Grace v. EverHome Mortgage Company et al

Filing 61

Memorandum Opinion and Order granting in part and denying in part 30 Motion for Summary Judgment. The Court GRANTS Defendants' Motion for SummaryJudgment as it relates to Plaintiff's breach of contract claim, declaratory judgment ac tion, and request for injunctive relief, but DENIES the Motion without prejudice to refile as it pertains to Plaintiff's suit to quiet title and action in trespass to try title. Should Defendants choose to refile their Motion, they must do so within twenty-one (21) days from the date of this order. (Ordered by Judge Jane J Boyle on 9/2/2015) (axm)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
GAIL A. GRACE,
Plaintiff,
v.
EVERHOME MORTGAGE
COMPANY, FEDERAL NATIONAL
MORTGAGE ASSOCIATION, and
HUGHES WATTERS ASKANASE
LLP,
Defendants.

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CIVIL ACTION NO. 3:13-CV-4563-B

MEMORANDUM OPINION AND ORDER
Before the Court is Defendants EverBank, successor by merger to Everhome Mortgage
Company,1 and Federal National Mortgage Association’s Motion for Summary Judgment (doc. 30),
filed March 20, 2015. For the reasons that follow, the Court concludes that the motion should be,
and hereby is, GRANTED in part and DENIED in part.
I.
BACKGROUND
A.

Factual Background
This is a dispute over real property located at 3208 Cole Avenue, Unit 2305, Dallas, Texas

75204 (the “Property”). On January 22, 2003, Plaintiff executed a note payable to First Horizon
Home Loan Corporation in the principal amount of $156,800.00 (the “Note”). Doc. 31, Defs.’ App.

