Longino v. Home Loan Corporation, et al.

Filing 28

MEMORANDUM OPINION AND ORDER granting 22 MOTION for Summary Judgment On All Claims and Counterclaims and Brief in Support and Request for Final Judgment and Order of Foreclosure, denying as moot 26 Motion to Strike. (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
CATHERYN LONGINO,
Plaintiff,
V.

SELECT PORTFOLIO SERVICING,
INCORPORATED; U.S. BANK, N.A.,
AS TRUSTEE FOR SECURITIZED
TRUST HOME EQUITY ASSET TRUST
2006-2 TRUST; and MORTGAGE
ELECTRONIC REGISTRATION SYSTEM
("MERS"),
Defendants.

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§

June 05, 2019
David J. Bradley, Clerk

CIVIL ACTION NO. H-18-1418

MEMORANDUM OPINION AND ORDER

Plaintiff

Catheryn

Longino

Select Portfolio Servicing,

Inc.

("Plaintiff")
("SPS");

sued

defendants

U.S. Bank,

N.A.,

As

Trustee for Securitized Trust Home Equity Asset Trust 2006-2 Trust
(the "Trustee"); and Mortgage Electronic Registration Systems, Inc.
("MERS") (collectively, "Defendants") alleging that Defendants are
improperly attempting to foreclose on her real property located at
3373 Ozark Street, Houston, Texas 77021 (the "Property") . 1

Pending

The Property is more particularly described in the subject
Texas Home Equity Security Instrument (the "Security Instrument")
recorded in the real property records of Harris County, Texas, in
Instrument Number Y771528 as:
1

Lot Forty (40), and the adjoining West Fifteen (15) feet
of Lot Forty-One (41), in Block Forty-Nine (49), of the
amended plat of Block Forty-Nine (49), of Riverside
(continued...)

before the court is Defendants' Motion for Summary Judgment on All
Claims and Counterclaims and Brief in Support ("Defendants' MSJ")
(Docket

Entry

No.

22).

For

the

reasons

explained

below,

Defendants' MSJ will be granted.
I.

Factual and Procedural Background

On September 7, 2005, Plaintiff executed a $214,400.00 Texas
Home Equity Note (the "Note") in favor of her original lender, Home
Loan Corporation d/b/a Expanded Mortgage Credit
Lender").2

(the "Original

The Note was secured by the Security Instrument, 3 which

established a first lien on the Property.4

During the closing

Plaintiff signed a Texas Home Equity Affidavit and Agreement (the
"Affidavit"). 5

Plaintiff also signed a Texas Home Equity Fair

Market Value Acknowledgment ("FMV Acknowledgment"), in which she

1 ( ••• continued)

Terrace Section Nine (9), a subdivision in Harris County,
Texas, according to the map or plat thereof recorded in
Volume 998, Page 135 of the Deed Restrictions of
Harris County, Texas.
See Plaintiff's First Amended Complaint ("Amended Complaint"),
Docket Entry No. 15, p. 3; Texas Home Equity Adjustable Rate Note
("Note"), Exhibit 1-A to Declaration of Select Portfolio Servicing,
Inc. ("SPS Declaration"), Docket Entry No. 22-1, p. 4.
2

The Note and the Security
collectively herein as the "Loan."
3

Instrument

are

referred

to

See Security Instrument, Exhibit 1-B to SPS Declaration,
Docket Entry No. 22-1, p. 9.
4

See Affidavit, Exhibit 1-C to SPS Declaration, Docket Entry
No. 22-1, pp. 25-28.
5

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acknowledged that the value of the Property upon closing was
$268,000.00. 6

The Original Lender ordered an appraisal prior to

closing that confirmed that the fair market value of the Property
was $268,000.00. 7

On February 22, 2010, the Loan was assigned to

the Trustee by MERS as nominee of the Original Lender. 8

On that

same date Plaintiff and the Trustee executed a Home Affordable
Modification Agreement ("Loan Modification Agreement").9
the

current

Mortgage

Servicer

and

Attorney-in-Fact

SPS is
for

the

Trustee. 10
The Trustee and SPS allege that Plaintiff defaulted on the
Loan and that all payments since July 1, 2012, are past due.11

