Who’s Baggin’ the For Sale By Owner Property before the Chief?

Pending before the Court1 is Defendant PHH Mortgage Services, Inc.’s (“Defendant”) Motion for Summary Judgment.

(Dkt. No. 33.)

Based on a thorough review of the motion, arguments, and relevant law, the Court GRANTS Defendant’s Motion for Summary Judgment.2

I.                   BACKGROUND

The facts are undisputed.

(Dkt. No. 38.)

Plaintiffs Nanik Bhagia (“Bhagia”) and Saihat Corporation (“Saihat”) (collectively, “Plaintiffs”) filed a Petition for Temporary Restraining Order and for Temporary Injunction action on January 27, 2022, in the 189th Judicial District Court for Harris County, Texas.

(Dkt. No. 1 at 1.)

Defendant removed the case to the United States District Court for the Southern District of Texas, Houston Division.

(Id.)

The dispute pertains to claim of title to real property located at 10823 Collingswood Drive, La Porte, Texas 77571 (the “Property”).

(Dkt. No. 33 at 1.)

On August 4, 2004, Bryan Patrick Daniel and Martha Daniel (the “Daniels”) executed a Texas Home Equity Adjustable Rate Note (the “Note”), creating a valid lien on the property, payable to Ameriquest Mortgage Company for the principal sum of $82,500.00 with an interest rate of 8.55% per annum.

(Id. at 4.)

Deutsche is the trustee for Ameriquest Mortgage Company.

(Dkt. No. 33-1 at 2.) Defendant is the servicer of the loan for Deutsche Bank National Trust Company (“Deutsche”).

(Dkt. No. 33 at 4.)

The Property is part of the Fairmont Park East Homeowners’ Association (“HOA”), which subjected the Daniels to pay assessments according to its deeds and covenants.

(Id.)

To secure payment of the assessments, the HOA reserved a vendor’s lien interest in the Property that permitted a foreclosure sale upon default.

(Id.)

The HOA’s deeds and covenants subordinated the HOA lien to “any valid purchase money lien or valid lien securing the cost of construction or for home improvements.”

(Id.)

The Daniels defaulted, and the HOA filed a judicial foreclosure action. (Id. at 5.) The HOA did not join any other lienholders as a party to the foreclosure action.

(Id.)

The HOA proceeded with a constable’s sale of the Property on May 1, 2018, in which Saihat was the highest bidder, paying $30,500.00.

(Id.)

However, Defendant sought foreclosure because the mortgage lien that encumbers the Property was defaulted, and Plaintiffs instituted this action to enjoin Defendant from foreclosing.

(Id. at 1.)

Before this action commenced, Saihat was involved in litigation where Deutsche argued that their lien on the Property was superior to the HOA’s lien.

(Id. at 5.);

Deutsche Bank Nat’l Tr. Co. v. Saihat Corp., No. 21-20002, 2021 WL 5830821 (5th Cir. Dec. 8, 2021).

As such, Deutsche claimed that their lien was superior to Plaintiffs’ interest since it survived the foreclosure sale.

(Id.)

The court held the “Deutsche Bank lien survives as a matter of law [and] Deutsche Bank is thus entitled to foreclose the property as against Saihat” because “[e]ither Deutsche Bank’s lien was senior to the HOA lien or Deutsche Bank’s lien was junior but survived the HOA foreclosure action because the HOA failed to join or give notice to Deutsche Bank.”

Deutsche Bank Nat’l Tr. Co., 2021 WL 5830821, *4.

Saihat filed a motion for reconsideration, which was denied.

(Dkt. No. 33 at 6.)

Saihat subsequently appealed to the Fifth Circuit Court of Appeals, which affirmed the judgment.

(Id.)

Defendant posted the Property to be sold at a trustee’s sale on February 1, 2022, in which Plaintiffs filed a petition seeking to restrain Defendant from pursuing foreclosure.

(Id.)

I.                   LEGAL STANDARDS

a.  Summary Judgment

Federal Rule of Civil Procedure 56(a) instructs the Court to “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.

See also Nall v. BNSF Ry. Co., 917 F.3d 335, 340 (5th Cir. 2019).

