Howard N. Alwais v. New Penn Financial, LLC

Filing 19

ORDER DENYING 18 Motion for Summary Judgment. Signed by Judge Xavier Rodriguez. (rg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
HOWARD N. ALWAIS,

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Plaintiff,
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v.
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NEW PENN FINANCIAL, LLC, D/B/A
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SHELLPOINT MORTGAGE SERVICING, §
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Defendant.
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Civil Action No. SA-18-CV-604-XR

ORDER
On this date, the Court considered Defendant’s Motion for Summary Judgment (docket no.
18). Plaintiff, proceeding pro se, did not respond. After careful consideration, the Court DENIES
Defendant’s motion.
BACKGROUND
On June 4, 2018, Plaintiff Howard Alwais filed his state court petition against Defendant
New Penn Financial, LLC d/b/a Shellpoint Mortgage Servicing in the 150th Judicial District Court
of Bexar County, Texas. Docket no. 1-1. Plaintiff brings claims for injunctive relief, sanctions,
breach of contract, fraudulent misrepresentations, and unfair lending practices.
Alwais purchased the property at 631 Carolina, San Antonio, Texas 78210 (the “Property”)
on November 30, 2005. To purchase the Property, Alwais received a loan from Bank of America,
which has been transferred several times in the intervening years. Alwais alleges the note and loan
servicing associated with the Property were transferred to Resurgent Mortgage Services in 2012
and to Defendant in 2014.

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Defendant removed to this Court on June 18, 2018, based on diversity jurisdiction. Docket
no. 1. Plaintiff was originally represented by Tamer Morsi in this case, but at a status conference
held November 6 the Court became aware that the State Bar had suspended Morsi. Morsi was thus
withdrawn, docket no. 10, and in response to a show cause order on this issue Plaintiff elected to
proceed pro se, stating he “wanted to settle this matter by selling the property to go on with my
life,” docket no. 16.
Defendant notes that, on August 3, 2015, Plaintiff filed a similar petition against Defendant
in the 408th Judicial District of Bexar County, Texas. Docket no. 18 at 2. Defendant removed that
case to federal court on August 14, 2015, after which Plaintiff took no action. Thus, on May 7,
2016, Judge Fred Biery dismissed Plaintiff’s case with prejudice for failure to prosecute. See
Alwais v. New Penn Financial d/b/a Shellpoint Mortgage Servicing, No. 5:15-CV-695-FB. Now,
Defendant has moved for summary judgment on the sole ground that res judicata bars Plaintiff’s
suit. Docket no. 18. Alwais did not respond. The Court, nevertheless, evaluates the merits of
Defendant’s motion for summary judgment.
DISCUSSION
I.

Standard of Review
The Court shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law. FED. R.
CIV. P. 56(a). To establish that there is no genuine issue as to any material fact, the movant must
either submit evidence that negates the existence of some material element of the non-moving
party’s claim or defense, or, if the crucial issue is one for which the non-moving party will bear
the burden of proof at trial, merely point out that the evidence in the record is insufficient to support
an essential element of the non-movant’s claim or defense. Lavespere v. Niagra Machine & Tool

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Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990). Once the movant carries its initial burden, the
burden shifts to the non-movant to show that summary judgment is inappropriate. See Fields v.
City of S. Hous., 922 F.2d 1183, 1187 (5th Cir. 1991).
To conclude that there are no genuine issues of material fact, the court must be satisfied
that no reasonable trier of fact could have found for the non-movant, or, in other words, that the
evidence favoring the non-movant is insufficient to enable a reasonable jury to return a verdict for
the non-movant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.4 (1986). In making
this determination, the court should review all the evidence in the record, giving credence to the
evidence favoring the non-movant as well as the “evidence supporting the moving party that is
uncontradicted and unimpeached, at least to the extent that evidence comes from disinterested
witnesses.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151 (2000). The Court “may
not make credibility determinations or weigh the evidence” in ruling on a motion for summary
judgment, id. at 150, and must review all facts in the light most favorable to the non-moving party,
First Colony Life Ins. Co. v. Sanford, 555 F.3d 177, 181 (5th Cir. 2009).
II.

Applicable Law
Defendant’s sole argument at summary judgment is that Plaintiff’s claim is barred by res

judicata. The doctrine of res judicata bars the relitigation of claims already decided by a court
with proper jurisdiction in a prior proceeding. Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d
559, 571 (5th Cir. 2005). “According to the doctrine of collateral estoppel, or issue preclusion,
‘when an issue of ultimate fact has once been determined by a valid and final judgment, that issue
cannot again be litigated between the same parties in any future lawsuit.’” RecoverEdge L.P. v.
Pentecost, 44 F.3d 1284, 1290 (5th Cir. 1995) (quoting Ashe v. Swenson, 397 U.S. 436, 443, 90 S.
Ct. 1189, 1194, (1970)).

