Upscale Builders, Inc. v. PHH Mortgage Corporation
(4:23-cv-02939)
District Court, S.D. Texas, Judge Al ‘Bent’ Bennett
DEC 22, 2024
Now consider this: No pleadings whatsoever by Upscale and no appearance by the Shack.
It takes 498 days after removal before M&R is issued
Above is the date LIT Last updated this article.
REMINDER OF THE FACTS EXCLUDED FROM MAGISTRATE JUDGE YVONNE HO’s M&R:
Sanctioned lawyer Ray Shackelford is another Texas lawyer and legal bandit above the law. He has submitted a lawsuit when the facts are clear that Cynthia Eneyana had prior foreclosure judgments but these facts were excluded from his filing on behalf of Upscale.
And then there’s Eneyana’s criminal conviction for mortgage fraud. She went to prison for 5 years and has restitution order for the sum of $1.7M. How much did she repay and why is the Quail property not part of the DOJ’s asset forfeiture?
MEMORANDUM AND RECOMMENDATION
This mortgage dispute was referred to the undersigned judge.
Dkt. 14.
Defendant PHH Mortgage Corporation (“PHH”) has filed a motion for judgment on the pleadings.
Dkt. 8.
Because Plaintiff Upscale Builders, Inc. (“Upscale Builders”) did not respond, the motion is deemed unopposed.
See S.D. Tex. L.R. 7.4; Dkt. 10
(PHH’s notice of failure to oppose).
After carefully considering the motion, the record, and the applicable law, it is recommended that PHH’s motion be granted, and that Upscale Builders’s claims be dismissed with prejudice.
Background
The following facts are drawn from Upscale Builders’s petition, the exhibits attached to and incorporated by the petition, the record in this case, and certain property records of which this Court takes judicial notice.
Upscale Builders’s allegations are taken as true at this stage.
This dispute concerns real property at 20518 Quail Chase Drive, in Katy, Texas 77450 (the “Property”).
LIT: SALE PENDING PER ZILLOW…
Cynthia Eneanya originally purchased the Property for $230,000 around June 16, 2005.
Dkt. 1-3 at 4.
The Property was secured by a Deed of Trust in favor of the lender, GreenPoint Mortgage Funding, Inc., and its nominee, MERS.
See Deed of Trust, No. Y550093, at 1 (Harris Cnty. Prop. Records June 20, 2005).
Over the years, several different entities serviced the mortgage, with PHH taking over those duties in 2022.
See Dkt. 1-3 at 4.
During that time, Eneanya suffered medical issues that affected her ability to maintain her mortgage payments.
See id.
Eneanya contacted a real estate broker, Natasha Martinez, who connected Eneanya with Upscale Builders.
See id.
Upscale Builders entered into a contract to purchase Eneanya’s interest in the Property.
Id. at 4, 16-17; Dkt. 1-4 at 1-9 (PX-A to the petition).
After receiving the payoff amount from PHH, Upscale Builders sent that amount to PHH in December 2022.
Dkt. 1-3 at 4; Dkt. 1-4 at 11
(PX-B, email noting wire transfer in unspecified amount).
Eneanya and her sister, Rita Nkolo, executed a special warranty deed granting to Upscale Builders their interests in the Property.
Dkt. 1-3 at 4; Dkt. 1-3 at 12-13
(PX-D, December 2, 2022 Special Warranty Deed).
Upscale Builders recorded its interest in the real property records.
Dkt. 1-3 at 5; Dkt. 1-4 at 14
(December 5, 2022 recordation of Special Warranty Deed).
Eneanya passed away on January 14, 2023.
Dkt. 1-3 at 5.
In June 2023, Upscale Builders received notice that Eneanya’s mortgage debt had not been fully satisfied.
See Dkt. 1-3 at 15
(affidavit of Natasha Martinez, attached to original petition).
Upscale Builders discovered that “there was a miscommunication between Ms. Eneanya and PHH Mortgage as to the amount necessary to reinstate the loan and the amount to pay off the mortgage debt.”
Id.
PHH set a foreclosure sale for July 5, 2023.
Id. at 3.
Two days before the scheduled sale, Upscale Builders sued PHH in Texas state court, asserting claims for
(1) quiet title;
(2) breach of the common-law duty of good faith and fair dealing;
(3) violations of the Texas Property Code § 51.002(b)(3) and (d).
Dkt. 1-3 at 6-7.
PHH sought a temporary restraining order [ LIT Upscale, not PHH] and an injunction to prevent PHH from foreclosing on the Property.
Id. at 7-11.
The trial court issued a temporary restraining order (“TRO”), Dkt. 1- 5 at 2-3, which was later extended until July 31, 2023, Dkt. 1-9 at 2.
PHH appeared and, after the TRO expired, removed the case to this Court on the basis of diversity jurisdiction.
See Dkt. 1-10 (August 9, 2023 answer); Dkt. 1 at 2 (August 10, 2023 notice of removal).
A few weeks before the deadline for filing dispositive motions, see Dkt. 6 (July 30, 2024 deadline), PHH filed a motion under Fed. R. Civ. P. 12(c) for judgment on the pleadings, Dkt. 8 (filed May 6, 2024).