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Effective July 1, 2011, Defendant EverHome Mortgage Company merged into EverBank, a federal
savings association.
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33–35 (Ex. B – Declaration of Bradley R. Lee ¶ 3), 36–39 (Ex. B-1 – Fixed/Adjustable Rate Note).
To secure payment of the Note, plaintiff executed a deed of trust encumbering the Property (the
“Deed of Trust”). Id. at 33–35 (Lee Decl. ¶ 4), 40–57 (Ex. B-2 – Deed of Trust). The Deed of Trust
was subsequently assigned to EverBank. Id. at 67–70 (Ex. C – Assignment of Deed of Trust).
On June 2, 2009, EverBank foreclosed on the Property. Defs.’ App. 105–07 (Ex. I –
Rescission of June 2, 2009 Foreclosure Sale). Plaintiff filed a suit challenging the propriety of the
foreclosure sale in July 2009 (the “first lawsuit”). Doc. 1-2, Orig. Pet. ¶ 11.
The parties agreed to settle the first lawsuit at a September 7, 2009 mediation and entered
into a Rule 11 and Settlement Agreement (the “Settlement Agreement”). Defs.’ App. 71–74 (Ex.
D – Rule 11 and Settlement Agreement); Doc. 42, Pl.’s App. 29–31 (Ex. 1B – Rule 11 and
Settlement Agreement). The material terms of the Settlement Agreement required EverBank to (1)
pay Plaintiff $5,000.00, (2) rescind the June 2, 2009 foreclosure sale, and (3) modify the payment
terms of Plaintiff’s existing loan to reflect a new unpaid principal balance of $160,896, a fixed interest
rate of 5.125%, and a maturity date of February 1, 2033, with a first payment due November 1, 2010.
Defs.’ App. 74; Pl.’s App. 31.The Settlement Agreement also included a provision requiring the
parties to mediate any disputes related to the interpretation and/or performance of the Settlement
Agreement. In full, that provision reads:
If one or more disputes arise with regard to the interpretation and/or performance of
this agreement or any of its provisions, the parties agree to attempt to resolve same
by phone conference with the Mediator who facilitated the settlement. If the parties
cannot resolve their differences by phone conference, then each agrees to schedule
a one-half day of mediation with the mediator within thirty (30) days to resolve the
disputes and to share the costs of same equally. If a party refuses to mediate, that
party may not recover the attorneys fees or costs in litigation brought to construe or
enforce this agreement. Otherwise, if mediation is unsuccessful, then the prevailing
party or parties shall be entitled to recover reasonable attorneys fees and expenses,
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including the costs of the unsuccessful mediation.
Defs.’ App. 73 (Settlement Agmt. ¶ 7); Pl.’s App. 30 (Settlement Agmt. ¶ 7). In accordance with
the requirements of the Settlement Agreement, EverBank paid Plaintiff $5,000, rescinded the
foreclosure sale, and the parties executed a loan modification agreement that reflected the terms
outlined in the Settlement Agreement. Defs.’ App. 58–59 (Ex. B-3 – Check dated Feb. 23, 2011),
104–07 (Ex. I – Rescission of Foreclosure Sale), 78–82 (Ex. F – Loan Modification Agreement).
Following EverBank’s implementation of the loan modification, Plaintiff’s counsel and
counsel for EverBank, Hughes Watters Askanase, LLP (“HWA”), began communicating regarding
the EverBank’s inclusion of lender-placed insurance on Plaintiff’s escrow account and the
concomitant increase in Plaintiff’s monthly escrow payment under the loan. Defs.’ App. 20–32 (Ex.
A – Plaintiff’s Original Petition); Pl.’s App. 1–4 (Ex. 1 – Affidavit of J.B. Peacock, Jr.), 37–86 (Ex.
1E – Email Correspondence). Under the Deed of Trust, Plaintiff had an obligation to maintain
insurance covering the Property and to provide proof of the same to EverBank. Defs.’ App. 44–45
(Ex. B-2 – Deed of Trust ¶ 5). If Plaintiff failed to do so, EverBank had the right to obtain its own
insurance policy to cover the Property and to charge the cost of such insurance to Plaintiff. Id. HWA
invited Plaintiff to provide proof of insurance for the years 2010–2011 and 2011–2012. Pl.’s App. 74.
On April 11, 2012, Plaintiff provided EverBank what she claimed was proof of insurance
coverage dating back to 2009. Id. at 37. These policies, however, only insured Plaintiff’s personal
property and against liability; they did not insure the Property. Id. at 38–57. HWA advised Plaintiff’s
counsel of this deficiency and again requested proof of insurance covering the Property on April 24,
2012. Id. at 80. On July 30, 2012, Plaintiff’s counsel sent HWA proof of an insurance policy covering
the Property that was acquired on May 12, 2012, but did not provide proof of insurance covering the
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prior years. Id. at 82–83.
EverBank’s counsel subsequently represented to Plaintiff’s counsel that EverBank was in the
process of cancelling the force-placed insurance and issuing a refund to the escrow. Id. at 84.
However, on November 26, 2012, EverBank’s counsel emailed again to inform Plaintiff’s counsel that
proof of coverage for the years 2010 and 2011 were needed before EverBank could issue a refund to
the escrow account. Def.’s App. 21. Plaintiff never provided EverBank with these policies.2
On March 12, 2013, EverBank notified Plaintiff that her loan was in default. The notice was
delivered to Plaintiff via certified mail, but she did not claim the letter. Defs.’ App. 33–35 (Ex. B –
Declaration of Bradley R. Lee ¶ 5), 60–66 (Ex. B-4 – Notice of Default). On July 11, 2013, HWA
sent Plaintiff a notice pursuant to the federal Fair Debt Collection Practices Act via first class U.S.
mail which also advised Plaintiff, among other things, that her loan was in default. Id. at 83–85 (Ex.
G – Declaration of Dominique M. Varner ¶ 3), 86–89 (Ex. G-1 – FDCPA Foreclosure Notice). On
July 15, 2013, HWA notified Plaintiff by U.S. first class mail and certified mail that EverBank had
accelerated the maturity of the debt and the Property would be sold at foreclosure sale on August
6, 2013. Id. at 83–85 (Varner Decl. ¶ 4), 90–94 (Ex. G-2 – Notice of Acceleration dated July 15,
2013). No sale occurred on August 6, 2013, and, on August 7, 2013, HWA again notified Plaintiff
that the maturity of the debt had been accelerated and the Property would be sold at a foreclosure
sale on September 3, 2013. Id. at 83–85 (Varner Decl. ¶ 5), 95–99 (Ex. G-3 – Notice of Acceleration
dated Aug. 7, 2013).