The movant is tasked with the initial burden of informing the Court of the basis for the motion and pointing to relevant excerpts in evidence that demonstrate the absence of genuine factual issues.

See Coastal Agric. Supply, Inc. v. JP Morgan Chase Bank, N.A., 759 F.3d 498, 505 (5th Cir. 2014) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).

The movant may also argue that the nonmovant failed to produce evidence in support of at least one element of a cause of action for which he bears the burden of proof.

See Austin v. Kroger Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017).

If the movant satisfies the initial burden, it shifts to the nonmovant who must produce evidence of a genuine factual dispute; he may not merely rest on the allegations in his pleading.

See Coastal Agric. Supply, Inc., 759 F.3d at 505 (quoting Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005)).

In reviewing a motion for summary judgment, the Court bears the responsibility of taking the nonmovant’s evidence as true and drawing all reasonable inferences in his favor.

Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).

But the Court should not accept “[u]nsubstantiated assertions, improbable inferences, [or] unsupported speculation” as sufficient to carry the nonmovant’s burden. Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003).

“When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, the Court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.”

Scott v. Harris, 550 U.S. 372, 380 (2007).

“In deciding unopposed summary judgment motions, the Fifth Circuit has noted that a motion for summary judgment cannot be granted simply because there was no opposition.”

Gonzales v. Abdurasulov, No. 3:22-CV-00654, 2022 WL 2717633, *1 (W.D. La. July 13, 2022) (citing Hetzel v. Bethlehem Steel Corp., 50 F.3d 360, 362 fn.3 (5th Cir. 1995)).

II.                DISCUSSION

Defendant brings forth five grounds to support their Motion for Summary Judgment.

(Dkt. No. 33 at 3.)

First, Defendant claims that Plaintiffs are not entitled to notice of acceleration or foreclosure as they are not a party to the deed of trust;

second, Plaintiffs are not entitled to a payoff as they are not a party to the deed of trust;

third, Plaintiffs’ claim to remove cloud from title fails as a matter of law;

fourth, Defendant is entitled to summary judgment on Plaintiffs’ claim for injunctive relief because it cannot prevail on its underlying claims; and

fifth, Bhagia lacks standing to assert any claim or cause of action against Defendant concerning the Property.

(Id.)

Plaintiffs filed an untimely response asserting that they do not dispute the facts asserted by Defendant and have “no substantial response to the legal arguments and authorities” cited in Defendant’s Motion for Summary Judgment.

(Dkt. No. 38.)

A.     Bhagia lacks standing

Defendant argues that Bhagia lacks standing.

(Dkt. No. 33 at 11.)

There are three requirements that must be met to establish standing.

Tenth St. Residential Ass’n v. City of Dallas, Texas, 968 F.3d 492, 499 (5th Cir. 2020).

First, the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is

(a) concrete and particularized; and

(b) actual or imminent, not conjectural or hypothetical.

Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court.

Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Id. (internal quotation marks omitted).

Specifically, Defendant claims that Bhagia does not have standing under the first requirement because “[n]owhere in the Petition do Plaintiffs allege that Bhagia personally owns or hold any interest in the Property or that Saihat Corporation has assigned any claim or cause of action it might have concerning the Property to Bhagia.”

(Dkt. No. 33 at 11.)

“As an aspect of justiciability, the standing question is whether the plaintiff has ‘alleged such a personal stake in the outcome of the controversy’ as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on his behalf.”

Warth v. Seldin, 422 U.S. 490, 498–99 (1975) (citing Baker v. Carr, 369 U.S. 186, 204 (1962)).

“If the plaintiff does not claim to have suffered an injury that the defendant caused and the court can remedy, there is no case or controversy for the federal court to resolve.”

TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021) (citing Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329, 333 (7th Cir. 2019)) (internal quotation marks omitted).

Here, it is Saihat who bought the Property at the constable’s sale after foreclosure.

(Dkt. No. 33 at 5.)

Bhagia is the President of Saihat but has not established his interest or personal stake in the outcome other than his status as President.

(Dkt. No. 33 at 11; Dkt. No. 1-1; Dkt. No. 38.)