SPS

sent a Notice of Default to Plaintiff via certified mail on
April 3, 2014.12

A Notice of Acceleration was mailed to Plaintiff

See FMV Acknowledgment, Exhibit 1-D to SPS Declaration,
Docket Entry No. 22-1, p. 29.
6

See Appraisal of Real Property ("Appraisal"), Exhibit 1-E to
SPS Declaration, Docket Entry No. 22-1, pp. 31-45.
7

See Assignment of Deed of Trust/Transfer of Lien ("Assignment
by Original Lender to Trustee"), Exhibit 1-F to SPS Declaration,
Docket Entry No. 22-1, p. 46.
8

See Loan Modification Agreement, Exhibit
Declaration, Docket Entry No. 22-1, p. 48.

1-G

to

SPS

See Limited Power of Attorney, Exhibit
Declaration, Docket Entry No. 22-1, p. 69.

1-J

to

SPS

9

10

MSJ, Docket Entry No. 22, pp. 1, 3; Demand
11See Defendants'
Letter-Notice of Default ("Notice of Default"), Exhibit 1-H to SPS
Declaration, Docket Entry No. 22-1, p. 57.
See Notice of Default, Exhibit 1-H to SPS Declaration, Docket
Entry No. 22-1, pp. 55-56.
12

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via certified mail on February 5, 2018. 13

The amount due under the

Loan as of March 2, 2019, was $369,486.11, and per diem interest
continues to accrue in the amount of $16.66 per day from March 2,
2019, until the amount due on the Loan is paid. 14
On March 9, 2018, the Trustee filed suit in the 133rd District
Court

of

Harris

process. 15

County,

Texas,

to

initiate

the

foreclosure

The Trustee's lawsuit was dismissed in accordance with

the Texas Rules of Civil Procedure when Plaintiff filed this action
in the 334th District Court of Harris County, Texas. 16 On April 10,
2018, the action was transferred to the 133rd District Court. 17
Defendants timely removed the action on May 3, 2018. 18

Defendants

filed their MSJ on February 22, 2019, arguing that the court should
grant summary judgment for Defendants because no genuine issues of
material fact remain with respect to the claims in Plaintiff's
Amended

Complaint. 19

Plaintiff

filed

a

response

contesting

See Notice of Maturity/Acceleration of Texas Non-Recourse
Loan ("Notice of Acceleration"), Exhibit 1-I to SPS Declaration,
Docket Entry No. 22-1, pp. 64-66.
1
3

See Payoff Statement sent to Plaintiff by SPS [January 31,
2019], Exhibit 1-K to SPS Declaration, Docket Entry No. 22-1,
p. 70.
14

15

See Amended Complaint, Docket Entry No. 15, p. 3.

See Defendants' Notice of Removal
Docket Entry No. 1, p. 1.
16

( "Notice of Removal") ,

1
7

See id.

18

See id. at 1-2.

19

See Defendants' MSJ, Docket Entry No. 22.
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Defendants' MSJ on March 29, 2019, and attached a number of
documents as evidence.20

Defendants filed a reply and a Motion to

Strike Plaintiff's Summary Judgment Evidence on April 4, 2019.21
II.

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." Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994) (en bane) (per curiam) (quoting
See Plaintiff's Response to "Defendant's Motion for Summary
Judgment on all Claims and Counterclaims and Brief in Support"
("Plaintiff's Response"), Docket Entry No. 25.
20

See Defendants' Reply Brief in Support of Summary Judgment
and Objections to and Motion to Strike Plaintiff's Summary Judgment
Evidence ("Defendants' Reply and Motion to Strike"), Docket Entry
No. 26. Defendants' Motion to Strike will be denied as moot. The
inadmissible documents attached to Plaintiff's Response did not
materially affect the court's analysis.
21

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Celotex, 106 S. Ct. at 2553).

"If the moving party fails to meet

this initial burden, the motion must be denied, regardless of the
nonmovant's response."

Id.

If the moving party meets this burden,

Rule 56(c) requires the nonmovant to go beyond the pleadings and
show

by

affidavits,

admissions on file,

depositions,

answers

to

interrogatories,

or other admissible evidence that specific

facts exist over which there is a genuine issue for trial.

