Logan v. Carrington Mortgage Services, LLC

Filing 104

MEMORANDUM OPINION AND ORDER denying for lack of jurisdicton 94 Defendant's MOTION to Enforce Settlement Agreement; granting 95 Plaintiff's MOTION to Vacate 83 Order of Dismissal. Plaintiffs' sole remaining claim for wrongful foreclosure is dismissed as moot.(Signed by Judge Gray H Miller) Parties notified.(rguerrero, 4)

Case 4:18-cv-03743 Document 104 Filed on 05/09/22 in TXSD Page 1 of 6
United States District Court
Southern District of Texas

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JOCK 0. LOGAN, et al.,

Plaintiffs,
V.

CARRINGTON MORTGAGE SERVICES, LLC,

Defendant.

§
§
§
§
§
§
§
§
§

ENTERED
May 09, 2022
Nathan Ochsner, Clerk

CIVIL ACTION H-18-3743

MEMORANDUM OPINION AND ORDER

Pending before the court are defendant Carrington Mortgage Services, LLC's
("Carrington") motion to enforce the settlement agreement (Dkt. 94) and plaintiff Jock 0. Logan's
motion to vacate the conditional order of dismissal and reinstate the case (Dkt. 95).

After

reviewing the motions, responses, replies, and the applicable law, the court is of the opinion that
Carrington's motion should be DENIED· for lack of jurisdiction, Logan's motion should be
GRANTED, and the plaintiffs' remaining claim should be DISMISSED AS MOOT.

I. BACKGROUND
This is a wrongful foreclosure dispute initially filed in the 80th Judicial District Court for
Harris County, Texas, and removed to this court on the basis of diversity jurisdiction. Dkt. 1.
Logan's first amended complaint asserted claims for breach of contract, wrongful foreclosure,
enforcement of an equitable right of redemption, quiet title, fraud, declaratory judgment, and a
permanent injunction. Dkt. 16. The court adopted the Magistrate Judge's Memorandum and
Recommendation in full and granted summary judgment to Carrington on all claims except the

Case 4:18-cv-03743 Document 104 Filed on 05/09/22 in TXSD Page 2 of 6

wrongful foreclosure claim. Dk.ts. 35, 39. Logan has elected to pursue a rescission remedy for the
wrongful disclosure claim rather than damages. 1 Dkts. 16 ~ 29; 35 at 13.
The parties entered into an oral settlement agreement, and the material terms of that
agreement were read into the record before the Magistrate Judge on November 9, 2021. Dk.ts. 82;
95, Ex. 1. On November 10, 2021, the court issued a conditional order of dismissal stating, "the
Court dismisses this case without prejudice to reinstatement of plaintiffs' claims if any party
represents to the Court within 60 days from the date of this order that the settlement could not be
completely documented." Dkt. 83. Later, the court extended the deadline to document the
settlement agreement allowing "an additional 60 days from [January 18, 2022] to file documents
dismissing this matter with prejudice." Dkt. 86. However, the parties continued to disagree, and
Carrington filed a motion to enforce the settlement agreement requesting that the court declare it
has substantially performed its portion of the settlement agreement, award attorney's fees, and
dismiss the case with prejudice.. Dkt. 94. Logan responded by filing his motion to vacate the
conditional order of dismissal and i:einstate the case. Dkt. 95.
The court held a hearing on these two motions on April 28, 2022. Dkt. 103. There, the
parties confirmed the material terms of the settlement agreement and the actions they have taken
towards its fulfillment. See id. The material terms of the settlement were: (1) a recission of the
foreclosure sale; (2) a modification of the loan with a new principal of $137,000 for a term of 360
months at 3% interest; (3) Carrington would pay $49,000 to Logan; (4) Carrington would send

