LIT UPDATES & COMMENTARY
The Waldens have not paid a dime on their home loan or taxes since July 15, 2011
(13 yrs 5 months and change)
REPUBLISHED BY LIT: DEC. 28, 2024
Before addressing this latest opinion, we needed to analyze the prior opinion of this court in related proceedings by the Waldens.
Once that was complete, we realized why the Fifth Circuit’s Judge Graves remanded – to deflect from the fact that the first opinion, and where he was also on the 3-panel – is VOID AB INITIO for lack of jurisdiction.
This determination is based on the facts presented below and in conjunction with this article and our prior interest in the Walden’s first case before the Fifth Circus.
Note:
The first 3-panel (2021) comprised of Judges Jolly, Elrod, and Graves, Circuit Judges. who issued their opinion Per Curiam.
The latest opinion (2024) comprised of Judges Clement, Graves, and Ramirez, with the one judge from the first opinion, James E. Graves, Jr. authoring the opinion.
In particular, the Waldens should raise either en banc or on remand that neither this court nor the federal district court have jurisdiction to continue with the questions on remand for the legal reasons provided by S.D. Tex Federal Judge Lee Rosenthal in the Izen case, which contradicts the earlier 3-panel’s determination.
The Fifth Circuit disregards the correct interpretation of Texas laws by Judge Lee Rosenthal, who remanded the Izen foreclosure case back to state court:
The issue is whether the court from which the case was removed, the 333rd Judicial District Court of Harris County, Texas, has prior exclusive jurisdiction.
The court holds that it does, and accordingly grants the motion to remand.
—
Mr. Izen moves to remand on the following grounds… (4) the 333rd Judicial District Court has exclusive in rem jurisdiction over “the res”—i.e., “Deutsche Bank’s alleged home equity lien on 6433 Roos Road and that lien’s enforcement.” (Docket Entry No. 5 at 12).
Mr. Izen’s last argument is meritorious.
—
When a court of competent jurisdiction assumes jurisdiction over an action in rem, no other court may exercise concurrent jurisdiction “in rem or quasi in rem respecting the same property until the first court’s jurisdiction is properly terminated.”
Key v. Wise, 629 F.2d 1049, 1059 (5th Cir. 1980).
This rule is “especial[ly] important[t] in its application to Federal and state courts.”
Id. (quoting Farmers Loan & Trust Co. v. Lake St. Elevated R. Co., 177 U.S. 51, 61 (1990)).
An action “to foreclose a specific lien” is an action in rem.
See Bryan v. Speakman, 53 F.2d 463, 466 (5th Cir. 1931); Hibernia Energy III, LLC v. Ferae Naturae, LLC, 668 S.W.3d 745, 758 (Tex. App.—El Paso 2022, no pet.).
Judge Rosenthal also took direct aim at the Fifth Circuit in her opinion:
The court disagrees with U.S. Bank’s holding that Rule 736.9 allows federal courts to exercise concurrent in-rem jurisdiction with Texas courts.
“The existence of federal jurisdiction is a matter of federal, not state law.”
Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 829 (1969).
State law cannot expand federal jurisdiction.
See Chicago, R.I. & P.R. Co. v. Stude, 346 U.S. 574, 581 (1954)
(“A state ‘legislature may not make a federal district court, a court of original jurisdiction, into an appellate tribunal or otherwise expand its jurisdiction.’”);
Woods Bros. Const. Co. v. Yankton Cnty., S.D., 54 F.2d 304, 308 (8th Cir. 1931)
(“[T]he jurisdiction of the federal court is prescribed by the Constitution and acts of Congress and cannot be restricted or enlarged by the statutes of a state or decisions of state courts.”).
Further, preclusive doctrines like res judicata and collateral estoppel are not jurisdictional.
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005)
(“Preclusion, of course, is not a jurisdictional matter.”);
Patterson v. United HealthCare Ins. Co., 76 F.4th 487, 495 (6th Cir. 2023).
THE RELEVANT PART OF THE FIFTH CIRCUIT OPINION FROM 2021
From the earlier 5th Circuit opinion (the July 20, 2021 opinion and restated in the revised October 19, 2021 opinion)
In addition, the Waldens assert that the district court erred in granting the motion for summary judgment because MTGLQ was simultaneously pursuing an expedited order for foreclosure in state court.
But this argument fails because a state court action for foreclosure under Texas Rule of Civil Procedure 736 is not a parallel proceeding.
It “has no res judicata, collateral estoppel, estoppel by judgment, or other effect in any other judicial proceeding.”
Tex. R. Civ. P. 736.9; accord Burciaga v. Deutsche Bank Nat’l Tr. Co., 871 F.3d 380, 387 (5th Cir. 2017)
(noting that Texas law states that a Rule 736 action has no preclusive effect and is subject to “collateral attack” in other courts).
AND THE RELEVANT PART FROM THE ADOPTED MAGISTRATE JUDGE’S REPORT
The Waldens argue that MTGLQ improperly filed this case while simultaneously maintaining the State Action in which MTGLQ is a petitioner and the Waldens are respondents, and thus abstention is appropriate.
Dkt. No. 7 at ¶¶ 27-38.
The State Action the Waldens rely on as a parallel proceeding, however, is a Rule 736 Application.
See Dkt. No. 7-1.
The Fifth Circuit has made clear that Rule 736 is “not a substitute for a judgment for judicial foreclosure.”
Meachum v. Bank of New York Mellon Tr. Co., 636 F. App’x 210, 213 (5th Cir. 2016)
(citing TEX. R. CIV. P. 735.3).
