibility
determinations or weighing any evidence. The latter functions, along with the
drawing of legitimate inferences from the facts, are for the jury, not the court.
Thus, although the court should review the record as a whole, it must disregard all
evidence favorable to the moving party that the jury is not required to believe.
Id. (citations omitted). “Summary judgment, although a useful device, must be employed
cautiously because it is a final adjudication on the merits.” Jackson v. Cain, 864 F.2d 1235,
1241 (5th Cir. 1989).
It is uncontested that the plaintiffs’ only evidence that they were not in default and that
their property should not have been foreclosed upon is Mrs. Johnson’s recollection that she made
the mortgage payments well into 2009. Mrs. Johnson does, however, acknowledge that her
recollection and Exhibit B to the complaint are contradicted by the bank records. The following
colloquy took place at Mrs. Johnson’s deposition:
Defense Counsel: Let’s look then at Exhibit 4 to the deposition which is your
Exhibit B to the Complaint. And let’s flip to the very last page which is – which
purports to be an image showing your payment from September 2009 to Saxon
Mortgage; is that correct?
Mrs. Johnson: Yes.
Q. Do you believe that this document of page 23 of Exhibit B to the Complaint is
an accurate reflection of the payment that you made to Saxon Mortgage in
A. Not an accurate one.
Q. Okay. And what’s inaccurate about it?
A. From comparing it to the bank statements that you guys obtained, the whole
check is inaccurate basically.
Q. And do you believe that the records produced by the bank and that we in turn
provided to your counsel are an accurate reflection of the payments that were
made to Saxon Mortgage?
Q. Okay. And so it is your contention then as we sit here today that these
documents that are included as Exhibit B to your complaint do not accurately
reflect your payments to Saxon Mortgage?
Q. Do you have any explanation for the discrepancies between the information
contained in Exhibit B to your complaint and these records that were produced
from Trustmark Bank?
A. No, I do not.
Though Mrs. Johnson stated at her deposition that she has no explanation for the
discrepancies between Exhibit B and the bank records, to the contrary, the plaintiffs have in fact
offered an explanation in the form of a long, meandering, and colorful story about bank
employees’ concerted criminal activity of which there is no record, criminal litigation of which
there is no record, an FBI investigation which is completely refuted by the FBI, an
impersonation of an FBI agent, and records allegedly obtained from bank employees of whom
the bank has no record of employment and through means that are contrary to the uncontested
standard procedures of the bank. The story does not end with these tales of intrigue, conspiracy,
false identities, and crimes against the plaintiffs – a story completely unsupported by the record
and one that only the most unreasonable juror would consider anything but fiction. The case is
no less interesting as it shifts to non-fiction three weeks after the foreclosure sale when the
plaintiffs’ house catches fire. Twice. In one day.
“When opposing parties tell two different stories, one of which is blatantly contradicted
by the record, so that no reasonable jury could believe it, a court should not adopt that version of
the facts for the purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550
U.S. 372, 380 (2007). The Supreme Court’s directive in Scott could hardly be more applicable
than in the present case.
It is undisputed that the only evidence the plaintiffs can present to the court in support of
their case is the recollection of Mrs. Johnson that she made the mortgage payments. While her
testimony is admissible evidence and while the court will not make credibility determinations in
ruling on a summary judgment motion, it is well settled that self-serving “affidavit or deposition
testimony setting forth ultimate or conclusory facts . . . are insufficient to defeat a motion for
summary judgment.” Clark v. America’s Favorite Chicken Co., 110 F.3d 295, 297 (5th Cir.
Mrs. Johnson’s recollection admittedly conflicts with every piece of evidence in the
record before this court with the singular exception of Exhibit B to the complaint, which the
plaintiffs themselves now acknowledge is not credible. The record reflects the simple fact that
the plaintiffs were in default on their mortgage and that the defendants properly foreclosed. The
plaintiffs’ claim of wrongful foreclosure cannot, therefore, survive summary judgment.
As for the plaintiffs’ contention that they did not receive notice of the default on their
loan and Saxon’s intent to accelerate and foreclose, the court notes that the deed of trust does not
require that the plaintiffs actually receive the notice of default. The deed of trust states that
“[a]ny notice to Borrower in connection with this Security Instrument shall be deemed to have
been given to Borrower when mailed by first class mail or when actually delivered to Borrower’s
notice address if sent by other means.” The plaintiffs do not dispute that the default notice was
sent by certified, first class mail to their proper address – only that they did not receive it. The
plaintiffs’ assertion that they were unaware of the foreclosure until the January 2009 eviction
notice is repeatedly contradicted by the record, as well, but no determination on that issue is
necessary in light of the unequivocal terms of the deed of trust.