Upscale Builders did not respond to the motion.
A few months later, PHH requested a stay of all remaining deadlines pending a ruling on its motion, see Dkt. 11, which the Court granted, Dkt. 13.
The Court then referred PHH’s Rule 12(c) motion to the undersigned judge.
Dkt. 14.
Legal standard
A party may move for judgment on the pleadings “[a]fter the pleadings are closed—but early enough not to delay trial ….”
Fed. R. Civ. P. 12(c).
“The standard for deciding a Rule 12(c) motion is the same standard used for deciding motions to dismiss pursuant to Rule 12(b)(6).”
Q Clothier New Orleans, L.L.C. v. Twin City Fire Ins. Co., 29 F.4th 252, 256 (5th Cir. 2022).
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
That is, “the complaint
(1) on its face
(2) must contain enough factual matter (taken as true)
(3) to raise a reasonable hope or expectation
(4) that discovery will reveal relevant evidence of each element of a claim.”
See Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009) (footnotes omitted).
When resolving a Rule 12(c) motion, the Court limits its review to the complaint and
“(a) documents attached to the complaint or identified as central to the claims made therein;
(b) documents attached to the motion to dismiss that are referenced in the complaint;
and
(c) documents that are subject to judicial notice as public record.”
Sparks v. Tex. Dep’t of Transp., 144 F. Supp. 3d 902, 903 (S.D. Tex. 2015) (collecting authorities).
If the Court opts to consider any other extrinsic material, then the motion must be converted into one for summary judgment.
See Ace Am. Ins. Co. v. Huntsman Corp., 255 F.R.D. 179, 188 (S.D. Tex. 2008) (citing Fed. R. Civ. P. 12(d)).
Analysis
I. Upscale Builders failed to state a plausible quiet title claim.
PHH argues that Upscale Builders’s allegations fail to state a cognizable claim for quiet title.
Dkt. 8 at 4-5.
In Texas, a quiet title claim “relies on the invalidity of the defendant’s claim to the property.”
Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App.—Houston [1st Dist.] 2012, pet. denied)
(reversing judgment on quiet title because plaintiff failed to establish that defendant’s lien was invalid).
“[A] plaintiff must show the following:
(1) an interest in specific property;
(2) that title to the property is affected by defendants’ claim;
and
(3) that the claim, although facially valid, is invalid or unenforceable.”
Trotter v. Bank of Am., N.A., 2013 WL 12106138, at *4 (S.D. Tex. June 28, 2013) (citing Sadler v. Duvall, 815 S.W.2d 285, 293 n.2 (Tex. App.—Texarkana 1991, writ denied)).
To obtain relief, a party “must prove, as a matter of law, right, title, or ownership in himself with sufficient certainty to enable the court to see that he has a right of ownership and that the alleged adverse claim is a cloud on the title that equity will remove.”
Hahn v. Love, 321 S.W.3d 517, 531-32 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (collecting authorities).
As PHH argues, the quiet claim falters on the third element because there is no indication that PHH’s interest in the Property is invalid or otherwise unenforceable.
See Dkt. 8 at 4-5.
Rather, Upscale Builders acknowledged that PHH is the mortgage servicer, see Dkt. 1-3 at 4, which makes PHH a beneficiary under the 2005 Deed of Trust between Eneanya, the mortgagor and prior owner of the Property, and the mortgagee.1
See Deed of Trust, No. Y550093, at 3 (Harris Cnty. Prop. Records June 20, 2005).
Upscale Builders also admits that PHH was not paid all amounts owed under the mortgage, due to an unspecified “miscommunication.”
See Dkt. 1-3 at 15.
Upscale Builders offers no theory that would allow it to eradicate PHH’s interest in the Property despite having paid the “wrong amount” to PHH.
See id. at 6 (conceding that “there is still an unpaid balance owed to [PHH]”).
Moreover, Upscale Builders acquired the Property through a Special Warranty Deed that was subject to “any liens securing the payment of any debt,” Dkt. 1-4 at 12, which includes the 2005 Deed of Trust.
1 As noted earlier, the Court takes judicial notice of the 2005 Deed of Trust, which is a matter of public record.
See Fed. R. Evid. 201; Rentfrow v. JP Morgan Chase Bank, Nat’l Ass’n, 2020 WL 1893558, at *2 (S.D. Tex. Mar. 25, 2020)
(taking judicial notice of a deed of trust),
adopted by 2020 WL 1891848 (S.D. Tex. Apr. 16, 2020);
see also Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007)
(endorsing judicial notice for “matters of public record”).
Without any basis to invalidate the 2005 Deed of Trust, the quiet title claim fails.
II. Texas law does not impose on PHH a common law duty of good faith and fair dealing.
PHH is also correct that Upscale Builders’s claim premised on a common law duty of good faith and fair dealing is barred as a matter of law.
“The duty of good faith and fair dealing does not exist in Texas unless intentionally created by express language in a contract or unless a special relationship of trust and confidence exists between the parties to the contract.”