Rather, a proceeding under Rule 736 is “merely . . . a procedural device to obtain authorization to proceed with the remedy of foreclosure,” and “is without prejudice and has no res judicata, collateral estoppel, estoppel by judgment, or other effect in any other judicial proceeding.”
Id. (citing TEX. R. CIV. P. 736.9).
See also Burciaga v. Deutsche Bank Nat’l Tr. Co., 871 F.3d 380, 387 (5th Cir. 2017)
MTGLQ Investors, L.P. v. Walden, Jr
2019
October 11, 2019:
MTGLQ filed their federal lawsuit and accelerated all payments due on the Loan seeking nonjuducial and/or judicial foreclosure.
2020
Oct 14, 2020:
The district court entered its final judgment and an order authorizing the non-judicial foreclosure of the property.
2021
July 20, 2021:
The appellate court affirmed the district court’s judgment in the case MTGLQ Invs., L.P. v. Walden (5th Cir. 2021).
August 13, 2021:
U.S. Bank, which now holds the loan, sent a notice of default to the Waldens.
October 19, 2021:
The appellate court issued a substitute opinion, affirming summary judgment and denying rehearing and the motion to vacate and dismiss as moot.
November 2021:
U.S. Bank sent the Waldens another notice indicating the property would be sold at a foreclosure sale on January 4, 2022.
U.S. Bank Trust National Association, as Trustee of the Tiki Series IV Trust v. Walden
December 31, 2021:
U.S. Bank filed a lawsuit arguing it had a right to foreclose pursuant to the final judgment.
May 17, 2023:
A United States Magistrate Judge issued a report and recommendation recommending that the district court grant U.S. Bank’s motion for summary judgment.
Jun 28, 2023:
ORDER ADOPTING REPORT AND RECOMMENDATIONS. Signed by Judge Robert Pitman.
Sep. 11, 2023:
Notice of Appeal
Dec. 20, 2024:
Fifth Circuit Opinion – which took in excess of 15 months to release – well over the normal 9 months to issue the 3-panel’s opinion:
YOU HAVE TO SCROLL TO THE FINAL SECTION/PARAGRAPH TO GET TO THE KEY QUESTION IN THIS CASE
C. The lender’s ability to rescind/abandon acceleration
The Waldens argue that U.S. Bank is permitted to abandon acceleration despite this court’s judgment in the first suit because it was a “foreclosure pursuant to the security instrument—i.e., power of sale,” making it a non-judicial foreclosure.
This court’s judgment in the first suit, argue the Waldens, was based upon the state of acceleration but the acceleration was subsequently rescinded.
The Waldens contend that when acceleration is abandoned, the lender must seek a new order authorizing exercise of power of sale or judicial foreclosure.
U.S. Bank argues, in the alternative, that even if the prior acceleration was abandoned, summary judgment in its favor must be affirmed because it conclusively established that it is entitled to a second order authorizing foreclosure.
On remand, we direct the district court to address these arguments.
REMEMBER THE TIMELINE – THE DISPUTE IS ABOUT THE EVENTS AFTER THE FIFTH CIRCUIT’S FIRST OPINION AND AMENDED OPINION
2021
July 20, 2021:
The appellate court affirmed the district court’s judgment in the case MTGLQ Invs., L.P. v. Walden (5th Cir. 2021).
August 13, 2021:
U.S. Bank, which now holds the loan, sent a notice of default to the Waldens.
October 19, 2021:
The appellate court issued a substitute opinion, affirming summary judgment and denying rehearing and the motion to vacate and dismiss as moot.
November 2021:
U.S. Bank sent the Waldens another notice indicating the property would be sold at a foreclosure sale on January 4, 2022.
December 31, 2021:
U.S. Bank filed a lawsuit arguing it had a right to foreclose pursuant to the final judgment.
May 17, 2023:
A United States Magistrate Judge issued a report and recommendation recommending that the district court grant U.S. Bank’s motion for summary judgment.
The doctrine of abstention refers to a principle in U.S. federal law where federal courts may choose not to hear a case if doing so would interfere with certain state matters.
Essentially, federal courts can refrain from hearing cases that involve state law issues or state interests when those issues can be resolved in state courts.
The doctrine is rooted in the idea of judicial restraint and respect for state sovereignty.
It allows state courts to handle certain matters more appropriately, particularly when federal involvement might disrupt state policies or procedures.
There are several types of abstention, including:
1. Pullman Abstention (Railroad Commission of Texas v. Pullman Co.)
When it applies:
Pullman abstention is invoked when a federal court is asked to rule on a constitutional issue that may be avoided if the state court interprets an unclear state law.
Purpose:
The goal is to allow the state court to resolve the state law issue first, potentially eliminating the need for federal constitutional intervention.
Example:
If a case involves a challenge to the constitutionality of a state law, and there’s an unresolved question of state law that could resolve the case without federal constitutional analysis, the federal court may abstain in favor of the state court deciding the state law issue first.
2. Younger Abstention (Younger v. Harris)
When it applies:
Younger abstention is used when federal courts refrain from intervening in certain state judicial proceedings that involve important state interests, such as criminal prosecutions, certain civil enforcement actions, or parental rights cases.
Purpose:
The idea is to allow states to exercise their sovereign powers without federal court interference, particularly when there are ongoing state proceedings that implicate significant state interests.
Example:
If there is an ongoing state criminal prosecution or a state administrative action that implicates important state interests (e.g., child custody), the federal courts will typically not intervene, even if there is a federal constitutional challenge to the state law or action.
3. Colorado River Abstention (Colorado River Water Conservation District v. United States)
When it applies:
Colorado River abstention is applied when there are parallel federal and state court cases involving the same issues and the same parties. It applies in these proceedings.
Purpose:
The goal is to avoid the inefficiencies and potential conflicts of litigating the same issues in both state and federal courts.
