Jones v. The Bank of New York Mellon

Filing 38

OPINION AND ORDER denying 32 Motion for Reconsideration.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
GUY JONES,

§
§
Plaintiff/Counter Defendant, §
§
VS.
§
§
THE BANK OF NEW YORK MELLON
§
F/K/A THE BANK OF NEW YORK, AS §
TRUSTEE FOR CERTIFICATEHOLDERS §
OF CWABS, INC.,
§
§
Defendant/Counter Plaintiff, §

CIVIL ACTION NO. H-13-2414

OPINION AND ORDER
The

above

referenced

action

challenges

a

foreclosure

on

Plaintiff/Counter Defendant Guy Jones’ (“Jones’”) homestead at Site
74 of Garden Villas, 7025 East Alpine, Houston, Texas 77061 in
Harris County (“the Property”), in which this Court previously
granted summary judgment (instruments #30 and 31) on statute of
limitations

grounds

on

January

22,

2015

in

favor

of

Defendant/Counter-Plaintiff The Bank of New York Mellon (“BONY”),
f/k/a Bank of New York, as Trustee for the Certificateholders of
CWABS, Inc., and denied Jones’ motion for summary judgment on
BONY’s counterclaim for breach of contract, judicial foreclosure,
and declaratory judgment. Pending before the Court are Jones’
motion to reconsider the denial of his summary judgment motion on
BONY’s Counterclaims (#32) and BONY’s amended motion for summary
judgment on its judicial foreclosure claim (#36), which supersedes
its previous one (#34).
For the reasons stated below, the Court reaffirms its order of
summary judgment on limitations grounds and its denial of Jones’
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motion for summary judgment (#30).
that

However because it now realizes

BONY’s counterclaim for breach of contract, judicial

foreclosure, and declaratory judgment is still pending, it vacates
its final judgment (#31).

Furthermore, for the reasons cited

below, it denies Jones’ motion for reconsideration of the denial of
his motion for summary judgment. (#32).
Standard of Review
Although the Federal Rules of Civil Procedure do not recognize
a general motion for reconsideration,1 courts address such motions
under Rules 54(b) for interlocutory orders, and 59
final judgments.

2

and 603 for

Dos Santos v. Bell Helicopter Textron, Inc.

Dist., 651 F. Supp. 2d 550, 553 (N.D. Tex. 2009), citing Teal v.
Eagle Fleet, Inc., 933 F.2d 341, 347 (5th Cir. 1991);

U.S. Bank

1

St. Paul Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d
336, 339 (5th Cir. 1997).
2

If filed within twenty-eight days of entry of judgment,
it falls under Fed. R. Civ. P. 59(e) as a motion to alter or
amend judgment. The standard for granting a motion to reconsider
under Rule 59(e) is strict: a party may file such a motion “to
correct manifest errors of law or fact or to present newly
discovered evidence.” Waltman v. International Paper Co., 875
F.2d 468, 473 (5th Cir. 1989).
3

If not filed within 28 days, but within a year of entry of
final judgment (Rule 60(c)), it is a motion for relief from
judgment under Rule 60(b). Under Rule 60(b)(1-6) relief is
available for “(1) mistake, surprise, or excusable neglect; (2)
newly discovered evidence that, with reasonable diligence, could
not have been discovered in time to move for a new trial under
Rule 59(b);(3) fraud (whether previously called intrinsic or
extrinsic), misrepresentation, or misconduct by an opposing
party; (4) the judgment is void; (5) the judgment has been
satisfied, released of discharged; it is based on an earlier
judgment that has been reversed or vacated; or applying it
prospectively it is no longer equitable; or (6) any other reason
that justifies relief.” In re Vioxx Products Liability Litig.,
509 Fed. Appx. 383, at *3 (5th Cir. Jan. 31, 2013).
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Nat’l Assoc. v. Verizon Communications, Inc., Civ. A. No. 3:10-CV1842-G, 2012 WL 3034707, at *1 (N.D. Tex. July 25, 2012).
Motions to reconsider are usually “not the proper vehicle for
rehashing evidence or legal theories, or raising arguments that
could have been presented earlier.” Dos Santos, 651 F. Supp. 2d at
553;

Id. at 478-79.
Because the Court is vacating its final judgment (#31) in this

case because BONY’s counterclaim for judicial foreclosure was
unresolved, and thus its order denying Jones’ motion for summary
judgment was interlocutory, his motion for reconsideration properly
falls under Rule 54(b)(“[A]ny order or other decision, however
designated, that adjudicates fewer than all claims or rights and
liabilities of fewer than all the parties does not end the action
as to any of the claims or parties and may be revised at any time
before the entry of a judgment adjudicating all the parties’ rights
and liabilities.”).
“Thus Rule 54(b) expressly allows for revision of an
interlocutory order before entry of final judgment” and can be
reopened at the discretion of the district judge.

Elephant Butte

Irr. Dist. of New Mexico v. U.S. Dept. of Interior, 538 F.3d 1299,
1306 (10th Cir. 2008), cert. denied, 555 U.S. 1172 (2009). See also
All-Pro Reps, Inc. v. Lukenbill, 961 F.2d 216, Nos. 90-16397, 9016430, 1992 WL 84295, at *2 (9th Cir. Apr. 22, 1992)(noting that an
interlocutory order does not have a res judicata effect), citing
Luben Indus., Inc. v. U.S., 707 F.2d 1037, 1040 (9th Cir. 1983)(an
unappealable

decision

is

“not

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sufficiently

firm

to

give

it

collateral estoppel effect.”).

Thus the standards for granting

reconsideration of an interlocutory order under Rule 54(b) “are
somewhat looser than those under Rule 59(e).”