Lovell v. W. Nat’l Life Ins. Co., 754 S.W.2d 298, 302 (Tex. App.—Amarillo 1988, writ denied) (citing Arnold v. Nat’l Cnty. Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987)).
No such circumstance exists here.
Upscale Builders has not articulated any basis for imposing such a common law duty on PHH.
PHH has no relationship with Upscale Builders, contractual or otherwise.
And even the Deed of Trust with Eneanya does not give rise to a duty of good faith.
See Chapa v. Chase Home Fin. LLC, 2010 WL 5186785, at *6 (S.D. Tex. Dec. 15, 2010)
(“The relationship of mortgagor and mortgagee ordinarily does not involve a duty of good faith.”) (quotation omitted).
Upscale Builder’s claim for breach of the duty of good faith and fair dealing should be dismissed.
III. Upscale Builders fails to state a claim under Texas Property Code § 51.002.
As for Upscale Builders’s claim under Texas Property Code § 51.002, PHH contends
(1) there is no private right of action;
and
(2) the claim fails, in any event, because the statutory notice provisions do not apply to Upscale Builders;
and
(3) the claim is also barred because no foreclosure sale has occurred.
The Court declines to reach PHH’s first contention because its remaining arguments are dispositive.2
First, Section 51.002 does not require a mortgage servicer to send notices to a property’s subsequent purchaser.
Instead, Section 51.002(d) requires the mortgage servicer to “serve a debtor in default under a deed of trust … with written notice by certified mail stating that the debtor is in default … and giving the debtor at least 20 days to cure the default before notice of sale can be given ….”
Tex. Prop. Code § 51.002(d) (emphasis added).
Similarly, with respect to foreclosure sales, Section 51.002(b)(3) states that a mortgage servicer must “serv[e] written notice of the sale by certified mail on each debtor who … is obligated to pay the debt.”
Id. § 51.002(b)(3) (emphasis added).
Upscale Builders neither claims nor shows that it was the “debtor” under the mortgage.
Rather, as Section 51.002 reflects, “[t]here is no legal
2 Authorities are split on whether Texas law recognizes a cause of action for violations of Texas Property Code § 51.002.
See Rucker v. Bank of Am., N.A., 806 F.3d 828, 830 & n.2 (5th Cir. 2015) (marshaling various district court decisions).
requirement that personal notice of a foreclosure be sent to persons” like Upscale Builders who are “not parties to the deed of trust.”
See Rodriguez v. Ocwen Loan Servicing, LLC, 306 F. App’x 854, 856 & n.8 (5th Cir. 2009)
(quoting Stanley v. CitiFinancial Mortg. Co., 121 S.W.3d 811, 817 (Tex. App.— Beaumont 2003, pet. denied)).
Second, a Section 51.002(d) claim cannot be brought when, as here, no foreclosure sale has occurred.
“[C]laims for violating [Section 51.002’s] notice requirements are cognizable only after a foreclosure.”
Kew v. Bank of Am., N.A., 2012 WL 1414978, at *6 (S.D. Tex. Apr. 23, 2012)
– 2012 and still in default in 2024 but when you’re a doctor in Houston….
(collecting authorities);
see also, e.g., Perez v. Midfirst Bank, 2019 WL 6687665, at *3 (S.D. Tex. Dec. 6, 2019) (“[T]here is no claim under Section 51.002(d) where no foreclosure has taken place.”). Although PHH initially scheduled a foreclosure sale, see Dkt. 1-3 at 3, the sale did not transpire, see Dkt. 1-5 (TRO); Dkt. 1-9 (extending TRO). Upscale Builders’s Section 51.002 claim should be dismissed.
IV. There is no basis for injunctive relief or attorneys’ fees.
The foregoing analysis negates Upscale Builders’s remaining requests for relief.
Injunctive relief is unavailable when all other claims have been dismissed.
See Reyes v. N. Tex. Tollway Auth., 861 F.3d 558, 565 n.9 (5th Cir. 2017)
(requests for declaratory relief “must be supported by some underlying cause of action”);
Torres-Aponte v. JP Morgan Chase Bank, N.A., 639 F. App’x 272, 274 (5th Cir. 2016) (per curiam)
(“Injunctive relief is a remedy and not an independent cause of action under Texas law.”).
Without a viable claim, Upscale Builders also cannot recover attorneys’ fees.
See, e.g., Futrell v. JPMorgan Chase Bank, NA, 2019 WL 3948222, at *9 (N.D. Tex. July 29, 2019)
(dismissing request for attorneys’ fees in mortgage case when other claims were dismissed),
adopted by 2019 WL 3947713 (N.D. Tex. Aug. 21, 2019).
The Court further notes that Upscale Builders has not responded to PHH’s motion, much less sought leave to amend.
Regardless, because the claims are legally barred, amendment would be futile.
Accordingly, this Court should dismiss Upscale Builders’s claims with prejudice.
Recommendation
For the foregoing reasons, it is RECOMMENDED that Defendant PHH Mortgage Corporation’s motion for judgment on the pleadings under Fed. R. Civ. P. 12(c) (Dkt. 8) be GRANTED, and that all of Plaintiff Upscale Builders, Inc.’s claims be DISMISSED WITH PREJUDICE.