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Plaintiff’s counsel claims that proof of coverage for the years 2010 and 2011 was already provided
to EverBank on April 11, 2012. But the policies that Plaintiff provided to EverBank on April 11, 2012 only
insured Plaintiff’s personal property and against liability. Pl.’s App. 2 (Ex. 1 – Peacock Aff.), 37–57.
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EverBank foreclosed on the Property on September 3, 2013. Pl.’s App. 87–91 (Ex. 1F –
Substitute Trustee’s Deed). Prior to the foreclosure sale, the Property was sold at another foreclosure
sale conducted by Plaintiff’s homeowner’s association, the Bois Du Chene Homeowners Association
(the “HOA”). Defs.’ App. 100–03 (Ex. I – Foreclosure Deed dated Sept. 3, 2013). Thus, at the time
of EverBank’s foreclosure, the HOA owned the Property.
B.

Procedural Background
On October 28, 2013, Plaintiff commenced the instant action in the County Court at Law

No. 2, Dallas County, Texas, asserting claims for breach of the Settlement Agreement, quiet title,
and trespass to try title and seeking, among other things, an order declaring EverBank’s foreclosure
as wrongful, quieting title in the Property in favor of Plaintiff and awarding her possession, and
requiring Defendants to comply with the Settlement Agreement.3 See generally Orig. Pet. Defendants
removed the case to federal court on November 14, 2013 and now move for summary judgment.
II.
LEGAL STANDARD
Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate “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). The substantive law governing a matter
determines which facts are material to a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). The summary judgment movant bears the burden of proving that no genuine issue of

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The County Court at Law issued a temporary restraining order halting Defendants’ eviction of
Plaintiff and subsequently transferred the case to the 193rd District Court, Dallas County, Texas. Doc. 1-5,
Order of Transfer.
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material fact exists. Latimer v. Smithkline & French Labs, 919 F.2d 301, 303 (5th Cir. 1990). However,
if the non-movant ultimately bears the burden of proof at trial, the summary judgment movant may
satisfy its burden by pointing to the mere absence of evidence supporting the non-movant’s case.
Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
Once the summary judgment movant has met this burden, the non-movant must “go beyond
the pleadings and designate specific facts showing that there is a genuine issue for trial.” Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (per curiam) (citing Celotex, 477 U.S. at 325).
In determining whether a genuine issue exists for trial, the court will view all of the evidence in the
light most favorable to the non-movant. Munoz v. Orr, 200 F.3d 291, 302 (5th Cir. 2000). But the
non-movant must produce more than “some metaphysical doubt as to the material facts.” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). If the non-movant is unable to make
such a showing, the court must grant summary judgment. Little, 37 F.3d at 1076.
III.
ANALYSIS
Defendants move for summary judgment on Plaintiff’s breach of contract claim, suit to quiet
title and action in trespass to try title, request for declaratory relief, and request for injunctive relief.4
The Court addresses Defendants’ arguments for why they are entitled to summary judgment on each
of these claims and requests for relief, in turn, below.
A.

Plaintiff’s Breach of Contract Claim
Defendants first move for summary judgment on Plaintiff’s breach of contract claim. To state