Example:
If the same case is proceeding in both state and federal court, the federal court may decide to abstain in favor of the state court if certain conditions, like the adequacy of the state court to resolve the issue and considerations of judicial economy, are met.
4. Burford Abstention (Burford v. Sun Oil Co.)
When it applies:
Burford abstention is used when a federal court is asked to intervene in state matters that involve complex state regulatory schemes or policies. This is typically invoked in cases involving specialized areas of state law, such as natural resource regulation, family law, or public health.
Purpose:
The federal court abstains because the state has a strong interest in regulating certain matters in a way that might conflict with federal jurisdiction or involvement.
Example:
If the state has a complex regulatory framework for natural resources or public health, a federal court may abstain from deciding the case if it would interfere with the state’s comprehensive regulatory scheme.
Abstention in Texas State Courts versus Federal Courts
In Texas, as in other states, the state courts are separate from the federal courts, and the rules for jurisdiction and procedural law differ between the two systems. Federal courts generally have jurisdiction over cases that involve federal law, constitutional issues, or cases that meet specific criteria, such as diversity jurisdiction (where the parties are from different states and the amount in controversy exceeds $75,000).
State courts, such as those in Texas, typically handle cases that involve state law, including Texas statutes, local ordinances, and state constitutional issues. While state courts are generally competent to resolve both state and federal law claims, federal courts may still abstain from hearing cases that involve important state law issues or matters within the exclusive domain of state courts.
In terms of abstention:
Federal courts may abstain from exercising jurisdiction when the case involves sensitive state matters or when a state forum is better suited to resolve the dispute (e.g., when a case involves a state regulatory scheme, state constitutional law, or state procedures).
Texas state courts have the authority to hear all cases involving state law, and they may also handle cases involving federal law under certain circumstances (such as diversity jurisdiction). However, Texas courts would generally not abstain unless they are guided by principles of comity or federal law principles, such as those requiring deferral to federal courts in certain circumstances.
In short, while state courts have broad jurisdiction over state matters, federal courts may invoke abstention doctrines to avoid overstepping their jurisdiction or interfering with important state matters, leaving the resolution of certain issues to the state courts.
Do You notice when the Mayor hands out “Sofia Adrogue Day” and, annual “Year of Joy Day”-https://t.co/5gwm7bNYok
these persons of interest are usually embroiled in foreclosure proceedings? Probably good news he’s now bound for Washington D.C. @GregAbbott_TX @JohnCornyn @tedcruz pic.twitter.com/NtVLfe0TCK— lawsinusa (@lawsinusa) December 26, 2024
U.S. Bank Trust National Association, as Trustee of the Tiki Series IV Trust
versus
Jerry K. Walden, Jr., also known as Jerry K. Walden; Tamatha Walden
(Published)
Fifth Circuit
23-50662
Dec 20, 2024
REPUBLISHED BY LIT: DEC. 28, 2024
Before Clement, Graves, and Ramirez, Circuit Judges. James E. Graves, Jr., Circuit Judge:
An entity that owns and holds a loan agreement, including its note and the beneficiary interest in the security instrument, sought to foreclose on a property after borrowers failed to make required payments on the note;
this court entered a judgment for non-judicial foreclosure.
Below, the district court
denied the borrowers’ motion for extension of time,
adopted the magistrate judge’s report recommending that summary judgment be entered against the borrowers,
entered a declaratory judgment,
and
denied the borrowers’ motion for an altered judgment, which was stylized as a motion for a new trial.
The borrowers challenged the district court’s orders, alleging
abuse of discretion
and
plain error.
We conclude that the district court
did not abuse its discretion
but did err in finding that the entity did not manifest an unequivocal intent to abandon acceleration.
Thus, we AFFIRM in part, REVERSE in part, and REMAND for further proceedings consistent with this opinion.
A past flame: Medina who was at the ceremony, said,
“It was a historic day. Sofia Adrogué — the first judge for this new court; the first female judge for this court; the first Latina judge for this court; the first immigrant judge for this court…” https://t.co/m2k5FZLuRa— lawsinusa (@lawsinusa) December 26, 2024
BACKGROUND
On June 15, 2004, Jerry and Tamatha Walden received real property located at 1017 Burleson Street, San Marcos, Texas (the Property) via a Warranty Deed with a Vendor’s Lien.1
Years later, in 2008, the Waldens executed a $316,800 Texas Home Equity Note with a 5.5% annual interest rate payable to Nationstar Mortgage LLC.
This Note included a corresponding Texas Home Equity Security Instrument2 that granted Nationstar, the named beneficiary, a security interest in the Property.
Together, the Note and the Security Instrument made up the Loan Agreement.
The Loan Agreement provided that
(1) the Waldens were required to pay the Note’s principal and interest when due;
and
(2) that if they failed to do so, or they failed to comply with any of the covenants and conditions of the Security Instrument, the lender could enforce the Security Instrument by selling the Property according to the law and with the provisions set out in the Loan Agreement.
1 This document was recorded in the Official Public Records of Hays County, Texas on June 16, 2004, as Document No. 04017063.
2 This document was recorded in the Official Public Records of Hays County, Texas on April 18, 2008, as Document No. 2008-80010245.
In 2008, Nationstar assigned the Loan Agreement to the Federal National Mortgage Association (Fannie Mae).
Fannie Mae then assigned the Loan Agreement to MTGLQ Investors, L.P. and recorded the transfer on May 18, 2017.
After the Waldens failed to pay the amount they owed on the Loan Agreement, MTGLQ served a Notice of Acceleration on January 30, 2018.
Then, in 2019, MTGLQ filed suit.