The individual trustee defendants, Robert Coleman and Floyd Healy, have presented
valid, meritorious arguments that they are entitled to summary judgment on the ground that
trustees in a foreclosure owe no duties to the plaintiffs “‘until called upon to foreclose,’ at which
point the duties [are] ‘limited to conducting a fair and impartial sale according to law and the
contract between the parties.’” Neely v. Regions Bank, 262 Fed. Appx. 630, 633 (5th Cir. 2008)
(citing K.F. Boakle, Miss. Real Estate Foreclosure Law § 2:3 (2d ed. 2006) and Wansley v. First
Nat’l Bank of Vicksburg, 566 So. 2d 1218, 1223 (Miss. 1990) (“A trustee under a deed of trust
does not assume the important obligations which in some instances are cast upon a trustee by
operation of law. The trustee of a trust deed is not a trustee in the strict sense of the word. The
role of such a trustee is more nearly that of a common agent of the parties to the instrument.”)).
The plaintiffs have not alleged that the trustee defendants conducted an unfair sale but
that they should have halted the sale when notified that the property had been wrongfully
foreclosed upon as evidenced by the now admittedly bogus checks from Exhibit B to the
complaint. The duties of the trustee do not extend “beyond the foreclosure sale,”4 and the
plaintiffs have articulated no breach of a duty owed to them by the trustee defendants.
The plaintiffs’ negligence claim and their claim of a breach of the duty of good faith and
fair dealing against the trustee defendants must fail on these grounds. The claims likewise fail,
along with all of the plaintiffs’ other claims, due to the complete lack of evidentiary support, as
set forth in the analysis above.
Motion for Sanctions
The defendants also move for sanctions against the plaintiffs pursuant to Rule 11 of the
Federal Rules of Civil Procedure. Rule 11 provides in pertinent part as follows:
By presenting to the court a pleading, written motion, or other paper – whether by
signing, filing, submitting, or later advocating it – an attorney or unrepresented
party certifies that to the best of the person’s knowledge, information, and belief,
formed after an inquiry reasonable under the circumstances . . . the factual
contentions have evidentiary support or, if specifically so identified, will likely
have evidentiary support after a reasonable opportunity for further investigation
or discovery . . . .
Fed. R. Civ. P. 11(b)(3).
After reviewing the documentary and testimonial evidence in this case, the court finds
that the plaintiffs have violated Rule 11. As outlined in detail in the above sections addressing
the defendants’ motions for summary judgment, the plaintiffs contentions are wholly without
evidentiary support. Indeed, it would appear that the plaintiffs may have perpetrated an
elaborate fraud upon the defendants and this court, but the court makes no official finding in that
The defendants request a sanction in the form of reasonable attorneys’ fees and expenses
in litigating this case, and the court finds that the request should be granted. The court notes that
there is no evidence nor allegations that the plaintiffs’ original attorneys in this action were
aware of any wrongdoing on the part of the plaintiffs. In fact, the above-referenced July 14,
2010, letter written by the plaintiffs to the magistrate judge assigned to this case reveals that the
plaintiffs’ counsel came to believe, as the facts of this case developed, that the plaintiffs had
tampered with the evidence and misrepresented various allegations throughout this litigation.
Upon learning of this information, counsel instructed the plaintiffs to voluntarily dismiss their
case, which the plaintiffs refused to do. Counsel then promptly moved to withdraw from the
case, and the motion was granted. The court, therefore, finds no improper action on the part of
the plaintiffs’ counsel. Rule 11(c), however, permits the court to “impose an appropriate
sanction on any attorney, law firm, or party that violated the rule or is responsible for the
violation.” Fed. R. Civ. P. 11(c)(1) (emphasis added).
The court “must impose the least severe sanction on attorneys and parties who violate
Rule 11.” Mercury Air Group, Inc. v. Mansour, 237 F.3d 542, 548 (5th Cir. 2001); Fed. R. Civ.
P. 11(c)(4). The Fifth Circuit “has affirmed a district court’s determination that the least severe
sanction for a lawsuit that is wholly frivolous is the imposition of reasonable attorneys’ fees and
expenses.” Id. (citing Granader v. McBee, 23 F.3d 120, 124 (5th Cir. 1994)). The court finds
that such a sanction is warranted and is the least severe available in this case. The defendants
may submit to the court affidavits and any other relevant documents supporting their request for
attorneys’ fees and expenses in litigating this case within thirty days of this date.
For the foregoing reasons, the court finds that the defendants’ motions for summary
judgment should be granted. The court further finds that the defendants’ motion for sanctions
should be granted. A separate order in accord with this opinion shall issue this day.
This, the 3rd day of November, 2011.
/s/ Neal Biggers
NEAL B. BIGGERS, JR.
UNITED STATES DISTRICT JUDGE
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