Shackelford v. Ocwen Loan Servicing, LLC
Filing
11
OPINION AND ORDER ON REMAND. This case is remanded to the 127th Judicial District Court of Harris County, Texas. No action is taken on the pending motion for summary judgment by Ocwen Loan Servicing, LLC. Dkt 9. Case terminated on 07/19/2021.(Signed by Judge Charles Eskridge) Parties notified.(jengonzalez, 4)
Case 4:19-cv-01540 Document 11 Filed on 07/19/21 in TXSD Page 1 of 6
United States District Court
Southern District of Texas
ENTERED
July 19, 2021
Nathan Ochsner, Clerk
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ALTHEA
SHACKELFORD
Plaintiff,
vs.
OCWEN LOAN
SERVICING LLC,
Defendant.
§ CIVIL ACTION NO.
§ 4:19-cv-01540
§
§
§
§ JUDGE CHARLES ESKRIDGE
§
§
§
§
§
OPINION AND ORDER ON REMAND
This action is remanded to state court. Supplemental
jurisdiction no longer exists over the state-law counterclaim
asserted by Defendant Ocwen Loan Servicing LLC.
The motion for summary judgment by Ocwen remains
pending for consideration by and in the discretion of the state
court. Dkt 9.
1. Background
Plaintiff Althea Shackelford brought action against Ocwen in
Texas state court in February 2019. She asserted claims for
breach of contract, negligence, violation of the Real Estate
Settlement Procedures Act, and violation of the Texas Debt
Collection Practices Act. Dkt 1-1 at 5–14. Ocwen answered,
raised affirmative defenses, and brought a counterclaim for
judicial foreclosure under Texas law. Id at 28–34. Specifically, its
counterclaim seeks a judgment authorizing it to foreclose on the
property under the terms of the deed of trust and Texas Property
Code § 51.002. See Dkt 9; see also Dkt 1-1 at 28–34.
Ocwen then removed the action in April 2019 pursuant to
28 USC §§ 1331, 1441, and 1446. It argued that federal-question
jurisdiction existed over the action because Shackelford raised
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claims based on “violations of various federal statutes and
regulations” and because a federal right was “an essential and
substantial element of” her breach-of-contract claim, with the
interpretation of that right being “necessary to resolve the claim.”
Dkt 1 at 2.
Ocwen moved for judgment on the pleadings in September
2019. Dkt 4. Shackelford never responded. The order granting
that motion stated, “This action is dismissed with prejudice.”
Dkt 8 at 6. That was a bit hasty and overlooked Ocwen’s
counterclaim. Ocwen sought no clarification, but then moved for
summary judgment on its counterclaim six months later.
2. Legal standard
The Fifth Circuit admonishes, “Federal courts, both trial and
appellate, have a continuing obligation to examine the basis for
their jurisdiction. The issue may be raised by parties, or by the
court sua sponte, at any time.” MCG, Inc v Great Western Energy Corp,
896 F2d 170, 173 (5th Cir 1990) (citations omitted).
A federal court having original jurisdiction over some claims
in a particular action may exercise “supplemental jurisdiction
over all other claims that are so related to claims in the action”
that “they form part of the same case or controversy.” 28 USC
§ 1367(a). But a district court may decline the exercise of
supplemental jurisdiction over a state-law claim on any of the
following four bases:
o First, the claim raises a novel or complex issue of
state law;
o Second, the claim substantially predominates over the
claim or claims over which the district court has
original jurisdiction;
o Third, the district court has dismissed all claims over
which it has original jurisdiction; or
o Fourth, in exceptional circumstances, there are other
compelling reasons for declining jurisdiction.
28 USC § 1367(c); see IntegraNet Physician Resource, Inc v Texas
Independent Providers, LLC, 945 F3d 232, 244 n 58 (5th Cir 2019)
(citations omitted), overruled in part on other grounds by
Latiolais v Huntington Ingalls, Inc, 951 F3d 286 (5th Cir 2020,
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Case 4:19-cv-01540 Document 11 Filed on 07/19/21 in TXSD Page 3 of 6
en banc). Dismissal under § 1367(c) is “discretionary—and not
jurisdictional.” Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 3567.3 (West 3d ed April 2021 Update).