Under Texas law, the plaintiff in a wrongful foreclosure suit "must elect between damages
and recission as inconsistent remedies." Mike Baggett, Texas Practice Series Vol. 15, Texas
Foreclosure: Law and Practice § 2.150 (2001) (citing Owens v. Grimes, 539 S.W.2d 387, 390
(Tex.App.-Tyler 1976, writ refd n.r.e:)).
2

Case 4:18-cv-03743 Document 104 Filed on 05/09/22 in TXSD Page 3 of 6

updated information to credit reporting agencies; (5) Carrington would permit the disbursement of
$11,263.15 of insurance proceeds according to FHA and insurance regulations; (6) Carrington will
make reasonable efforts to submit an insurance claim for damages from Hurricane Harvey; (7)
mutual agreement to confidentiallty and non-disparagement; and (8) dismissal of all claims with
prejudice. Dkt. 95, Ex. 1.
The primary point of contention at the hearing was whether Carrington' s proposed loan
modification document added additional material terms in violation of the settlement agreement.
See Dkt. 103. Critically, the parties agreed at the hearing that Carrington had rescinded the
foreclosure sale,2 Logan had received the $49,000 payment,3 Carrington had submitted updated
information to the credit reporting agencies, 4 Carrington had attempted to schedule an inspection
of Logan's property in order to release the $11,263.15 in insurance funds, 5 and Carrington had
taken steps to investigate a potential, additional insurance claim. 6 See id. Further, Carrington's
counsel offered a modified loan modification document at the hearing that removed two
paragraphs of boilerplate terms that Logan had previously found objectionable. See id. However,
Logan was still unwilling to sign this document. See id. The court gave the parties ten days to

2

Carrington filed the record of the rescission as an exhibit to its motion. Dkt. 94, Ex. B.
Carrington filed an email where Logan confirmed receipt of the $49,000 on January 14,
2022, as an exhibit to its motion. Dkt. 94, Ex. C.
4
Carrington filed a copy of their request to update Logan's credit report as an exhibit to its
motion. Dkt. 94, Ex. D.
5
Carrington filed a January 19, 2022, email from Carrington's counsel to Logan to schedule
an inspection of the property as an exhibit to its reply brief. Dkt. 99, Ex. C.
6
Carrington represents that such a claim was not possible because of a previous claim in
2017 was approved and funds were dispersed to Logan-Logan had endorsed the check over to
the Lane Law Firm (plaintiffs' former counsel). Dkt. 94. However, Carrington was not aware of
this claim until this investigation even though Carrington was listed as the payee and did not
endorse the check. Id. Carrington filed the check as an exhibit in its motion. Dkt. 94, Ex. E.

3

3

Case 4:18-cv-03743 Document 104 Filed on 05/09/22 in TXSD Page 4 of 6

resolve the dispute before ruling on the instant motions, and that deadline has passed without an
agreement. See id

II. LEGAL STANDARD
A. Jurisdiction to Enforce a Settlement Agreement
"Enforcement of the settlement agreement ... is more than just a continuation or renewal
of the dismissed suit, and hence requires its own basis for jurisdiction." Kokkonen v. Guardian
Life Ins. Co. ofAm., 511 U.S. 375, 378, 114 S. Ct. 1673 (1994). A district court retains jurisdiction
over a settlement agreement when "the parties' obligation to comply with the terms of the
settlement agreement had been made part of the order of dismissal." Id at 381. The Supreme
Court "specified two ways in which a court may make a settlement agreement part of its dismissal
order: 'either by separate provision (such as a provision ~retaining jurisdiction' over the settlement
agreement) or by incorporating the terms of the settlement agreement in the order."' Hosp. House,
Inc. v. Gilbert, 298 F.3d 424, 430 (5th Cir. 2002) (quoting Kokkenen, 511 U.S. at 380-81). The
court may consider the question ofjurisdiction sua sponte. Ruhrgas AG v. Marathon Oil Co., 526
U.S. 574, 583, 119 S. Ct. 1563 (1999).
B. Mootness
"A claim is moot when a case or controversy no longer exists between the parties."
Brinsdon v. McAllen Indep. Sch. Dist., 863 F.3d 338, 345 (5th Cir. 2017).

