Johnson v. Real Estate Mortgage Network, Inc. et al
Filing
62
MEMORANDUM OPINION AND ORDER granting 52 AMENDED MOTION for Summary Judgment . (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DAVID JOHNSON,
April 18, 2017
David J. Bradley, Clerk
§
§
§
§
§
§
Plaintiff,
v.
HOMEBRIDGE FINANCIAL SERVICES,
INC. f/k/a REAL ESTATE MORTGAGE
NETWORK; FEDERAL NATIONAL
MORTGAGE ASSOCIATION,
Individually and as Trustee
for FANNIE MAE REMIC TRUST
2 0 0 8- 81; BRANCH BANKING & TRUST
COMPANY; and MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS INC.
§
§
§
§
§
§
§
§
§
I
I
§
§
§
Defendants.
__________________________________ §
FEDERAL NATIONAL MORTGAGE
ASSOCIATION and BRANCH BANKING
& TRUST COMPANY,
Counter-Plaintiffs,
v.
DAVID JOHNSON,
Counter-Defendant.
CIVIL ACTION NO. H-16-0748
§
§
§
§
§
§
§
§
§
§
§
MEMORANDUM OPINION AND ORDER
Plaintiff brought this action against defendants HomeBridge
Financial Services,
Inc.,
formerly known as Real Estate Mortgage
Network, Inc. ( "HomeBridge" or "REMNI") ; 1 Federal National Mortgage
1
The parties refer throughout their filings to "Real Estate
(continued ... )
Association ("Fannie Mae"), individually and as Trustee for Fannie
Mae REMIC Trust 2008-81; Branch Banking & Trust Company ("BB&T");
and
Mortgage
(collectively,
Electronic
Registration
Systems,
Inc.
( "MERS")
"Defendants") in the 155th Judicial District Court
for Austin County, Texas.
Defendants Fannie Mae, BB&T, and MERS
removed the action to this court and defendants Fannie Mae and BB&T
counterclaimed for judicial foreclosure.
2
Pending before the court
is Defendants' Amended Motion for Summary Judgment ( "MSJ")
Entry No. 52).
(Docket
For the reasons explained below, the motion will be
granted.
I.
Factual Background
In August of 2008 plaintiff David Johnson obtained a
home
equity loan secured by his principal residence (the "Property") . 3
1
( • • • continued)
Mortgage Network, Inc."
Although HomeBridge Financial Services,
Inc. is the proper party to this action (see Amendment to
Registration, Exhibit B to Notice of Removal, Docket Entry No. 1-1,
pp. 28-29), the court will refer to "REMNI" in regards to the
original transaction to avoid confusion and for consistency with
the filings and original loan documents.
2
Amended Counterclaim of Federal National Mortgage Association
and Branch Banking and Trust Company ("Amended Counterclaim"),
Exhibit A to Motion for Leave to File Amended Counterclaim, Docket
Entry No. 30-1.
3
Plaintiff's Amended Petition, Exhibit A to Motion for Leave
to File Amended Claim, Docket Entry No. 34-1, p. 4 ~ 17;
Defendants' MSJ, Docket Entry No. 52, p. 3 ~ 6.
-2-
Johnson executed a $273, 000 Texas Home Equity Note
and
Texas
Instrument")
Home
5
Equity
Security
Instrument
(together "the Loan Agreement")
(the "Note") 4
(the
"Security
in favor of REMNI. 6
Johnson's loan was assigned to Fannie Mae in October of 2008 and
has since been serviced by BB&T. 7
Johnson defaulted on the loan
and BB&T sent him a Notice of Default in May of 2014. 8
Fannie Mae,
through its counsel, then sent Johnson a Notice of Acceleration on
January 14, 2015. 9
Johnson has not made any payments on the loan
since receiving the Notice of Default. 10
action for
Trade
(1) quiet title,
Practices-Consumer
(3-5)
Johnson alleges causes of
(2) violation of the Texas Deceptive
Protection
Act
( "DTPA")
I
11
and
fraudulent court record and fraudulent claims against real
4
Exhibit A-1 to Defendants' MSJ, Docket Entry No. 52-1, pp. 8-
5
Exhibit A-2 to Defendants' MSJ, Docket Entry No.