In 2020, the district court entered its final judgment and an order authorizing the non-judicial foreclosure of the Property.
The Waldens appealed the district court’s judgment, which this court affirmed
[LIT: ON JULY 20, 2021]
MTGLQ Invs., L.P. v. Walden, 853 F. App’x 957 (5th Cir. 2021) (per curiam),
opinion withdrawn and superseded on denial of reh’g,
No. 20-50944, 2021 WL 4888870 (5th Cir. Oct. 19, 2021) (per curiam).
While the appeal was pending, MTGLQ assigned the Loan Agreement to U.S. Bank.3
U.S. Bank presently owns and holds the Loan Agreement, including the Note and its beneficiary interest in the Security Instrument.
On August 13, 2021—after this court affirmed the ruling of the district court—U.S. Bank and SN Servicing, its loan servicer, sent a notice of default to the Waldens.
The notice of default stated that the Waldens could cure the default by paying $346,060.32—less than the full accelerated amount due under the Loan Agreement.
Despite receiving the notice of default, the Waldens still did not pay on the Note.
This court issued a substitute opinion on October 19, 2021.
MTGLQ Invs., L.P. v. Walden, No. 20-50944, 2021 WL 4888870 (5th Cir. Oct. 19, 2021) (per curiam)
(affirming summary judgment, denying rehearing, and denying motion to vacate and dismiss as moot).
3 The Assignment of Deed of Trust was recorded on May 4, 2021, in the Official Public Records of Hays County, Texas as Document No. 21030450.
U.S. Bank then sent the Waldens another notice in November 2021 indicating that the Property would be sold at a foreclosure sale on January 4, 2022.
U.S. Bank filed this suit on December 31, 2021,
arguing that it had a right to foreclose pursuant to the final judgment the district court issued and this court affirmed.
U.S. Bank filed a motion for summary judgment.
On May 17, 2023, a United States Magistrate Judge issued a report and recommendation recommending that the district court grant U.S. Bank’s motion for summary judgment.
The report and recommendation allowed the parties to file written objections within fourteen days.
On May 31, 2023, the Waldens filed an unopposed motion to extend time to file objections.
The district court granted the motion and extended the deadline to June 9, 2023.
The day of the deadline, the Waldens filed a second motion to extend time to file objections that was the same in form and substance as the first.
On June 12, 2023, the Waldens filed a corrected motion, acknowledging their error in submitting an identical motion and requesting to extend the deadline again, until June 16, 2023.
The district court mooted the June 9th motion and denied the corrected motion.
On June 23, 2023, the Waldens filed a motion for leave with their objections attached.
On June 28, 2023, the district court found that there was no good cause to grant the Waldens leave to file their objections, adopted the magistrate judge’s report and recommendation, and entered a judgment for non-judicial foreclosure.
On July 26, 2023, the Waldens filed a motion for new trial, which the district court denied on August 10, 2023.
This appeal followed.
Read the Judge’s scathing Judgment of $4 million dollars. Remember, this series of litigation went on for 19 yrs with the lawyers for @DeutscheBank and ONITY refusing to stop their egregious and unlawful and illegal tactics to steal citizens homesteads.https://t.co/RxBRMDyK0R
— lawsinusa (@lawsinusa) December 20, 2024
STANDARD OF REVIEW
We “review a district court’s grant or denial of an extension of time under Federal Rule of Civil Procedure 6(b) for an abuse of discretion.”
L.A. Pub. Ins. Adjusters, Inc. v. Nelson, 17 F.4th 521, 524 (5th Cir. 2021) (citing Geiserman v. MacDonald, 893 F.2d 787, 793 (5th Cir. 1990));
Fed. R. Civ.P. 6(b).
The same is true of a district court’s denial of motions for a new trial.
Fornesa v. Fifth Third Mortg. Co., 897 F.3d 624, 627 (5th Cir. 2018) (citing United States v. Sertich, 879 F.3d 558, 562 (5th Cir. 2018)).
“When a party who is warned of the requirement to file timely objections to a magistrate judge’s report and recommendation fails to file any such objections, and the magistrate judge’s factual findings and legal conclusions are accepted by the district court, our review is for plain error.”
Alexander v. Verizon Wireless Servs., L.L.C., 875 F.3d 243, 248 (5th Cir. 2017).
“When, however, the district court undertakes an independent review of the record, our review is de novo, despite any lack of objection.” Id. (citing Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir. 2005)).
DISCUSSION
I. The district court did not abuse its discretion by denying the Waldens’ motion to extend time to file objections to the magistrate judge’s report and recommendation.
The trial court’s denial of the Waldens’ motion to extend time to file objections to the magistrate judge’s report and recommendation was not an abuse of discretion.
Under Federal Rule of Civil Procedure 72, a party has 14 days to file objections to the proposed findings and recommendations of the magistrate judge.
Fed. R. Civ. P. 72.
The Waldens did not file their objections in 14 days.
Instead, they filed a motion for an extension.
District courts have broad discretion in managing their dockets and deadlines.
See Versai Mgmt. Corp. v. Clarendon Am. Ins. Co., 597 F.3d 729, 741 (5th Cir. 2010) (per curiam).
Before the original deadline expires, a court may extend time for a party to act if there is good cause.
Fed. R. Civ. P. 6(b)(1)(A).
Using its discretion, the district court extended the Waldens’ deadline to file their objections until June 9, 2023.
However, the Waldens did not meet that deadline.
Instead, on June 9th, the Waldens requested a second extension with a motion that was similar in form and substance to their first extension request.
This extension request violated Western District of Texas Local Rule CV-7(g) because the Waldens failed to confer with opposing counsel, despite sufficient time before filing to do so.