Id.

The nonmovant "must do more than simply show that there is some
metaphysical doubt as to the material facts."

Matsushita Electric

Industrial Co., Ltd. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356
(1986).
In reviewing the evidence "the court must draw all reasonable
inferences in favor of the nonmoving party, and it may not make
credibility determinations or weigh the evidence."

Reeves v.

Sanderson Plumbing Products, Inc., 120 S. Ct. 2097, 2110 (2000).
The court resolves factual controversies 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.
III.

Analysis

Plaintiff pleads claims against (1) the Trustee and SPS for
breach of contract and (2) the Trustee, SPS, and MERS for quiet
title.22

Plaintiff also seeks declarations (1) that SPS and the

see Amended Complaint, Docket Entry No. 15, pp. 6, 9.
Plaintiff's Response includes briefing discussing a number of
(continued ...)
22

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Trustee failed to cure their violation of Article 16, § 50(a)(6)(B)
of the Texas Constitution and (2) that SPS, the Trustee, and MERS
lack standing to foreclose on the Property. 23
A.

Breach of Contract

The

Texas

Constitution

allows

homeowners

to

voluntarily

encumber their homesteads with a lien in return for an extension of
credit.

See

Tex.

Const.

art.

XVI

§

50(a)(6).

The

Texas

Constitution imposes various requirements on such home equity
See id.

loans.

§

50(a)(6)(A)- (Q).

For example, the amount of a

home equity loan may not exceed eighty percent of the fair market
value of the homestead to which it is attached (the "80% Rule").
See id.

§

50(a)(6)(B).

Plaintiff claims that the Trustee and SPS breached the terms
of

the

Loan

Constitution. 24

by

failing

to

cure

a

violation

of

the

Texas

She alleges that the Loan violates the 80% Rule

because the amount financed through the Loan was more than 80 % of
the value of the Property at the time the Loan was executed. 25

At

continued)
causes of action not properly pled in her Amended Complaint,
including common law fraud, wrongful foreclosure, unconscionable
contract, breach of fiduciary duty, slander of title, and
See Plaintiff's
violations of the Texas Debt Collection Act.
Response, Docket Entry No. 25, pp. 11-21.
Plaintiff failed to
assert these claims in her Amended Complaint and cannot properly
add claims to this action in response to Defendants' MSJ.
22 ( •••

See Amended Complaint, Docket Entry No. 15, pp. 5-6 (standing
to foreclose), pp. 8-9 (violation of the Texas Constitution).
23

24

25

See Amended Complaint, Docket Entry No. 15, pp. 4, 6-10.
See id. at 4.
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closing, Plaintiff signed the FMV Acknowledgment, in which she
acknowledged that the fair market value of the Property upon
closing was $268,000.00. An appraisal of the Property stated that
the value of the Property was $268,000.00.26

The Loan was for

$214,400.00, which is exactly 80% of $268,000.00. 27
"Lenders may conclusively rely on a written acknowledgment by
the property owner as to the fair market value of the homestead
when it matches the value estimate in an appraisal prepared in
accordance with state requirements for an extension of credit."
Gonzalez v. U.S. Bank National Association as Trustee for RASC
2004KS12,

By and Through its servicer-in-fact GMAC Mortgage,

L.L.C., 548 F. App'x 118, 119 (5th Cir. 2013) (citing Tex. Const.
art. XVI§ SO(h)).

Both the appraisal and the FMV Acknowledgment

signed by Plaintiff recognize that the value of the Property upon
closing was $268,000.00.

Because the Loan was not for more than

80% of the fair market value of the Property, it complied with
Article 16 § 50 (a) (6) (B) of the Texas Constitution.

Plaintiff has

failed to present any evidence to corroborate her assertion that
the Loan violates the 80% Rule. No genuine issues of material fact
therefore remain with respect to Plaintiff's breach of contract
claim against SPS and the Trustee.

SPS and the Trustee are

See Appraisal, Exhibit 1-E to SPS Declaration, Docket Entry
No. 22-1, pp. 31-45.
26

Note, Exhibit 1-A to SPS Declaration, Docket Entry
27 See
No. 22-1, p. 4 (listing the principal balance of the Note as
$214,400.00).
-8-

entitled to summary judgment on Plaintiff's breach of contract
claim and Plaintiff's corresponding claim for a declaration that
SPS and the Trustee violated the Texas Constitution.
B.

