Powell et al v. Nationstar Mortgage LLC et al

Filing 35

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE for 32 Report and Recommendations. Having received the report of the United States Magistrate Judge, having considered each of Plaintiffs timely filed objections (Dkt . #33), and having conducted a de novo review, this Court is of the opinion that the findings and conclusions of the Magistrate Judge are correct and adopts the Magistrate Judges report (Dkt. 32 ) as the findings and conclusions of the Court. It is, therefore, ORDERED that Plaintiffs Motion to Remand (Dkt. 11 ) is DENIED, and Nationstar Mortgage, LLC is hereby DISMISSED. Signed by Judge Amos L. Mazzant, III on 1/18/2017. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

RICHARD POWELL, VICKIE POWELL

v.
NATIONSTAR MORTGAGE LLC, U S
BANK NATIONAL ASSOCIATION, AS
TRUSTEE FOR THE HOLDERS OF BANC
OF AMERICA FUNDING CORPORATION
2008-FT1 TRUST, MORTGAGE PASSTHROUGH CERTIFICATES, SERIES
2008-FT-1

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§ Civil Action No. 4:16-CV-251
§ (Judge Mazzant/Judge Nowak)
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MEMORANDUM ADOPTING REPORT AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action,
this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636.
On November 29, 2016, the report of the Magistrate Judge (Dkt. #32) was entered containing
proposed findings of fact and recommendations that Plaintiffs’ Motion to Remand (Dkt. #11) be
denied. Having received the report of the Magistrate Judge (Dkt. #32), having considered each of
Plaintiffs’ timely filed objections (Dkt. #33), Defendants’ Response (Dkt. #34), and having
conducted a de novo review, the Court is of the opinion that the findings and conclusions of the
Magistrate Judge are correct, and the Court hereby adopts the Magistrate Judge’s report (Dkt. #32)
as the findings and conclusions of the Court.
BACKGROUND
Richard Powell and Vickie Powell (“Plaintiffs”) filed a civil action in the Probate Court
of Denton County, PR-2016-00326 (“State Court Action”) against Defendant Nationstar
Mortgage, LLC (“Nationstar”) and Defendant U.S. Bank National Association, as Trustee for the

holders of Bank of America Funding Corporation 2008-FT1 Trust, Mortgage Pass-Through
Certificates Series 2008-FT1 (“U.S. Bank”). Plaintiffs seek a declaratory judgment that, because
their loan has been accelerated for more than four years, the Deed of Trust is void pursuant to
Texas Civil Practice and Remedies Code § 16.035(d) and consequently U.S. Bank and any servicer
acting on behalf of U.S. Bank is barred from enforcing their rights under the Deed of Trust (and
foreclosing on the Property).
By way of background, on January 18, 2006, Plaintiffs executed a Note payable to Bank
of America, N.A., and a Deed of Trust to secure payment of the Note for the refinance of real
property located at 11697 Keystone Drive, Frisco, Texas 75034 fka 11697 Purgatory, Frisco, Texas
75034 (“Property”). On June 15, 2011, the Deed of Trust was assigned to U.S. Bank. BAC Home
Loans Servicing, LP acted as the servicer on the Property for U.S. Bank until July 2013, at which
time Nationstar became the loan servicer.

Plaintiffs allege they first received a notice of

acceleration on June 22, 2011 from BAC Home Loans Servicing, LP. Years later, on March 15,
2016, Plaintiffs received a “Notice of Foreclosure Sale” related to the Property. On March 30,
2016, Plaintiffs filed the instant suit against Nationstar and U.S. Bank seeking to prevent a
foreclosure sale scheduled for April 5, 2016.
U.S. Bank filed its Notice of Removal for the instant suit on April 13, 2016. U.S. Bank
asserts that this Court has diversity jurisdiction because Nationstar is a nominal party, and thus,
diversity jurisdiction exists. On May 16, 2016, Plaintiffs filed a Motion to Remand, and on
May 27, 2016, U.S. Bank filed a Response. Plaintiffs filed a Reply on June 6, 2016, and at the
request of the Court, U.S. Bank filed a Supplemental Response in late July. The Magistrate Judge
entered a report and recommendation on November 29, 2016, recommending Plaintiffs’ Motion
to Remand be denied (Dkt. #32). Specifically, the Magistrate Judge found that Nationstar is a