W.D. TEX. CIV. R. 7(g).
Acknowledging their substantive and procedural error, the Waldens filed a corrected motion on June 12, 2023, three days after the deadline for the extension.
Under Federal Rule of Civil Procedure 6, the court may for good cause extend the time after it has expired “if the party failed to act because of excusable neglect.”
Fed. R. Civ. P. 6(b)(1)(B).
In assessing whether a party failed to act because of excusable neglect, a district court weighs the following factors:
“the danger of prejudice to the [opposing party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.”
United States v. Clark, 51 F.3d 42, 44 (5th Cir. 1995) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993)).
Employing these factors, the district court denied the request, noting that “when [it] alerted counsel to the error [in filing the same motion], counsel replied that the motion contained the correct dates, rather than first checking to determine whether a mistake had been made.”
The court also considered that the Waldens did not conference with U.S. Bank prior to the motion being filed on June 9th, so U.S. Bank did not have sufficient time to note opposition.
Taken together, the district court concluded the Waldens did not show good cause and denied their motion.
Given the imprudent reason for the delay, which was clearly in the Waldens’ control, this denial was well within the district court’s discretion pursuant to Federal Rule of Civil Procedure 6(b)(1)(B).
Therefore, the district court did not abuse its discretion.
II. The trial court did not abuse its discretion by denying the Waldens’ motion for leave to file objections to the magistrate judge’s report and recommendation.
The Waldens filed the motion for leave to file objections, like the second motion to extend time, without conference with U.S. Bank in violation of Western District of Texas Local Rule CV-7(g).
The district court denied the motion because it did not find good cause.
The Waldens argue that the denial was based on an error—the incorrect date on the motion.
They reason that this error established good cause to grant their motion for leave.
But the Waldens are mistaken.
Because the Waldens raised this issue after the final judgment, we analyze the denial of the motion for leave under Federal Rule of Civil Procedure 60(b).
A district court does not abuse its discretion by denying a Rule 60(b) motion when “the proffered justification for relief” is the mistake or carelessness of the party’s own counsel.
Lozano v. Donna Indep. Sch. Dist., 648 F. App’x 412, 413 n.2 (5th Cir. 2016) (quoting Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 356–57 (5th Cir. 1993)).
The Waldens, by admission, acknowledged that the motion was incorrect because of their mistake.
Thus, the district court’s denial was not an abuse of discretion.
Happy 86th Birthday @jcbrhodesia
You’ve been thru WWII, married a Paratrooper, lived in Africa during war and revolution. Now, living in America you have witnessed the type of Govt bribery n corruption that you thought was only for dictators. They underestimated your heart. xx pic.twitter.com/T1AWSBtuHh— lawsinusa (@lawsinusa) November 25, 2024
III. Upon de novo review, we conclude that U.S. Bank owned the loan and had standing, but it abandoned acceleration on the loan via a notice that unequivocally manifested its intent to abandon.
In its order denying the motion for the new trial, the trial court noted that the Waldens’ objections were not timely filed.
This means it could have performed plain error review.
Alexander, 875 F.3d at 248.
Instead, the district court acknowledged that “even considering their objections along with Plaintiff’s response, under a de novo standard, the [district court] agrees” with the magistrate judge’s report and recommendation.
As the district court indicated it undertook an “independent review of the record, our review is de novo,” id., and we “apply the same standard applicable to the district court.”
Carnegie Techs., L.L.C. v. Triller, Inc., 39 F.4th 288, 293 (5th Cir. 2022).
“A ‘court shall grant summary judgment if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.’”
Id. (quoting Fed. R. Civ. P. 56(a)).
“A movant is ‘entitled to a judgment as a matter of law [when] the nonmoving party has failed to make a sufficient showing on an essential element of [its] case with respect to which [it] has the burden of proof.”
Id. (alterations in original) (quoting Terral River Serv., Inc. v. SFC Marine Inc., 20 F.4th 1015, 1018 (5th Cir. 2021)).
A. The ownership of the loan/standing
The Waldens argue that U.S. Bank does not have standing to foreclose on the loan because MTGLQ improperly assigned the loan to U.S. Bank.
According to the Waldens, Fannie Mae did not have authority to transfer the Loan Agreement to MTGLQ because the Federal Housing Finance Agency (FHFA) was Fannie Mae’s receiver.
Therefore, the argument goes, MTGLQ did not transfer any interest in the Loan Agreement to U.S. Bank because it never had an interest to transfer.
The Housing and Economic Recovery Act of 2008, 12 U.S.C. § 4501 et seq., “created the [FHFA], ‘an independent agency’ tasked with regulating [Fannie Mae and Freddie Mac] and, if necessary, stepping in as their conservator or receiver.”
Collins v. Yellen, 594 U.S. 220, 226–27 (2021) (citing 12 U.S.C. §§ 4511, 4617).
As conservator or receiver of Fannie Mae, the FHFA may “transfer or sell any asset or liability of the regulated entity in default, and may do so without any approval, assignment, or consent with respect to such transfer or sale.” 12 U.S.C. § 4617(b)(2)(G).
The role of the FHFA, as conservator, is to oversee Fannie Mae, not to control daily operations.
See Collins, 594 U.S. at 229–30.
Fannie Mae, then, continues to operate as a business corporation, including the ability to transfer assets, although the FHFA retains ultimate authority.
See Conservatorship, FHFA, https://www.fhfa.gov/conservatorship (last visited December 18, 2024));
12U.S.C. § 1719(a)(2).
Thus, when Fannie Mae assigned the Loan Agreement to MTGLQ, it was well within its statutory authority to do so, and it properly transferred the interest.