It is further RECOMMENDED that this Court enter a separate final judgment pursuant to Fed. R. Civ. P. 58(a) directing that Upscale Builders take nothing on its claims.
The parties have fourteen days from service of this Report and Recommendation to file written objections.
28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).
Failure to file timely objections will preclude appellate review of factual findings and legal conclusions, except for plain error.
Ortiz v. City of San Antonio Fire Dep’t, 806 F.3d 822, 825 (5th Cir. 2015).
______________________________
Yvonne Y. Ho
United States Magistrate Judge
Signed on December 20, 2024, at Houston, Texas.
Upscale Builders, Inc. v. PHH Mortgage Corporation
(4:23-cv-02939)
District Court, S.D. Texas, Judge Al ‘Bent’ Bennett
SEP 8, 2023 SEP 12, 2024
A year has passed since our last update…what’s been happening?
Above is the date LIT Last updated this article.
MOTION to Stay all case deadlines and the current November 4, 2024 trial setting pending a ruling on Defendants Motion for Judgment on the Pleadings by PHH Mortgage Corporation, filed. Motion Docket Date 9/19/2024. (Attachments: # 1 Proposed Order) (White, Thomas) (Entered: 08/29/2024)
MOTION (Rule 12(c) Motion for Judgment on the Pleadings)) by PHH Mortgage Corporation, filed. Motion Docket Date 5/28/2024. (Attachments: # 1 Proposed Order) (Davis, Kathryn) (Entered: 05/06/2024)
NOTICE of Appearance by Kathryn B. Davis on behalf of PHH Mortgage Corporation, filed. (Davis, Kathryn) (Entered: 05/02/2024)
District Court
SOUTHERN DISTRICT OF TEXAS (Houston)
CIVIL DOCKET FOR CASE #: 4:23-cv-02939
| Upscale Builders, Inc. v. PHH Mortgage Corporation Assigned to: Judge Alfred H Bennett
Cause: 28:1332 Diversity-Notice of Removal |
Date Filed: 08/10/2023 Jury Demand: None Nature of Suit: 220 Real Property: Foreclosure Jurisdiction: Diversity |
| Date Filed | # | Docket Text |
|---|---|---|
| 11/20/2023 | 4 | JOINT DISCOVERY/CASE MANAGEMENT PLAN by PHH Mortgage Corporation, filed.(White, Thomas) (Entered: 11/20/2023) |
| 11/20/2023 | 5 | PROPOSED ORDER (Scheduling Order), filed.(White, Thomas) (Entered: 11/20/2023) |
| 12/01/2023 | 6 | SCHEDULING ORDER. Amended Pleadings due by 12/15/2023. Joinder of Parties due by 12/15/2023. Pltf Expert Report due by 4/1/2024. Deft Expert Report due by 5/15/2024. Discovery due by 6/30/2024. Motions due by 7/30/2024. Joint Pretrial Order due by 10/4/2024. Motions in Limine due by 10/18/2024. Docket Call set for 11/1/2024 at 01:30 PM in Courtroom 9A before Judge Alfred H Bennett. Trial set for 11/4/2024 at 09:00 AM in Courtroom 9A before Judge Alfred H Bennett.(Signed by Judge Alfred H Bennett) Parties notified.(JacquelineMata, 4) (Entered: 12/04/2023) |
| 05/02/2024 | 7 | NOTICE of Appearance by Kathryn B. Davis on behalf of PHH Mortgage Corporation, filed. (Davis, Kathryn) (Entered: 05/02/2024) |
| 05/06/2024 | 8 | MOTION (Rule 12(c) Motion for Judgment on the Pleadings)) by PHH Mortgage Corporation, filed. Motion Docket Date 5/28/2024. (Attachments: # 1 Proposed Order) (Davis, Kathryn) (Entered: 05/06/2024) |
| 05/15/2024 | 9 | DESIGNATION OF EXPERT WITNESS LIST by PHH Mortgage Corporation, filed. (Davis, Kathryn) (Entered: 05/15/2024) |
| 06/17/2024 | 10 | NOTICE OF NON-OPPOSITION TO DEFENDANTS MOTION TO DISMISS PLAINTIFF’S COMPLAINT] re: 8 MOTION (Rule 12(c) Motion for Judgment on the Pleadings)) by PHH Mortgage Corporation, filed. (Davis, Kathryn) (Entered: 06/17/2024) |
| 08/29/2024 | 11 | MOTION to Stay all case deadlines and the current November 4, 2024 trial setting pending a ruling on Defendants Motion for Judgment on the Pleadings by PHH Mortgage Corporation, filed. Motion Docket Date 9/19/2024. (Attachments: # 1 Proposed Order) (White, Thomas) (Entered: 08/29/2024) |
| PACER Service Center | |||
|---|---|---|---|
| Transaction Receipt | |||
| 09/12/2024 17:46:20 |
ORDER for Initial Pretrial and Scheduling Conference and Order to Disclose Interested Persons.
