Conrell Hadley and Bandit Lawyer Erick DeLaRogue Team Up to Extend Foreclosure to Year 14+

On Friday, Feb. 9, 2024, LIT released a tweet which states; Coming up on LIT: Shocking facts and case studies on the current criminal activity endorsed by the US Gov for implementation by Federal Judges and Wall Street’s Creditor Rights lawyers. Truth that will shake American homeowners to the core. Stay tuned. #TruthRevealed #USJustice

This published foreclosure case is part of the live reporting and investigation, which is explained, in part, below:

LIT’s inquiry delves into the prevailing standards governing foreclosures, Temporary Restraining Orders (TROs), Injunctions, evictions, and appeals. Drawing from rigorous analysis of factual case studies and a wealth of data amassed over years of investigation, LIT’s insights are prominently featured on this legal blog, LawsInTexas.com.

The initial confusion stemming from the aftermath of the 2008 financial crisis, wherein the US Government, hand in hand with the judiciary, orchestrated the mass seizure of millions of homes, is a focal point of LIT’s examination.

LIT refrains from extensively elaborating on the myriad frauds that transpired initially, such as lender application fraud and predatory lending which resulted in the financial crisis, and thus leading to counterfeit assignments, robo-signing, document falsification, perjury, and the unlawful actions of the Mortgage Electronic Registration System (MERS) in foreclosing on homesteads.

Instead, LIT steers the discussion toward the avarice evident within the legal profession and the complicit role of the judiciary in perpetuating fraud in real estate and title deed matters, beyond the scandals within their own administration.

LIT’s live reporting and investigation is published in real-time, as it probes into the motivations driving the US Government’s directive for the judiciary to adopt predatory practices in the latter part of 2023 and throughout 2024—an inquiry to which LIT claims to hold the key answers.

In the ongoing saga of foreclosure proceedings the close circle of foreclosure defense lawyers along with the creditor rights attorney’s and the judges in both state and federal court, have protected Conrell Hadley’s second homestead from foreclosure as a sign of their power against prosecution.

The state issued TRO to halt the Jan 2023 auction of the property has never been upgraded to a temporary injunction in either state or federal court. As the TRO has well and truly expired, the lender/mortgage servicer can foreclose, based on the latest actions LIT is witnessing in Texas federal courts, and where this case was removed.

Indeed, there has been no foreclosure auction set since the expiry of the TRO.  Instead of relisting the foreclosure, creditor rights law firm Bradley arrived some months later and removed the action to federal court on March 31, 2023.

In the intervening 11 months,  the case has remained on the docket without a motion to dismiss or motion for summary judgment, nor any motions for sanctions from Bradley, nor any order to show cause why this frivolous lawsuit is before the court by Judge Andrew Hanen, SDTX.

No surprises there.

DEFENDANT’S MOTION TO SET ASIDE CLERK’S DEFAULT

Defendant Carrington Mortgage Services, LLC (“Carrington”) moves to set aside the Clerk’s Default entered on October 24, 2024, because an Answer was filed in this matter prior to removal and would respectfully show as follows:

I. BACKGROUND

Plaintiff Conrell Hadley (“Plaintiff”) filed suit against Carrington on December 28, 2022 in the 152nd District Court of Harris County, Texas under Case No. 2022-83431. Carrington filed its Answer and Affirmative Defenses to Plaintiff’s Petition on March 27, 2023.

A copy of Carrington’s Answer is attached hereto as Exhibit A.

Carrington removed the case to this Court on March 31, 2023 (the “Removal”).

Exhibit A to the Removal, which contained the state court filings required by 28 U.S.C. § 1446(a), had been prepared prior to filing the Answer.

Carrington inadvertently failed to include the file-stamped Answer in Exhibit A and, therefore, the Answer and Affirmative Defenses did not make it into the Removal documents filed with this Court.

Clearly evidencing its intent to defend the case, Carrington filed:

(1) a corporate disclosure statement on April 19, 2023 (Doc. 3);

(2) a Joint Discovery Case Management Plan on June 21, 2021 (Doc. 4);

and

(3) a Motion for Summary Judgment on March 8, 2024 (Doc. 9).

Plaintiff has never raised the issue of Carrington’s failure to include its Answer in its removal papers.

Plaintiff filed a Response to Carrington’s Motion for Summary Judgment on April 4, 2024 (Doc. 12).

Concurrently herewith, Carrington files a Motion for Leave to Supplement its Notice of Removal to include its Answer which was previously filed.

Plaintiff is unopposed to Carrington’s Motion for Leave.

II.

ARGUMENTS & AUTHORITIES

A court may set aside an entry of default “for good cause shown.”