Likewise, MTGLQ properly transferred the interest in the Loan Agreement to U.S. Bank, making U.S. Bank the owner and holder of the loan.
The Waldens also argue that U.S. Bank did not suffer a concrete injury.
This is incorrect.
Because U.S. Bank owns and holds the loan that the Waldens defaulted on, it has suffered a concrete injury in the form of financial loss.
See Texas v. United States, 787 F.3d 733, 748 (5th Cir. 2015)
(“It is well established that a financial loss generally constitutes an injury.”).
Further, U.S. Bank’s concrete injury is traceable to the Waldens’ nonpayment and is redressable through foreclosure.
Therefore, U.S. Bank has standing.
See Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409 (2013)
(“To establish Article III standing, an injury must be ‘concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.’” (quoting Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 149 (2010))).
The Waldens also argue that U.S. Bank’s request for a declaratory judgment is not a sufficient injury-in-fact to confer standing because it asks this court to issue an advisory opinion.
The Waldens are correct that a court “cannot render an advisory opinion on hypothetical or abstract facts.”
Hodgson v. H. Morgan Daniel Seafoods, Inc., 433 F.2d 918, 920 (5th Cir. 1970).
But declaratory judgments are not advisory opinions based on hypothetical or abstract facts.
Instead, declaratory judgments permit courts to “declare the rights and other legal relations of any interested party” where an “actual controversy” exists.
28 U.S.C. § 2201(a) (emphasis added).
U.S. Bank requests a declaratory judgment that the August 13, 2021 notice it sent to the Waldens did not affect the final judgment in the first suit.
The Waldens disagree that is the case.
As these parties have opposing interests that affect their respective rights and obligations, an actual controversy exists.
This controversy requires judicial resolution to determine if U.S. Bank can foreclose on the Property, making the dispute ripe.
Thus,
U.S. Bank is not requesting an advisory opinion.
Taken together, we conclude that U.S. Bank owns the loan and had standing.
ORDERED, ADJUDGED AND DECREED that due to event of default on the Note, Plaintiff, or its successors or assigns, may enforce its Security Instrument against the Property through non-judicial foreclosure of the Property – Judge David Hittner, signed 22nd day of January, 2021. https://t.co/kEGIujhuei pic.twitter.com/WcislZbVSb
— lawsinusa (@lawsinusa) December 28, 2024
B. The status of acceleration of the loan
The magistrate judge’s report and recommendation, which was adopted by the district court after de novo review, determined that U.S. Bank did not abandon acceleration of the loan.
The Waldens, however, argue that the August 13, 2021 notice was an “unequivocal express notice of abandonment of any prior acceleration.”
U.S. Bank contends, and the district court agreed, that the notice was inadvertently sent and that the notice, by itself, did not manifest an unequivocal intent to abandon acceleration as U.S. Bank later sent the Waldens another notice of foreclosure sale on November 22, 2021.
However, binding precedent forecloses that conclusion.
“The acceleration of a note can be abandoned ‘by agreement or other action of the parties.’”
Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015) (quoting Khan v. GBAK Props., Inc., 371 S.W.3d 347, 353 (Tex. App.–Houston [1st Dist.] 2012, no pet.)).
“Texas courts have framed the issue of abandonment of acceleration by reference to traditional principles of waiver.”
Id. at 105.
Under Texas law, “[t]he elements of waiver include
(1) an existing right, benefit, or advantage held by a party;
(2) the party’s actual knowledge of its existence;
and
(3) the party’s actual intent to relinquish the right, or intentional conduct inconsistent with the right.”
Thompson v. Bank of America Nat’l Ass’n, 783 F.3d 1022, 1025 (5th Cir. 2015) (quoting Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008)).
“The central element is intent, which must be unequivocally manifested.”
Id.
In Boren, this court held that a “notice unequivocally manifested an intent to abandon” acceleration when it “informed [the party] that the total amount necessary to bring their loan current was the amount due under the original terms of the Note and that the bank would accelerate the maturity date of the loan if the [party] failed to pay [the amount].”
807 F.3d at 106 (emphasis added).
With this in mind, we look at U.S. Bank’s notice to the Waldens, which stated:
To the extent you have received demand letters with intent to accelerate the obligations under the above subject Note and any notice of acceleration of said Note prior to the date of this demand letter, be advised that
any such demands or notices of acceleration have been withdrawn, cancelled, and abandoned.
(emphasis omitted in part).
This notice expressly withdraws, cancels, and abandons any demands or notices of acceleration, and provides the Waldens with the “opportunity to avoid foreclosure.”4
Boren, 807 F.3d at 106.
Boren is unequivocally clear that a written notice constitutes intent to abandon acceleration under Texas Civil Practice and Remedies Code
§ 16.038.5 Id.;
accord Jatera Corp. v. US Bank Nat’l Ass’n, 917 F.3d 831, 835
4 What’s more, the opportunity to avoid foreclosure for the Waldens is less stringent than of the mortgagees in Boren as it is not premised on the condition that the Waldens pay the full amount.
5 U.S. Bank cites Lyons v. Select Portfolio Servicing Inc., 748 F. App’x 610 (5th Cir. 2019) (per curiam) for the proposition that a post-acceleration statement that identifies the arrearage the borrower can pay to avoid foreclosure will not abandon acceleration if the lender persists in its efforts to foreclose.
But Lyons is inapposite because it is distinguishable.
As Lyons makes clear, the key difference between cases like Lyons and cases like Boren is that in Boren “a mortgagee accelerated a loan under the terms of the note and deed of trust but later ‘manifested an intent to abandon [the] previous acceleration.’”
Lyons, 748 F. App’x at 611 (alteration in original) (quoting Boren, 807 F.3d at 106).
