Molina v. RMS Residential Properties LLC et al

Filing 19

MEMORANDUM AND ORDER entered DENYING 15 MOTION for Extension of Time Discovery & Motions for Summary Judgment. Molina must respond to the summary judgment motion and file any cross-motions no later than December 21, 2018. Specialized Loan may reply and respond no later than January 11, 2019. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ARLETTE MOLINA,
Plaintiff,
VS.
RMS RESIDENTIAL PROPERTIES
LLC, et al.,
Defendants.

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December 06, 2018
David J. Bradley, Clerk

CIVIL ACTION NO. H-17-3659

MEMORANDUM AND ORDER
In December 2017, Molina sued Specialized Loan Servicing LLC; RMS Residential
Properties, LLC; David Sklar; C. Edward Harrel; and Hughes, Watters & Askanase LLP. Molina
alleges that the defendants misrepresented facts to her during settlement negotiations in a previous
case. Specialized Loan Servicing moved for summary judgment, arguing that it was not involved
in the previous case or the settlement agreement, and that Molina submitted no evidence supporting
her allegations. Molina’s response deadline is December 12, 2018. Molina has moved under
Federal Rule of Civil Procedure 56(d) for additional discovery before responding to the motion for
summary judgment or cross-moving for summary judgment. Molina moves to compel Specialized
Loan to produce “the Ragan settlement agreement documents” before she has to respond or crossmove. (Docket Entry No. 15 at 1–2). She has also filed two motions for summary judgment against
Specialized Loan, which set forth conclusory allegations and offer no evidence.
The court denies Molina’s motion for more time to respond to Specialized Loan’s summary
judgment motion and to cross-move for summary judgment. Specialized Loan has submitted the
documents that Molina seeks, the discovery and dispositive motion deadlines have passed, and
Molina has filed motions for summary judgment. The court orders Molina to respond to Specialized

Loan’s motion and to supplement her summary judgment motions no later than December 21, 2018.
The reasons are explained below.
I.

Background
In May 2004, Molina obtained a home mortgage loan for $286,800 from Encore Credit

Corporation. (Docket Entry No. 1-1 at 29). She signed a Promissory Note to repay the mortgage
through monthly payments of $2,102.44. (Id. at 24). Encore acquired an interest in her home under
a Deed of Trust. (Id. at 28–34). Years later, in March 2010, Encore assigned the Promissory Note
and Deed of Trust to RMS Properties. (Docket Entry No. 14-4).
In May 2009, RMS Residential sent Molina a Notice of Default and Intent to Accelerate
because Molina had not made payments since July 2008. (Notice of Filing Pleadings Part 23,
Exhibit 11, Molina v. RMS Residential Properties LLC, No. 15-3221 (Bankr. S.D. Tex. Sept. 3,
2015)). The notices stated that she had 33 days to make the payments she owed. Id. In January
2010, RMS Residential accelerated the mortgage and began foreclosure proceedings because Molina
failed to make any payments. (Notice of Filing Pleadings Part 23, Exhibit 10, Molina, No. 15-3221).
In May 2010, Molina sued RMS Residential in the 295th Judicial District Court of Harris
County, alleging that RMS Residential had sent an unlawful Notice of Default, had an invalid lien
on her property, had reported false credit information, and had misrepresented that it owned the
Promissory Note. (Notice of Filing Pleadings Part 1, Exhibit 1, Molina, No. 15-3221). RMS
Properties made no appearance, and Molina moved for summary judgment. See RMS Residential
Props., LLC v. Molina, No. 14-11-232-cv, 2011 WL 5314526, at *1 (Tex. App.—Houston [14th
Dist.] Nov. 3, 2011, no pet.). In August 2010, the state district court entered summary judgment for
Molina, invalidating RMS Residential’s lien and removing the Promissory Note and Deed of Trust