Livingston Downs

Racing Ass’n v. Jefferson Downs Corp. , 259 F. Supp. 2d 471, 474
(M.D. La. 2002)(district courts have considerable discretion in
determining whether to reconsider an interlocutory order); Brown v.
Wichita County, Tex., No. 05-108, 2011 WL 1562567, at *1 (N.D. Tex.
Apr. 26, 2011)(While the exact standard for deciding a Rule 54(b)
is unclear, “whether to grant such a motion rests within the
discretion of the court” and “the district court’s discretion in
this respect is broad.”).

With an interlocutory order, “the trial

court is free to reconsider and reverse its decision for any reason
it deems sufficient, even in the absence of new evidence or an
intervening change in or clarification of the substantive law.”
Lavespeare v. Niagra Machine & Tool Works, Inc., 910 F.2d 167, 185
(5th Cir. 1990), cert. denied, 510 U.S. 859 (1993), rev’d on other
grounds, Little v. Liquid Air Corp., 37 F.3d 1069 (1994)(en banc).
Jones’ Motion for Reconsideration (#32)
Jones argues that because the Texas Constitution must be
strictly complied with in creating a loan on homestead property,
BONY does not have a valid lien on Jones’ homestead because the
Note on its face charged more than three percent of the loan amount
in fees in violation of Article XVI, Section 50(a)(6)(E),4 and BONY
4

Section 50(a)(6)(E) provides, “The homestead of a family,
or of a single adult person, shall be, and is hereby protected
from forced sale, for the payment of all debts except for: . . .
an extension of credit that: . . . does not require the owner or
the ownner's spouse to pay, in addition to any interest, fees to
any person that are necessary to originate, evaluate, maintain,
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did not cure the defect by refunding $117.25 to Jones.

Even if

BONY does have a valid lien, that lien does not comply with Section
50(c) and thus is not necessarily “foreclosable.”

See Larry and

Bonnie Hutto v. Carrington Mortgage Services LLC, et al., Cause No.
2012-08693, slip op. (“Findings of Fact and Conclusions of Law”)
(55th Judicial District Ct. Jan. 29, 2015)(copy at Ex. E)(lender’s
failure to comply with the Texas Constitution’s requirements for a
home equity lien, without its curing

of that violation, was

sufficient to render the lien “unforclosable.”).
BONY’s Response (#33)
Jones’ mortgage originated on June 4, 2004.

In Priester v.

JPMorgan Chase Bank, 708 F.3d 667, 674-75 (5th Cir. 2012), making
an Erie guess,5 the Fifth Circuit held that the four-year statute
of limitations, which begins to run at the creation of the lien,
applies to constitutional infirmities under the Texas Constitution
Art. XVI, § 50(a)(6) and Tex. Civ. Prac. & Rem. Code § 16.051
(“Every action for which there is no express limitations period,
except an action for recovery of real property, must be brought not
later than four years after the day the cause of action accrues.”),

record, insure, or service the extension of credit that exceed,
in the aggregate, three percent of the original amount of the
extension of credit.”
5

Erie R.R. Co. v. Tomkins, 304 U.S. 64 (1938). As this
court indicated in its Opinion and Order (#30) at pp. 10-12 &
nn.4 and 5, where the state’s highest court has not ruled on an
issue, the district court may look at decisions of intermediate
appellate state courts and other jurisdictions and general policy
concerns for guidance in making a guess as to how the Texas
Supreme Court might rule. Jones’ reliance on the unpublished
Hutto case from a district court does not persuade the Court that
its Erie guess must be amended.
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cert. denied, 134 S. Ct. 196 (2013)).

“[L]iens that are contrary

to the requirements of § 50(a) [of the Texas Constitution] are
voidable rather than void from the start.”

Id, at 674, n.14.

“To

the extent that a constitutional claim under Section 50(a)(6)
renders a lien voidable rather than void, once the period of
limitations has passed, the lien is no longer voidable and is
valid.”

Id. at 678.

Because Jones did not attempt to invalidate

the mortgage during the four-year limitations period and because he
failed

to

assert

the

constitutional

defects

as

a

defense

to

foreclosure for ten years, BONY’s lien is valid and foreclosable as
a

matter

of

law.

Furthermore, the Fifth Circuit reaffirmed

Priester in Moran v. Ocwen Loan Servicing, LLC, 560 Fed. Appx. 277,
279-80 (5th Cir. Mar. 24, 2014).

In addition it held in Moran that

the borrower cannot use a declaratory judgment action under the
Texas Constitution as a defense to foreclosure to circumvent the
four-year statute of limitations. Id. at 279, citing Priester, 708
F.3d at 671-72, 674-75 (dismissing declaratory judgment action
under the four-year statute of limitations).
Court’s Ruling
Because BONY’s counterclaim has not been resolved, the Court
ORDERS that its final judgment (#31) is VACATED.

Because

BONY’s not-yet-ripe, amended motion for summary judgment on its
counterclaim for judicial foreclosure (#36) supersedes its earlier
motion (#34), #34 is MOOT.

#36 remains pending.

This Court notes that not only has the Fifth Circuit recently
again reaffirmed its decision in Priester in Smith v. JP Morgan
Chase Bank, 594 Fed. Appx. 221, 221-223 (5th Cir. Nov. 5, 2014), but
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points to “subsequent Texas decisions that have followed Priester’s
reasoning and validated its holding.”

Id. at 223.

Because the Court ruled on the issues raised in Jones’ motion
to reconsider the denial of its motion for summary judgment in its
previous order and has not changed its mind, and because it agrees
with BONY that Jones’ argument fails as a matter of law, the Court
ORDERS that

Jones’ motion to reconsider the denial of his

summary judgment motion on BONY’s Counterclaims (#32) is DENIED.
SIGNED at Houston, Texas, this

16th

day of

April , 2015.

___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE

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