12.
52-1, pp.
14-36.
6
Note, p. 8; Security Instrument, pp. 14-15.
7
Declaration of Patrick Carper, Exhibit A to Defendants' MSJ,
Docket Entry No. 52-1, pp. 4-5, ~ 5.
Id. at 5, ~ 7; see also Notice of Default, Exhibit A-3 to
Defendants' MSJ, Docket Entry No. 52-1, pp. 38-40.
8
Carper Declaration, Docket Entry No. 52-1, p. 5, ~ 8; see
also Notice of Acceleration of Loan Maturity, Exhibit A-4 to
Defendants' MSJ, Docket Entry No. 52-1, pp. 42-44.
9
1
°Carper Declaration, Docket Entry No. 52-1, p. 5,
11
Tex. Bus. & Com. Code
§§
17.41-17.63.
-3-
~
8.
property. 12
Defendants Fannie Mae, BB&T, and MERS have moved for
summary judgment on all of Johnson's claims and Fannie Mae and BB&T
(together, "Counter-Plaintiffs") have moved for summary judgment on
their counterclaim for judicial foreclosure.
II.
A.
13
Defendants' Motion for Summary Judgment
Standard of Review
Summary judgment is appropriate if the movant establishes that
there is no genuine dispute about any material fact and the movant
is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a).
Disputes about material facts are genuine "if the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party."
Anderson v.
Liberty Lobby,
Inc.,
106 S.
Ct.
2505,
2510
(1986).
The moving party is entitled to judgment as a matter of
law if "the nonmoving party has failed to make a sufficient showing
on an essential element of her case with respect to which she has
the burden of proof."
Celotex Corp. v. Catrett, 106 S. Ct. 2548,
2552 (1986) .
A party moving for summary judgment "must
'demonstrate the
absence of a genuine issue of material fact,' but need not negate
the elements of the nonmovant's case."
37 F.3d 1069, 1075 (5th Cir. 1994)
Celotex, 106 S. Ct. at 2553).
Little v. Liquid Air Corp.,
(en bane)
(per curiam)
(quoting
"If the moving party fails to meet
12
Plaintiff's Amended Petition, Docket Entry No. 34-1.
13
Amended Counterclaim, Docket Entry No. 30-1.
-4-
this initial burden, the motion must be denied, regardless of the
nonmovant's response."
this
burden,
Id.
If, however,
"the nonmovant must
the moving party meets
go beyond the pleadings"
and
produce evidence that specific facts exist over which there is a
genuine
issue
for
Id.
trial.
(citing Celotex,
106 S.
Ct.
at
The nonmovant "must do more than simply show that there
2553-54)
is some metaphysical doubt as to the material facts."
Matsushita
Electric Industrial Co.,
106 S.
Ltd. v.
Zenith Radio Corp.,
Ct.
1348, 1356 (1986).
In reviewing the evidence "the court must draw all reasonable
inferences in favor of the nonmoving party,
credibility determinations
or weigh
Sanderson Plumbing Products,
the
and it may not make
evidence."
Reeves
Inc., 120 S. Ct. 2097, 2110
v.
(2000).
Factual controversies are to be resolved in favor of the nonmovant,
"but only when there is an actual controversy, that is, when both
parties have submitted evidence of contradictory facts."
Little,
37 F.3d at 1075.
B.
Johnson's Claims
Because Johnson is proceeding pro se, the court construes his
pleadings liberally.
(2007)
See Erickson v. Pardus, 127 S. Ct. 2197, 2200
("A document filed pro se is 'to be liberally construed,'
and 'a pro se complaint, however inartfully pleaded, must be held
to
less
stringent
lawyers.'"
97
s.
standards
(citations
Ct. 2 8 5
I
than
omitted)
2 9 2 ( 19 7 6) ) ) .
-5-
formal
pleadings
(quoting
Estelle
drafted
v.
by
Gamble,
1.