Quiet Title

A suit to remove cloud or to quiet title 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) (quoting Bell
v. Ott, 606 S.W.2d 942, 952 (Tex. Civ. App. -- Waco 1980, writ
ref'd n.r.e.)). The plaintiff has the burden of proof to establish
To do so "the

his superior equity and right to relief.
plaintiff must show

(1) an interest in a specific property,

(2) title to the property is affected by a claim by the defendant,
and

(3)

the

claim,

unenforceable."

although

facially

valid,

is

invalid

or

Vernon v. Perrien, 390 S.W.3d 47, 61-62 (Tex. App.

-- El Paso 2012, no pet.) (citation omitted).

The plaintiff must

recover on the strength of his own title, not on the weakness of
the defendant's title.

Hurd v. BAC Home Loans Servicing, LP, 880

F. Su�p. 2d 747, 767 (N.D. Tex. 2012); Ventura v. Wells Fargo Bank,
N.A., Civil Action No. 4:17-075-A, 2017 WL 1194370, at *2 (N.D.
Tex. March 30, 2017; Martin v. Amerman, 133 S.W.3d 262, 265 (Tex.
2004) (citation omitted).
Plaintiff

asserts

Trustee, and MERS.

a

quiet

title

claim

against

SPS,

the

Plaintiff alleges that "a controversy exists
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whether [the Trustee], SPS, and MERS are the current valid holders
or owners

(or agents of the current holder or owner) of the

underlying note or the current valid assignees of the [Security
Instrument]

(or agents of the current valid assignee of the

[Security Instrument]) with standing to foreclose under Texas
law." 28

Plaintiff argues that the Trustee and SPS lack standing to

foreclose on the Property and that the Trustee's lien on the
property is invalid.
While a mortgagee can be the original holder of a security
interest, a mortgagee can also be the most recent assignee of
record of a security interest.

Tex. Prop. Code § 51.0001(4). The

Trustee is the most recent assignee of record of the Security
Instrument and holder of the Note, and is therefore the current
mortgagee on the Loan. 29

As the mortgagee, the Trustee has all the

rights in the Property that the Original Lender held at the time of
the assignment, including the right to foreclose in the event that
the borrower defaults. 30
To the extent that Plaintiff challenges the Original Lender's
ability to assign the Loan to the Trustee, Plaintiff lacks standing
28

See Amended Complaint, Docket Entry No. 15, p. 5.

See Note, Exhibit 1-A to SPS Declaration, Docket Entry
No. 22-1, p. 4; Security Instrument, Exhibit 1-B to SPS
Declaration, Docket Entry No. 22-1, p. 9; Assignment by Original
Lender to Trustee, Exhibit 1-F to SPS Declaration, Docket Entry
No. 22-1, p. 46.
29

See Security Instrument, Exhibit 1-B to SPS Declaration,
Docket Entry No. 22-1, pp. 17-21.
30

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to contest the assignment.

"[U]nder Texas law, facially valid

assignments cannot be challenged for want of authority except by
the defrauded assignor."

Reinagel v. Deutsche Bank National Trust

Co., 735 F.3d 220, 228 (5th Cir. 2013). Plaintiff, as the borrower
on the Loan, therefore has no standing to challenge the Original
Lender's assignment to the Trustee.
Plaintiff has failed to present any evidence showing that the
Trustee's lien is invalid.

Plaintiff's quiet title claim against

the Trustee, and SPS in its capacity as the Trustee's servicer,
fails because the Trustee has a valid lien on the Property.
Plaintiff has also failed to present any factual allegations
supporting a quiet title claim against MERS.

MERS is an online

mortgage registration database and claims no interest in the
Property.

The Trustee, and SPS as its servicer, have standing to

foreclose on the Property,

and Plaintiff is not entitled to a

declaration that the Trustee or SPS lacks standing to foreclose.
Defendants
Plaintiff's

are

therefore

quiet

entitled

to

summary

judgment

on

title claim and corresponding claim for a

declaration that Defendants lack standing to foreclose.
C.