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For a claim to be barred on res judicata grounds, the Fifth Circuit requires that: (1) the
parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of
competent jurisdiction; (3) the prior action was concluded by a final judgment on the merits; and
(4) the same claim or cause of action was involved in both actions. Test Masters Educational
Services, Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005). A “transactional test” is used to
determine “a prior judgment's preclusive effect” and such preclusion extends “to all or any part of
the transaction, or series of connected transactions, out of which the original action arose.” Id.
Under that test, a prior judgment’s preclusive effect extends to all rights the original
plaintiff had “with respect to all or any part of the transaction, or series of connected transactions,
out of which the [original] action arose.” Petro-Hunt, LLC v. United States, 365 F.3d 385, 395-96
(5th Cir. 2004) (quoting Restatement (Second) of Judgments § 24(1) (1982)). Courts
“pragmatically” determine what facts constitute a transaction by considering factors like “whether
the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit,
and whether their treatment as a unit conforms to the parties’ expectations or business
understanding or usage.” Id. at 396. “The nucleus of operative facts, rather than the type of relief
requested, substantive theories advanced, or types of rights asserted, defines the claim.” United
States v. Davenport, 484 F.3d 321, 326 (5th Cir. 2007).
III.

Application
As Defendant notes, Plaintiff has brought a claim to stop the foreclosure of the Property

before. The sole question necessary to decide this motion is whether this prior suit bars the suit
now before the Court. The first three elements are easily satisfied, as the parties are identical, a
competent court in this district entered final judgment in the earlier case, and that final judgment
expressly indicated that it was on the merits.

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Defendant’s motion fails, however, on the final element. Defendant’s motion repeats the
puzzling assertion that all conduct on which Plaintiff’s claims are based predates the May 2016
judgment in the prior case. For example, Defendant states that “the live Petition’s factual
allegations in this matter all predate the dismissal with prejudice of Plaintiff’s prior, substantially
identical, claims against Shellpoint.” Docket no. 18 at 5. Defendant then contends that whether the
same claims are the basis of both cases “is an especially easy determination for the Court since the
same facts are pled in both Petitions and Current Action’s Petition’s factual allegations cease well
before the dismissal in the Prior Action.” Id. at 7 (emphasis in original). These assertions are flatly
wrong, as even a cursory glance at the petition reveals.
Plaintiff’s petitions in both cases list the same causes of action, and much of the factual
material pled in this case spells out the allegedly illegal conduct between 2013 and 2015 that was
the subject of the first suit. Docket no. 1-1 at 2-8. If the petition in this case contained nothing
more, Defendant’s motion might succeed. But the petition describes several events that occurred
after judgment was entered in the prior case in May 2016. Plaintiff alleges, for example, that
Defendant’s counsel has ignored pay-off requests since May 2016. Id. at 6. Plaintiff further alleges
that Defendant failed to appear in a separate state-court proceeding regarding the same property,
which resulted in a November 1, 2016 restraining order preventing foreclosure and a $5,000
attorney’s fees award; Plaintiff alleges Defendant has not paid. Id. Plaintiff alleges that, in violation
of this restraining order, Defendant sent a notice of maturity and acceleration on the loan and a
notice of substitute trustee’s sale on October 20, 2017. Id. Finally, Plaintiff alleges that he
repeatedly tried to pay off the loan in the months prior to the scheduled June 5, 2018 foreclosure
sale. Id.

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Plaintiff could not have brought any claims related to these acts in the prior suit because
they had not happened yet. The res judicata doctrine does not bar plaintiffs “from presenting any
ground for relief arising out of conduct not complained of in the prior lawsuits.” Kilgoar v. Colbert
Cty. Bd. of Ed., 578 F.2d 1033, 1035 (5th Cir. 1978). “Subsequent conduct, even if it is of the same
nature as the conduct complained of in a prior lawsuit, may give rise to an entirely separate cause
of action.” Id.; see also Adumekwe v. Securitas USA Inc., 2006 WL 1662932, at *2 (S.D. Tex. June
9, 2006) (“A plaintiff is not barred from bringing a separate suit to remedy conduct that occurred
after a prior action.”); Roa v. City of Denison, 2017 WL 9287012, at *12 (E.D. Tex. Aug. 29,
2017), report and recommendation adopted, 2017 WL 4675062 (E.D. Tex. Oct. 18, 2017)
(“Because the 2016 Claims could not have been raised in Plaintiff's 2013 State Court Action, res
judicata does not bar these claims.”).
Defendant’s motion might have merit if Plaintiff’s causes of actions depended on the facts
and transactions now precluded by the prior suit. But that is far from clear on the record at this
stage, as the earlier events detailed in Plaintiff’s petition might well be merely contextual, to help
the Court and Defendant better understand the facts at issue. As evidence of this, after first
describing the above conduct that has occurred since 2016, Plaintiff states that Defendant’s
allegedly illegal practices “go back several years as further described herein below.” Id. at 7.
Plaintiff then proceeds to describe the history of the loan and Plaintiff’s interactions with
Defendant and Defendant’s predecessors in interest.
In any case, Defendant’s assertions that all facts in the live pleadings predate the earlier
dismiss are wrong, and Defendant advances no other argument on the final res judicata element.
Thus, summary judgment is inappropriate and the Court DENIES Defendant’s motion (docket no.
18).

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It is so ORDERED.
SIGNED this 1st day of March, 2019.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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