In Lyons, “the Bank never wavered from accelerating the loan.”
Id.
Unlike the mortgagee in Lyons and like the mortgagee in Boren, U.S. Bank did not merely send a “monthly mortgage statement and reinstatement notice [that] referenced different amounts from the original loan amount.”
Id. at 611–12.
Instead, it sent a document with clear language demonstrating abandonment, i.e., “any such demands or notices of acceleration have been withdrawn, cancelled, and abandoned ”
Poole v. City of Shreveport, 13 F.4th 420, 426 (5th Cir. 2021).
Thus, even if Lyons and Boren are in conflict—and the court is not convinced they are—Boren controls.
Insofar as the Boren and Lyons holdings present any tension in the case law, “we are bound by this Circuit’s rule of orderliness.
Under our rule of orderliness, one panel of our court may not overturn another panel’s decision, absent an intervening change in the law, such as by a statutory amendment, or the Supreme Court, or our en banc court.”
Mercado v. Lynch, 823 F.3d 276, 279 (5th Cir. 2016) (cleaned up).
“Under our rule of orderliness, the earlier published decisions control over the later unpublished ones.”
(5th Cir. 2019);
Martin v. Fed. Nat’l Mortg. Ass’n, 814 F.3d 315, 318 (5th Cir. 2016);
cf. Sexton v. Deutsche Bank Nat’l Tr. Co., 731 F. App’x 302, 308 (5th Cir. 2018) (per curiam)
(“Our court has consistently held a lender demonstrates abandonment where the lender, after accelerating a debt, sent subsequent notices of default seeking only the amount overdue and warning borrowers that, in the event of failure to cure, the debt would be accelerated.”).
Because the district court’s grant of summary judgment is contrary to controlling circuit precedent, we
REVERSE the district court’s order granting summary judgment,
VACATE the judgment it entered,
and
REMAND the matter to the district court for further proceedings consistent with Boren.
C. The lender’s ability to rescind/abandon acceleration
The Waldens argue that U.S. Bank is permitted to abandon acceleration despite this court’s judgment in the first suit because it was a “foreclosure pursuant to the security instrument—i.e., power of sale,” making it a non-judicial foreclosure.
This court’s judgment in the first suit, argue the Waldens, was based upon the state of acceleration but the acceleration was subsequently rescinded.
The Waldens contend that when acceleration is abandoned, the lender must seek a new order authorizing exercise of power of sale or judicial foreclosure.
U.S. Bank argues, in the alternative, that even if the prior acceleration was abandoned, summary judgment in its favor must be affirmed because it conclusively established that it is entitled to a second order authorizing foreclosure.
On remand, we direct the district court to address these arguments.
***
We AFFIRM in part, REVERSE in part, and REMAND for further proceedings consistent with this opinion.
U.S. Bank Trust National Association, as Trustee of the Tiki Series IV Trust v. Walden
(1:21-cv-01188)
District Court, W.D. Texas
DEC 31, 2021
REPUBLISHED BY LIT: DEC. 28, 2024
MEMORANDUM AND OPINION
The defendants, Deutsche Bank National Trust Company and Select Portfolio Servicing, Inc., removed this case on the basis of diversity jurisdiction.
(Docket Entry No. 1).
The plaintiff, Joe Alfred Izen, Jr., moves to remand.
(Docket Entry No. 5).
The issue is whether the court from which the case was removed, the 333rd Judicial District Court of Harris County, Texas, has prior exclusive jurisdiction.
The court holds that it does, and accordingly grants the motion to remand.
I. Background
This controversy began in February 2014, when Deutsche Bank applied to the 333rd Judicial District Court for an order allowing it to foreclose on a lien it held on the home of Afton Jane Izen, the plaintiff’s sister.
(Docket Entry No. 5-6).
Deutsche Bank non-suited the action in November 2015.
(Docket Entry No. 5-11).
In February 2018, Deutsche Bank filed another action in the 333rd Judicial District Court, again seeking to foreclose on Ms. Izen’s home.
(Docket Entry No. 5-15).
A month before her death, Ms. Izen granted her brother power of attorney.
(Docket Entry No. 5-18 at 2).
Mr. Izen conveyed his sister’s home by special warranty deed a few days before her death.
(Docket Entry No. 5-19 at 2; Docket Entry No. 5-20).
Deutsche Bank added Mr. Izen as a defendant in the foreclosure action.
In May 2023, Mr. Izen filed his own action, which he calls his “independent suit,” against Deutsche Bank in Texas state court, alleging that foreclosure is barred by the statute of limitations.
(Docket Entry No. 5-23 at 12–13).
The action was promptly transferred to the 333rd Judicial District Court of Harris County.
(Docket Entry No. 5-21).
Mr. Izen then moved to dismiss Deutsche Bank’s suit, arguing that his “independent suit” mandated dismissal under Texas Rule of Civil Procedure 736.11.1
(Docket Entry No. 14-2 at 2–3).
Deutsche Bank removed Mr. Izen’s “independent suit” to this court on the same day that Mr. Izen filed his motion to dismiss, which is still pending.
Mr. Izen moves to remand on the following grounds:
(1) Deutsche Bank waived its right to remove by filing its action in state court and participating extensively in that action;
(2) removal became unavailable once Izen’s “independent suit” was transferred to the 333rd Judicial District Court;
(3) the property’s occupant is an “indispensable party” whose joinder destroys complete diversity;
and
(4) the 333rd Judicial District Court has exclusive in rem jurisdiction over “the res”—i.e., “Deutsche Bank’s alleged home equity lien on 6433 Roos Road and that lien’s enforcement.”
(Docket Entry No. 5 at 12).
Mr. Izen’s last argument is meritorious.