Quiet Title
Johnson seeks "quiet title" to the Property.
A suit to remove
cloud or to quiet title accords an equitable remedy.
Katz v.
Rodriguez, 563 S.W.2d 627, 629 (Tex. Civ. App.-Corpus Christi 1977,
writ
ref'd n.r.e.).
It
exists
"to
enable
the
holder of
the
feeblest equity to remove from his way to legal title any unlawful
hindrance having the appearance of better right."
Essex Crane
Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App.-Houston [1st
Dist.]
2012, pet. denied)
(citations omitted); Hahn v. Love, 321
S.W.3d 517, 531 (Tex. App.-Houston [1st Dist.] 2009, pet. denied).
The plaintiff has the burden of supplying the proof necessary to
establish his superior equity and right to relief--that is, that he
has a right of ownership and that the adverse claim is a cloud on
the title that equity will remove.
387-88; Hahn, 321 S.W.3d at 531.
interest in a
specific property,
Essex Crane,
371 S.W.3d at
The plaintiff must show (1) an
(2)
title
'
to the property is
affected by a claim by the defendant, and (3) the claim, although
facially valid,
is invalid or unenforceable.
390 S.W.3d 47, 61-62
Vernon v. Perrien,
(Tex. App.-El Paso 2012, no pet.)
(citation
omitted).
As
far
as
the
court
can tell
from
the Amended
Petition,
Johnson's primary basis for asserting that Defendants' claim on his
title
is
invalid
or
unenforceable
is
that
the
entire
loan
transaction is "null and void" because the original lender failed
to disclose the "real party" or "real terms" of the transaction by
-6-
failing to disclose its intent to sell his loan. 14
notice that the loan may be sold,
however,
Johnson had
because the Security
Instrument explicitly states that "[t] he Note or a partial interest
in the Note
(together with this Security Instrument) can be sold
one or more times without prior notice to Borrower. " 15
cites generally to the Truth in Lending Act, 15 U.S.C.
~'
Johnson
1601 et
§
and "SEC rules, " 16 but assuming arguendo that there was a
violation at the time of the original transaction,
the court can
find no basis under either authority to nullify the Loan Agreement.
Any TILA cause of action is also barred by the statute of
limitations, as is apparent from the face of the Amended Petition.
"The general statute of limitations for damages claims under the
TILA is one year after the violation."
Williams v.
Countrywide
Home Loans, Inc., 504 F. Supp. 2d 176, 186 (S.D. Tex. 2007)
15 U.S.C.
"'The
§
1640(e)), aff'd, 269 Fed. App'x
violation
"occurs"
when
the
(citing
523 (5th Cir. 2008).
transaction
is
consummated.
Nondisclosure is not a continuing violation for purposes of the
statute of limitations.'"
632, 633 (5th Cir. 1986)
(11th Cir. 1984)).
Moor v.
Travelers Ins.
Co.,
784 F.2d
(quoting In re Smith, 737 F.2d 1549, 1552
"The credit transaction is consummated at the
moment 'a contractual relationship is created between [a creditor
and a consumer] . '"
Williams,
504 F.
Supp.
2d at 186
~
(quoting
14
Amended Petition, Docket Entry No. 34-1, p. 5,
15
Security Instrument, Docket Entry No. 52-1, p. 23, Provision
16
Amended Petition, Docket Entry No. 34-1, p. 5,
22.
19.
-7-
~~
22, 25.
Bourgeois v. Haynes Construction Co., 728 F.2d 719, 720 (5th Cir.
1984)).
8,
The credit transaction at issue was consummated on August
This suit was brought on February 26,
2008.
2016, more than
Plaintiff's TILA claims are therefore time-
seven years later.
barred.
Johnson alleges no other factual basis for his quiet title
Johnson's
claim.
remaining
allegations
are
conclusory,
unsupported, and raise no genuine issue of material fact as to the
validity of
Defendants'
claim on title.
Accordingly,
summary
judgment is appropriate on Johnson's quiet title claim.
2.