The assessment isn’t limited to consideration of the statutory
bases alone. The court must also consider certain common-law
factors pertaining to judicial economy, convenience, fairness, and
comity. Enochs v Lampasas County, 641 F3d 155, 158–59 (5th Cir
2011) (citations omitted); see also Wright & Miller, Federal Practice
and Procedure § 3567.3. In more detail, these are:
o First, judicial economy based on the amount of
federal judicial resources that have been devoted to
the action;
o Second, convenience to the parties based on whether
they would have to duplicate any of their previous
efforts or expenses upon remand;
o Third, fairness to the parties based on whether any
party would be prejudiced by having the case tried
in federal or state court; and
o Fourth, comity between state and federal courts.
Carnegie-Mellon University v Cohill, 484 US 343, 350 n 7 (1988);
Mendoza v Murphy, 532 F3d 342, 346 (5th Cir 2008). No single
factor is dispositive, and they must be taken together on a caseby-case basis. Mendoza, 532 F3d at 346.
It is important overall to bear in mind that the Fifth Circuit
admonishes, “Our general rule is to dismiss state claims when the
federal claims to which they are pendent are dismissed.” Enochs,
641 F3d at 161 (internal quotations omitted). And the Supreme
Court has for decades cautioned federal courts to avoid “needless
decisions of state law.” Ibid, quoting United Mine Workers of
America v Gibbs, 383 US 715, 726 (1966).
3. Analysis
The claims raised by Shackelford over which federalquestion jurisdiction existed have all been dismissed with
prejudice. Ocwen’s pending motion for summary judgment
necessarily requires inquiry into whether the further exercise
supplemental jurisdiction over its state-law counterclaim is
warranted.
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None of the four statutory bases indicate retention of
supplemental jurisdiction here. Indeed, as to § 1367(c)(2), the
state-law counterclaim without question now substantially
predominates, as it is the only remaining claim. And this is
because, as to § 1367(c)(3), all federal claims have been dismissed.
See Dkt 8. This supports remand. For example, see Acain v
International Plant Services, LLC, 2012 WL 4845602 *2 (SD Tex)
(as to both § 1367(c)(2) and (c)(3)); Enochs, 641 F3d at 159 (as to
§ 1367(c)(2)); Heggemeier v Caldwell County, 826 F3d 861, 872–73
(5th Cir 2016) (citations omitted) (as to § 1367(c)(3)).
None of the common-law factors warrant retention either.
As to judicial economy, a federal court must assess whether its
resources would be wasted or saved if it maintains jurisdiction
over the action. And when “the federal-law claims have dropped
out of the lawsuit in its early stages and only state law claims
remain, the federal court should decline the exercise of
jurisdiction.” Carnegie-Mellon, 484 US at 350, citing Gibbs, 383 US
at 726. The Fifth Circuit defines an early stage of litigation based
upon the amount of time elapsed in the litigation, the length of
time remaining until trial, and the extent of discovery completed.
Owens v PLS Check Cashers of Texas, LP, 2011 WL 1485678, *3
(SD Tex), citing Parker & Parsley Petroleum Co v Dresser Industries,
972 F2d 580, 586 (5th Cir 1992); see also Munoz v Caliber Home
Loans, Inc, 2014 WL 12878536, *3 (WD Tex).
Judicial economy weighs heavily in favor of remand. A
minimal amount of time and resources has been thus far invested
in this action. No scheduling order has entered, no hearing has
been held, only ten docket entries appear of record. The only
event of moment was an eight-page order disposing of all federalquestion claims. Dkt 8. It appears that upon remand there “would
be no need for either party to duplicate any research, discovery,
briefing, hearings, or other trial preparation work, because very
little had been done at that point.” Oliver v Lewis, 891 F Supp 2d
839, 849 (SD Tex 2012), citing Enochs, 641 F3d at 159. This early
stage of litigation provides a “powerful reason to choose not to
continue to exercise jurisdiction.” Gibbs, 383 US at 726.