Fed. R. Civ. P. 55(c); In re U.S. Liquids Securities Litigation, No. H-99-2785, 2005 WL 8165776, at *3 (S.D. Tex. Sept. 13, 2005).

The good cause requirement is interpreted liberally, and “federal courts should not be agnostic with respect to the entry of default judgments, which are ‘generally disfavored in the law’ and thus ‘should not be granted on the claim, without more, that the defendant had failed to meet a procedural time requirement.”

Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000) (quoting Mason & Hanger-Silas Mason Co. v. Metal Trades Council, 726 F.2d 166, 168 (5th Cir. 1984)).

The Fifth Circuit dictates that, where there are no intervening equities, any doubt should be resolved in favor of the movant with the goal of consideration of the case on the merits.

Lacy, 227 F.3d at 292.

The following factors are considered when determining whether good cause exists:

(1) whether the failure to act was willful;

(2) whether setting the default aside would prejudice the adversary;

and

(3) whether a meritorious claim has been presented.

In re U.S. Liquids, 2005 WL 8165776m at *3.

These factors are not exclusive, but instead are regarded as means to identify whether good cause exists. Id.

Importantly, courts may look to other factors, such as whether the party acted expeditiously to correct the default.

Lacy, 227 F.3d at 292.

A.                 Carrington answered the lawsuit, and therefore there was no “willful” failure to answer.

The Fifth Circuit considers willfulness to be “an intentional failure to respond to litigation.”

Lacy, 227 F.3d at 292.

When an answer was actually timely filed, such as in this case, a clerk’s default should be set aside because there is no actual default.

DVH Cos., Inc. v. Bropfs Corp., No. 3:06-CV-2084-P, 2007 WL 9717276, at *1 (N.D. Tex. Feb. 5, 2007)

(“Bropfs timely filed its answer on December 14, 2006, before the expiration of the time to file a responsive pleading, and therefore was not actually in default at the time of the clerk’s entry of default. On this basis alone, the default should be set aside.”).

In this case, there was not willful failure to answer Plaintiff’s suit, as it is undisputed that Carrington filed its Answer and Affirmative Defenses in the underlying state court action.1

The undersigned recognizes that this Court’s Order, dated October 10, 2024, directed Carrington to file an answer before October 23rd. At the time the Order was issued, the undersigned was preparing for a jury trial that began on October 15, 2024 and, not immediately reviewing the Order, neglected to calendar the deadlines set out therein.2

This error was purely inadvertent and due to the undersigned’s trial preparation schedule, not to any willful disregard of this Court’s Order.

The willfulness factor thus weighs in favor of setting aside the judgment.

1 Exhibit A, Carrington’s Answer and Affirmative Defenses.

2 Case No. CC-20-00379-B, Cheryl Harmon v. PLS Check Cashers of Texas, Inc. d/b/a PLS Check Cashers, in the County Court at Law No. 2 of Dallas County, Texas.

B.                 Setting aside the clerk’s default will not prejudice Plaintiff.

There is no prejudice to a plaintiff where setting aside the default judgment does no harm to the plaintiff except to require it to prove its case. Lacy, 227 F.3d at 293.

Mere delay does not alone constitute prejudice to the plaintiff.

Lacy, 227 F.3d at 293; Berthelsen v. Kane, 907 F.2d 617, 621 (5th Cir. 1990).

Instead, the plaintiff must show that the delay will result in the loss of evidence, increased difficulties in discovery, or greater opportunities for fraud and collusion.

Lacy, 227 F.3d at 293.

In this case, Plaintiff will not be prejudiced if the Clerk’s default is set aside. Plaintiff was served with Carrington’s Answer and Affirmative Defenses and is well aware of the defenses asserted therein.3

The Parties have litigated this case for over a year, and the Court’s acceptance of Carrington’s Supplement to its Notice of Removal, containing the previously filed Answer, will not require Plaintiff to change course or alter his litigation tactics in any way.

Simply put, the failure to include the Answer with Carrington’s Notice of Removal is administrative only and will have no substantive affect on Plaintiff whatsoever.

Carrington has addressed this default within a day of it being issued, and therefore has moved expeditiously in attempting to have it set aside.

It is no prejudice to Plaintiff to obligate it to prove its case on the merits, instead of at a default judgment stage.

Thus, this factor weighs in Carrington’s favor.

C.                 Carrington has a meritorious defense.

In order to show it has a meritorious defense, a defendant must provide definite factual allegations, as opposed to mere legal conclusions, in support of its defense.

Scott v. Carpanzano, 556 F. App’x 288, 296 (5th Cir. 2014).