Initial Conference set for 12/1/2023 at 09:30 AM in Courtroom 9A before Judge Alfred H Bennett
(Signed by Judge Alfred H Bennett) Parties notified.(ChrisKrus, 4) (Entered: 08/11/2023)
Result: 112 days
It is 112 days from the start date to the end date, but not including the end date.
Or 3 months, 20 days excluding the end date.
U.S. District Court
SOUTHERN DISTRICT OF TEXAS (Houston)
CIVIL DOCKET FOR CASE #: 4:23-cv-02939
| Upscale Builders, Inc. v. PHH Mortgage Corporation Assigned to: Judge Alfred H Bennett
Cause: 28:1332 Diversity-Notice of Removal |
Date Filed: 08/10/2023 Jury Demand: None Nature of Suit: 220 Real Property: Foreclosure Jurisdiction: Diversity |
| Date Filed | # | Docket Text |
|---|---|---|
| 08/10/2023 | 1 | NOTICE OF REMOVAL from 129th Judicial District Court, Harris County, Texas, case number 2023-40897 (Filing fee $ 402 receipt number ATXSDC-30337207) filed by PHH Mortgage Corporation. (Attachments: # 1 Exhibit A, # 2 Exhibit A-1, # 3 Exhibit A-2.Part 1, # 4 Exhibit A-2.Part 2, # 5 Exhibit A-3, # 6 Exhibit A-4, # 7 Exhibit A-5, # 8 Exhibit A-6, # 9 Exhibit A-7, # 10 Exhibit A-8, # 11 Exhibit B, # 12 Exhibit C, # 13 Civil Cover Sheet)(White, Thomas) (Entered: 08/10/2023) |
| 08/10/2023 | 2 | CORPORATE DISCLOSURE STATEMENT by PHH Mortgage Corporation identifying Ocwen Financial Corporation as Corporate Parent, filed.(White, Thomas) (Entered: 08/10/2023) |
| 08/11/2023 | 3 | ORDER for Initial Pretrial and Scheduling Conference and Order to Disclose Interested Persons. Initial Conference set for 12/1/2023 at 09:30 AM in Courtroom 9A before Judge Alfred H Bennett(Signed by Judge Alfred H Bennett) Parties notified.(ChrisKrus, 4) (Entered: 08/11/2023) |
| PACER Service Center | |||
|---|---|---|---|
| Transaction Receipt | |||
| 09/08/2023 11:21:15 |
Judge Bennett is Also Protectin’ Bandit Lawyer Ray Shackelford
Judge Bennett’s Magistrate Judge Yvonne Ho is the Antithesis of Honorable Stephen Wm. Smith -Judge Al ‘Bent’ Bennett is a former Harris County District Judge and we all know how honest they are too. Outlaws in Dirty Black Robes are Protecting Bandit Vilt. https://t.co/h9hxjJXrRq pic.twitter.com/ZggdyY4gux
— lawsinusa (@lawsinusa) September 8, 2023
202340897 –
UPSCALE BUILDERS INC vs. PHH MORTGAGE CORPORATION
JUL 3, 2023 | REPUBLISHED BY LIT: JUL 31, 2023
JUL 31, 2023
Above is the date LIT Last updated this article.
Very generous in death, $10 plus allegedly $130k for a total stranger to acquire a property worth over $600k.
There is no obituary for Cynthia in local press and her Death certificate exhibit is missing from the docket.
Sanctioned lawyer Ray Shackelford is another Texas lawyer and legal bandit above the law. He has submitted a lawsuit when the facts are clear that Cynthia Eneyana had prior foreclosure judgments but these facts were excluded from his filing on behalf of Upscale.
And then there’s Eneyana’s criminal conviction for mortgage fraud. She went to prison for 5 years and has restitution order for the sum of $1.7M. How much did she repay and why is the Quail property not part of the DOJ’s asset forfeiture?
Monday’s Quiz: There’s a theme on our @X timeline. Can y’all figure it out? No flashing lights necessary. https://t.co/9LAOdDwcZ2@HarrisCountyRP @HarrisCountyAO @HarrisCountyDAO @harriscountypl @JusticeLehrmann @RMFifthCircuit @HanksKendyl @dodrummond @JusticeLandau @CecereCarl pic.twitter.com/sCm2IEZe0h
— lawsinusa (@lawsinusa) July 31, 2023
Eneanya v. Ocwen Loan Servicing,
CIVIL ACTION No. 4:19-CV-01846
(S.D. Tex. Feb. 28, 2020)
CIVIL ACTION NO. 4:19-CV-01846
02-28-2020
CYNTHIA P.M. ENEANYA, Plaintiff, v. OCWEN LOAN SERVICING, LLC, Defendant.
Kenneth M. Hoyt United States District Judge
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
Pending before the Court is the defendant’s, PHH Mortgage Corporation (“PHH”) successor-by-merger to Ocwen Loan Servicing, LLC (“Ocwen”) (collectively, “the defendants”), motion for summary judgment (Dkt. No. 10). The plaintiff, Cynthia P.M. Eneanya has failed to file a response to the motion and the time for doing so has long elapsed. Thus, pursuant to this Court’s local rules, the plaintiff’s “[f]ailure to respond will be taken as a representation of no opposition.” S.D. Tex L.R. 7.4. After having carefully considered the motion, the record and the applicable law, the Court determines that PHH’s motion for summary judgment should be GRANTED.
