Parffrey et al v. Ocwen Loan Servicing, LLC et al

Filing 18

MEMORANDUM AND ORDER GRANTING 15 MOTION to Dismiss and Brief in Support Thereof WITH PREJUDICE(Signed by Judge Keith P Ellison) Parties notified.(sloewe, 4)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BRYON A. PARFFREY AND ANGELINE §
M. PARFFREY,
§
§
Plaintiffs,
§
VS.
§
§
OCWEN LOAN SERVICING, LLC AND §
DEUTSCHE BANK NATIONAL TRUST
§
COMPANY,
§
§
Defendants.
§

CIVIL ACTION NO. 4:14-CV-3077

MEMORANDUM AND ORDER
Pending before the Court is Defendants’ Motion to Dismiss (Doc. No. 15). For the
reasons stated below, Defendants’ Motion to Dismiss is GRANTED.
I.

BACKGROUND.
According to the Original Petition filed in state court, Plaintiffs obtained a home equity

loan in 2005 and made timely payments until February 2011. (Original Petition, Doc. No. 1,
Exhibit B-2 at 2-3.) Plaintiffs experienced financial hardship in February 2011 and sought a
modification of their loan. (Id. at 3.) They allege that their requests for assistance went
unheeded by Defendants, who also failed to provide Plaintiffs with adequate proof of their
alleged default under the security instrument. (Id. at 4.) Plaintiffs allege claims for breach of
contract, negligence, and violation of the Texas Property Code §51.002, et seq., and violation of
Texas Debt Collection Act. (Id. at 5-7.)
Plaintiffs filed their Original Petition in state court on October 3, 2014. Defendants
timely removed to this Court on diversity grounds. (Doc. No. 1.) Defendants then filed a
Motion to Dismiss, in which they argue that Plaintiffs’ claims are barred by the res judicata

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effect of a decision rendered March 22, 2013, in the District Court of Harris County, Texas, 61st
Judicial District. (Doc. No. 15.)1 Plaintiffs have not filed a response to Defendants’ Motion.
II.

RES JUDICATA
When considering the preclusive effect of a prior Texas state court decision, this Court

applies the Texas law of res judicata. Hogue v. Royse City, Tex., 939 F.2d 1249 (5th Cir. 1991);
Flores v. Edinburg Consol. Independent School Dist., 741 F.2d 773 (5th Cir. 1984). Under
Texas law, for res judicata to apply, there must be: “(1) a prior final judgment on the merits by a
court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a
second action based on the same claims that were raised or could have been raised in the first
action.” Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007).
The earlier decision at issue here was rendered by the District Court of Harris County,
Texas, a court of competent jurisdiction. That court granted summary judgment in favor of the
defendants and dismissed the case with prejudice.

Parffrey v. American Home Mortgage

Servicing, Inc. and Deutsche Bank National Trust Company, No. 2011-72624, (Dist. Ct. of
Harris County, Tex., 61st Judicial Dist., March 22, 2013). The effect of that decision on the
instant suit turns on whether the parties in the two cases are identical or in privity, and on
whether the two actions are based on the same claims.
The parties in the earlier case in state court overlap with the parties in the case before this
Court. Plaintiffs are the same and Deutsche Bank National Trust Company is a Defendant in
each suit.

The non-overlapping parties are American Home Mortgage Servicing, Inc.

(“AHMS”), a defendant in the state court action, and Ocwen Loan Servicing, LLC (“Ocwen”), a
defendant in this case. Although they are distinct entities, AHMS and Ocwen are in privity with
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Defendants advance additional arguments for why Plaintiffs’ claims must be dismissed pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. Because the Court finds that Plaintiffs’ claims are barred by res judicata, it
does not consider Defendants’ other arguments for dismissal.

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one another. Parties can be in privity in at least three ways: “(1) they can control an action even
if they are not parties to it; (2) their interests can be represented by a party to the action; or (3)
they can be successors in interest, deriving their claims through a party to the prior action.”
Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex. 1996). As the loan’s former servicer
(AHMS) and current servicer (Ocwen), the two parties “share an identity of interests in the basic
legal right that is the subject of litigation.” Id. Furthermore, Plaintiffs allege that Ocwen is
successor in interest to AHMS. (See Original Petition at 3 (“Plaintiffs have continued to contact
the Defendant ‘OCWEN’ as a successor in interest to American Home Mortgage Servicing, Inc.,
. . . with no success[.]”).)
The instant case is also based on the same claims that were raised in the earlier state court
suit. The Petitions filed in the two cases are nearly identical, with large portions of the secondfiled Petition copied directly from the first. Both Petitions allege exactly the same claims arising
from the Plaintiffs’ attempts to obtain a loan modification through the Home Affordable
Modification Program. Plaintiffs’ claims in the instant suit therefore have already been litigated
and decided in the District Court of Harris County, Texas.
III.

CONCLUSION
For the reasons stated above, Plaintiffs’ suit is barred by res judicata. Defendants’

Motion to Dismiss is therefore GRANTED and the case is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.
SIGNED in Houston, Texas on this the 14th day of April, 2015.

KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE
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