Violation of the DTPA
Johnson argues that Defendants, specifically REMNI,
§ 17.46(b} (24}
17
of
the DTPA by failing
intended to sell his loan.
plaintiff[]
must
prove
victimized by false,
violated
to inform him that
"To prove a violation of the DTPA,
that:
( 1}
misleading,
[he
is]
consumer,
or deceptive acts,
disclose, or an unconscionable course of action,
17
a
it
[a]
( 2}
failures to
(3) which was a
Johnson's Amended Petition cites "section 17.46(b} (23}," but
the cited portion of the statute deals with suit on a written
contract brought in a county other than that in which the defendant
resides or in which defendant
signed the contract while
§ 17.4 6 (b) ( 24)
deals with "failing to disclose information
concerning goods or services which was known at the time of the
transaction if such failure to disclose such information was
intended to induce the consumer into a transaction into which the
consumer would not have entered had the information been
disclosed."
Because only the latter matches Johnson's alleged
facts, the court concludes that the reference to§ 17.46(b) (23) is
in error.
-8-
'producing cause' of damages."
727
(5th Cir. 2000)
Streber v. Hunter,
(citing Doe v. Boys Clubs of Greater Dallas,
907 S.W.2d 472, 478 (Tex. 1995)).
may be sold. 18
221 F.3d 701,
Moreover,
Johnson had notice that his loan
as Counter-Plaintiffs argue,
DTPA claim fails because he is not a consumer. 19
Johnson's
"Generally,
a
person cannot qualify as a consumer if the underlying transaction
is a pure loan because money is considered neither a good nor a
service."
Fix v.
Flagstar Bank,
App.-Fort Worth 2007, pet. denied)
FSB,
242 S.W.3d 147, 160
(citing Riverside National Bank
v. Lewis, 603 S.W.2d 169, 173-74 (Tex. 1980)).
evidence
before
the
court
that
(Tex.
the
Because there is no
transaction
at
issue
was
anything other than a pure loan, the court concludes that Johnson
is not a "consumer" under the DTPA.
Accordingly, summary judgment
is appropriate as to Counter-Plaintiffs on Johnson's DTPA claim. 20
3.
Fraudulent Court Record and Fraudulent Claims Against
Real Property
Johnson claims that Counter-Plaintiffs violated Chapter 12 of
the Texas Civil Practice and Remedies Code by filing "knowingly
fraudulent documents" and asserting fraudulent claims against real
18
See Section II. B .1, supra.
19
Defendants' MSJ, Docket Entry No. 52, p. 12-13.
20
Although Johnson's DTPA claim against HomeBridge likely fails
for the same reason, HomeBridge has neither joined the CounterPlaintiffs in their Motion for Summary Judgment nor filed one of
its own.
-9-
property in their initial foreclosure action. 21
Section 12.002(a)
states that a person may not make, present, or use a document or
other record with (1) knowledge that the document or record is a
fraudulent court record or a fraudulent lien or claim against real
property or an interest in real property,
document
be
given
legal
effect,
and
( 2)
( 3)
intent that the
intent
to
cause
plaintiff physical or financial injury or mental anguish.
Civ. Prac. & Rem. Code§ 12.002(a).
the
Tex.
Counter-Plaintiffs argue that
Johnson has offered no evidence to support his fraudulent court
record and fraudulent claims against real property claims.
The
court agrees.
Insofar as Johnson's claim relies on the invalidity of the
assignment from REMNI to Counter-Plaintiffs, he lacks standing to
challenge that assignment.
Trust Co.,
735 F.3d 220,
See Reinagel v.
227-28
(5th Cir.
Deutsche Bank Nat.
2013)
(holding that a
debtor lacks standing to challenge an assignment to a third party
on a basis that renders the assignment merely voidable rather than
void ab
initio) .
Plaintiffs'
Fannie
21
Mae
Johnson offers
evidence
and
no
that
BB&T
evidence
no
holds
to
response
to
the
Note
support
his
the
on
Counter-
behalf
of
allegations. 22
Amended Petition, Docket Entry No. 34-1, pp. 7-9.