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nominal party and; accordingly, should not be considered in the Court’s diversity jurisdiction
analysis. Subsequently, on December 12, 2016, Plaintiffs filed their objection to the Magistrate
Judge’s report and recommendation. On December 16, 2016, U.S. Bank filed its Response.
ANALYSIS
Under the law, a party who files timely written objections to a magistrate judge’s report
and recommendation is entitled to a de novo determination of those findings or recommendations
to which the party specifically objects. 28 U.S.C. § 636(b)(1)(c); Fed. R. Civ. P. 72(b)(2)-(3).
Plaintiffs object generally that equity demands Nationstar remain as a party to this suit. Plaintiffs
argue that Nationstar is not a nominal party because it has been authorized by agreement with
U.S. Bank to service the mortgage, all contact related to the Loan goes directly through Nationstar,
and Nationstar has a substantial, significant relationship to the Loan.
“The grandaddy case in our circuit dealing with nominal parties and removal is Tri–Cities
Newspapers, Inc., 427 F.2d 325 (5th Cir. 1970).” Farias v. Bexar Cty. Bd. of Trustees for Mental
Health Mental Retardation Servs., 925 F.2d 866, 871 (5th Cir. 1991); see Schmelzer v. Nationstar
Mortgage, LLC, et al., No. 4:16-cv-389, 2016 WL 4368735, *2 (E.D. Tex. Aug. 16, 2016). “The
Tri–Cities test of whether defendants are nominal parties ‘is whether in the absence of the
[defendant], the Court can enter a final judgment consistent with equity and good conscience which
would not be in any way unfair or inequitable to the plaintiff.’” Farias, 925 F.2d at 871. Plaintiffs
cite Farias for the notion that “equity is the major concern in the nominal party inquiry,” and
should govern the result herein (which Plaintiffs assert is to remand).
Here, the absence of Nationstar would not prevent this Court from entering a final judgment
entirely consistent with the relief sought by Plaintiffs. Indeed, the Eastern District of Texas, and
this Court, recently directly confronted the exact factual scenario presented by Plaintiffs’ case. In

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Schmelzer v. Nationstar Mortgage, LLC, et al., the District Court was likewise presented with an
action filed in the Probate Court of Denton County, Texas against both the mortgage servicer
(Nationstar) and the mortgagee (Deutsche Bank). No. 4:16-CV-389, 2016 WL 4368735, *1 (E.D.
Tex. August 16, 2016). Therein, the plaintiff—as here—sought a declaration that because her loan
had been accelerated for more than four years, foreclosure was barred and argued that the mortgage
servicer was a necessary party to the action premised on the servicer’s broad authority to act on
behalf of the mortgagee. Id. at *3-4. The District Court, after noting that the issue of whether
diversity jurisdiction exists is a separate inquiry from whether a servicer can qualify as a real party
in interest, found that the Court could enter a final judgment against the mortgagee (which would
also be binding on any servicer thereof), assuming the plaintiff prevailed, and give the plaintiff the
full relief she requested. Id. Accordingly, the mortgage servicer was a nominal party, and the
Court denied plaintiff’s motion to remand. Id. at *5.
Plaintiffs’ objection to the Magistrate Judge’s recommendation and report does not attack
the application of Schmelzer, and the Court sees no reason to stray from Schmelzer in a case that
is nearly identical in both fact and law. Moreover, Plaintiffs’ objection fails to articulate how
Nationstar’s absence in the instant suit would be inequitable and/or would preclude the Court from
entering a final judgment, consistent with the relief sought by Plaintiffs, that is fair and equitable.
The fact that “all correspondence is funneled through Nationstar” and, from Plaintiffs’ perspective,
Nationstar is more involved with the loan, fails to identify any practical effect Nationstar’s absence
would have on the Court’s ability to grant Plaintiffs’ requested declaratory relief. Under the
circumstances of this case, Nationstar is a nominal party; the only required party is U.S. Bank, the
mortgagee. The Court finds, in Nationstar’s absence, it could still enter a final judgment against
U.S. Bank, giving Plaintiffs the full relief requested in their Petition. Also notable, there are also

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no independent or separate allegations that Nationstar did anything wrong other than allegedly
improperly seeking foreclosure as the agent for U.S. Bank. Accordingly, Nationstar is not a
necessary party for the relief sought by Plaintiffs. Plaintiffs’ objection is overruled.
CONCLUSION
Having received the report of the United States Magistrate Judge, having considered each
of Plaintiffs’ timely filed objections (Dkt. #33), and having conducted a de novo review, this Court
is of the opinion that the findings and conclusions of the Magistrate Judge are correct and adopts

. the Magistrate Judge’s report (Dkt. #32) as the findings and conclusions of the Court.
It is, therefore, ORDERED that Plaintiffs’ Motion to Remand (Dkt. #11) is DENIED, and
Nationstar Mortgage, LLC is hereby DISMISSED.
IT IS SO ORDERED.

SIGNED this 18th day of January, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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