As such, Plaintiffs fail to show how Bhagia suffered from an injury in fact.

(Id.)

Additionally, Plaintiffs responded to Defendant’s Motion for Summary Judgment with no substantive legal arguments to counter Defendant’s claims.

(Dkt. No. 38.)

Absent a showing of injury in fact, the Court finds Bhagia lacks standing.

B.     Saihat is not entitled to notice of acceleration or foreclosure

Defendant argues that Saihat is not entitled to notice of acceleration or foreclosure because Saihat is not a party to the deed of trust.

(Dkt. No. 33 at 6–7.)

“There is no requirement that personal notice be given to persons who were not parties to the deed of trust.”

Am. Sav. & Loan Ass’n of Houston v. Musick, 531 S.W.2d 581, 588 (Tex. 1975).

“[N]otification duty extends ‘to the parties named on the requisite documents as the debtors, and not to other parties, known or unknown.’”

Id. (quoting Casstevens v. Smith, 269 S.W.3d 222, 229–30 (Tex. App.—Texarkana 2008, pet. denied)).

No legal duty is imposed onto a lender to give an intervening purchaser of property notice of sale when they are not the debtor, even if the lender has knowledge of the intervening purchase.

See Lawson v. Gibbs, 591 S.W.2d 292, 295 (Tex. Civ. App.—Houston [14th Dist.] 1979, writ ref’d n.r.e.).

Notice of sale must be given at least 21 days before the date of sale by:

(1)   posting at the courthouse door of each county in which the property is located a written notice designating the county in which the property will be sold;

(2)  filing in the office of the county clerk of each county in which the property is located a copy of the notice posted under Subdivision

(1); and

(3) serving written notice of the sale by certified mail on each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt.

Tex. Prop. Code Ann. § 51.002(b).

Here, Saihat is neither the debtor in default nor the debtor obligated to pay the debt according to the records of the mortgage servicer.

(Dkt. No. 33 at 7.)

The debtors that are guaranteed written notice are the Daniels since they are the borrowers under the mortgage secured by the deed of trust.

(Dkt. No. 33-1 at 13–29.)

Defendant did not have an obligation to provide written notice of sale or acceleration to Saihat since it is not the debtor in default and Saihat has not proven otherwise.

(Dkt. No. 33 at 1; Dkt. No. 38.)

Defendant and Saihat agree that no notice was given to Saihat however, there was no obligation as a matter of law to provide Saihat with notice.

Lawson, 591 S.W.2d at 295.

As such, Defendant is entitled to judgment as a matter of law on this claim because there is no genuine dispute as to any material fact.

C.     Saihat is not entitled to a payoff amount

Saihat alleges that Defendant failed to follow proper procedure in not responding to Saihat’s request for a payoff amount.

(Dkt. No. 1-1 at 6.)

Defendant argues that Saihat is not entitled to a payoff amount as Saihat is not a party to the deed of trust.

(Dkt. No. 33 at 3.)

A purchaser who is neither a party to the deed of trust nor assumed the position of borrower after purchasing an interest in the property from an HOA is not “entitled to receive a payoff amount or any other notice to survive summary judgment.”

Gonzalez Equities, Ltd. v. Select Portfolio Servicing, Inc., No. SA-14-CV-1087-XR, 2015 WL 3407357, *3 (W.D. Tex. May 26, 2015).

“Section 51.002 does not require that a debtor receive notification of the payoff amount prior to foreclosure” and no such duty is owed to someone who is not a debtor.

Sanders v. Shelton, 970 S.W.2d 721, 726 (Tex. App.—Austin 1998, pet. denied) (citing In re Davis Chevrolet, Inc., 135 B.R. 29, 32 (Bkrtcy. N.D. Tex. 1992)).

Here, Saihat is not the debtor or borrower under the mortgage secured by the deed of trust.

(Dkt. No. 33 at 8.)

The debtors that have a right to receive notification of the payoff amount are the Daniels, and that duty is not imposed prior to foreclosure.

Sanders, 970 S.W.2d at 726.