The Trustee's Request for an Order of Foreclosure

The Trustee argues that it is entitled to an order authorizing
foreclosure and a declaration of its right to foreclose on the
Property. 31

"Under Texas law, lenders have a substantive right to

31 See Defendant's Original Counterclaims for Order Authorizing
Judicial Foreclosure, Docket Entry No. 10, p. 4.

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elect judicial or nonjudicial foreclosure in the event of a
default."

Douglas v. NCNB Texas National Bank, 979 F.2d 1128, 1130

(5th Cir. 1992).

"To foreclose under a security instrument in

Texas with a power of sale,
following:

(1) a debt exists; (2) the debt is secured by a lien

created under Article 16,
(3)

plaintiff[

instrument;

the lender must demonstrate the

(4)

is]

in

§ S0(a)(6) of the Texas Constitution;
default

plaintiff[]

under

received

the

note

notice

and

of

security

default

and

acceleration;" and (5) plaintiff is not a member of the National
Guard or United States Military and has not applied for relief
under the Soldier's and Sailor's Relief Act of 1940.

Tex. Prop.

Code Ann. § 51.002; Amaro v. Bear Stearns Residential Mortgage
Corporation, No. 1:15-CV-74, 2016 WL 6775504, at *4 (S.D. Tex.
March 31, 2016).
Defendants have established that a debt exists and that the
debt is a secured lien created under Article 16, § S0(a)(6) of the
Texas

Constitution.32

Defendants

Plaintiff is in default. 33

have

also

established

that

The Texas Property Code requires the

mortgage servicer to serve a debtor in default with a written
notice by certified mail stating that the Note is in default and
providing at least twenty days to cure the deficiency.

Tex. Prop.

See Note, Exhibit 1-A to SPS Declaration, Docket Entry
No. 22-1, p. 4; Security Instrument, Exhibit 1-B to SPS
Declaration, Docket Entry No. 22-1, p. 9.
32

See Notice of Default, Exhibit 1-H to SPS Declaration, Docket
Entry No. 22-1, p. 56.
33

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Code Ann.

§

51.002(d).

April 3, 2014.34
February 5,

Notice of Default was sent to Plaintiff on

A Notice of Acceleration was sent to Plaintiff on

2018. 35

All notices required by Texas law were

therefore sent to Plaintiff, and Plaintiff was given sufficient
time to cure her default.
member

of

the

Plaintiff does not allege that she is a

military.

Because

Defendants

have

presented

sufficient evidence to satisfy the requirements for an order of
foreclosure under the Texas Property Code, their request for a
judgment authorizing foreclosure will be granted.
IV.

Conclusion and Order

For the reasons explained above, no genuine issues of fact
remain with respect to Plaintiff's breach of contract claim against
SPS and the Trustee and Plaintiff's quiet title claim against SPS,
the Trustee, and MERS.

Because Plaintiff's substantive claims

fail, Plaintiff is not entitled to declaratory relief. 36 Defendants
are entitled to summary judgment on all of Plaintiff's claims.
Defendants have also presented sufficient evidence that they are
entitled to a judgment authorizing foreclosure.

See Notice of Acceleration, Exhibit 1-I to SPS Declaration,
Docket Entry No. 22-1, p. 65.
35

Where all substantive underlying claims have been dismissed,
a claim for declaratory judgment cannot survive. Ayers v. Aurora
Loan Services, L.L.C., 787 F. Supp. 2d 451, 457 (E.D. Tex. 2011).
Because Defendants are entitled to summary judgment on all of
Plaintiff's substantive claims, Plaintiff's claim for declaratory
relief is also subject to dismissal.
36

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Defendants'

Motion for Summary Judgment on All Claims and

Counterclaims (Docket Entry No. 22) is GRANTED.

Defendants' Motion

to Strike Plaintiff's Summary Judgment Evidence
No. 26) is DENIED as MOOT.

(Docket Entry

Defendants' requested Final Judgment

and Order of Foreclosure (Docket Entry No. 22-3) is GRANTED.
SIGNED at Houston, Texas, on this the 5th day of June, 2019.

UNITED STATES DISTRICT JUDGE

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