Ocwen merged with PHH on June 1, 2019. Since it is a successor-in-interest to Ocwen, PHH need not file a motion for substitution before moving for a summary judgment. See Fairport Ventures, LLC v. Beneficial Fin. I, Inc., No. CV H-16-1038, 2017 WL 7806388, at *2 (S.D. Tex. July 6, 2017) (citing Fed. R. Civ. P. 25(c)).
II. FACTUAL OVERVIEW
The plaintiff, Cynthia P.M. Eneanya (“the plaintiff”), executed an Adjustable Rate Note dated June 10, 2005, in the amount of $184,000.00 payable to GreenPoint Mortgage Funding, Inc. (the “Note”).
As security for the Note, the plaintiff executed a Deed of Trust dated June 10, 2005, encumbering the real property located at 20518 Quail Chase Drive, Katy, Texas 77450 (the “Property”).
On June 20, 2005, the Deed of Trust was recorded in the official public records of Harris County, Texas as Document No. Y550093.
Servicing of the loan, as evidenced by the Note, was transferred from Bank of America to Ocwen effective November 30, 2013.
Pursuant to a letter dated December9, 2013, Ocwen notified the plaintiff of the change in servicing of the Note.
Subsequently, the plaintiff defaulted on the Note by failing to render payments when due.
On April 18, 2018, Ocwen sent the plaintiff a Notice of Default advising her that she was in default on the Note and further informing her that the loan would be accelerated if she failed to bring it current by paying $11,640.08 on or before May 25, 2018.
On May 4, 2018, Ocwen sent the plaintiff a letter advising her that mortgage assistance may be available to her and enclosing a Request for Mortgage Assistance (“RMA”) form to be completed by her to determine her eligibility.
The plaintiff, however, failed to cure the default or submit a RMA.
On August 6, 2018, the plaintiff filed a legal action against Ocwen in the 270th Judicial District Court of Harris County, Texas asserting claims for breach of contract, violations of the Real Estate Settlement Procedures Act (“RESPA”), and seeking an application for a temporary restraining order and temporary injunction (the “first lawsuit’).
On August 16, 2018, Ocwen removed the first lawsuit to this Court where it was identified as Civil Action No. 4:18-cv-02830 and assigned to Judge Sim Lake. On October 19, 2018, the parties filed a Stipulation of Dismissal, wherein the plaintiff agreed to dismiss the first lawsuit with prejudice.
(See Civil Action No.: 4:18-cv-02830, Dkt. No. 8).
On October 22, 2018, Judge Lake entered an Order granting the parties’ Stipulation of Dismissal and dismissing the plaintiff’s first lawsuit with prejudice.
(Id., Dkt. No. 10).
Thereafter, the Property was set for a foreclosure sale on January 2, 2019.
The foreclosure sale, however, was postponed after the plaintiff filed a voluntary petition for bankruptcy pursuant to Chapter 13 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court, Southern District of Texas, Houston Division.
On January 15, 2019, Ocwen sent the plaintiff a letter advising her that mortgage assistance options may be available to her, subject to approval by the bankruptcy court.
On January 18, 2019, the bankruptcy court dismissed the plaintiff’s bankruptcy petition.
On April 11, 2019, Ocwen sent the plaintiff a letter advising her that it would be merging with PHH and consolidating all of its mortgage accounts into PHH.
It further informed her that effective May 1, 2019, PHH would be her new mortgage servicer and would be collecting payments on her account going forward.
On May 6, 2019, the plaintiff commenced the instant action seeking to enjoin a foreclosure of the Property set for May 7, 2019
(the “second lawsuit”).
III. ANALYSIS AND DISCUSSION
The plaintiff has initiated the instant action now before this Court to further stall foreclosure proceedings and delay relinquishing possession of the Property, alleging that the defendants are liable for breach of contract and RESPA violations by, inter alia, failing to comply with HUD regulations outlining procedures that must be followed prior to accelerating and foreclosing a loan subject to the FHA.
PHH now moves for a summary judgment on the plaintiff’s second lawsuit, asserting that the doctrine of res judicata bars the plaintiff’s claims.
It further contends that even if the plaintiff’s claims were not barred, the plaintiff has failed to raise a genuine issue of material fact on her claims against it and a summary judgment is appropriate.
This Court agrees.
“Claim preclusion or res judicata, bars the litigation of claims that either have been litigated or should have been raised in an earlier suit.”
Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005), cert. denied, 547 U.S. 1055, 126 S. Ct. 1662, 164 L. Ed.2d 397 (2006) (citing Petro-Hunt, L.L.C. v. United States, 365 F.3d 385, 395 (5th Cir. 2004)).
The elements of claim preclusion, or res judicata, are as follows:
(1) the parties in the subsequent action are identical to, or in privity with, the parties in the prior action;
(2) the judgment in the prior case was rendered by a court of competent jurisdiction;
(3) there has been a final judgment on the merits;
and
(4) the same claim or cause of action is involved in both suits.