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Defendants also move for summary judgment on Plaintiff’s wrongful foreclosure claim, but Plaintiff
has clarified that she is not asserting such a claim. Doc. 40, Pl.’s Resp. Br. 11.
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a claim for breach of contract, Plaintiff must plead “(1) the existence of a valid contract; (2)
performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant;
and (4) damages sustained by the plaintiff as a result of the breach.” Smith Int’l, Inc. v. Egle Grp.,
LLC, 490 F.3d 380, 387 (5th Cir. 2007) (internal quotations and citations omitted).
Plaintiff claims that Defendants breached the terms of the Settlement Agreement by
foreclosing on the Property without first attempting to resolve the issue of the force-placed insurance
with the mediator. Orig. Pet. ¶¶ 16–18. According to Defendants, however, neither the Settlement
Agreement nor the loan modification requires EverBank to notify the mediator or Plaintiff’s counsel
in the event she defaulted under the modified loan. Doc. 31, Defs.’ Br. 6. Thus, Defendants contend
they are entitled to summary judgment on Plaintiff’s breach of contract claim. Id. The Court agrees
with Defendants.
According to the plain language of the Settlement Agreement, the agreement to mediate
applied only “[i]f one or more disputes arise with regard to the interpretation and/or performance of
this agreement or any its provisions.” Defs.’ App. 73 (Ex. D – Settlement Agreement ¶ 7) (emphasis
added). The material terms of the settlement required EverBank to (1) pay Plaintiff $5,000.00, (2)
rescind the June 2, 2009 foreclosure sale, and (3) modify the payment terms of Plaintiff’s loan. Defs.’
App. 74 (Ex. D – Settlement Agreement). Plaintiff does not contest that EverBank complied with
these obligations.
The only “dispute” identified by Plaintiff in support of her claim is an alleged dispute
regarding the forced inclusion of property insurance on Plaintiff’s escrow account and the
concomitant increase in Plaintiff’s escrow payment that arose after the loan was modified and all of
the other terms of the Settlement Agreement had been performed. But whether Plaintiff had
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sufficient insurance coverage or provided proof of same to EverBank is completely irrelevant to the
Settlement Agreement. Rather, to the extent there was a dispute over force-placed insurance
between Plaintiff and EverBank, such a dispute must have arisen under the Deed of Trust, because
there is no provision of the Settlement Agreement requiring Plaintiff to maintain sufficient insurance
coverage or provide proof of the same. See generally Defs. App. 71–74 (Ex. D – Rule 11 and
Settlement Agreement); see also id. at 44–45 (Ex. B-2 – Deed of Trust ¶ 5). Or, stated differently,
there is no provision of the Settlement Agreement that EverBank could have sought to interpret or
enforce if Plaintiff failed to maintain sufficient insurance coverage or provide proof of same to
EverBank. As such, EverBank was not required to mediate the dispute over the force-placed
insurance and Plaintiff’s claim fails as a matter of law.5
B.

Plaintiff’s Suit to Quiet Title or Action in Trespass to Try Title
Defendants next move for summary judgment on Plaintiff’s suit to quiet title and action in

trespass to try title. A suit to quiet title is not the same as an action in trespass to try title. “A suit in
trespass to try title is statutory and accords a legal remedy, while a suit to remove cloud or to quiet
title accords an equitable remedy.” Katz v. Rodriguez, 563 S.W.2d 627, 629 (1977) (citing Standard
Oil Co. v. Mashall, 265 F.2d 46 (5th Cir. 1959)). “To prevail in a trespass-to-try-title action, a
plaintiff must usually (1) prove a regular chain of conveyances from the sovereign, (2) establish
superior title out of a common source, (3) prove title by limitations, or (4) prove title by prior