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“as clouds on” her title. (Notice of Filing Pleadings Part 2, Exhibit 14, Molina, No. 15-3221, at 2).
In October 2010, Molina conveyed the home to Panda Properties Holding Corporation, a
real-estate company owned by her daughter, Amanda Murphy. The transfer was recorded in Harris
County. In November 2010, Molina recorded the summary judgment decision in the Harris County
records. In December, Panda Properties sold Molina’s home to James and Gloria Ragan for
$335,200. (Notice of Filing Pleadings Part 23, Exhibit 13, Molina, No. 15-3221). The sale was
recorded in Harris County.
In February 2011, RMS Residential appealed the state district court’s summary judgment
decision. (Notice of Filing Pleadings Part 2, Exhibit 15, Molina, No. 15-3221). The Texas Court
of Appeals reversed the summary judgment decision, ruling that RMS Properties had not been
adequately served, and remanded the case for further proceedings. See RMS Residential Props.,
2011 WL 5314526, at *2. RMS Residential answered, counterclaimed, and sought judicial
foreclosure. (Notice of Filing Pleadings Part 3, Exhibits 33–34, Molina, No. 15-3221). RMS
Residential asserted claims of fraudulent conveyance, civil theft, and unjust enrichment against
Molina, alleging that she was in default, made material misrepresentations in obtaining the
mortgage, and failed to pay the mortgage with the money from her home’s sale. (Notice of Filing
Pleadings Part 36, Exhibit 10, Molina, No. 15-3221).
James and Gloria Ragan, the couple who purchased Molina’s home, intervened and asserted
a quiet-title claim against RMS Residential, alleging that they purchased the home without notice
of the RMS Residential lien or the pending appeal. (Notice of Filing Pleadings Part 18, Exhibit 11,
Molina, No. 15-3221). The Ragans cross-claimed against Murphy and Panda Properties, asserting
claims for breach of warranty, fraudulent inducement, conspiracy, negligent misrepresentation, and

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unjust enrichment, based on allegations that neither Murphy nor Panda Properties had informed
them of the lien or the appeal. (Notice of Filing Pleadings Part 34, Exhibit 1, Molina, No. 15-3221).
RMS Residential amended the pleadings to assert cross-claims of fraudulent conveyance,
conspiracy, and unjust enrichment against Murphy and Panda Properties. (Notice of Filing
Pleadings Part 19, Exhibit 2, Molina, No. 15-3221). RMS Residential alleged that Murphy and
Panda Properties interfered with its lien and failed to pay the mortgage with the sale money. Id.
Against the Ragans, RMS Residential asserted a counter-claim of fraudulent conveyance. (Notice
of Filing Pleadings Part 19, Exhibit 17, Molina, No. 15-3221).
In September 2015, Molina filed a suggestion of bankruptcy and removed the case to
bankruptcy court, alleging that she had sought bankruptcy in Florida. That same month, RMS
Residential settled the state-court claims against the Ragans for $135,000. The settlement agreement
stated that RMS Residential and the Ragans would dismiss their claims against each other, with
prejudice. (Docket Entry No. 14-6 at 2). As to any judgments obtained against Molina, Panda
Properties, or Murphy, the settlement agreement stated:
To resolve potential disputes respecting collection of such judgments, the Parties
agree that RMS shall be entitled to receive the first $480,322.88 collected (being the
home equity loan balance, not including RMS’s attorney fees). The $480,322.88
shall be calculated net of collection costs and expenses (exclusive of any attorney
fees incurred in collection). After $480,322.88 is collected, the Parties will share the
net collections as follows: 75% to RMS and 25% to the Ragans. If collections reach
an amount sufficient to discharge either Party’s judgments in full, the other party
shall receive all future collections.
(Id.).
A few months later, in December 2015, RMS Residential, Molina, Murphy, and Panda
Properties settled their dispute. RMS Residential released its claims and lien for $150,000 and a
promise of an additional $100,000 over 10 years. (Docket Entry No. 1-1 at 49–50). The parties
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informed the bankruptcy court of the settlement, and the case was dismissed in February 2016.
(Order Dismissing Adversary Case, Molina, No. 15-3221). Throughout the litigation, James H.
Miller represented Molina and Panda Properties; Abhijit Modak represented Murphy; Edward
Harrell of Hughes Watters & Askanase represented RMS Residential; and Christopher Conry and
Jude T. Barreneche represented the Ragans. David Sklar was RMS Residential’s managing director.
In July 2017, Molina sued RMS Residential, Specialized Loan Servicing, David Sklar,
Edward Harrell, and Hughes Watters & Askanase in the 295th Judicial District Court of Harris
County. (Docket Entry No. 1-1 at 6). Molina alleged that RMS Residential released its lien on her
home in its settlement with the Ragans, kept that settlement secret, and misrepresented to her that
it still possessed the lien during their settlement negotiations. (Id. at 9–13). She alleged that the
Ragans said nothing about the settlement and that, in December 2015, David Sklar had told her that
RMS Residential had not reached a settlement with the Ragans. (Id. at 12). In the settlement
agreement, Molina alleged, the Ragans agreed to help RMS Residential in the litigation for a portion
of the recovery. (Id. at 12). Against each defendant, Molina asserted claims of fraud, fraudulent
inducement, extrinsic fraud, civil theft, conversion, conspiracy to commit fraud, breach of fiduciary
duty, negligent misrepresentation, unjust enrichment, and breach of contract. (Id. at 13–20). Molina
attached to her state-court petition the Promissory Note, Deed of Trust, her settlement with RMS
Residential, Murphy’s and Panda Properties’s settlement with RMS Residential, and RMS
Residential’s release of the Deed of Trust. (Id. at 23–74). She did not serve RMS Residential,
David Sklar, Edward Harrell, or Hughes Watters & Askanase, and none appeared.
Specialized Loan removed the case to federal court. (Docket Entry No. 1). It denied each
allegation and raised a number of affirmative defenses. (Docket Entry No. 1-1 at 75–76). In

