Casterline v. OneWest Bank, F.S.B.

Filing 18

ORDER ADOPTING MEMORANDUM AND RECOMMENDATION AND GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT re: 12 Memorandum and Recommendations, 7 MOTION for Summary Judgment. Casterline's claims in this action are DISMISSED. (Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, )

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
CAROLYN CASTERLINE,
Plaintiff,
VS.
ONEWEST BANK, F.S.B.,
Defendant.

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§ CIVIL ACTION NO. 2:12-CV-00150
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ORDER ADOPTING MEMORANDUM AND RECOMMENDATION AND
GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
Before the Court is Defendant OneWest Bank’s (OneWest’s) Motion for Summary
Judgment (D.E. 7). On October 10, 2012, United States Magistrate Judge Brian L.
Owsley filed a Memorandum and Recommendation on Defendant’s Motion for Summary
Judgment (D.E. 12). On October 24, 2012, Plaintiff Carolyn Casterline (Casterline)
timely filed her objections to the Magistrate Judge’s Memorandum and Recommendation
(D.E. 13), to which OneWest responded (D.E. 16). For the reasons set forth below,
Casterline’s objections are OVERRULED. The Magistrate Judge’s Memorandum and
Recommendation (D.E. 12) is ADOPTED. OneWest’s Motion for Summary Judgment
(D.E. 7) is GRANTED.
Casterline’s objections to the Memorandum and Recommendation involve
numerous arguments regarding OneWest’s authority to foreclose a lien on her home. In
her conclusion, she sums up her objections as follows:

“The issue is simply that

[OneWest] has failed to meet its burden to show that it is the owner or holder of the
Note.” D.E. 13, p. 20.
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More specifically, she states her objections as: (1) the holder of the note and the
holder of the security instrument must be demonstrated by movant to be one and the
same; (2) the FDIC’s website does not conclusively establish the transfer of the note and
it is improper to take judicial notice of that fact by use of the website; and (3) the January
4, 2011 assignment of the mortgage from IndyMac to OneWest purportedly assigned the
right to foreclose the lien but did not assign or transfer the note to OneWest and the
severance of the two obligations nullifies the lien. In the course of her briefing, she also
complains of the evidentiary effect of the note’s allonge. Each of Casterline’s concerns
are addressed below.
A. OneWest is not required to be a holder or
owner of the note in order to foreclose.
As observed by Kan v. OneWest Bank, FSB, 823 F.Supp.2d 464 (W.D. Tex. 2011)
and this Court in Hazzard v. Bank of America, N.A., No. C-12-127, 2012 WL 2339313, at
*2 (S.D. Tex. June 19, 2012):
The current statutory procedure for a deed of trust foreclosure
does not require mortgage servicers to produce or hold the
note. The mortgage servicer need only provide notice of
default, with an opportunity to cure, and notice of the actual
foreclosure sale. See Tex. Prop. Code Ann. § 51.002(b), (d)
(West 2010). Production of the original promissory note is
not necessary. Crear v. JP Morgan Chase Bank, N.A., No.
10–10875, 2011 WL 1129574, at *1 n. 1 (5th Cir. Mar. 28,
2011) (unpublished, per curiam).
Kan, supra at 470. Casterline’s objection as stated—that there must be an identity
between owner and mortgage servicer—is OVERRULED. Any complaint that OneWest
as mortgage servicer must produce the note is OVERRULED.
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However, reading Casterline’s objection broadly and in context with her other
objections, the issue is not whether OneWest must own both the note and security
instrument. Rather, the problem she has identified is whether OneWest has demonstrated
that, as the entity handling the foreclosure, it is properly authorized by the owner or
holder of the note (which happens to be itself). While the questions are essentially two
sides of the same coin, the analytical distinction is important for the consistency of our
jurisprudence.
The Kan court noted that mortgage servicers only have the power to foreclose if
they are authorized to do so by agreement with the mortgagee. Id. (citing Tex. Prop.
Code Ann. § 51.0025). In order to be authorized by the mortgagee, the mortgage servicer
must be able to demonstrate that its relationship is with the genuine note holder or owner.
This requirement guards against the risk that proceeds of the foreclosure sale will be
misapplied and not credited to the debtor’s debt.
In this case, the mortgage servicer and the alleged mortgagee are one and the
same. Thus the question is whether OneWest’s claim is true: that it is, in fact, the
mortgagee with power to authorize the foreclosure. This evidentiary issue is addressed in
Casterline’s other objections to the Memorandum and Recommendation and are
discussed below.
B.

OneWest owns the note.