1 Rule 736.11 provides, in relevant part:
(a) A proceeding or order under this rule is automatically stayed if a respondent files a separate, original proceeding in a court of competent jurisdiction that puts in issue any matter related to the origination, servicing, or enforcement of the loan agreement, contract, or lien sought to be foreclosed prior to 5:00 p.m. on the Monday before the scheduled foreclosure sale.
. . .
(c) Within ten days of filing suit, the respondent must file a motion and proposed order to dismiss or vacate with the clerk of the court in which the application was filed giving notice that respondent has filed an original proceeding contesting the right to foreclose in a court of competent jurisdiction.
If no order has been signed, the court must dismiss a pending proceeding.
If an order has been signed, the court must vacate the Rule 736 order.
II. Legal Standard
When a court of competent jurisdiction assumes jurisdiction over an action in rem, no other court may exercise concurrent jurisdiction “in rem or quasi in rem respecting the same property until the first court’s jurisdiction is properly terminated.”
Key v. Wise, 629 F.2d 1049, 1059 (5th Cir. 1980).
This rule is “especial[ly] important[t] in its application to Federal and state courts.”
Id. (quoting Farmers Loan & Trust Co. v. Lake St. Elevated R. Co., 177 U.S. 51, 61 (1990)).
The rule “is not ‘restricted in its application to cases where property has been actually seized under judicial process before a second suit is instituted in another court, but it often applies as well where suits are brought to enforce liens against specific property, to marshal assets, administer trusts, or liquidate insolvent estates, and in suits of a similar nature where, in the progress of the litigation, the court may be compelled to assume the possession and control of the property to be affected.’”
First Nat. Bank v. Charles Broadway Rouss, Inc., 61 F.2d 489, 491 (5th Cir. 1932) (quoting Farmers Loan & Trust Co., 177 U.S. at 61).
An action “to foreclose a specific lien” is an action in rem.
See Bryan v. Speakman, 53 F.2d 463, 466 (5th Cir. 1931); Hibernia Energy III, LLC v. Ferae Naturae, LLC, 668 S.W.3d 745, 758 (Tex. App.—El Paso 2022, no pet.)
(“In general, an action to foreclose on a lien is an ‘in rem’ proceeding”).
III. Analysis
The 333rd Judicial District Court has prior exclusive jurisdiction.
Deutsche Bank filed its action in state court in February 2018, long before this case was removed to this court.
That action, “to foreclose a specific lien,” is an action in rem.
The 333rd Judicial District Court acquired jurisdiction “when the petition was sanctioned by the judge of that court, ordered filed, and filed.”
Bryan, 53 F.2d at 466.
This case is also an action in rem concerning the same property.
(See Docket Entry No. 1-4 at ¶¶ 7–8); see Sloan v. Thompson, 4 Tex. Civ. App. 419, 424 (1893, no writ)
(an action to remove clouds on title is “a proceeding in rem”).
Accordingly, the 333rd Judicial District Court’s first-acquired jurisdiction over the res precludes this court’s exercise of jurisdiction.
The court is unpersuaded by the defendants’ arguments that the doctrine of prior-exclusive-jurisdiction does not apply.
The defendants note that Mr. Izen seeks dismissal of Deutsche Bank’s action, (Docket Entry No. 14 at 2–3), but that is immaterial to whether the state court has exclusive jurisdiction.
Mr. Izen’s motion to dismiss is pending, and the case is still active.
The defendants also rely on U.S. Bank N. A. as Tr. of Holders of J.P. Morgan Mortgage Acquisition Tr. 2006-WMC4 Asset Backed Pass-Through Certificates, Series 2006-WMC4 v. Morris, 2019 WL 5595235, at *3 (W.D. Tex. Oct. 30, 2019), report and recommendation adopted sub nom. U.S. Bank N.A. v. Morris, 2019 WL 8501026 (W.D. Tex. Nov. 19, 2019).
In that case, the Western District of Texas held that the doctrine of prior-exclusive-jurisdiction did not bar federal jurisdiction despite identical earlier-filed state actions because
(1) the state-court actions had since been closed,
and
(2) Texas Rule of Civil Procedure 736.9 provides that “[a]n order granting or denying a foreclosure order ‘is without prejudice and has no res judicata, collateral estoppel, estoppel by judgment, or other effect in any other judicial proceeding.’”
Id. at *3.
The court disagrees with U.S. Bank’s holding that Rule 736.9 allows federal courts to exercise concurrent in-rem jurisdiction with Texas courts.
“The existence of federal jurisdiction is a matter of federal, not state law.”
Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 829 (1969).
State law cannot expand federal jurisdiction.
See Chicago, R.I. & P.R. Co. v. Stude, 346 U.S. 574, 581 (1954)
(“A state ‘legislature may not make a federal district court, a court of original jurisdiction, into an appellate tribunal or otherwise expand its jurisdiction.’”);
Woods Bros. Const. Co. v. Yankton Cnty., S.D., 54 F.2d 304, 308 (8th Cir. 1931)
(“[T]he jurisdiction of the federal court is prescribed by the Constitution and acts of Congress and cannot be restricted or enlarged by the statutes of a state or decisions of state courts.”).
Further, preclusive doctrines like res judicata and collateral estoppel are not jurisdictional.
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005)
(“Preclusion, of course, is not a jurisdictional matter.”);
Patterson v. United HealthCare Ins. Co., 76 F.4th 487, 495 (6th Cir. 2023).
IV. Conclusion
The motion to remand is granted.
_________________________
SIGNED on October 2, 2023, at Houston, Texas.
Lee H. Rosenthal United States District Judge
REPUBLISHED BY LIT: DEC. 28, 2024
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