Defendant has no duty to notify Saihat of the payoff amount since Saihat is not the debtor of the deed of trust and Saihat has not offered evidence otherwise.

(Dkt. No. 33 at 1; Dkt. No. 38.)

Defendant and Saihat agree that no notification of a payoff amount was given to Saihat however, there was no obligation as a matter of law to provide Saihat with such information.

Sanders, 970 S.W.2d at 726.

As such, Defendant is entitled to judgment as a matter of law on this claim because there is no genuine dispute as to any material fact.

D.     Saihat’s claim to remove cloud from title fails

Saihat alleges that if the Property is sold at a foreclosure sale, the title in the Property will be clouded causing Saihat to suffer a loss of $40,000 and the family at the Property will be evicted during Covid.

(Dkt. No. 1-1 at 6.)

“A suit to clear title or quiet title—also known as a suit to remove cloud from title—relies on the invalidity of the defendant’s claim to the property.”

Morlock, L.L.C. v. JP Morgan Chase Bank, N.A., 586 F. App’x 631, 633 (5th Cir. 2013) (quoting Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex.App.—Houston [1st Dist.] 2012, pet. denied)).

“The plaintiff must prove, as a matter of law, that he has a right of ownership and that the adverse claim is a cloud on the title that equity will remove.”

Essex Crane Rental Corp., 371 S.W.3d at 388 (quoting Hahn v. Love, 321 S.W.3d 517, 531 (Tex. App.—Houston [1st Dist.] 2009, pet. denied)).

“In order to prevail on a claim to quiet title, a plaintiff must show that:

(1) he has an interest in a specific property,

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

(3) the claim, although facially valid, is invalid or unenforceable.”

Hurd v. BAC Home Loans Servicing, LP, 880 F. Supp. 2d 747, 766 (N.D. Tex. 2012).

Here, Saihat fails to prove that removing cloud from title is a proper remedy.

(Dkt. No. 33 at 10.)

On the contrary, the Fifth Circuit held that the lien on the Property was superior to Saihat’s interest.

Deutsche Bank Nat’l Tr. Co., 2021 WL 5830821, *4.

Saihat has not proven that there is a factual dispute regarding the superiority of title to the Property, but rather asserts a conclusory allegation that the title is clouded.

(Dkt. No. 1-1 at 6.)

Additionally, Saihat has stated that there are no disputes as to the facts Defendant has recited in the Motion for Summary Judgment.

(Dkt. No. 38.)

As such, Defendant is entitled to judgment as a matter of law on this claim because there is no genuine dispute as to any material fact.

E.     Saihat’s claim for injunctive relief cannot prevail

Defendant argues that Saihat’s “request for injunctive relief is improper because the underlying claims fail as a matter of law and fact.”

(Dkt. No. 33 at 10.);

Smith v. Wells Fargo Bank, N.A., No. CV H-14-283, 2014 WL 3796413, *2 (S.D. Tex. July 31, 2014)

(“Because all of plaintiff’s underlying claims fail as a matter of law, her requests for injunctive relief and attorneys’ fees likewise must be denied.”).

“To obtain injunctive relief, a plaintiff is required to plead and prove, inter alia, a substantial likelihood of success on the merits.”

Wells v. Bank of Am., N.A., No. 3:13-CV-3658-M, 2015 WL 4269089, *9 (N.D. Tex. July 14, 2015) (citing Jackson v. Fed. Home Loan Mortg. Corp., No. 4:11–CV–507–A, 2011 WL 3874860, at *3 (N.D. Tex. Sept.1, 2011)) (internal quotation marks omitted).

Because Saihat has failed to provide any evidence of a dispute of material fact and Saihat’s claims fail as a matter of law, the request for injunctive relief must be denied.

As such, the Court finds that Saihat’s request for injunctive relief fails.

IV.                CONCLUSION

Based on the foregoing, the Court GRANTS Defendant’s Motion for Summary Judgment (Dkt. No. 33) and Plaintiffs’ claim for injunctive relief is DISMISSED WITH PREJUDICE.

SIGNED in Houston, Texas on October 27, 2023.

Sam S. Sheldon
United States Magistrate Judge