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