22
Plaintiff's Response to the Defendants' Amended Motion for
Summary Judgment (Docket Entry No. 53) largely repeats procedural
arguments that the court has dealt with elsewhere.
See Docket
Entry Nos. 28, 39, 55 & 61.
The remainder of Johnson's Response
(continued ... )
-10-
Accordingly, summary judgment is appropriate as to Johnson, s claims
of
fraudulent
court
record and
fraudulent
claims
against
real
property.
c.
Counter-Plaintiffs' Claim for Judicial Foreclosure
Counter-Plaintiffs
move
for
summary
judgment
on
their
counterclaim for judicial foreclosure.
To foreclose under a security instrument in Texas with a
power of sale, the lender must demonstrate that: {1) a
debt exists; (2) the debt is secured by a lien created
under Art. 16, § 50(a) (6) of the Texas Constitution; (3)
plaintiff is in default under the note and security
instrument; and (4) plaintiff received notice of default
and acceleration.
Huston v. U.S. Bank National Association, 988 F. Supp. 2d 732, 740
(S.D. Tex. 2013), aff,d, 583 F. App,x 306 (5th Cir. 2014)
Tex. Prop. Code
§
51.002).
(citing
In support of their motion, Counter-
Plaintiffs offer loan documents and payment records along with the
Declaration of Patrick Carper. 23
Johnson offers no evidence in
response.
22
continued)
fails to address Counter-Plaintiffs, arguments.
( •••
23
Exhibit A to Counter-Plaintiffs, MSJ, Docket Entry No. 52-1,
pp. 2-6. Carper, a Vice President at BB&T bases the statements in
his declaration on a review of BB&T,s business records. Id. at 23. Johnson objects to Carper,s Declaration as hearsay. CounterPlaintiffs reply that the Fifth Circuit has held that a bank
employee
may
gain
personal
knowledge
by
reviewing
the
organization,s records, citing Dalton v. FDIC, 987 F.2d 1216, 1223
(5th Cir. 1993). The court agrees. Johnson,s objection is denied.
-11-
1.
The Debt
Neither party disputes that Johnson executed a Loan Agreement
in the principal amount of $273,000.00.
As of January 31, 2017,
the amount required to satisfy the loan in full is $303,928.59. 24
This amount increases as interest and other charges continue to
accrue. 25
Counter-Plaintiffs have presented sufficient evidence to
establish this element as a matter of law.
2.
The Debt is Secured by a Lien for a Home Equity Loan
Counter-Plaintiffs attached to their motion a
security instrument,
a
lien created under Article
copy of the
16,
Section
50(a) (6) of the Texas Constitution, that was filed in the official
Austin County real property records. 26
creates
a
first
lien
mortgage
foreclosure upon a default. 27
Plaintiffs'
evidence,
and
on
The Security Instrument
the
home
and
authorizes
Johnson does not contest CounterCounter-Plaintiffs
have
met
their
summary-judgment burden as to this element.
3.
Johnson's Default
Counter-Plaintiffs allege that Johnson defaulted under the
terms of the Loan Agreement,
24
Id. at 6
I
fl
11
and the Loan Agreement
"is still
9•
2sid.
26
Security Instrument, Docket Entry No. 52-1, pp. 14-36.
27
Id. at 25, Provision 22.
-12-
currently due for the July 1, 2014[,] payment and all subsequent
monthly payments. " 28
allegation.
Johnson does not dispute Counter-Plaintiffs
I
Counter-Plaintiffs' evidence satisfies this element
for a judgment of foreclosure.
4. Notice of Default and Acceleration
The Property Code requires the mortgage servicer to serve a
debtor in default with written notice by certified mail stating
that the note is in default and providing at least 20 days to cure
before
any notice
51.002(d).
of
Fannie Mae,
Johnson the
sale
can be
Tex .
given.
Prop .
Code
§
through its mortgage servicer BB&T, sent
requisite notices
of
default
and acceleration via
certified mail and Johnson has had more than 20 days to cure the
default. 29
Counter-Plaintiffs
have
presented
summary-judgment evidence to establish the
counterclaim.
sufficient
last element of its
The court will therefore grant Counter-Plaintiffs'
request for an order and judgment of foreclosure against Johnson.