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Even if the “dispute” between EverBank and Plaintiff could be characterized as one involving the
enforcement of the loan modification agreement, as Plaintiff appears to argue in her response, Plaintiff’s claim
still fails. While the Settlement Agreement requires the parties to enter into a loan modification agreement
and outlines its basic terms, the loan modification agreement is a distinct contract between the parties (not
a provision of the Settlement Agreement) and a dispute over its enforcement is not subject to the mediation
provision in the Settlement Agreement.
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possession coupled with proof that possession was not abandoned.” Martin v. Amerman, 133 S.W.3d
262, 265 (Tex. 2004). In addition, the plaintiff must also show that the defendant “unlawfully
entered upon and dispossessed him of such premises . . . and withholds from him the possession
thereof.”6 Serna v. U.S. Bank, N.A., No. CIV.A. H-13-2559, 2014 WL 108732, at *2 (S.D. Tex. Jan.
9, 2014) (internal quotations and citations omitted).
“The elements of the claim for relief to quiet title are (1) an interest in a specific property,
(2) title to the property is affected by a claim by the defendant, and (3) the claim, although facially
valid, is invalid or unenforecable.” Bell v. Bank of Am. Home Loan Servicing LP, No. 4:11-CV-2085,
2012 WL 568755, at *7 (S.D. Tex. Feb. 21, 2012) (citing U.S. Nat’l Bank Ass’n v. Johnson, No. 0110-837-CV, 2011 WL 6938507, at *3 (Tex. App.—Houston [1st Dist.] Dec. 30, 2011, no pet.)
(mem.op.)). “A plaintiff in a suit to quiet title must prove and recover on the strength of his own
title, not the weakness of his adversary’s title.” Fricks v. Hancock, 45 S.W.3d 322, 327 (Tex.
App.—Corpus Christi 2001, no pet.). Unlike in a trespass to try title action, however, plaintiffs need
not “trace [....] title to either the sovereign or to a common source.” See Katz, 563 S.W.2d at 629–30.
Defendants move for summary judgment on Plaintiff’s suit to quiet title and action in trespass
to try title on the grounds that Plaintiff cannot show superior title to the property. Defs.’ Br. 7.
According to Defendants, even if Plaintiff could show that EverBank did not have the right to
foreclose on the property, the HOA would have superior title as a result of the foreclosure of the
HOA’s assessment lien. Id. In response, Plaintiff maintains that she preserved her right to redeem
the property from the HOA should she prevail in this action against EverBank by filing an affidavit

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The Court struggles to see how Plaintiff can maintain an action in trespass to try title given that she
was never physically dispossessed of the Property by Defendants.
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with the clerk. Pl.’s Resp. Br. 9 She also observes that should she prevail in this suit, the title would
revert back to her because Defendants paid all of the HOA assessment fees. Id. at 10.
Plaintiff’s response raises the question whether EverBank exercised its right to redeem the
Property from the HOA by paying the outstanding assessment fees, in which case Plaintiff would
have superior title to the Property should she succeed in proving a defect in EverBank’s title.7
Unfortunately, the Court has no way of confirming that Everbank, in fact, paid the assessment fees
or took the other steps necessary to exercise its statutory right to redeem the Property from the
HOA, because Plaintiff has not submitted any evidence of such payment and Defendants have not
offered a response confirming or denying Plaintiff’s contention. While technically Plaintiff’s burden
to come forward with evidence to raise an issue of material fact, the Court is reluctant to grant
EverBank summary judgment on such a technicality, especially given Defendants’ lack of response.8
For these reasons, the Court denies EverBank’s motion for summary judgment as it pertains to
Plaintiff’s suit to quiet title and action in trespass to try title without prejudice to refile.

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Pursuant to Section 82.113(g) of the Texas Property Code, “[t]he owner of a unit purchased at a
foreclosure sale of a [homeowners’] association’s lien for assessments may redeem the unit not later than the
90th day after the date of the foreclosure sale.” Tex. Prop. Code § 82.113(g). To exercise his or her right to
redemption when the association is the purchaser, the owner must:
pay to the association to redeem the unit all amounts due the association at the time of the
foreclosure sale, interest from the date of foreclosure sale to the date of redemption at the
rate provided by the declaration for delinquent assessments, reasonable attorney’s fees and
costs incurred by the association in foreclosing the lien, any assessment levied against the
unit by the association after the foreclosure sale, and any reasonable cost incurred by the
association as owner of the unit, including costs of maintenance and leasing.
Id.
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Indeed, the Court notes that to the extent Defendants were aware that EverBank exercised its right
to redeem the Property from the HOA when they filed their Motion for Summary Judgment, but represented
to the Court that the HOA was the title holder of the Property, Defendants may be subject to sanctions
under Rule 11 of the Federal Rules of Civil Procedure.
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C.