Mootness is a

'

justiciability doctrine and "a federal court is obligated to raise the issue, sua sponte, if the facts
suggest mootness notwithstanding the silence of the parties with respect to the issue." Dailey v.
Vought Aircraft Co., 1.41 F.3d 224, 227 (5th Cir. 1998). For the court to have jurisdiction, the
parties must have "a personal stake in the outcome of the controversy." US. Parole Comm'n v.
4

Case 4:18-cv-03743 Document 104 Filed on 05/09/22 in TXSD Page 5 of 6

Geraghty, 445 U.S. 388, 397, 100 S. Ct. 1202 (1980) (quoting Baker v. Carr, 369 U.S. 186, 204,
82 S. Ct. 691 (1962)). The personal stake requirement ensures "that federal courts are presented
with disputes they are capable of resolving . ; . [and] 'must continue throughout its existence
(mootness)."' Id (quoting Monaghan, Constitutional Adjudication: The Who and When, 82 Yale
L.J. 1363, 1384 (1973)). ·

Ill. ANALYSIS
A. Carrington's Motion to Enforce the Settlement Agreement
The court did not include a provision retaining jurisdiction in its conditional order of
dismissal. See Dkt. 83. Thus, for the court to have jurisdiction to enforce the settlement agreement,
the conditional order of dismissal must "embody the terms of the agreement within the dismissal
order so that any violation of the terms would also be a violation of the court's order."

SmallBizPros, Inc. v. MacDonald, 618 F.3d 458,464 (5th Cir. 2010). The court only required that
the parties completely document the settlement agreement, and the terms of the agreement itself
are not implicated. See Dkt. 83. Therefore, the court lacks jurisdiction to enforce the settlement
agreement.

B. Logan's Motion to Vacate the Conditional Order of Dismissal
Logan timely represented to the court that the settlement had not been completely
documented. ·Dkt. 95. Specifically, the parties have not executed a loan modification document.

See Dkt. 103. Therefore, under the court's conditional order of dismissal, Logan is entitled to
reinstatement. See Dkt. 83.

5

Case 4:18-cv-03743 Document 104 Filed on 05/09/22 in TXSD Page 6 of 6

C. Mootness of the Remaining Claim
After summary judgment, the sole claim remaining is wrongful foreclosure seeking
rescission of the foreclosure sale. See Dkt. 39. The parties agree that the rescission has already
occurred. Dkts. 94, Ex. B; 103. Even without a formal settlement agreement, Carrington's action
in rescinding the foreclosure sale renders the claim moot. See Vela v. City of Houston, 276 F.3d
659, 682-83 (5th Cir. 2001) (holding that claims were moot after the district court entered partial
summary judgment without setting an amount; and prior to the entry of final judgment, the
defendant city adopted ordinances to pay the amount demanded without a formal settlement
agreement); see also 13B Wright & Miller, Federal Practice and Procedure§ 3533.2 (3d ed. 2008)
("[A ]n offer to settle for all the relief the plaintiff might win by judgment may moot the action.
Formal tender may be required to ensure that the offer in fact will be made good."). Therefore,
there is no longer a case or controversy between the parties, and the court lacks jurisdiction to hear ·
Logan's case. See Brinsdon,_863 F.3d at 345.

IV. CONCLUSION
For the reasons given above, Carrington's motion to enforce the settlement agreement
(Dkt. 94) is DENIED for lack of jurisdiction. Logan's motion to vacate the conditional order of
dismissal (Dkt. 95) is GRANTED. Finally, the plaintiffs' sole remaining claim for wrongful
foreclosure is DISMISSED AS MOOT. The court will issue a final judgment concurrently with
this memorandum opinion and order.
Signed at Houston, Texas on May 9, 2022.

6