As to convenience, a federal court must consider whether the
state court to which the action would be remanded is
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geographically and financially inconvenient for the parties. Acain,
2012 WL 4845602 at *3. It should also consider whether the
parties would have to duplicate any previous efforts or expenses
upon remand. Owens, 2011 WL 1485678 at *4.
Nothing suggests that remand to the 127th Judicial District
Court of Harris County, Texas would inconvenience either
Shackelford or Ocwen. Shackelford apparently resides in Harris
County, and the property on which Ocwen seeks to foreclose is
also located there. Dkt 1; Dkt 1-1 at 5. And with so little forward
progress in this litigation having occurred, no duplication of
efforts or expense will occur. See Owens, 2011 WL 1485678 at *4,
citing Parker & Parsley, 972 F2d at 585.
As to fairness, a federal court must consider whether remand
would foreclose any relief because state statutes of limitation
would bar refiling of a dismissed claim, present a danger of
duplicative or conflicting rulings, or allow parties to relitigate
matters that had already been settled by the federal court. Owens,
2011 WL 1485678 at *4, citing Carnegie-Mellon, 484 US at 252; see
also Guzzino v Felterman, 191 F3d 588, 595 (5th Cir 1999); Guidry v
Bank of LaPlace, 954 F2d 278, 286 (5th Cir 1992).
Nothing suggests that remand of Ocwen’s state-law
counterclaim would be unfair to either party. No prejudice
appears in terms of a potential for precluded relief, conflicting
rulings, or claim relitigation.
As to comity, a federal court must consider it along with the
principle of judicial federalism, with attendant deference to Texas
state courts to determine quintessential matters of Texas law. The
Fifth Circuit explains that federal courts are ones of limited
jurisdiction and often “not as well equipped for determinations
of state law as are state courts.” Brewster v Nationstar Mortgage LLC,
2013 WL 6501261, *8 (ND Tex), quoting Parker & Parsley,
972 F2d at 588–89. True, any federal court is competent to
interpret and apply Texas law—where necessary. But on the
other hand, the supplemental jurisdiction statute itself permits a
federal court to decline to exercise supplemental jurisdiction
where it “has dismissed all claims over which it has original
jurisdiction.” 28 USC § 1367(c)(1).
The principle of comity weighs heavily in favor remand.
Ocwen’s foreclosure counterclaim is indisputably based on a
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Texas statute. Dkt 9 at 1, 8. This makes it more appropriate to
state-court resolution, given that any issues that arise are likely to
be issues of substantive Texas law. Garrett v Southern Newspapers,
Inc, 2018 WL 4352914, *3 (SD Tex), citing Chameleon Distributors,
LLC v Virtuoso Selections LLC, 2018 WL 3342703, *3 (SD Tex).
And federal courts in Texas regularly decline to exercise
supplemental jurisdiction over actions arising out of Texas
foreclosure proceedings. For example, see Munoz, 2014 WL
12878536 at *3; Brewster, 2013 WL 6501261 at *8 (ND Tex);
Shaw v Bank of America NA, 2014 WL 12589593, *4 (WD Tex);
Cooper v Barrett Burke Wilson Castle Daffin & Frappier LLP,
2008 WL 1848453, *4 (ND Tex).
4. Conclusion
This case is REMANDED to the 127th Judicial District Court
of Harris County, Texas for further proceedings.
The Clerk is ORDERED to provide a copy of this Order to
the District Clerk of Harris County, Texas.
NO ACTION is taken on the pending motion for summary
judgment by Ocwen Loan Servicing, LLC. Dkt 9. It remains
pending for consideration in the discretion of the state court on
remand.
SO ORDERED.
Signed on July 16, 2021 at Houston, Texas.
Hon. Charles Eskridge
United States District Judge
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