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November 2018, Specialized Loan moved for summary judgment, arguing that it was not a party to
the previous litigation or the settlements; that neither David Sklar, Edward Harrell, nor Hughes
Watters & Askanase had represented it; and that RMS did not release its lien in the Ragan
settlement. (Docket Entry No. 14 at 11, 14–15). As to the civil theft and conversion claims,
Specialized Loan contended that it had not wrongfully taken or withheld money from Molina and
that she had not requested an accounting. (Id. at 15–16). Specialized Loan argued that, under Texas
law, no fiduciary relationship exists between a mortgage servicer and a borrower. (Id. at 19–20).
Specialized Loan submitted documents supporting its arguments, including the settlement agreement
between RMS Residential and the Ragans. (Docket Entry Nos. 14-1–14-17).
II.

Analysis
“Rule 56(d) motions for additional discovery are ‘broadly favored and should be liberally

granted’ because the rule is designed to ‘safeguard non-moving parties from summary judgment
motions that they cannot adequately oppose.’” Am. Family Life Assurance Co. of Columbus v. Biles,
714 F.3d 887, 894 (5th Cir. 2013) (quoting Raby v. Livingston, 600 F.3d 552, 561 (5th Cir 2010));
see Wichita Falls Office Assocs. v. Banc One Corp., 978 F.2d 915, 920 (5th Cir. 1992) (“[W]hen a
party is seeking discovery that is germane to the pending summary judgment motion it is inequitable
to pull out the rug from under them by denying such discovery.”). If the moving party identifies “a
specific piece of evidence that would likely create a material fact issue,” the court must grant the
motion. Smith v. Reg’l Transit Auth., 827 F.3d 412, 423 (5th Cir. 2016) (citing Biles, 714 F.3d at
895).
The party “requesting Rule 56(d) relief ‘may not simply rely on vague assertions that
additional discovery will produce needed, but unspecified, facts.’” Biles, 714 F.3d at 894 (quoting

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Raby, 600 F.3d at 561). It “must ‘set forth a plausible basis for believing that specified facts,
susceptible of collection within a reasonable time frame, probably exist and indicate how the
emergent facts, if adduced, will influence the outcome of the pending summary judgment motion.”
Id. (quoting Raby, 600 F.3d at 561). “[A] plaintiff’s entitlement to discovery prior to a ruling on a
motion for summary judgment is not unlimited, and may be cut off when the record shows that the
requested discovery is not likely to produce the facts needed by the plaintiff to withstand a motion
for summary judgment.” Washington v. Allstate Ins. Co., 901 F.2d 1281, 1285 (5th Cir. 1990).
Molina argues that Specialized Loan refused to produce “the Ragan settlement agreement
documents.” (Docket Entry No. 15 at 1–2). Specialized Loan submitted the Ragan settlement
agreement as part of the record in November 2018. (Docket Entry No. 14-6). The settlement
agreement shows that RMS Residential and the Ragans released their legal claims against one
another. It says nothing about RMS releasing its lien on Molina’s home. Molina has neither
identified other “settlement agreement documents” nor explained how any such documents provide
facts that she needs to withstand Specialized Loan’s motion for summary judgment. Molina
mentions that she has heart and pancreas issues, but she does not elaborate on how those issues
affect this case’s deadlines, and she is clearly capable of pursuing litigation.
Because Molina has relied on “vague assertions” that discovery will reveal “needed, but
unspecified, facts” from unidentified documents, her motion for further discovery and additional
time to respond to the motion for summary judgment is denied. Biles, 714 F.3d at 894 (quotation
omitted). The court denies Molina’s request to compel Specialized Loan to produce “the Ragan
settlement agreement documents,” because the record contains the Ragan settlement agreement and
Molina has not identified any other relevant documents.

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III.

Order
Molina must respond to the summary judgment motion and file any cross-motions no later

than December 21, 2018. Specialized Loan may reply and respond no later than January 11, 2019.

SIGNED on December 6, 2018, at Houston, Texas.
______________________________________
Lee H. Rosenthal
Chief United States District Judge

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