Duffie v. United States, 600 F.3d 362, 372 (5th Cir. 2010) (citing Test Masters, 428 F.3d at 571; see also Ellis v. Amex Life Ins. Co., 211 F.3d 935, 937 (5th Cir. 2000)).
If all four of these elements are present, “claim preclusion prohibits [a litigant] from raising any claim or defense in the later action that was or could have been raised in support of or in opposition to the cause of action asserted in the prior action.”
United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994) (citing In re Howe, 913 F.2d 1138, 1144 (5th Cir. 1990) (emphasis in original)).
Here, the parties in the first lawsuit and second lawsuit are in privity with one another, as it is undisputed that PHH is a successor-in-interest to
Ocwen. See Meza v. Gen. Battery Corp., 908 F.2d 1262, 1266 – 67 (5th Cir. 1990)
(reasoning that privity may be found in three situations: “(1) where the non-party is the successor in interest to a party’s interest in property; (2) where the non-party controlled the prior litigation; and (3) where the non-party’s interests were adequately represented by a party to the original suit.”).
Additionally, the prior judgment entered by Judge Lake is certainly a judgment on the merits by a court of competent jurisdiction that the plaintiff has not appealed.
See Oreck Direct, LLC v. Dyson, Inc., 560 F.3d 398, 401 (5th Cir. 2009) (citing Fernandez-Montes v. Allied Pilots Ass’n, 987 F.2d 278, 284 n.8 (5th Cir. 1993)
(noting that a federal court’s dismissal with prejudice is generally a final judgment on the merits for res judicata purposes)).
Moreover, although the “named” causes of action alleged in the first lawsuit and second lawsuit somewhat differ, they, nevertheless, are based on the same nucleus of operative facts relative to foreclosure of the Property and, thus, could have been raised in the first lawsuit.
For these and other reasons, the Court is of the opinion that PHH is entitled to judgment as a matter of law on the plaintiff’s claims.
See Matter of Howe, 913 F.2d 1138, 1144 (5th Cir. 1990)
(“Under [the transactional test], the critical issue is not the relief requested or the theory asserted but whether plaintiff bases the two actions on the same nucleus of operative facts.”);
see also Davis v. Dallas Area Rapid Transit, 383 F.3d 309, 312 – 13 (5th Cir. 2004).
In making this determination, the Court is guided by the pleadings, the record and other submissions on file, including certain real property records on file in the Harris County Appraisal District’s Office, which demonstrate that:
(1) this is the second lawsuit that the plaintiff has filed attempting to challenge the foreclosure sale of the real property located at 20518 Quail Chase Drive, Katy, Texas 77450 in Harris County, Texas (the “Property”);
(2) after the plaintiff defaulted on her mortgage payment obligations, Ocwen initiated steps to foreclose on the Property;
(3) on August 6, 2018, the plaintiff commenced an action in the 270th Judicial District Court of Harris County, Texas, seeking to challenge Ocwen’s authority to foreclose on the Property;
(4) in the first lawsuit, the plaintiff alleged claims for breach of contract, violations of RESPA and sought an application for a temporary restraining order and temporary injunction against Ocwen relative to the Property;
(5) the first lawsuit was dismissed, with prejudice, pursuant to an Order entered by Judge Lake on October 22, 2018;
(6) on May 6, 2019, the plaintiff filed a second lawsuit in the 281st Judicial District Court of Harris County, Texas, again seeking to challenge Ocwen’s/PHH’s rights to foreclose on the Property, alleging essentially the same claims asserted in her first lawsuit, namely claims for breach of the duty of good faith and fair dealing, violations of RESPA and seeking an application for a temporary restraining order and temporary injunction;
(7) the second lawsuit was removed to this Court on May 21, 2019;
(8) upon removal, PHH moved for a summary judgment on the plaintiff’s second lawsuit, arguing, inter alia, that the res judicata doctrine bars the plaintiff’s claims;
and
(9) the plaintiff has failed to offer any evidence to the contrary or raise a genuine issue of material fact on her claims against Ocwen/PHH.
Courts may “take judicial notice of documents in the public record.” R2 Invs. LDC v. Phillips, 401 F.3d 638, 640 n. 2 (5th Cir. 2005) (citing Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017 – 18 (5th Cir. 1996)).
Courts are also permitted to consider the public records of prior judicial proceedings when assessing an affirmative defense raised by a defendant.
See Clifton v. Warnaco, Inc., Nos. 94-10226, 94-10657, 1995 WL 295863, *6 at n.13 (5th Cir. 1995).
IV. CONCLUSION
Based on the foregoing analysis and discussion, it is hereby ORDERED that PHH’s motion for summary judgment is GRANTED and the plaintiff’s second lawsuit is hereby DISMISSED with prejudice.
Further, the plaintiff is hereby admonished and directed to refrain from filing further lawsuits regarding this matter, as further litigation would be frivolous and MAY RESULT IN SANCTIONS BEING IMPOSED.
It is so ORDERED.
SIGNED on this 28th day of February, 2020.
