U.S. Bank National Association v. Denning et al

Filing 42

ORDER DISMISSING Defendant's 34 First Amended Motion to Stay. Signed by Judge Robert Pitman. (ml)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
U.S. BANK NATIONAL ASSOCIATION,
AS SUCCESSOR TRUSTEE TO BANK
OF AMERICA, N.A. AS SUCCESSOR BY
MERGER TO LASALLE BANK, N.A. AS
TRUSTEE FOR THE MLMI TRUST
SERIES 2006-RM2
Plaintiff,
v.
CHARLES H. DENNING, JR. and
MINDY K. STRINGER a/k/a
MINDY K. DENNING,
Defendants.

§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§

1:15-CV-00239-RP

ORDER
Before the court are Defendant’s First Amended Motion to Stay, filed July 29, 2015
(Clerk’s Dkt. # 34) and the responsive pleadings thereto. After reviewing the pleadings, relevant
case law, and the case file, the Court issues the following Opinion and Order.
I.

BACKGROUND

Defendant Charles Denning, Jr. and the original mortgagee, ResMAE Corporation, entered
into a loan agreement in 2006. Defendant allegedly defaulted on the loan in January 2013 and
has been in material breach ever since. Plaintiff Bank initiated this Action seeking, among other
remedies, judicial foreclosure.
In response, Defendant claims the mortgage is void ab initio because his wife, Mindy
Stringer, did not sign the loan and Texas homesteads may only be mortgaged with the consent
of both spouses. Plaintiff retorts that the mortgage is valid because Defendant’s wife has
consented to the mortgage and, alternatively, that the mortgage is valid because Defendant
committed fraud when he signed an affidavit stating that he was unmarried.

The subject of this Motion, however, is apart from the claims of validity, consent, or fraud.
Defendant signed the relevant loan agreement in 2006, over six years before the original default
and almost nine years prior to making this Motion to Stay. The Fifth Circuit, which has
mandatory authority over this Court, has held that there is a four-year statute of limitations on
claims such as Defendants’. See Priester v. JPMorgan Chase Bank, N.A., 708 F.3d 667, 672
(5th Cir., 2013). If this Court follows Priester, Defendant is ostensibly time barred from raising
the nullity defense.
Defendant notes, however, that the Texas Supreme Court is poised to address that statute
of limitations in Wood v. HSBC Bank, N.A, and has filed a motion to stay pending the outcome
of Wood. Alternatively, Defendant claims that an ongoing state-court proceeding over the same
property, filed before the present Action, strips this Court of jurisdiction or minimally counsels a
stay pending the resolution of the state court proceedings. The parties have filed responsive
pleadings and the matters are ripe for determination.
II.

ANALYSIS

A. Wood v. HSBC Bank
Lawyers on both sides of Wood v. HSBC Bank, N.A. are briefing the Texas Supreme Court
as to whether a four-year residual limitations period prevents suit on home equity loans that
would otherwise be void by the Texas Constitution.
Defendant argues that this Court should stay proceedings pending the resolution of Wood.
He makes a number of related points in support of this claim which reduce to an equitable
analysis: a stay serves judicial economy, benefits Defendant, and does not harm Plaintiff.
Ultimately, however, the Plaintiff makes the more compelling case. While, as Defendant
cites, “the power to stay proceedings is incidental to the power inherent in every court to control
the disposition of the cases on its docket,” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936),
“[o]nly in rare circumstances will a litigant in one cause be compelled to stand aside while a
litigant in another settles the rule of law that will define the rights of both.” Id. at 255. Defendant

asks that Plaintiff stand aside and wait – for a period yet indefinite – while litigants in an
unrelated case settle a pertinent rule of law.
The timeline for a decision in Wood is speculative, and the outcome is speculative as well.
Though Defendant is quick to point out that the Texas Supreme Court reversed more decisions
than it affirmed in 2013, Def.’s First Am. Mot. Stay, filed July 29, 2015 (Clerk’s Dkt. 34), at 3, it is
not clear why that probability is persuasive in this case. This Court would not be crafting a
statute of limitations from whole cloth. Priester is binding on this Court, and intermediate Texas
courts have followed its logic in cases analogous to the present Action. See Williams v.
Wachovia Mortg. Corp., 407 S.W.3d 391, 397 (Tex. App. – Dallas 2013, pet. denied); Santiago
v. Novastar Mortg., Inc., 443 S.W.3d 462, 470 (Tex. App. – Dallas 2014, pet. denied); In re
Estate of Hardesty, 449 S.W.3d 895 (Tex. App. – Texarkana 2014, no pet.); Wood v. HSBC
Bank USA, N.A., 439 S.W.3d 585 (Tex. App. – Houston 2014, pet. filed). The strong
precedential foundation for a decision in this matter mitigates the cost to judicial economy or the
threat to comity.
More important to this Motion than the speculative chronology and outcome of the Wood
decision is the fact that Wood has only limited importance to the present action. To be sure,
Wood settles a potential issue in this case – if there is a four-year statute of limitations on claims
such as defendants’, defendants ostensibly lose their ability to challenge the mortgage as
unconstitutional. But the converse is not true. If the Texas Supreme Court were to determine not
only that there is no four-year limitation on defenses such as Defendants’, but that there is no
limitation on such defenses at all, it would nonetheless leave unresolved other important issues
in this case – for instance, whether Defendant behaved fraudulently when he attested to being
single at the time of the signing. The findings in Wood, therefore, neither begin the discussion
nor end it.
Accordingly, Defendants’ motion to stay should be dismissed insofar as it requests a stay
based on a potential Texas Supreme Court decision in Wood v. HSBC Bank USA, N.A..

B. Ongoing State Court Proceedings
Defendant next claims that this Action should be dismissed, or minimally stayed, in light of
ongoing state court proceedings regarding the same property. Though Plaintiff nonsuited
Defendant – the only respondent in that case – prior to filing in this Court, and though state
court records reflect that the matter is completely closed, Defendant maintains that proceeding
in this Court would be an affront to the “comity between courts,” Def.’s First Am. Mot. Stay, filed
July 29, 2015 (Clerk’s Dkt. 34), at 8.
The Court finds Defendant’s claim unavailing. Plaintiff intended to close the state-court case;
the state court understood as much and closed the state-court case. There is no ongoing statecourt proceeding, and as such no reason to stay the Action in federal court.
Accordingly, Defendant’s First Amended Motion to Stay should be dismissed insofar as it
pertains to claims of an ongoing state-court proceeding.
III.

Conclusion

For the reasons stated herein,

IT IS ORDERED that Defendant’s First Amended Motion to Stay (Clerk’s Dkt. 34) is
DISMISSED.

SIGNED on September 8, 2015.

_______________________________
ROBERT L. PITMAN
UNITED STATES DISTRICT JUDGE