OneWest traces its ownership of the note from the original payee, IndyMac,
through the FDIC. See Affidavit of Rebecca Marks, D.E. 7-1. It is undisputed that
IndyMac was placed in receivership on July 11, 2008 and substantially all of its assets
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were thereafter administered by the FDIC and eventually sold to OneWest. OneWest
then relies on an allonge, which bears no date, to evidence the transfer of the specific note
from the FDIC as receiver to OneWest. D.E. 7-2, pp. 5-6. Rebecca Marks, in her
affidavit on behalf of OneWest specifically asserts that OneWest owns and holds the
original note.1 D.E. 7-1, pp. 1-2.
1. Judicial Notice of the FDIC website is proper.
Casterline objects to the use of the FDIC website to establish that the note was
transferred from IndyMac to the FDIC conservatorship. She claims that the website is
not a proper subject for judicial notice and does not conclusively prove the specific
transfer at issue. In particular, Casterline suggests that the website’s reference to the
FDIC taking over “substantially all” of IndyMac’s assets means that it is possible that the
subject note was not included in those administered assets and there is thus an
unexplained gap in OneWest’s title to the note.
First, this Court recognizes that governmental websites are proper sources for
judicial notice, as set out in the Memorandum and Recommendation. Any objection on
that basis to the information regarding the FDIC takeover of IndyMac and sale to
OneWest is OVERRULED. Second, while Casterline claims “a number of unexplained
gaps in the Note’s chain of title,” there is no “unexplained gap.” D.E. 13, p. 13. If there
is a gap, it is explained by the FDIC receivership.
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Casterline challenges Ms. Marks’ assertion that OneWest “has remained the holder and servicer of the Note from
March 19, 2009 until present” because the assertion with respect to the date is not supported by the attachments to
the affidavit. Ms. Marks specifically attests that she has access to all of the OneWest records for servicing loans.
D.E. 7-1, p. 1. Based on “these records,” she attests as to the date. Her attestation is not limited to what can be
gleaned from the attached documents. Without any competent evidence to contradict the affidavit, the Court
overrules any objection to the affidavit’s proof of the date of OneWest’s status as holder and servicer of the Note.

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The suggestion that “substantially all” of the assets does not mean “all, including
the Casterline note,” elevates semantics over evidence. There is no disputed issue of
material fact when one acknowledges five evidentiary facts:
(1) IndyMac indorsed the note in blank, thus relinquishing its ownership.
D.E. 7-2, p. 4.
(2) “Substantially all” of the IndyMac assets were taken into receivership
by the FDIC and sold to OneWest. See the FDIC website page for
IndyMac.
(3) The FDIC signed an allonge, which is specific to the subject note,
transferring it to OneWest. D.E. 7-2, p. 6.
(4) The other allonge, signed by OneWest, is signed in blank, making the
possessor the owner. D.E. 7-1, p. 5.
(5) OneWest possesses the original note. D.E. 7-1, pp. 1-2.
The evidence supports a finding that the subject note was included with “substantially
all” of the assets delivered to the FDIC and was specifically indorsed over to OneWest,
which now possesses the note.
Casterline’s reliance on Jernigan v. Bank One, Texas, N.A., 803 S.W.2d 774, 777
(Tex. App.–Houston [14th Dist.] 1991, no writ) is misplaced. In that case, there was
internally inconsistent evidence that converted the assertions of the affidavit into
unsupported allegations. Here, there is no such inconsistent evidence and Casterline has
failed to offer any expressly controverting evidence.