Plaintiff’s Request for a Declaratory Judgment
Defendants further urge the Court to grant their request for summary judgment on Plaintiff’s

request for a judgment declaring EverBank’s acceleration of the debt and foreclosure of the Property
as wrongful. Defendants contend that “[a] declaratory judgment is not an appropriate remedy for the
relief sought.” Defs.’ Br. 9. The Court agrees.
An action for declaratory judgment is remedial in nature; “its purpose is to settle and to afford
relief from uncertainty and insecurity with respect to rights, status, and legal relations.” Tex. Civ.
Prac. & Rem. Code § 37.002. Under Texas law, a declaratory judgment is only appropriate if “(1)
a justiciable controversy exists as to the rights and status of the parties; and (2) the controversy will
be resolved by the declaration sought.” Park Cities Ltd. P’ship v. Transpo Funding Corp., 131 S.W.3d
654, 661 (Tex. App.—Dallas 2004, pet. denied) (citing Tex. Dep’t of Pub. Safety v. Moore, 985
S.W.2d 149, 153 (Tex. App.—Austin 1998, no pet.). “A declaratory judgment action is not
appropriate where plaintiff’s cause of action is mature and enforceable in a pending suit that involves
the same parties and the same issues as alleged in the declaratory judgment action.” Tucker v.
Graham, 878 S.W.2d 681, 683 (Tex. App.—Eastland 1994, no writ) (citing Southern Traffic Bureau
v. Thompson, 232 S.W.2d 742 (Tex. Civ. App.—San Antonio 1950, writ ref’d n.r.e.); see also
SpawGlass Const. Corp. v. City of Houston, 974 S.W.2d 876, 878 (Tex. App.—Houston [14th Dist.]
1998) (holding that a court may deny a request for declaratory relief “where judgment would not
remove the uncertainty giving rise to the proceedings.”). A declaratory judgment is not appropriate
in this case because the allegedly wrongful foreclosure has already occurred and a declaratory
judgment would not provide Plaintiff any relief that she could not obtain in an action for damages.

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D.

Plaintiff’s Request for Injunctive Relief
Finally, Defendants argue that they are entitled to summary judgment on Plaintiff’s request

for injunctive relief because Plaintiff lacks any valid causes of action on which to base such relief.
Defs.’ Br. 10. Under Texas law, a request for injunctive relief “is not in and of itself a cause of action,
but instead necessarily depends on an underlying cause of action.” Wildy v. Wells Fargo Bank, NA,
3:12-CV-01831-BF, 2013 WL 246860, at *6 (N.D. Tex. Jan. 21, 2013); Cooks v. Wells Fargo Bank,
N.A., No. 3:10-CV-0592-D, 2010 WL 2772445, at *4 (N.D. Tex. July 12, 2010); Brown v. Ke–Ping
Xie, 260 S.W.3d 118, 122 (Tex. App.—Houston [1st Dist.] 2008, no pet.); Butanaru v. Ford Motor
Co., 84 S.W.3d 198, 210 (Tex. 2002).
Plaintiff seeks an injunction prohibiting Defendants from evicting Plaintiff from the Property
or from selling or attempting to sell the Property. Orig. Pet. 8. But Plaintiff has not asserted a cause
of action that would entitle her to such relief. As discussed above, Plaintiff’s claim for breach of
contract fails as a matter of law because the Settlement Agreement did not require EverBank to
mediate before foreclosing. And, to the extent Plaintiff is able to prevail on her suit to quiet title,
Plaintiff is entitled to an order quieting her title to the Property, not an injunction prohibiting
Defendants from evicting her or selling the Property. Montenegro v. Ocwen Loan Servicing, LLC, 419
S.W.3d 561, 567 (Tex. App.—Amarillo 2013), reh’g overruled (Jan. 10, 2014), review denied (Apr.
25, 2014) (observing that the “holder of feeblest equity” may use a quiet title action to “remove from
his way to legal title any unlawful hinderance having the appearance of better right.”) (internal
quotations and citations omitted). Accordingly, Defendants are entitled to summary judgment on
Plaintiff’s request for injunctive relief.

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IV.
CONCLUSION
For the aforementioned reasons, the Court GRANTS Defendants’ Motion for Summary
Judgment (doc. 30) as it relates to Plaintiff’s breach of contract claim, declaratory judgment action,
and request for injunctive relief, but DENIES the Motion without prejudice to refile as it pertains
to Plaintiff’s suit to quiet title and action in trespass to try title. Should Defendants choose to refile
their Motion, they must do so within twenty-one (21) days from the date of this order.

SO ORDERED.
SIGNED: September 2, 2015.

_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE

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