/s/_________
Kenneth M. Hoyt
United States District Judge
2008: The Indymac fraud continues to cast a long shadow over the lives of countless American homeowners. The unprecedented theft of citizens homes orchestrated by Wall St. stands as a dark stain on the nation’s history. The search for justice is ongoing.https://t.co/0nB5FoGgIh
— lawsinusa (@lawsinusa) July 29, 2023
Missouri City woman convicted of mortgage fraud, sentenced to 5 years in Federal Prison
Eneanya faces a maximum of five years imprisonment for the wire fraud conspiracy conviction and 20 years for each count of conviction for wire fraud and conspiracy to launder funds and substantial fines, as well as an order to pay restitution to the victims of the fraud scheme.
U.S. District Judge Nancy F. Atlas, who presided over trial that began on Monday, Nov. 28, has set sentencing for Feb. 24, 2006.
During the week-long trial, prosecutors presented evidence that showed the workings of a multi-million dollar mortgage fraud scheme executed in the Houston area between September 2003 and August 2004. The evidence proved the mortgage fraud scheme involved the securing of mortgages by the defendants in amounts greater than the amount the seller received in payment for the house. The difference between the sales price and the mortgage amount was given by the buyers to the defendant brokers. These real estate transactions were allegedly brokered by a company. Thereafter, the defendant buyers allegedly defaulted on the loans.
Michael McKelvey, Gerald Scott and Johnny Hill were the buyers of the houses allegedly brokered by Peter Gibson Kolo through AMH Enterprises, operated by Cynthia Eneanya, a licensed loan officer with the Texas Department of Savings and Mortgage Lending. Each buyer received $5,000 for each house they purchased during the scheme. The monies were paid by Eneanya and Kolo through AMH Enterprises to James Turner, a licensed realtor, who acted as a middleman in this scheme.
The defendants obtained a mortgage to purchase a total of 12 houses, each with an estimated value of approximately $500,000 or more, by making false statements and concealing facts in their sworn mortgage applications, such as falsely inflating their incomes; listing false employers; providing false references; falsely stating that their current residences were leased; falsely stating that they intended to live in the house of purchase after the sale was completed; and failing to disclose on their mortgage application their obligations to pay for other homes previously purchased in the scheme.
The evidence showed that during the course of the scheme, the defendants caused more than $6.9 million in wires to be sent to title companies to effect the closing on the homes. Losses to the lenders are over $2 million.
Eneanya is the fifth of six defendants indicted for their respective roles in the scheme to be convicted.
Within the United States Department of Justice (DOJ), there is a division specifically responsible for handling the collection of restitution from federal prisoners and ensuring it is distributed to the victims. This division is known as the “Asset Forfeiture and Money Laundering Section” (AFMLS).
The AFMLS is a component of the DOJ’s Criminal Division and is tasked with handling various financial matters related to criminal prosecutions, including asset forfeiture and money laundering cases. One of its key responsibilities is overseeing the collection and disbursement of restitution payments from federal prisoners to their victims.
The question remains, why has the property at Quail not been seized and sold?
Arvind Lal, Chief
The Asset Forfeiture and Money Laundering Section oversees all criminal and civil forfeiture matters for the Criminal Division. Federal law provides authority to seize and forfeit the proceeds of virtually all serious federal offenses, including terrorism, drug trafficking, organized crime, child exploitation, human trafficking, fraud, and money laundering.
The mission of the section is to enforce compliance with the laws of the United States by using criminal and civil forfeiture, and money laundering charges, to disrupt and deter criminal activity, to dismantle criminal enterprises, and to deprive criminals and criminal organizations of illegal proceeds and instrumentalities of crime. We strive to recover property that may be used to compensate victims. Forfeited funds are used to provide full or partial restitution to victims of crimes, and as permitted by law, to support federal, state, and local law enforcement activities.
Prosecutors assigned to the Asset Forfeiture and Money Laundering Section assist all of the prosecutors in the Criminal Division with any forfeiture and money laundering issues in their cases. Section prosecutors assist with financial investigations, draft forfeiture language for indictments, informations, and plea agreements, and assist with forfeiture issues at trial and in sentencings. The section also files civil forfeiture actions, where appropriate, and handles all civil forfeiture litigation. The section is responsible for tracking forfeitures and ensuring final disposition of seized assets. Section prosecutors also handle money laundering investigations and prosecutions.
Pro Hac Vice by IFP Application: Sanctioned Lawyer Ray L. Shackelford Appears Without Authority
LIT’s watched Shackelford appear in many of his removed foreclosure cases without submitting a pro hac vice application and fees.
Felon Marc Trammell-Wade and Sanctioned Shack Enters District Court With a Full Non-Disclosure Petition
Ancillary Judge Payne ain’t interested in the facts, just a quick disposal granting the legal bandit and his bankrupt client a $500 TRO.
Harris County Criminal Magistrate Judge Sharon Chu aka Muharib’s Bad Faith Bankruptcy Dismissed
Jan. 2024: The judges of Harris County District Courts appointed Sharon Chu Criminal Law Hearing Officer. In federal court, this happened.