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Casterline offers no alternative explanation for what happened to the note.
Nothing in the summary judgment standard of review requires this Court to indulge in
speculation regarding abstract possibilities in order to manufacture a fact question when
there is no evidence to support a genuinely disputed issue of fact. “Unsubstantiated
assertions, improbable inferences, and unsupported speculation are not sufficient to
defeat a motion for summary judgment.” Brown v. City of Houston, 337 F.3d 539, 541
(5th Cir. 2003).
2. The allonge is probative evidence.
Along with Casterline’s claim—that she demonstrated fact issues in the chain of
title—is the assertion that the allonge was not “properly executed” or “adequately
affixed” to the note. D.E. 13, p. 14. She first suggests that the use of an allonge will
always generate a fact issue because it is inherently questionable whether any paper is “so
firmly affixed to the instrument as to become a part thereof . . . .” For that proposition,
she cites Estrada v. River Oaks Bank & Trust Co., 550 S.W.2d 719, 728 (Tex. Civ.
App.—Houston [14th Dist.] 1977, writ ref’d n.r.e.). The court in Estrada bemoaned the
use of allonges, preferring that transfers be indorsed on the instrument itself rather than
being on a separate paper affixed thereto. But it did not prevent the claimant from
recovering on the basis of an allonge. Id.
The use of an allonge, without more, does not create an automatic fact issue. The
Texas Supreme Court has held that stapling an allonge to a note satisfies the “so firmly
affixed thereto as to become a part thereof” requirement. Southwestern Resolution Corp.
v. Watson, 964 S.W.2d 262, 264 (Tex. 1997).
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The attachment requirement has been said to serve two
purposes: preventing fraud and preserving the chain of title
to an instrument. Adams [v. Madison Realty & Dev., Inc.,
853 F.2d 163 (3rd Cir. 1988)], at 167. Still, the requirement
has been relaxed in the current code from “firmly affixed” to
simply “affixed.” Tex. Bus. & Com.Code § 3.204(a). As the
Commercial Code Committee of the Section of Business Law
of the State Bar of Texas concluded in recommending
adoption of the provision, “the efficiencies and benefits
achieved by permitting indorsements by allonge outweigh[ ]
the possible problems raised by easily detachable allonges.”
Daryl B. Robertson, Report of the Commercial Code
Committee of the Section of Business Law of the State Bar of
Texas on Revised UCC Articles 3 and 4, 47 BAYLOR L.REV.
427, 459 (1995).
Southwestern Resolution Corp., supra. Here, the allonges specifically reference the loan
number, the original loan amount, the date of the note, and the borrower’s last name and
address. D.E. 7-2, pp. 5-6. This information makes abundantly clear that the allonges
belong with this note. Furthermore, there is no summary judgment evidence that the
allonges are not properly affixed to the note. That they may not have been copied along
with the note in past proceedings is not evidence that they are not proper or affixed.
Casterline’s objection to the Memorandum and Recommendation on the basis that there
is a fact question as to the propriety of the allonges is OVERRULED.
Casterline considers it suspicious that the allonges were not submitted along with
the notes in previous foreclosure applications. While advancing no nefarious theory as to
why the allonges were previously omitted, Casterline states that she would like to
conduct discovery regarding the “purported execution of these documents.” D.E. 13, p.
15. This action was removed to this Court on May 11, 2012. January 31, 2013 is the
discovery deadline. Casterline has had over seven months to conduct discovery. Under
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Fed. R. Civ. P. 56(d), “If a nonmovant shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify its opposition,” the court may
issue any appropriate order, including deferring or denying the motion. Casterline did
not file an affidavit or declaration compliant with this rule in her Response to the Motion
for Summary Judgment (D.E. 9), in her Objections to the Memorandum and
Recommendation (D.E. 13), or at any time in between. The request to defer or deny the
motion in favor of discovery is DENIED.
Casterline’s objection that there is an unexplained gap in OneWest’s title to the
note is OVERRULED.
C. The January 4, 2011 assignment of the mortgage
from IndyMac to OneWest did not sever the note
from the security instrument thus nullifying the lien.
After stating this objection, Casterline fails to supply this Court with any briefing
to support it. The Court presumes that Casterline is relying on such authorities as the
holding that, “The note and mortgage are inseparable; the former as essential, the latter as
an incident. An assignment of the note carries the mortgage with it, while an assignment
of the latter alone is a nullity.” Carpenter v. Longan, 83 U.S. 271, 274 (1872); see also
Windham v. Citizens Bank, 105 S.W.2d 348, 350 (Tex. Civ. App.—Austin 1937, writ
dism’d w.o.j.) (“an assignment of the interest of a mortgage however, without an
assignment of the debt is considered without meaning or use”).
As discussed above, OneWest has demonstrated that it owns the right to enforce
the note as well as the security instrument. So the only question presented is whether, by
way of technicality, any transfer of the respective documents that is out of sync renders
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the security instrument and its lien a permanent nullity. With no fact, law, or policy to
create such a technical trap in favor of Casterline, the Court declines to do so. OneWest
has demonstrated that it is fully authorized to foreclose its lien.
D. Conclusion
Plaintiff is entitled to a de novo disposition of those portions of the Magistrate
Judge’s memorandum and recommendation to which timely objections were raised.
FED. R. CIV. P. 72(b); 28 U.S.C. § 636(b)(1); Koetting v. Thompson, 995 F.2d 37, 40
(5th Cir. 1993).

Where no objections to the Magistrate Judge’s memorandum and

recommendation are raised, the district court need only satisfy itself that there is no clear
error on the face of the record and accept the Magistrate Judge’s memorandum and
recommendation. Guillory v. PPG Industries, Inc., 434 F.3d 303, 308 (5th Cir. 2005)
(citing Douglass v. United Services Auto Ass’n, 79 F.3d 1415, 1420 (5th Cir. 1996)).
For the reasons stated above, the Court OVERRULES Casterline’s objections and
adopts the Memorandum and Recommendation (D.E. 12) as its own as supplemented
herein. The Court GRANTS the Defendant’s Motion for Summary Judgment (D.E. 7)
and Casterline’s claims in this action are DISMISSED.
ORDERED this 19th day of December, 2012.

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NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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