D.
Counterclaim for Attorneys' Fees
Counter-Plaintiffs seek attorneys'
fees
rights under the Note and deed of trust,
28
in defending their
arguing that fees are
Carper Declaration, Docket Entry No. 52-1, p. 6,
29
~
9.
Notice of Default, Exhibit A-3 to Defendants' MSJ, Docket
Entry No. 52-1, pp. 38-40; Notice of Acceleration of Loan Maturity,
Exhibit A-4 to Defendants' MSJ, Docket Entry No. 52-1, pp. 42-44;
Carper Declaration, Docket Entry No. 52-1, pp. 2-6.
-13-
recoverable
as
a
further
Security Instrument. 30
obligation
provided by statute or by contract.
F.
Supp.
3d
the
subject
Note
and
Johnson does not respond to this claim.
A party may recover attorneys'
181
on
375,
378
{S.D.
fees when such recovery is
Christiana Trust v. Henderson,
Tex.
2016)
Henegar, 640 F.2d 732, 736 (5th Cir.1981).
non-recourse
liability.
Huston, 988 F. Supp. 2d at 741 {citing Tex. Const. Art.
50 (a) ( 6) {C) ) .
§
preclude
Home equity loans are
generally
XVI
and
{citing Graham v.
contractual
mortgagor
But a mortgagee may recover its attorneys'
fees, if the contract permits, against the mortgaged property from
any surplus.
Here,
Id.
the
Security
Instrument,
"Acceleration, Remedies," states:
in
Section
21
entitled
"Insofar as allowed by Section
50{a) {6), Article XVI of the Texas Constitution, Lender shall be
entitled to collect all expenses incurred in pursuing the remedies
provided in this Section 21, including, but not limited to, court
costs, reasonable attorneys'
fees and costs of title evidence." 31
This language makes clear that the Lender, in this case Fannie Mae,
may recover its attorneys' fees incurred in defending its rights as
a lienholder,
insofar as the Texas Constitution permits.
These
fees may be recovered against the property upon a foreclosure sale.
30
Defendants' MSJ, Docket Entry No. 52, p. 8,
31
Docket Entry No. 52-1, p. 25.
-14-
~
17.
After reviewing Counter-Plaintiffs' evidence, the court finds
that Counter-Plaintiffs may recover reasonable attorneys' fees (to
be
identified
in
a
subsequent
motion)
under
the
security
instrument.
III.
Conclusions and Order
For the reasons explained above,
the court concludes that
Johnson has failed to raise a genuine issue of material fact for
trial with regard to any of his alleged claims for relief.
The
court therefore concludes that the Counter-Plaintiffs are entitled
to
judgment
Moreover,
as
a
matter
of
Counter-Plaintiffs
law
on
have
all
of
Johnson's
established
that
claims.
they
are
entitled to summary judgment on their counterclaim for judicial
foreclosure.
Accordingly, Defendants' Amended Motion for Summary
Judgment (Docket Entry No. 52) is GRANTED.
It is further ORDERED that Counter-Plaintiffs are authorized
to foreclose
their lien on the property that secures the Note
indebtedness,
located at 1 East Nichols Street, Bellville, Texas
77418,
and more fully described in Exhibit A to the Texas Home
Equity Security Instrument, (Docket Entry No. 52-1, p. 29) pursuant
to the Loan Agreement and the Texas Property Code
Finally,
GRANTED.
Counter-Plaintiffs'
§
51.002.
motion for attorneys'
fees
is
In foreclosing its lien, Counter-Plaintiffs are entitled
to apply the proceeds from the sale of the property against not
only principal and accrued, unpaid interest, but also against the
-15-
reasonable attorneys'
fees and costs that it has incurred, to be
submitted in a separate filing within 14 days of the entry of this
Memorandum Opinion and Order and supported by affidavit.
will
respond
with
any
objections
within
14
days
of
Johnson
Counter-
Plaintiffs' filing.
SIGNED at Houston, Texas, on
UNITED
-16-
JUDGE
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