In determining whether a meritorious defense exists, the underlying concern is whether there is some possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the default. Id.

3 Exhibit A.

Carrington has a meritorious defense to this suit, as set out in its Motion for Summary Judgment (Doc. 9).4

The claims Plaintiff asserts in this suit have been previously litigated and dismissed with prejudice and, therefore, are barred by res judicata.

Plaintiff’s declaratory judgment claim is based on the alleged improper assignment of the loan to Carrington and, therefore, Plaintiff lacks standing to assert such a claim.

Plaintiff’s breach of contract claim fails primarily because he fails to outline which specific portions of the subject contract(s) he alleges Carrington breached.

This claim also fails due to his prior material breach of the Loan.

Plaintiff’s TDCA claims fail because Carrington never misrepresented the amount of the debt, the status or nature of the services it rendered, or any other false representations when servicing the loan.

Lastly, Section 5.065 of the Property Code only applies to executory contracts and is therefore inapplicable in this case.

The above demonstrates that, at this stage, Carrington has a meritorious defense to Plaintiff’s claims.

Thus, Carrington has satisfied the third factor by showing it has a meritorious defense to this suit.

For these reasons, Defendant Carrington Mortgage Services, LLC respectfully requests the Court GRANT this Motion to Set Aside Clerk’s Entry of Default Judgment, SET ASIDE the Clerk’s Entry of Default, and for such other and further relief to which it may be justly entitled.

4 Carrington incorporates its Motion for Summary Judgment herein.

Respectfully submitted,

By: /s/ Melissa Gutierrez Alonso

Jon H. Patterson
Texas Bar No. 24077588
jpatterson@bradley.com

Bradley Arant Boult Cummings LLP
1819 Fifth Avenue
North Birmingham, Alabama 35203-2104
Telephone: (205) 521-8403
Fax:     (205) 488-6403

Melissa Gutierrez Alonso
Texas Bar No. 24087648
Fed. I.D. No. 2255351
mgutierrez@bradley.com

600 Travis Street, Suite 5600
Houston, Texas 77002
(713) 576-0300 Telephone
(713) 576-0301 Telecopier

ATTORNEYS FOR DEFENDANT

CERTIFICATE OF CONFERENCE

I hereby certify that I spoke with Erick Delarue, counsel for Plaintiff, via telephone on October 25, 2024, who indicated that Plaintiff was opposed to the relief sought herein.

/s/ Melissa Gutierrez Alonso

Melissa Gutierrez Alonso

CERTIFICATE OF SERVICE

I certify that on this 25th day of October, 2024, I electronically filed the foregoing with the Clerk of Court by using the CM/ECF system. I further certify that a true and correct copy of the foregoing has been served on all counsel of record as follows:

Via E-mail: erick.delarue@delaruelaw.com Erick Delarue

Law Office of Erick DeLaRue, PLLC 2800 Post Oak Boulevard, Suite 4100

Houston, Texas 77056

Attorney for Plaintiff

 /s/ Melissa Gutierrez Alonso     

Melissa Gutierrez Alonso

Judge Andrew Hanen releases an order today denying Defendant’s motion on the grounds that parties on both sides of the table missed the rather crucial fact that no timely answer had been filed by Defendants, either in state court or upon removal, indeed no answer at all.

Judge Hanen points the finger at the parties, but LIT suggests that before the court accepted the motion for summary judgment, the clerk(s) responsible should have checked to see if an answer was on file. In short, everyone dropped the ball.

Seel; Easterling v. U.S. Bank , Civil Action No. 3:18-CV-2528-C-BH, at *2-3 (N.D. Tex. Jan. 24, 2019) (“Defendant again failed to file an answer or otherwise respond to the amended complaint. Because of Defendant’s failure to answer or respond to either complaint, Plaintiff was ordered to show cause in writing by January 21, 2019, why he had not requested entry of default and moved for a default judgment against Defendant, unless it had filed an answer or response prior to that date.”)

The proposed solution by Judge Hanen is to restart that process on trimmed timelines.

Representing Carrington, Bradley’s response does not seek sanctions or any other kind of punitive damages in this case presented by Houston-based lawyer Erick Delarue.

The motion for summary judgment has been fully briefed since April, which equals 168 days  or 5 months, 15 days. According to Carrington, the arguments presented are neither complex nor merit review as they claim res judicata prevents these proceedings.

Yet, lawer Erick Delarogue apparently disagrees on behalf of his client.

This case started Dec. 28, 2022 in state court. It’s now in excess of 16 months since this case was removed to federal court Mar. 31, 2023. The motion for summary judgment has been fully briefed. No opinion has been issued to date.